Monday, June 8, 2020

The Capability & Readiness Framework

A well-defined capability & readiness framework enables the organization to explore the digital way of managing capabilities in a structural way. 

A business capability is an acquired and organized ability within a company to achieve certain business values, and it takes hard work to put in place and it takes time and effort to build sophisticated organizational capabilities and core business competency.

 Often unique business capabilities cannot be transferred because of the degree of organizational learning and organization that goes with it. A set of business capabilities directly decides the overall organizational competencies. Forward-looking organizations develop a business-specific capability and readiness framework with all important pillars to enable business strategy execution and unlock organizational performance.

Planning: The value of the capability planning and mapping is the ability to identify capability gaps and patterns of the enterprise, offer insight to senior management in building business strength, focus on what they truly do well, and make strategic planning and holistic investment decisions. The dynamic planning process is the continual attention to current changes in the organizational ecosystem, keep iterating, evolving, learning, building dynamic capabilities, or recombining existing capabilities into the new business competency for adapting to the market dynamic. The planning process is never "done" and it is a continuous cycle.

Process: Process underpins business capability. A "business process" evokes the notion of inputs, managing known from flows and it could show how capabilities are related. The business process brings clarity around the rhyme and reason for activities being performed in a predetermined order, illustrating dependencies, and the effect if certain activities are not done. The business capability is at a higher level than a business process and is in the conceptual layer. Capabilities often include dependencies - one is part of another or depends on another. For example, if you take "customer acquisition" as a business capability, it evolves many business processes, like "lead-to-customer," that support the "capability." At the same time, this “customer acquisition” capability could also make part of wider business processes at the organization. Important business processes need to be reviewed regularly; refined regularly and is transparent across the business for improving organizational maturity.

Information/Technology/Infrastructure: Information Technology is often the “superglue” to close the gaps between process and capability via systematic alignment of crucial business elements. In fact, business capability represents a conceptual service that a group of processes and people, supported by the relevant application, information, and underlying technology, will perform. Thus, the new technological solutions that could change how current business is performed should be explored, proposed, and implemented. If businesses do not invest in the right technology or explore an abundance of information, they may already lose the game. The trick is that even every business can approach the same emerging technology, they may not be able to achieve the same level of business capabilities. Where the organization on the technology or process adoption curve directly impacts on its maturity level of business capability and performance.

Human Capital: To compete, businesses rely so much on their people assets or human capital, to reach their goals and succeed. Human Capital is always the largest intangible asset of a company that has to keep investing in to ensure the long term prosperity of the business. Human Capital includes all the talents, competencies, and experiences of your employees and managers. In fact, people are still the most crucial component in developing organizational capability. Human Capital is about potential, make sure the right people with the right capabilities are put in the right position to solve the right problems, and build collective business competency.

Financial: A cost-benefit analysis of business capability development simply compares investment cost to its anticipated financial benefit. Make sure the executive team first understands what it needs to drive future business growth and improve cash flow, map the strategic objectives into KPIs and then determine what capital investments will be needed to develop unique business competency to execute strategy. Do cost/benefits analytics is important to improve management maturity by proving that the combination of quality and price for the capability is comparable to the marketplace. Oftentimes, C-level executives are oriented on hard costs vs, soft costs upon investment on capability development, soft dollar costs cannot be ignored to get a true TCO. Return On Investment value proposition should be an overall measurement based on the combination of cost, schedule, quality, performance, and satisfaction of the customer, users, and stakeholders.

Project: Map the strategic objectives into portfolio management, which is essential to develop a set of business capabilities, a comprehensive fusing of a firm's strategic business competency. Strengthen the strategic alignment of programs and projects to prevent initiatives being undertaken that do not shape business capability and support the enterprise strategy. An organization needs to make sure enough resources are available to drive business initiatives, facilitate projects and programs, and also manage the interdependencies of the project accordingly to build a set of cohesive business capabilities to improve the strategy management success rate.

Enterprise capability management, in essence, consists of a portfolio or matrix of capabilities that are used in various combinations to achieve outcomes. A well-defined capability & readiness framework enables the organization to explore the digital way of managing capabilities in a structural way. The dynamic capabilities are fundamental building blocks in digital transformations with which companies can transform business models, operational processes, and customer experiences to build unique organizational strength and reach high-level business maturity.


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