Thursday, July 18, 2013

CIO as Strategist: Practice Capability-Based Strategy

The capability-based strategy is to well bridge ‘as-is’ and "to-be" state.

CIO as IT leader needs to spend significant time in strategic planning, IT strategy is an integral element of corporate strategy, but how to make a sustainable and implemental strategy is more science than art, it takes clear business vision and solid business/IT capabilities as well. Is it time to practice capability-based strategy? 

Capability maturity is a differentiator: A business capability is a specific ordering of Processes, People, Resources, Information, and Technology aimed at creating a defined business outcome; capabilities are often developed reactively to competitive threats, strategic opportunities, and environmental changes, so all businesses have certain capabilities, what matters is maturity, the high-mature set of business capabilities can make organizations more adaptable and agile, to fulfill their strategy.

Create the mapping between capability and strategy: CIOs and executive teams must have a clear understanding of the link between IT capabilities and business strategies, in order to capture the potential value of their IT investments. Prepare strategic plan points the company in a direction where it can maximize its market position and reap as many benefits as possible. This direction must allow for economic, market or customer change and let business adapt swiftly. EA can be taken as a mapping tool in providing the visibility and defining the roadmap for strategic alignment. EA is also a discipline that helps organizations define and deliver IT capabilities aligned with their strategic objectives. It is a process of progressively elaborating a set of capabilities through conceptual, logical and physical states, informing decision-making at multiple levels, and helping to maximize the business value of IT.

The capability-based strategy is to well bridge ‘as-is’ and "to-be" state: It's about breaking down the business capability blocks, there are skills (ability), knowledge (internal/external), policies/routines, business processes, any type of tangible/intangible resources, culture and forms of communications. The capability-based strategy is not only leading to a destination but also cultivating and optimizing the set of mature enterprise capabilities on the way proactively. A good strategic planning helps organizations extract the maximum value from their portfolio of IT capabilities by their ability to inform decision-making at multiple levels, and to drive strategic alignment and optimization.
Modular business capabilities enable agile & flexible strategic planning and execution:  Alternatives and adaptation are the keywords to survival. You know where you come from but you may never sure where you’ll arrive precisely, so be well prepared for surprises! Most of the enterprise capabilities need to be woven cross-functionally, it takes cohesive collaboration for business as a whole, and thus, making capability-based strategy should also take a collective effort, to break through the silo thinking.
Use the capability-based plan to drive budgets and prioritization: It helps those stakeholders to articulate what they need in their natural language (and not be hung up about methodologies). This will get reluctant stakeholders to want to contribute in the next iteration, and gives IT enough time to develop good strategies to deliver them.

As capability is an acquired and organized "ability" within a company and takes hard work to put in place, it can therefore not be transferred because of the degree of organizational learning and organization that goes with it, so the capability-based strategy should be practical to implement, also unique to keep competitive, it’s the good approach in strategic planning.


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