A capability is anything you do that produces something that someone finds valuable.
Every capability has inputs, processes, and outputs
To live a successful life you need to create capabilities where the output is something that others value.
Capabilities are on a spectrum from skills to products.
On the one side of the scale, a skill is a capability where you are putting your skill and time together to create a capability that others will find valuable. The problem is you can only sell this capability once. Time is a non-renewable resource.
On the other end of the spectrum is products where you have created a self-sustaining product that others find valuable.
A musician has a skill. A musician who can create a song in a format that someone can buy has a capability.
Most capabilities fall somewhere in-between where some of your time is required but the rest of the capability is wrapped up in the process and structure you have created.
Once you have a capability focus on improving the process to make the capability more valuable to you. Focus on replacing what you do with process and structure.