The Logical Steps to Build Business Capability and Develop Key Business Competency

It is imperative to identify and close business capability gaps and build organizational competency.

The capability is the ability to do certain things. Business capabilities are typically expressed in general and high-level terms and typically require a combination of people, processes, structure, technology, and resources, to achieve certain business results. There are both competitive necessities and competitive differentiators, the unique set of business capabilities is integrated into key business competency. But more specifically, which logical steps should you take to build business capabilities and develop key business competency?

Identify its key capabilities and hone them into organization-wide competency: Every competitive business has a unique set of key capabilities to achieve its business goals and reach a high level of performance. 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; and it is at the same time also valuable, rare, and difficult to imitate. Therefore, it is important to identify the key capability of the business and make an objective assessment of capability maturity, also hone them into organization-wide competency for achieving its business strategy and building its reputation and brand in the industry or business ecosystem.

Compare itself with competitors to ensure that it is developing unique competency: Every business is different, and they are also at the different stage of its business life cycle, with different level of business maturity. Thus, they are also have differentiated business capabilities to build unique competency. In order to know the organization better, the business management should make an assessment, to ensure they not only have “me too” type competitive necessity but also keep developing unique competency based on multilayered and integral business capabilities. And each of these capabilities may be combined in different fashions to yield multiple competencies.

Develop an understanding of what capabilities bring core business advantage and invest accordingly in developing and sustaining valued competency: The important components of the business capability include resources, processes, information & technologies and human capitals, etc.

Organizational capabilities have business outcomes; they collaborate with each other and are enabled by processes, to integrate into business competency. To map business capabilities to business outcomes, it is important to identify those companies that consistently deliver best shareholder returns do so by focusing hard on customers and business results and then redesign or fine tune their processes back into the operation.

Create an organizational roadmap that sets goals for competence building: It takes time and effort to build sophisticated business capabilities. Hence, it is important to create an organizational roadmap for competence building. Estimate the cost and methodologies to develop those competencies. This also gives the executive the decision support they need to choose which of the strategic choices is most likely to succeed. It also allows you to manage the spend in creating the capability to match the revenue from introducing the new capability they intend to build. 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.

Pursuing dynamic capability that will further build the organization’s strengths in core areas and differentiated competency: The characteristics of digital business are dynamic, volatile, uncertain, and hypercompetitive, therefore, it is also critical to build dynamic capabilities to adapt to changes. The dynamic capabilities' are defined as the business’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments, build new capability, and achieve innovative forms of competitive advantage given path dependencies and market positions.

Encourage communication and involvement in core capability development across the organization: The business capability is a composite of "whos," "whats," "wheres," "whens,""whys," and "hows." More and more digital capabilities are built via cross-functional processes and interactions. Hence, it is important to encourage communication and involvement in core capability development at the organizational, or even at the digital ecosystem scope. The best scenario is to create a comprehensive capability map through cross-functional communication and collaboration to bridge capability gaps and clarify business goals and objectives. And many times strategy-capability mapping fails to have enough detail to really serve the purpose. Those business capabilities with gaps are evaluated more deeply which produced a list of remediation work that needs completing to improve differentiated business capabilities.

Preserve core competency even as management expands and redefines the business: Business capabilities are decomposable, while decomposing processes provides a deep understanding about how these granular functionalities connect to deliver the final business outcome. Capabilities give additional views that are seldom available in processes, etc. Many components of business capabilities are common and reusable across the enterprise. To shorten the time cycle and save the cost for building business capabilities, the high mature digital businesses also do the great work to preserve core competency even as management expands and redefines the business. Hence, it’s also important to have an in-depth understanding of what capabilities are important to develop core competency.

Divest non-core capabilities to free up resources that can be used to deepen core capabilities: In today’s business dynamic, digital capabilities are a fundamental building block in digital transformations with which companies can achieve operational excellence, create a new business model, and accelerate business performance and growth, to reach high-level business agility and maturity. The lack of resources is often one of the roadblocks to building varying business capabilities. Hence, it is also important to set up priorities, divest non-core capabilities, free up resources that can be used to deepen core capabilities in order to build sustainable business competency for the long run.

Digital businesses are becoming complex and uncertain, to survive and thrive, today’s digital organizations must build the unique set of capabilities with often described characteristics such as robustness, speed, comprehensiveness, responsiveness, agility, improvement, sensitivity, optimization, resilience, etc. It is imperative to identify and close business capability gaps and build organizational competency to reach the business vision and achieve strategic business goals seamlessly.

Posted in: Digitalization,Enterprise Capability