Saturday, March 1, 2014

Five Aspects of Digital Capabilities

Digital capability is synthetic in nature, embedding agility in processes and focusing on Long-Term Competency. 

A business capability is the abilities needed by an organization in order to deliver value. It’s the ability of an organization to do things effectively to achieve desired outcomes and measurable benefits and fulfill business demand. In today’s business environment, business capabilities are a fundamental building block in digital transformations with which companies can transform the customer experience, operational processes, and business models, to reach a higher level of business agility, delight, and maturity.

Highlight the value of having a good understanding of current and future capabilities. There is a case for only allowing changes that have a direct impact on these capabilities. One of the beauties of working with capabilities is that it keeps you from being dragged into all the detail of the processes involved too early. Clearly, the processes and then procedures need to be understood as well in order to understand the full impact of changes on roles, staff, and applications but put the focus on building the unique set of capabilities in order to compete for today and future.

Identify gaps and conflicts in digital transformation. Using business capability model, you can identify potential gaps and conflicts in accountability of execution and digital transformation. The capability map will provide you better coverage for accountability and also in some cases you will see overlapping resources support the same capability. In some cases, you will discover no resource to support a business capability. The approach can be used for the entire enterprise, or for business units or for a team or even for stakeholders, and the time depends on the complexity of the transformation project.

Capabilities have outcomes; they collaborate with each other and are enabled by processes. They include resources (manpower and maybe raw materials),  technology (systems) required and human capital (talent potential as asset and capital, not just as resources), identify those companies that consistently delivered best shareholder returns do so by focusing hard on the customer and re-designing their operations from the customer back into the operation. The maturity of a business capability would be based on the ability for the capability to deliver on customer needs or to achieve the desired capability outcome, as the digital era is the age of the customer. 

Transformational leadership/management capability: The key role of the senior leader is to be constantly challenging the business paradigm. It has much to do with the combination of mindset and pace.   The reality of senior leadership in many organizations is one of high pace and rapid decision-making. What is really relevant is a changing mindset and visioning pattern that allows these leaders to 'spot' the problem / symptom and constructively challenge the organization to support the transformation. In that manner, the transformation doesn't become a one-time activity instead it is a constant game changer for the organization. In systems terms, transformational change comes from outside and the good businesses will always be seeking and embracing the influences beyond their own business. This requires a constant awareness of digital dynamic and challenging of mindset and the inevitable rejuvenation of the leadership.

Establish sustainable transformational capabilities based on the following key dimensions:
1). Scope - Clear defined scope of the transformation engagement
2). Alignment - Alignment to business and its strategy that is agreed by sponsors. This is where you need to challenge the status quo and be creative.
3). Design - Design of the transformation comprising of people, process, and technology through visioning / value map process.
4). Execution - Execution of the transformation through collaborative approach using internal and external organizations. Here you mustn't undermine the knowledge of internal excellence.
5). Governance - Governance of the execution to manage and mitigate risks and intervention to ensure that strategic objectives do not drift.
6). People power - the commitment and belief in people who are part of the execution and governance will multiply the results of the transformation program. 
7) KPIs and Measurement: The procedure to set KPIs must be defined for the achievement of the objective & its measurement

Compared to industrial capabilities, digital business capabilities are more complex in design, with synthetic nature requiring cross-functional collaboration, embedding agility into processes for adapting to the changes, and the right set of unique digital capabilities directly decide the overall organization’s competency, and how well they can make digital transformation, deliver the value to the customers and build long term winning position.


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