What Is Capability-Based Planning?

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In a business context, capability-based planning, also known as capability modelling, is an approach that ensures that changes in an organization are aligned to the overarching strategic vision.

The approach has its origins in defense and military planning by the likes of the US, UK, Australia and Canada. More recently, it has become popular in the business domain, particularly for developing systems and IT-related strategies.

The overall theory is that those organizations with superior capability to execute strategy will win – whether they are the armed forces or a business.

Whilst capability-based planning has long been the tool of trade for successful enterprise architecture, military strategists and consultants, it hasn’t yet been widely understood or adopted in the broader community.

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What is a Capability?

A capability describes what the business does and should not be confused with just the skills or competencies of the people (which the HR function also refers to as a capability).

So, a business capability is described by more than just the people perspective; it includes the process and physical perspective. In other words, a business capability can describe the processes involved, the physical objects used, and the people roles and skills required as well.

For example: a software development capability would encompass not just the developers (people), but processes such as Agile methodology, and physical assets such as software tools and hardware.

The diagram below shows a couple of example capabilities with associated sub-capabilities.

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For further discussion and examples of capabilities and capability mapping, check out our article on building a data governance strategic roadmap, or our digital transformation strategic roadmap walk-through.

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Looking for an even faster roadmap method that doesn't involve capability-based planning? Check out this nonprofit example that takes an alternative approach to strategic planning.

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How does Capability-Based Planning (Capability Modelling) Work?

Supported by a collection of techniques (e.g. capability mapping), capability-based planning (Capability modelling) will enable an organization to:

• Identify its capabilities
• Assess the level of change required for each capability
• Prioritize the changes required
• Develop a plan for making the changes

Typically, capabilities identified as requiring change should be linked to the organization’s strategic goals or objectives. Focusing on these capabilities helps the organization to stay on track as it works to execute the strategy.

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Seven Reasons Why Capability-Based Planning is Effective

1. It’s a top-down, whole-of-organization approach. It breaks through departmental silos by shifting from a functional view to a capability view.
2. It focuses directly on what an organization needs to do to execute its strategy.
3. It provides a map of the organization’s overall capabilities to ensure nothing is missed.
4. It directly links initiatives and projects back to capability changes and, in turn, back to the organization’s objectives. No more random initiatives that seemed like a good idea at the time, but in hindsight don’t actually align with your strategy.
5. It cuts the wheat from the chaff by helping you determine the highest priority capabilities that you need to develop and related initiatives. In doing so, it clarifies and optimizes business investment.
6. It stops you from jumping to conclusions about solutions too early. By delaying solution definition and doing it in the context of capabilities, it opens you up to alternatives rather than simply incrementing existing deployed equipment, processes and people.
7. It provides a systematic way of identifying change initiatives. Many business planning approaches define mission, goals and objectives, and then start spawning initiatives and projects. By looking at what capabilities are required to meet your objectives, it provides clarity for your initiatives.

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Industry Frameworks

Capability-based planning is embodied in industry frameworks such as The Open Group Architecture Framework (TOGAF^®), which is used extensively for planning information technology strategy and architecture. Both TOGAF^® and A Guide to the Business Architecture Body of Knowledge^® (BIZBOK^®) are well worth a read if you want to immerse yourself in the details of capability-based planning.

For a specific exploration of capability mapping, check out our guide here.