Business Capability Map

A Business Capability (a.k.a. Capability):

describes what a business needs to do to achieve its business outcomes

Capabilities provide a common business language for technology and non-technology stakeholders alike, which facilitates strategic conversations unencumbered by technical details, thus leading to broader stakeholder support and buy-in.

Capabilities are a combination of organizational resources such as human capital (competencies and skillsets), processes, technologies, applications, initiatives, partnerships and information assets which can help the organization deliver value to its stakeholders and create differentiation (Figure 1).

figure 1: capabilities are a combination of resources

By using capabilities, organizations can anchor what they can do, to their business strategy thus creating common linkages between business model, business strategy, and operating model (Figure 2).

Figure 2 - Capability provides a common theme between strategy and models

Example of Capability Map - a visual presentation of capabilities:

Business capabilities carry certain attributes. They are:

1. Stable - capabilities do not change over time unlike applications, processes or projects

2. Unique - no two capabilities are the same and they are independent of each other

3. Strategic - capabilities belong to the strategy domain and as such express strategic intent

4. Agnostic - are implementation agnostic & describe what a business can do and not how

5. Collective - combination of human capital, process, technology and information resources

6. Multi-level - can be defined at an enterprise level as well as for any organizational unit

7. Combinable - can be combined in different ways to address variety of business problems

8. Independent - of process, people, technologies, organizational structure or domains

9. Assessable - can be assessed against number of parameters such as value or risk

10. Categorizable - can be categorized based on their assessment e.g. advantage

11. Decomposable - can be decomposed into several levels

Best Practices:

1. Align with Business Strategy and Model. Develop Business Capability model in the light of business strategy, business model and operating model and not independent of them. Focus on capabilities that ‘matter’ instead of compiling a complete or exhaustive set of capabilities. Carefully assess relevance versus completeness.

2. Define for Future. View capabilities from the point of what an organization can do in the future and not simply what it is currently doing

3. Engage Stakeholders. Define capabilities with full engagement of organizational stakeholders in a way which reflects their concerns and thought process

4. Differentiate. Learn to differentiate between business capabilities (what, strategic intent, strategic context), business processes (how), business functions (organizational structure context) and services (operational context)

5. Nomenclature. Use a consistent naming convention for business capabilities either noun-verb or verb-noun example of noun-verb is Product Management and an example of verb-noun is Manage Products. We recommend verb-noun as it shows the intent to take ‘action’.

6. Use 3 Levels. Limit capability map decomposition to 3 levels - 1, 2, and 3 or 0,1 and 2. Keep presentations to executive stakeholders limited to three levels

7. Limit number of capabilities. Limit number of capabilities in each level to a reasonable number say 5 to 10