What Exactly Are Capabilities, Then?
A capability is the expression of the capacity, materials, and expertise an organization needs to be able to execute its business strategy. For example: enable e-payments, tailor solutions at the point of sale, demonstrate product concepts with customers, or combine elastic and non-elastic materials side by side). In short, capabilities encapsulate what a business is doing right now and what needs to be done in order to meet its current and future strategy.
Another way to think of capability modeling is to think about capabilities as organizational-level skills that are embedded in people, processes, and/or technology.
Each capability is unique
A capability is a crucial element of the organization and as such is clearly different from other capabilities. A capability might be applied throughout the organization and can be applied in different ways to bring about different outcomes.
Capabilities are steady
Well-defined capabilities seldom change. The capabilities provide a much more stable view of organizations than do projects, processes, applications, or even strategies. Capabilities only change when there is a significant shift in the underlying business model or mission, which might occur through a business transformation initiative or in conjunction with a new merger or acquisition.
Capabilities are abstracted from the organizational model
Capability models are more than a simple restatement of the enterprise's organizational model. They are organizationally neutral, meaning changes in the organizational structure don't require a change in the capability model. In simple organizations, the capability model may indeed look similar to the corporate organizational structure. However, in more complex organizations, capabilities arise that are both common to, and unique to, the organization.
Common practice is to identify capabilities at different levels that can be mapped to each other. For example, business capabilities may be identified at the organizational, departmental, or team levels and then mapped to one another. For example:
- Managing client risk: A bank manages risks by Know Your Customer (KYC), Anti Money Laundering (AML), and other processes.
- Managing credit risk: A bank's global credit department manages its credit risks.
- Analyzing client credit ratings: A team of analysts in a bank's global credit department analyzes its clients' credit ratings.
- Sales pipeline management: The sales department of a telecommunications company manages its sales pipeline.
- Qualifying sales leads: A sales operation team qualifies sales leads before they enter a sales pipeline.
To be continued in Part 2 next month. Based on the capabilities we have discussed, we shall look at project delivery success as they apply to any project.