Today, every company in the world is looking for ways to transform in the direction of more digital capabilities. Many companies of the old economy look up to companies of the new economy like Amazon or Google and perceive them as role models if not as archetypes. Most of these companies want to become ‘a bit like Amazon’ but forget about one key thing: their existing business capabilities that represent the strengths that made them successful in the past. They do not model their current and strategic future capabilities systematically. They do not use the key to open the treasure chest of digital transformation.
The basic idea of capability modeling is simple: structure the business of a company hierarchically by capabilities it needs to create customer value.
Why is it important to model business capabilities?
- Capabilities clarify terms and concepts across organizational borders.
- Capabilities provide a robust skeleton, a framework for assigning all the other elements of the enterprise architecture.
- Capabilities can be used as the central structure for heat mapping in order to answer questions such as: ‘Which strategic fields of actions do we see in which capability’; ‘In which capabilities are we planning to invest how much?‘; ‘Which capabilities are not supported enough by IT?’
- Assigning IT-applications to capabilities is a powerful way to support business & IT alignment.
What you should do:
1.) Create a simple high-level capability map and heat map it according to your strengths and weaknesses. The ‘how to model capabilities’ section of the Architectural Thinking Framework provides design guidance
2.) During strategic planning: define capabilities where you want to invest (i.e. innovate or optimize)
3.) Focus your investments according to these strategic decisions