The capability-building process:.a. requires first developing the ability to do something, however imperfectly or inefficiently; second, translating this ability into a competence by learning to do the activity consistently well and at an acceptable cost; and then continuing to polish and refine its know-how in an effort to further improve its performance, ideally striving to match or beat rivals in performing the activity. b. entails establishing a new department with primary responsibility for developing the expertise to give the company the needed core competencies and capabilities. c. stands a better chance of succeeding if a company employs a traditional functional organization structure. d. is made much easier if a company abstains from outsourcing important value chain activities. e. aims at turning the company's distinctive competencies into core competencies.