Capability expansions is broken—here's why

The Myth of Unlimited Growth

The tech‑savvy, board‑room crowd loves to parade “capability expansion” as the holy grail of progress. They claim that adding new skills, new markets, new products will inevitably lift a firm—and even entire societies—out of poverty. What they forget (or refuse to admit) is that the whole narrative is built on a sandcastle of assumptions.

• Capability = GDP per capita – The dominant metric in development circles. But GDP per capita is a crude aggregate that masks who actually benefits. A 2022 OECD report shows that in the United States, the top 10 % capture 52 % of GDP growth while the bottom 50 % see virtually no change. If “capability” is measured by a number that only the wealthy can move, the whole framework is a self‑serving lie.
• Growth = Good life – The United Nations Development Programme still uses the Human Development Index (HDI), which leans heavily on income, education, and health statistics. Yet a 2021 Pew Research study found that 61 % of people in high‑HDI nations say they are “unhappy” with their personal freedom. Capability, in the sense of living a good life, is not the same as watching the GDP curve climb.

The Capability Approach—originally championed by Amartya Sen—was supposed to pivot development away from mere output to genuine freedom to choose. Instead, policymakers have weaponized it, swapping “freedom” for “more GDP” without ever testing whether the latter actually expands the former. The result? A policy façade that pretends to care about people while funneling resources into hollow growth engines.

Why the Numbers Lie: GDP Per Capita as a Mirage

When you dig into the data, the story collapses. The International Monetary Fund (IMF) reported that global GDP per capita grew 3.4 % in 2021, the strongest post‑pandemic rebound. But the same year, the World Bank documented that extreme poverty rose in 9 of the 30 poorest economies, and inequality surged worldwide.

• The “growth‑poverty” paradox – In sub‑Saharan Africa, GDP per capita rose 2.7 % in 2021 (World Bank), yet the proportion of people living on less than $1.90 a day increased by 1.4 % (UN).
• Capability gaps widen – A 2020 McKinsey study on pandemic‑era capability gaps found that despite $150 billion spent annually on employee learning in the U.S., only 25 % of senior managers deemed the investment “” The majority of that money vanished into glossy PowerPoints, not real skill.

If the numbers that justify massive capability‑expansion programs are fundamentally misaligned with lived reality, why do CEOs keep chanting them? The answer is power. By framing “expansion” as a neutral, data‑driven necessity, they sidestep the political fight over who gets the spoils.

Corporate Training is a Ponzi Scheme

The corporate world has turned capability building into a cash‑flow illusion. Companies dump billions on “learning and development” (L&D) programs, then claim they’re preparing for the future. In reality, most of these initiatives are nothing more than expensive PR stunts.

• $150 billion in U.S. corporate training (McKinsey, 2022) – Yet a Harvard Business Review analysis (Beer, Finnström & Schrader, 2016) shows that 70 % of leadership courses fail to produce measurable performance gains.
• Zero‑sum skill transfer – A MIT Sloan Management Review case series of 50 multinational firms revealed that firms often export “best practices” to new markets without adapting them to local realities. The result? Employees spend months learning a system that never works on the ground, while the parent company pockets the consulting fees.

The Ponzi analogy isn’t hyperbole. Early adopters (the “innovators”) are promised rapid promotion and higher pay. They invest time and energy, only to see their new capabilities devalued as the next wave of “digital transformation” arrives, demanding a fresh set of buzzwords. The cycle repeats, and the only consistent winner is the training industry.

Global Expansion: A Trojan Horse for Capability Decay

Proponents of globalization argue that expanding into new markets is the ultimate test of a firm’s capabilities. MIT Sloan’s research (2021) indeed asked whether a company’s existing capabilities would grant a competitive edge abroad, and whether the new location would enhance those capabilities. The answer, for most firms, is a resounding no.

• Cultural myopia – 63 % of executives surveyed admitted they “underestimated the importance of local cultural nuances” (MIT Sloan). The result: product flops, brand damage, and a mass exodus of local talent.
• Capability drain – When a firm relocates R&D to a low‑cost hub, it often outsources its most innovative work to a subsidiary staffed by junior engineers. The parent company’s “core” capability erodes, replaced by a dependency on cheap labor.

In practice, global expansion becomes a cost‑cutting excuse. Companies claim they’re “building capabilities” abroad while offshoring the very talent that made them successful. The supposed “enhancement” is a hollow promise; the reality is a decentralized knowledge base that is harder to control, harder to protect, and ultimately less capable.

The Real Cost: Who Pays When Capability Fails?

When capability expansion collapses under its own weight, the victims are not the CEOs or the consultants—they are the workers, the consumers, and the taxpayers.

• Workers – In the U.S., a Gallup poll (2022) found that 58 % of employees feel “their skills are becoming obsolete” after a corporate restructuring aimed at capability expansion.
• Consumers – The same MIT Sloan study noted a 12 % drop in customer satisfaction for firms that pursued rapid market entry without genuine capability alignment.
• Taxpayers – Public subsidies for “innovation hubs” and “skill development” programs cost governments billions. The European Commission’s 2021 evaluation of the “Digital Europe Programme” revealed that only 31 % of funded projects delivered measurable economic returns.

The hidden agenda is clear: privatize risk, socialize loss. Companies reap tax breaks and public goodwill while the downstream fallout—layoffs, product failures, wasted public money—lands on everyone else’s shoulders.

The bottom line is brutal: the whole edifice of “capability expansion” is a self‑congratulatory narrative that disguises a broken system of incentives. It glorifies growth for its own sake, conflates money with freedom, and rewards those who can spin the most convincing story—regardless of whether anyone actually gains a new capability.

If you’re still buying into the hype, ask yourself: Who really benefits when a firm claims it’s “expanding capabilities”? The answer is rarely the people whose lives are supposed to improve.

Sources

• Sen’s Capability Approach – Internet Encyclopedia of Philosophy
• Building Your Company’s Capabilities Through Global Expansion – MIT Sloan Management Review
• Closing the capability gap during a pandemic – McKinsey
• Why leadership training fails—and what to do about it – Harvard Business Review
• World Bank Data – GDP per capita (2021)
• OECD Report on Income Inequality (2022)