Monday, December 22, 2014

A Capability View of Enterprise

Organization's long-term success is based on the set of differentiated capabilities.

A capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve.

The enterprise consists of a set of capabilities: The organization then uses these capabilities to understand the markets / environment, create new products and services and then deliver products and services. Capabilities can be identified at an architectural level and then designed, built, made and tested in an organization to match the architectural description. The program management process organizations are using focuses on creating, improving, replicating, and releasing capabilities.

The capability is a very flexible term: Usually, it is used at a high level, and it requires a combination of "things" - the complete list of "things" it requires. For example, a capability draws upon processes, people, information, assets - what is the list and what are the relationships - are they mutually exclusive or inter-related. The relationship between the concept of capability and the concept of “things" in organization is interrelated:
a) process
b) service
c) function (this is potentially a synonym if at the same level of granularity)
d) interface (the interface and service are potential synonyms)
e) resources

A capability is the defined or emergent property of a system: It means that the parts or components interact to create this ability or realize the ability. So the obvious components of an organizational capability are:
-People (with the appropriate skills, knowledge, experience, attitudes and behaviors).
-Process Descriptions (and associated activity / decision descriptions and input / output descriptions).
-Technology (information systems, or other tools)
Once you knew your customer need and the gaps you should then be able to define your capabilities and services which are needed to meet the needs of the customer.

There are three levels of business capabilities: The capability is the ability to achieve the desired effect under specified performance standards and conditions through combinations of ways and means (activities and resources) to perform a set of activities. The business is then designed around the experience. There are three levels of business capabilities: 1) management, 2) marketing / innovation (new productions / service development), 3) delivery and support of products and services.

Capability provides a level of abstraction that allows more open consideration: A process view will cause stakeholder to limit their thinking to process deficiencies, and not consider the other resources inherent in exercising the process - by using capability, they readily consider service, people, process, information, asset, etc dimensions of the adequacy of the capability to fulfill their business strategy. Capability seems to be more open to considering sourcing (internal or external) as a subsequent consideration. If using the function, they think of existing function and internal function, and do not engage as easily in considering the possibility of externally sourcing particular capabilities - people are comfortable with purchasing capabilities more than functions. The function ties to organizational structure and process, whereas capability provides a level of abstraction that allows more open consideration of business ecosystem. 

Capability vs. Process:
- The capability is an ability, and the process is the realization (operationalization, implementation) of a capability.
- The capability is the ability to do something, and Process is doing something.
- What capabilities (abilities, competencies) do we have/need vs. How are we/will we do that (processes)
- Capability can "contain" many services, processes, and functionality, but there is a 1:1 correspondence between a service and a functionality and a process, whatever the granularity level. A capability can be decomposed to finer grain capabilities.

A rule of thumb of which view you take: Capability is the description of an ability with an associated measure. Capacity is a measure of ability. The function is the execution of a task in an ability. The process is a sequence of tasks. When looking at large organizations or, in fact, any organization, it is about perspectives which are relevant for your stakeholder. If you start looking at the business through a single dimension you will either start to miss things or get into meta-model issues, very quickly. It is often useful to use capabilities at a high level and then talk in terms of services and processes at the more granular level, but it is in principle possible to; the definition still holds. A rule of thumb: 
1) If you are externally observing the subject without the internal components, the language is capacity and capability. The subject's internal first level details are abilities ( functional components).
2) As the observer shifts position into the first level detail, abilities ( functional components) now become observed subjects and the language shifts back to capacity and capability.
3) When describing anything, you should always attempt to answer the 5Ws from each perspective aligned with the audience (stakeholder) preference.

Business capabilities are fundamental pillars to achieve the corporate strategy, and the digital capabilities are dynamic and recombinant by nature, without them, strategy execution can not be sustained. A capability view of enterprise helps business identify  “actuality, capability, and potentiality,” build competency and improve overall business maturity.  


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