Thursday, May 19, 2022


In face of fierce competitions and frequent disruptions, forward-thinking companies need to make an objective assessment of business capability portfolio maturity,

Capability is an acquired and organized "ability" that takes hard work to put in place; it can therefore not be transferred because of the degree of learning. A set of business capabilities directly decide the overall organization’s competency, as well as how well they can execute business strategy. 

There are a couple of important ingredients for configuring business capability such as people, process, knowledge, technology, etc. The goal of capability assessment and improvement is to highlight the value of having a good understanding of current and future capabilities, as well as develop and improve the overall organizational competency.

One way to evaluate "value" is by assessing the capability's effectiveness in achieving the desired outcome: Capabilities are abilities that organizations have and are closely related to competencies. The enterprise consists of a set of capabilities with the right mix of competitive necessity and competitive differentiator to enable strategy execution. There are many "ingredients" in the business capability. Among them, people are the decisive factor in capability effectiveness and maturity. It’s also important to assess soft business elements such as culture for dealing with business frictions, and improve capability management effectiveness.

From a business management perspective, capability-based strategy management has a higher success rate to meet business expectations. Top business leadership teams need to set the right checkpoint, make an objective assessment of their investment on business capability development, including human capital investment, and improve the overall organizational competency. Technically, people, process, technology are all crucial components in capability development. The capability assessment can be accomplished by measuring the people impact on capability effectiveness; the organizational learning agility impact on capability effectiveness; the process impact on capability effectiveness- the degree of value creation, the technology impacts on process efficiency and workforce productivity, as well as the overall capability portfolio effectiveness and maturity.

The criteria to evaluate capability maturity need to clearly identify the core competencies
: You should have an in-depth understanding of what capabilities are critical to building the differentiated competency for the business's long-term prosperity. It helps the organization take a look at what’s happening now as well as what’s coming down the pike so they can be proactive in preparing for it. Capability is core because it offers a competitive advantage in delivering the products or services. The core capabilities could be those which are identified as delivering the business competency, or customer experience than competitors. The capability maturity can be measured against the achievement of desired business or customer outcomes.

In the era with an on-demand business model, the core capability does not have to be delivered by the company itself. Some capability necessities can be acquired to keep the lights on. The key point is the speed of delivery and overall business agility and maturity. The evaluation of capability maturity is based on the impact on capability effectiveness, collective capability effectiveness and maturity, what level of transitions of capability development are required in future based on business strategic priorities, and also make an objective assessment of which level of maturity your organizations have arrived at.

The capability maturity can be assessed by measuring the technology impact on capability effectiveness:
IT is often the glue to integrate varying components into business capabilities. The management needs to understand the possibilities of how new technologies can enhance the creation or improvement of products and services while balancing the technical and business risks, the investment needed, and timing, etc, derives the most value out of the technology investments by translating the promise of technology to core capabilities for realizing strategic and competitive advantage of the company for the long run.

All businesses have certain capabilities; what matters is the level of maturity. The core business capabilities are often built via cross-functional process management with IT as “superglue..” There are some of the issues where you must be aware of integration of a single functional capability into a holistic portfolio of digital capabilities across all enterprises. It is important to identify the key business capability and make an objective assessment of new technology impact on capability maturity, If needed, repurpose, realign and reconfigure well-designed components and systems to optimize capability development and fine-tune organizational competencies for accelerating business performance.

In face of fierce competitions and frequent disruptions, forward-thinking companies need to make an objective assessment of business capability portfolio maturity, apply an interdisciplinary management approach to integrate different capabilities into a unique set of business competencies, and move business capabilities from base to competitive to differentiated level, improve organizational strategy management effectiveness and speed.


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