The New Book “Digital Capability” Chapter 1 Introduction: Digital Capability Assessment ~ Future of CIO

Tuesday, June 13, 2017

The New Book “Digital Capability” Chapter 1 Introduction: Digital Capability Assessment

11:01 PM Pearl Zhu No comments

Defining and assessing your enterprise business capability is part art and part science.

Capabilities are typically expressed in general and high-level terms and require a combination of people, processes, and technology to achieve. The organization then use these capabilities to understand its ecosystem environment, create new products and services and then deliver them to the customers.

Defining your enterprise business capability is part art and part science: A capability is comprised of people, process, technology, resource, and assets. This is a holistic and strategic definition and balances the various components of the capability. The business is art because it is the abstract understanding of a system; a capability is also the science because it includes many hard-core business elements. Business processes are enabled by technology and people within the framework of a capability. The business capability is, therefore, at a high level than a business process and is at the conceptual level that allows more open consideration of the business ecosystem. Business capability concept, hence, enables strategic level communication. The capability represents the WHAT, whereas the process and people represent the how. Also, organizations can look at both process and capability maps and decides that capabilities are much more accessible and thus aid the conversations between IT and its stakeholders.

Five dimensions of digital capability: Business capabilities are the abilities to produce specific goods or services for serving customers, gaining market shares, and building business competency. And the organization’s competency is based on the set of differentiated and cohesive capabilities and how fast and effective they can be built upon.

-Scale: The scalability of the digital capability directly impacts on how effective the business adapts to the digital paradigm shift across-functionally.

-Scope: The digital ecosystem expands when the business community broadens its scope and consumes all sorts of resources. The scope of digital capability will decide how effective the organization can build a powerful digital ecosystem and expand its impact.

-Coherence: The organization’s core competency is based on the set of differentiated and cohesive capabilities and how fast and effective they can be built upon.

-Impact: It is important to have a good understanding of current and future capabilities as well as their impact on implementing the strategic business goals.

-Maturity: The maturity of a business capability would be based on the ability for the business to deliver on customer needs or to achieve the desired capability outcome.

The core business capability: A business capability is core because it offers a competitive advantage in delivering and selling the products/services/processes, and it supports the strategic direction of the organization. Aso, because the company excels in delivering that capability based on the core capability. An organization would need to ask whether they need the capability at the base level to sustain the business, competitive level to stay competitive in the business or at differentiating level to be the key differentiator for the business. Identify what capabilities give your products/services a competitive advantage and align to the enterprise vision and strategy. Discover the business strength that can be transformed into a core capability if it aligns with the strategic direction. Choose how to improve the capability based on your enterprise strengths for investing in a best of breed capability.

The business capability is the decisive factor for the success of strategy implementation. A cohesive set of business capabilities builds into the business competency. And a core business competency is a deep proficiency that enables a company to deliver the premium business products/services and improve the organizational competency.

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