Sunday, March 19, 2017

Understanding Business Capabilities from Multiple Perspectives

Gaining an in-depth understanding of business capabilities helps today’s business leaders to craft good strategy and implement it effectively.

The capability is the ability to achieve the desired effect under specified performance, standards, and conditions through combinations of ways and means (activities and resources) to perform a set of activities. The capability necessities enable the business to operate smoothly on the daily basis, and the capability differentiator leaps the business to win over the competition and building the long-term competency. Statistically, the capability-based strategy has much high success rate to achieve the well-defined business result. Therefore, it is critical to gain an in-depth understanding of business capabilities from multiple perspectives and build a solid foundation for implementing the capability-based strategy and running a high-performance digital business.

Investment Perspective: All business investments and meaningful business activities should strive to build tangible business capabilities to achieve ultimate business goals. There are both opportunities and risks for every investment. The business executives have to apply systems thinking to make an objective assessment of their investment portfolio for getting high ROIs; continually evaluating individuals and aggregate investments in terms of value, risk, and reward, for building a cohesive business capability portfolio. Visibility into each investment is established to provide ongoing investment health information as well as enable understanding the overall portfolio health: Are they diversified?What is the relative health (risk, value, strategic importance) of each of the portfolios? What investments, or even portfolios, should be shut down? What investments, or even portfolios, should you direct more assets to? What, and where, are there talent gaps to build the set of differentiated business capabilities?

Process Perspective: Business processes underpin organizational capabilities. Hence, process improvement, time, and period reduced for the business by IT directly impact the maturity level of business capability. The processes and capabilities are the opposite sides of the same coin, processes are the actions that provide desired capabilities as outcomes. Start with a mapping of processes to capabilities, do the process assessments, and infer from that with the resulting capability perspective. There are different conditions to evaluate a capability, such as - is this capability valuable? Is this capability rare?  Is this capability costly to imitate? Is this capability non-substitutable? Any capability which fulfills all these conditions would lie pretty close to the core competency of that enterprise and thus is valuable.

Talent Perspective: Even process, resource, information, etc., are all important elements of business capabilities. People are still the most critical business element for either crafting organizational capability or building business competency. The collective human capability is the ability to transform which existing to which is new, it is the driving force of creativity, and investing human capital will directly impact on how to maximize the full digital potential of the business. Today’s digital professionals are innovative workers, hard workers, knowledge workers and intelligent workers, who are exploring, innovating and evolving bringing new digital paradigms.

Information Technology Perspective: IT is the threshold for building the digital capability of the business. Digital IT is the integrator and superglue to recombinant dynamic business capabilities, without them, strategy execution can not be sustained. Thus, IT first needs to dig through the underneath functions and processes of the business, and understand the business’s operation models, explore the way to define value to the organization, and to do that, it needs to properly understand all elements of business capabilities that can help create business competency to the organization, and how all the pieces and parts of the organization’s capabilities can be recombined into the new dynamic business capabilities to respond to the ever fast-changing business dynamic for either improving operational excellence or delighting customers.

Governance Perspective: Corporate governance is most often viewed as both the structure and the relationships for enabling business capability building. It also determines corporate direction and performance. Governance can begin with frameworks and policies to be put in place, depending on the nature, scale, and complexity of the organization, understanding one's risks and conducting. From a business capability perspective, governance is not about maximization but about optimization. Governance is a neutral term which is useful in having the ability to discuss bad governance with terms such as waste, corruption, inefficiency etc. It is the structure and processes of authority, responsibility and accountability in a business or organization with three things in concert: Oversight of assessment - gauging conditions and choices, oversight of appropriation - matching priorities and resources, and oversight of accountability - scoring activity and net results.

Gaining an in-depth understanding of business capabilities helps today’s business leaders to craft good strategy and implement it effectively; it also enables the digital workforce to map their daily tasks with the professional capabilities they need to craft, as well as mapping professional capabilities with specific business functional/operational or change/innovation capabilities, for adapting to the new business dynamic, with the ultimate goal to run, grow and transform the business and maximize its full digital potential.


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