Tuesday, December 29, 2015

“Digital Master” Holiday Intense Tuning Chap V: Three Debates about Business’s Digital Capabilities

Digital business capabilities are dynamic and complex in design, with recombinant nature.

Business capability, in general, is defined as the ability to perform or achieve certain actions or outcomes through a set of controllable and measurable faculties, features, functions, processes, or services. It is the ability of the business to consistently deliver an expected result. Organizational capabilities are delivered when various resources work together for a purpose to achieve an outcome. And the organization’s digital capabilities are business competency to execute its digital strategy and deliver value to its customers. Here are three debates brainstormed in the book of “Digital Master” to further clarify and deepen the understanding of business capabilities which underpin strategy execution.

(1) Is Business Capability equal to business process?

A: The business capability is at a high level than a business process, it is in the conceptual layer. It is the company’s ability to integrate, build, and reconfigure internal and external competencies to address increasing changing environment, the ability the organization can perform a specific set of functional activities repetitively to achieve the consistent results. A capability is comprised of people, process, technology, and assets. And business processes are then a succession of activities that define and support business capabilities and business processes are enabled by technology and people within the framework of a capability.  Capabilities can be an enormous help in understanding and prioritizing the changes business and IT are attempting to create.

(2) How to Determine if a Capability is a Core Capability?

Top leadership/management in an organization defines a business strategy, in order to reach the business vision, a set of core capabilities are needed to meet and implement the strategy. So the core capabilities could be those that are identified as delivering the competitive products, services, and customer experiences than competitors. And an organization needs to ask whether they need the capability at the base level to keep the light on; at the competitive level to stay competitive in the business and at a differentiating level to be the key differentiator for its business.

(3) How to Map IT Capabilities to Business Capabilities?

Business capabilities are a hierarchical decomposition of “WHAT” the organization does, all the work is actually done by business processes which are the “HOW” part of the question; while, at the age of digital, all key business processes are enabled by enterprise IT capabilities and digital technologies. So IT capabilities to business capabilities mapping is trying to assess and define how interconnected the IT organization is to the business and trying to determine the ROI for their IT investment. The business-IT alignment includes mapping IT capabilities to either at strategic work or tactical level in identifying business IT alignment issues. Generally speaking, capabilities are the best for strategic work and processes are the best if you are working at a tactical level.

Digital business capabilities are dynamic and complex in design, with recombinant nature requiring cross-functional collaboration and agility to adapt to changes. But the right set of digital capabilities will directly decide the overall business’s competency, and how well it can execute digital strategy and deliver values to customers to build a long-term winning position.   


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