Sunday, December 7, 2014

Business strategy and capability mapping

Rather simplistically a business capability is a means of achieving a business strategy.

Business strategy is underpinned by business competencies, capabilities, and resources. If it’s not, you don't have a strategy, what you may have is possibly a marketing plan at best. The point is how to do business strategy and capability mapping systematically?

Rather simplistically a business capability is a means of achieving a business strategy. A missing but necessary capability must be created or purchased, or the strategy must be revised. If you cannot "see/read" your strategic competencies and capabilities, then it's a great question to ask of the executive and strategic planning team. It is far easier to discuss the business criticality of capabilities with the Executive than working at the process / function / application level. This is especially the case when you discuss how much the executive are willing to invest in achieving IT resilience and recovery. It takes a systematic approach to applying business capability maps as a component of developing a Business Continuity / IT Disaster Recovery program.

The business capability is a composite of "whos," "whats," "wheres," "whens,""whys," and "hows." The composite must be broken down to its constituent elements and each element mapped to each associated strategy. Furthermore, the capacity of each element of the capability must be analyzed against each associated strategy to assure the element as used by each capability to achieve each strategy, and it is capable of meeting the need over all applications of the element. Just because there is no gap does not mean the capability which exists is sufficient to meet the need of any one strategy, let alone the needs of all strategies requiring it.

A business capability is the people, process, and tools required to perform a business function.
(1). You need to establish the business functions. You might use the process framework, which is actually a functional view of business. Business processes extend across those functions.
(2). Categorize your own flavor and decompose.
(3). Establish the business processes required to support those functions
(4). Determine the required skillset required to support those functions
(5) Determine the tools you have to support those functions.
(1). Create an end to end set of business processes to develop and deploy strategy
(2). Conduct a fit / gap analysis of capability vs requirements
(3). Fill the gap with a big bang or transitions
-Capacity: You have a business capability. Capacity is how well you actually perform that function. Are you hitting your KPIs? Have you benchmarked cross-industry? How much fat is in your process (over-processing, too many controls, too many escalations)? How much room do you have with the tools you use?

You need to create a value chain and full set of business processes that does this. Essentially in the strategy development phase, you have a current state. After formulating strategy alternatives you design the capability and cost it for each alternative. That way you can see if you can do it with your own workforce through training, or if it will require transitions. It also allows you to manage the spend in creating the capability to match the revenue from introducing said capability. This gives the executive the decision support they need to choose which of the strategic choices is most likely to succeed in the organizational culture, and the program of work required to build and sustain it.

Shape a customer-centric view. Assuming that such view is readily available, the next step then is to build the business services to deliver the customer journey and associated value streams. Once done, then you can start looking at the capabilities required to deliver those services. The trick is to abstract the critical success factors rather than describe the whole detailed business process flow with all the IT and/or business units aligned. That would be a transitional/transformational plan/strategy which is a different kettle of fish.

Business strategy and capability mapping is not single-minded or one-dimensional approach. There is seldom a capability that has a one-to-one relationship with a strategy. Seldom is there a strategy that is achieved by one capability, and this is why the task of mapping capabilities to strategies is difficult. And many times strategy-capability mapping fails to have enough detail to really serve the purpose. The best scenario is to create a comprehensive capability map through cross-functional collaboration. Those business capabilities with gaps are evaluated more deeply which produced a list of remediation work that needs completing to improve differentiated business capabilities. It is also important for project teams (engineering, designer, architecture, business functions)  to integrate the work into their roadmap. Such mapping scenario is to apply system thinking to bridge strategy & execution, management and governance, and business & IT more seamlessly.


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