Friday, October 23, 2020

Capability Mapping and Development to Shape Business Competency

A structural capability mapping and development approach enable the business to improve organizational competency throughout the company, and enable strategic responsiveness of the company. 

Organizational capabilities continue being considered the market-relevant bundles of resources with the potential to drive business competitiveness. A "business capability" describes what is a business entity in the organization, what is their purpose and output to the enterprise. 

There are many "ingredients" in business capability development such as people, processes, technology, and various intangible and tangible resources, etc. It is crucial to identify and close enterprise capability gaps, doing effective capability mapping, and proactively developing a set of differentiated capabilities to enable strategy execution, achieving business coherence and improving organizational maturity.

To identify capability gap: Processes underpin capabilities, and capabilities enable business strategy. Organizational capability mapping starts with the realization of the gaps where you currently no longer can deliver the strategic business objective for your company and shareholders. Besides capability mapping at the strategic level, perhaps you also have to go down to a second-tier, or even a third tier, at the operational level, to get to the point where there is enough differentiation between capabilities that you can build, and then, map between capability and capacity, as well as map against different roles in the organization to achieve business objectives and make continuous deliveries. Processes underpin enterprise capability, and processes streamline business capacity. The capacity can reflect the gap in capability. A capacity gap is a lack of “the resources” needed by the processes, which operationalize a capability to do a given amount of work. It might either be a throughput gap or it might be a resource/process gap for the capability to deliver different products or services.

Due to rapid change, fierce competition and more selective customers, products are becoming more commoditized and there is a lot of pressure on pricing, margins, and investable budget dollars. Business leaders today need to look ahead and be proactively looking for opportunities to improve, identify the capability gaps for strategy management; also comparing your set of capabilities with competitors' to ensure that you are developing differentiated capabilities to gain unique business competency. So the strategic capability mapping helps to visualize the end to end enterprise and bridge the “gap of opportunity” between where you are and want to become.

To convey the key capabilities required by/of which an enterprise will need to improve business maturity: To fill the capability gap, determine what the future needs to look like, and what the transformation must look like is the next step. Fundamentally, there are two types of the organizational capabilities: Competitive necessity and competitive differentiator. Competitive necessity focuses on meeting customer expectations and delivering what the business asks for today; while competitive differentiator allows the business to “dream bigger,” and achieve “the art of possible.” It’s also important to identify your business core capabilities, and hone them into organization-wide competency.

Organizations across vertical sectors are on the journey to make digital transformation. Transformational capability creates something new out of something old, reaching the new horizon out of an existing vision. Capability development may evolve and move from the fundamental level to differentiated level between categories based on the technology evolution, business driver, or business model evolution etc. Capability mapping can be an enormous help in understanding and prioritizing changes businesses are attempting to create, and improve the success rate of strategy execution. The transformational capabilities evoke fundamental evolutions in the basic political and cultural systems of the organization for achieving the high performance business results and make a leap of business transformation.

To provide an insight into condition and relationship dependency: Any business practice today is always a combination of people, process, and technology to develop business capabilities. The value of capability maps is the ability to identify capability “patterns” of the enterprise to make holistic investment decisions, as well as provide the basis for conveying other business assessments. Capabilities may include dependencies, one is part of another or depends on another. So capability mapping also includes capability dependency identification, to ensure capability portfolio coherence. To provide an insight into condition and relationship/dependency, executives are sufficiently aware of the "general condition" of the various capabilities to provide input into a qualitative assessment.

In practice, when you want to make a change to one of those capabilities, then your capability mapping and modeling help you understand relationships or dependencies, assists with a high-level impact assessment and delivery approach. With increasing pace of changes, it is not necessary to reinvent the wheel in building duplicated capabilities. It is crucial to build the dynamic business capabilities via those existing building blocks or recombine those existing capabilities into the more sophisticated capabilities to speed up the delivery cycle. You must also be aware of the integration of a single functional capability into a holistic portfolio of digital capabilities across all enterprises, to build sustainable business advantage.

The digital capability is modular, dynamic and nonlinear, having many visible and invisible business elements. A structural capability mapping and development approach enable the business to improve organizational competency throughout the company, and enable strategic responsiveness of the company. So they can transform themselves into a fully digital business powerhouse and innovation engine of our society.


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