Written by
Chuen Seet
Business capability mapping is your key to ensuring your organization or function is properly set up to achieve its strategic goals. A capability map is an integral part of any capability-based planning approach, as it helps you to identify what needs to change and to what degree. It plays a key role in enabling you to engage the business and realize value.
There are various methods for building a capability map, but two that we favor. Here, we’re going to cover the what, why and how of capability mapping.
Before we get into it, if you need a refresher on the exact definition of a business capability then be sure to read the prequel to this article. In a nutshell, business capabilities are the tangible and intangible building blocks of a business that give it the ability to do what it does.
When we lay out these capability building blocks as a visualization, we call it a map.
An example key for this map could be:
Purple = new
Red = requires high degree of change
Orange = requires medium degree of change
Yellow = requires low degree of change
Blue = no change needed
We can also add visual tags to the capability map as a means of indicating additional characteristics, such as associated strategic objectives or priorities.
By abiding by the Mutually Exclusive and Collectively Exhaustive (MECE) principle, we can ensure that nothing is amiss. Mutually Exclusive requires that each capability is distinct and not repeated, i.e. no duplicates. Collectively Exhaustive ensures that the capability map covers all possible capabilities for the business (or area of interest).
A MECE capability map provides a structured, holistic view that makes it easier to spot the capabilities requiring change, as well as those that may have been missed or misplaced.
Once a capability map is developed, it can be used as a reference model to visualize and communicate different views. For example, we can apply color-coding to indicate the degree of change or capability gaps. We can also tag or label each capability to show the ones which are required to meet objectives.
Capabilities can be arranged in a specific order or pattern to ease communication and understanding. For example, they can be positioned horizontally and aligned to business value streams, such as marketing, product manufacturing or customer care. Alternatively, they can be arranged vertically, with front of house capabilities at the top and back office capabilities at the bottom.
These arrangements provide a logical representation of the business and therefore improve communication of what capabilities exist and why certain ones need change.
There are many methods to derive and map your capabilities, such as:
The first method is relatively quick and simple, but prone to being incomplete or biased. The fourth is self-explanatory. For our purposes, we’ll focus on the second and third methods: using objectives and value streams.
Your existing list of strategic objectives can serve as an excellent framework for deriving your capabilities. Focus on identifying the specific capabilities that are required to meet the objectives.
For example, in the diagram below, we have a list of objectives on the left and the corresponding capabilities on the right.
The main advantage of this approach is that it is efficient. As you have a specific target to achieve, you can derive the specific capabilities required quickly.
The disadvantage of this approach is the risk of not achieving a collectively exhaustive list of capabilities. You may have identified the capabilities that directly deliver to your objectives (core capabilities), but you’re likely to miss those that are indirectly required (enabling capabilities). For example, in the above diagram we may note that Financial Management is a capability that is likely needed because, without this, you cannot perform the Sales Management capability.
Every business or a business function performs a chain of activities with a beginning and an end. Along this chain, there are specific outcomes that add value to the business. A value stream is a chain of activities that delivers a value outcome.
The following example is a chain of activities for sourcing, qualifying and hiring employees, all the way through to the employee’s exit. We could group the chain of activities into value streams such as Recruitment, Onboarding and so on. At the end of each value stream, there is a value outcome for the business.
When naming a value stream, it is useful to refer to the starting value chain and the follow on value chain so that we can identify the flow. So in our example, we can name the value streams as Recruitment to Onboarding, Onboarding to Performing, and Performing to Retirement. We could also aggregate these value streams to one higher-level value stream: Recruitment to Retirement.
By mapping all the capabilities needed for the identified value streams, you’ll get a complete picture of the capabilities of the business or the area of interest, i.e. it’s an excellent technique for ensuring adherence to the MECE principle.
Using our Recruitment to Retirement value stream example, we can now identify all the capabilities required as follows:
Our Recruitment example is of course vastly simplified, as we have shown only one primary value stream. When developing your capability map in practice, you will likely have to understand multiple core and enabling value streams. For instance, what do employees do in the business? In fact, what does the business do as a whole?
With this in mind, we could also have value streams such as Order to Pay, Order to Shipping, Ideas to Product, Compliance to Licence, and so on. Identifying these other value streams will ensure that you map all the core and enabling capabilities and therefore achieve coverage.
Whether you derive your capability map from your objectives or value streams, both ensure a systematic approach to business capability mapping. With a thorough and substantiated capability map to hand, you can be certain that you’re focusing on the right things in order to solve your strategic challenges and achieve your objectives.
A capability-based plan is a powerful plan, but it can only be as good as the capability changes that you identify from your capability map.
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Written by world-class business and IT consultants, Jibility’s ebook takes you through illustrative case studies and real-life examples of capability-based planning and making your strategy successful.
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Business capability mapping helps you to identify what needs to change. There are two key frameworks for deriving your business capabilities.
Business capabilities are the tangible and intangible building blocks of a business that give it the ability to do what it does.
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