Friday, August 22, 2014

Business Capability vs. Process

Capability view is for the strategic re-think of ‘What’, and the process view is about the “ executable knowing ‘How.'

Generally speaking, 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. Business Process Management is the way you manage the processes to achieve operational excellence. However, many times, even the industry experts are not always on the same page regarding definitions of business capability or business process, how some of the standard artifacts for business capability management might be developed; how broad scope the process management should go for; or more fundamentally, how to differentiate the interdependent concepts such as business capability and process?

Strategic vs. Executable: Broadly there are two different perspectives/views of Capabilities:  (1) Capabilities are processes and competencies viewed strategically. (2) Capabilities are the resources required for a certain mission/purpose. Capability and process are two viewpoints of an organization. An organization has the capability to deliver outcomes; an organization executes processes to deliver an output.

Abstract vs. Detailed: Capability is an attribute of a system - so it is used largely as an abstraction of a system. The capability is used in the context of assessment - capacity to realize an outcome, existing or intended, or potential - which is in stark contrast to the use of the process. With the capability view, being more abstract, no detail is provided as to the means by which the transformation occurs, nevertheless, the system has external interfaces which deal with inputs and outputs. With the process view, being more logic and detailed, the process shows the receiving processes, the distributing processes, and the transforming processes. Both views can logically show inputs and outputs - it simply depends on how the viewpoint is being used, as to whether inputs and outputs are included. For example, business systems and information systems each has inputs and outputs, and the system is the means by which the inputs are transformed into outputs.  In this context, a capability is an abstraction of a system and therefore also has inputs and outputs just as the system-of-interest for which the capability is referenced. 

What vs. How: Capabilities are WHAT abilities/ competencies an organization has/needs. Processes are HOW an organization does something. The fundamental difference between Capabilities and Processes is "What vs. How". Adding inputs and outputs to a Capability (a What) turns it into a Process (a How) as Inputs and Outputs imply/indicate transformation. It makes no difference if a process is described a system, its purpose is still to transform/process inputs into outputs. Capability and process viewpoints consider different characteristics (what vs how outputs vs outcomes). What and how much you model for business capabilities depends on what you intend to use the model for. Capabilities can be mapped to the processes that instantiate the capability, the technology used, the information required, organizations, etc. They can also be assessed for maturity, costs (based on the technology, systems, labor, etc.), relationship to strategy.

Both capability view and process view are useful in managing business transformation, which to use depends on the purpose you have in mind: Strategic re-think of ‘What’ vs. “ Executable knowing ‘How’; and the high mature and high performing business depends on its differentiated sets of dynamic capabilities which are underpinned by the well-managed business processes matrix and portfolio within the organization.





4 comments:

capability view and process view are useful in managing business transformation, which to use depends on the purpose you have in mind: Strategic re-think of ‘What’ vs. “ Executable knowing ‘How’; and the high mature and high performing business depends on its differentiated sets of dynamic capabilities which are underpinned by the well managed business processes matrix and portfolio within the organization.

Can you provide an example of what these views look like in practice?

Often they way organizations model capabilities are really as high level processes, esp. when its a future state model. In that case, the capabilities may not exist yet...but are planned for future state. Many people struggle to get to the terminology for "capabilities". So far, I haven't seen that they are any different than the very important use of level zero modeling, whether current or future state.

Great post
Capabilities Based Planning is part of our domain for DoD acquistion
http://herdingcats.typepad.com/my_weblog/2016/01/capabilities-based-planning.html

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