Sunday, February 26, 2017

Five Dimensions of Digital Capability

The right set of scalable, coherent and impactful capabilities directly contribute to the business maturity and success for both gaining the short term benefits and the long-term winning proposition.

Business Capabilities are the abilities to produce specific goods or services for serving customers, gaining market shares, and building business competency. They are essentially underpinned by business processes that are embodied in the knowledge capital of a digital organization. Organization’s capabilities are business competency to execute its strategy and deliver value to its customers. There are both utility capability and differentiated capability which make the different level of impact on the business growth and maturity. Here are five dimensions of digital capability.

Scale: Digital is about hyperconnectivity and interdependence. The digital ecosystem expands when the digital business territories blur and the business communities broaden their scope and consume all sorts of resources. The emergence of potential opportunities for exploiting digitization is likely to follow a nonlinear pattern as the pervasiveness of an organization's digitization journey increases. Hence, to effectively respond to the digital dynamics, companies must begin thinking about ways with strategic planning to broaden their ecosystems and revenue streams while becoming more responsive and scalable. Thus, the scalability of the digital capability directly impacts on how effective the business adapt to the digital paradigm shift. From the organizational design, capability building, and structure tuning perspectives, it is important to align the different parts of the digital ecosystem to adopt more points of integration with the digital loosely coupled modular capabilities and processes, for managing a smooth digital transformation.

Scope: The digital ecosystem expands when the business community broadens its scope and consumes all sorts of resources. A digital organization is an organic system. It will be organized as an organic system, with cells that have a function, an infrastructure for input and output and for signaling, a “brain” to process information, generate ideas, and make decisions. How these ideas are recognized, filtered and dealt with will become a crucial factor in an organization's success in producing digitized products and services, enhancing the scope of its competitive business capabilities, and expanding the influence with the ability to co-create in a digital ecosystem -treats customers, employees, channel partners, suppliers, and industry ecosystem participants as active agents who have a permission to combine the modular capabilities exposed in a platform to create new experiences and expand its impact.

Coherence: The most successful organizations have a very clear vision and understanding of why they exist, the value they bring to customers and the very reason for digital transformation. They also have a coherent set of business capabilities to enable strategy and reach the well-defined vision. Digital strategy execution is a dynamic continuum. How effective the strategy execution is directly dependent on how coherent of business capabilities is.The organization’s competency is based on the set of differentiated and cohesive capabilities and how fast and effective they can be built upon. The digital organization’s capabilities can be categorized into both competitive necessity and competitive uniqueness. The company needs to take the logical steps to truly understand its capabilities and build blocks, and continually refine them for improving its agility and maturity.

Impact: Companies operate within ecosystems to deliver value to their customers. To improve business maturity, it is important to having a good understanding of current and future capabilities as well as their impact on implementing the strategic business goals. There is a case for only allowing changes that have a direct impact on these capabilities. One of the beauties of working with capabilities is that it keeps you from being dragged into all the detail of the processes involved too early. Clearly, the processes and then procedures need to be understood as well in order to understand the full impact of changes on roles, staff, and applications but put the focus on building the unique set of capabilities to make and proportional impact on the strategy management in order to compete for today and future.

Maturity: Every organization has some capabilities, the capability maturity will decide which companies are digital leaders, and which one are digital laggards. The maturity of a business capability would be based on the ability to deliver on customer needs or to achieve the desired capability outcome, with maturity attributes, such as "quality," “agility,” “flexibility,” "value," ”measurability.”  Capabilities have outcomes; they collaborate with each other and are enabled by processes. Since a capability is made up of people, processes, and technology, you can use overall process maturity as one part. To improving digital maturity, the processes have to be fine-tuned to adapt to change and capabilities need to be optimized to achieve efficiency.

Due to the increasing speed of changes, digital capabilities also need to be more dynamic and diverse, with the recombinant nature and involving many building blocks, so you don’t need to reinvent the wheel all the time. And the right set of scalable, coherent and impactful capabilities directly contribute to the business maturity and success for both gaining the short term benefits and the long-term winning proposition.


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