PLAN Concepts

What is Strategy?

There is nothing quite so useless, as doing with great efficiency, something that should not be done at all -- Peter Drucker

Strategy is a concept that is important to business leaders and academics alike. What a strategy is and how it should be developed for a business is therefore a topic of discussion in boardrooms and classrooms alike. But we often struggle with this concept, even though we know that strategy should guide the actions of the organization and that without it, valuable time and resources can be wasted on activities that should not be undertaken in the first place.

According to Oxford languages a Strategy is

a plan of action designed to achieve a long-term or overall aim. -- Oxford Languages

In enterprises, government organizations and even in non-profits, a clear definition can be helpful to all members of the organization involved in formulating and executing the strategy. Some definitions of business strategy are below:

“Strategy is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition - -- Playing to Win – Lafley and Martin

a good strategy has, at a minimum, three essential components: a diagnosis of the situation, the choice of an overall guiding policy, and the design of coherent set of action“– Good Strategy Bad Strategy - Richard Rumelt

A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives -- HBR - Michael D. Watkins

Some key points:

Strategy is about choices and decision-making by organizational leaders
It aims to create a sustainable advantage over the competition
It should be based on a thorough diagnosis of the situation
Action is essential to translate it into successful results
Strategy must guide resource allocation

Stakeholder

A stakeholder is:

any person, organization, social group, or society at large that has a stake in the business.

Role is

the position assigned to a stakeholder in the organization.

An organization has many roles. Each person may have more than one role, or one role may be assigned to more than one person. Thus, there is a many-to-many relationship between organizational stakeholders and roles.

Some examples are given below:

Chief Executive Office (CEO) - one person only
Chief Information Officer (CIO) - can be more than one for each business unit
Project Manager - many
Board Member - many
Call Center Agent - many

Roles are different from responsibilities, which are specific tasks or duties assigned to team members as part of their role.

Impact and Influence of Role of a Stakeholder

Impact - The positive or negative effects of their decisions or their ability to bring about change. For example, a stakeholder in a role may have the ability to bring about change, but may have lost the leverage to persuade others. In this case, the impact may be high but the influence low.

Role Influence - The power a stakeholder has to facilitate or hinder the achievement of the goal of an activity. The extent to which the stakeholder is able to persuade or coerce others to make decisions and follow a particular course of action. For example, a stakeholder may have a strong influence to persuade others but not hold a decision-making position or bring about change themselves. In this case, the influence may be great but the impact is small.

Source: APMAS Knowledge Network

Impact and Influence and impact can be represented in a matrix as shown below:

RACI

RACI is a matrix for assigning responsibilities. It is used to describe the involvement of different roles in the strategic process.

Responsible - Those who do the work to complete the task
Accountable - The one ultimately answerable for the correct completion of the strategy
Consulted - Those whose opinions are sought
Informed - Those who are kept up-to-date on progress,

Concerns

Concerns are the aspects of the business that decision makers are interested in and want to explore in depth. The range of concerns is very wide and includes all internal and external matters related to the business. Some of the areas of interest are (not in any particular order):

Market and Competitors
Organizational strength and weaknesses
Market threats and opportunities
Laws and Regulations
Environmental factors
Health and Safety
Organizational Competencies and Capabilities
Business Applications
Legacy Applications
Technical Debt
Technological issues
New and emerging technologies
Human Capital
Risks
Political changes
Cyber Security
Communication
Learning and Growth

Business Capability

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 without being pulled into technical details, leading to broader stakeholder support and buy-in.

Capabilities are a combination of organizational resources such as human capital (competencies), processes, technologies, applications, initiatives, partnerships and information assets which can help the organization deliver value to its stakeholders and create differentiation (figure 1). By using capabilities, organizations can anchor what they can do to its business strategy thus creating common linkages between business model, business strategy and operating model (figure 2).

Business Capability Modeling

According to Gartner:

Business capability modeling (BCM) is a technique that represents the ways in which enterprises combine resources, competencies, information, technology, processes and their environments to create unique competitive possibilities and deliver value to customers or citizens.-- Gartner

Business capability Map (BCM) is a type of model to present business capabilities in a hierarchical model. A BCM captures all the important capabilities of an industry or an organization. Heat-mapping technique is often used to color code individual capabilities in the map to highlight their current or target maturity, their category, and other attributes. It is a useful technique and widely used.

Benefits of Business Capabilities

Common business language to connect technology and non-technology stakeholders
Common theme between Business Strategy, Business Model and Operating Model
Translate Business Strategy, Business Model and Operating Mode into ‘what can be done’
Foundation for subsequent use cases e.g Application Catalog or Application Rationalization
Identify sustainable differentiation and advantage which are unique to the organization and cannot be replicated easily

Business Capability Lifecycle

A business capability goes through many phases in its lifecycle as follows:

Discover - ascertain, determine, and learn more about the business capability
Define - state or describe exactly the nature, scope, or meaning of, and define the limits or boundary of business capability
Development - making it happen. Putting resources on ground.
Deployment - the action of bringing resources into effective action. Actually putting the capability into action to achieve and objective
Maintenance - the process of preserving the condition or situation of business capability when no more development is being done
Maturity - when the capability has reached its full development

Business Capability Attributes

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. Hierarchical- 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

Business Capability Categorization

Categories of Business Capabilities:

Advantage - create distinction in eyes of customers AND drive financial results
Strategic - with high customer value but little Financial Impact
Essential - drive financial performance but not customer Value
Business Necessity - are necessary but are not seen as creating value for customers or driving financial performance

Business Capability Best Practices

Align with Business Strategy and Model. Develop Business Capability model in the light of business strategy and business 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.
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
Engage Stakeholders. Define capabilities with full engagement of organizational stakeholders in a way which reflects their concerns and thought process
Differentiate. Learn to differentiate between business capabilities (what, strategic intent, strategic context), business processes (how), business functions (organizational structure context) and services (operational context)
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’.
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
Limit number of capabilities. Limit number of capabilities in each level to a reasonable number say 5 to 10

Business Capability Maturity Assessment

Please read more on maturity assessment here

Risk Management

Refer to risk management here