Saturday, June 17, 2017

The New Book “Digital Capability - Building Lego-Like Capability Into Business Competency” Chapter 5 Introduction: Digital Capability Maturity

The high-mature organizational capability is the digital business differentiator, to keep the business unique, competitive, and innovative.

A business capability is a specific ordering of people, processes, resources, information, and technology, aimed at creating a defined business outcome. So, all businesses have certain capabilities, what matters is maturity. The high-mature set of business capabilities can make organizations more adaptable to fulfill their strategy, as the key business differentiator.

The business capability maturity is based on the attributes such as, importance, effectiveness, quality, adoption rate, flexibility, scalability, etc: Every surviving business has certain capabilities, however, only very few high-performing businesses have a high mature level of capabilities, for not only running the business today but also competing for the future. Hence, from the management perspective, it’s critical to assess business capability maturity objectively. The maturity of a business capability would be based on the ability to deliver on customers’ needs or to achieve the desired capability outcome. Different weighting may be applied to the capabilities. The criteria include the importance of each capability to the enterprise or the sophistication of the capability - how hard to be copied by competitors. With the maturity attribute like “adoption,” you can measure the percentage of business units engaging the capability on a year by year basis, As it increases, the maturity rises.

Dynamic capability is the ability to reconfigure your organization in the way that has the effect of increasing its “variety”: The dynamic capabilities are defined as “the firm’s ability to integrate, build, and reconfigure internal and external competencies to address the rapidly changing environment.” It is the ability to match the variety in the environment where variety is a measure of complexity. Dynamic business capabilities are more complex in design, with synthetic nature requiring cross-functional collaboration,  embedding agility into processes for adapting to the changes. Whether it is a resource or not, Dynamic Capability is not just about “doing more with less,” but more about “doing more with innovation,” with continuous renewal for the digital transformation. And the right set of unique dynamic capabilities directly decides the overall organizational competency and changeability.

A core competency is a combination and harmonization of multiple capabilities with a focus: A core competency is a deep proficiency that enables a company to deliver unique value to customers. Competencies usually emerge from a blend of people, processes, and culture which evolves into a mindset. Competency is a combination of capabilities with a focus. Each of these capabilities may be combined in different fashions to yield multiple competencies. A core competency is a harmonization of multiple capabilities such that it permeates the entire organization with a focus, and in alignment with the resource-based view. It is at the same time valuable, rare, and difficult to imitate. It is definitely possible to have multiple competencies. Organizations with multiple and complementary core competencies can build formidable companies and shape the unique digital masters.

As capability is an acquired and organized “ability” within a company and takes hard work to put in place. It can therefore not be completely transferred because of the degree of organizational learning and organization that goes with it. So, the high-mature organizational capability is the digital business differentiator, to keep the business unique, competitive, and innovative, and improve the business maturity significantly.  


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