Wednesday, October 7, 2020

Capability Modeling and Development Insight

The enterprise consists of a set of capabilities. Business capabilities are fundamental pillars to achieve the corporate strategy. There are multiple perspectives of organizational capabilities, and there are all sorts of capabilities. Processes underpin capabilities. One of the beauties of working with capabilities is that it keeps you from being dragged into all the detail of the processes involved too early. 

Capabilities oftentimes include dependencies, one is part of another, or depends on another: Capability Modeling and models can be a driver for designing and developing capability, especially when done in collaboration. 

Capability modeling can be seen as an evaluation activity (simulation and/or analytics review) prior, during, or after the design phase: Design a new capability starting off with the modeling phase. In a nutshell, capability design is described as the larger activity of creating new capability or improving on existing ones. While capability modeling is described as a part of the overall design phase which aids in capability analysis. In specific, Capability Modeling means representing decision gateways, linking the sequence of activities, events from end to end, and taking the theoretical design to implementation. Modeling and design are not one-shot activities, but a logical and continuous improvement cycle - you design the capability, then model, execute, monitor, optimize then again back to design.

A model is developed to help you with something - answer a question to some degree of precision that is useful or let the complexity shine through with a certain degree of insight. Capability Model helps to communicate about the design of a capability with several stakeholders. It means graphically communicating how a capability could be 'as is' or 'to be' and there are different types of models and notations you can use. It’s an evaluation process in which analysts examine the “as-is” by making a graphical representation of the model using illustrations. After “drawing” out the capability, the analyst would find it a lot easier to measure the relevant capability metrics.

Capability modeling facilitates the process of identifying and recognizing duplicate capabilities and opportunities to leverage existing capabilities: Capability models allow analysts to manage large volumes of activities and run simulation events to identify areas in a capability portfolio that can be changed and optimized, such as duplicated capability or ineffective capability, etc. In practice, capability designers create a model of it and measure the outputs; if it produces the desired results, that’s great; if not, then use the model to identify the capability pieces most likely to be responsible and re-design them to enable strategy implementation. Capability Modeling may consider the process dimension itself, but also technology, information, people, strategy and others, depending on the complexity level of capability.

Making your capabilities do what they promise. If no capability model process exists, or, if it is incapable of delivering measurable results, then capability designers start with a design, model it, measure it, and seek improvements. Moreover, these activities are cyclic, from capability analysis - document how an existing capability works/ flows to capability re-engineering - making improvements to an existing capability; capability design - creating and/or documenting a new capability. In the end, it is not about modeling or designing a capability. It's about strategy execution!

Understanding the limitations of each capability model you use is the key: Capability Modeling is about testing the practicality, efficiency and effectiveness of your capability design. You have to balance the art and science that goes back and forth between design and modeling in order to manage the capability development cycle successfully. Using models without understanding their limitations exposes you to big surprises. Most problems with models are that people make simplistic assumptions, sometimes fail to make these assumptions explicit or assume that the future can be predicted by simply looking at past history. In fact, there is no “one size fits all” formula for capability modeling.

Oftentimes, users of the models don’t bother to look at assumptions, assume that they live in a linear world where everything is normally distributed and proceed to use a point prediction made by a model. A model will never be perfect, so even highly chaotic systems can be modeled and should be modeled. But a model can still be useful if users know what to use it for and understanding the limitations of it. Either capability or other types of modeling serves many purposes beyond forecasting –not the least of which is to device adaptive strategies. As the organization matures, you can start to look at more sophisticated models. Using one good methodology for capability modeling is an indicator for capability maturity.

The enterprise consists of a set of capabilities with the right mix of competitive necessity and competitive differentiator to enable strategy execution. Capability modeling is a useful analytical and communication tool to bring insight and visibility in the capability management cycle. highlight the value of having a good understanding of current and future capabilities, as well as develop and optimize the overall organizational competency.


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