Translating Corporate objective into business initiatives is a challenging work. One of the main reason is lack of common language and visual representation of the business.
For example, for the strategic objective of ‘Improve Customer Experience’, Sales and Warehouse heads are likely to identify different initiatives.
- Sales head – ‘Business needs ability to send digital catalogue to customer via email’
- Warehouse manager – ‘Customers should be able to track their orders’
They both can be right but may not be aligned. Further, it is unlikely that these initiatives are well understood. For instance, what are the dependencies, impact, risks and priority of the identified initiatives?
This is because, business initiatives are being identified from a narrow viewpoint.
Due to lack of visual representation of overall business, initiatives are often not wisely identified and prioritised. Initiatives proposed by stakeholders with loud voice and influence often gets the priority. It leads misalignment within business. Even worse, if individual departments have budget allocations (to run independent initiatives) then, misalignment can be even worse.
So, what is the solution to the problem? How different stakeholders can form a consistent view of overall business, as one enterprise? How executives, department heads and managers can visualise business from one common viewpoint?
It is possible by ‘Capability Mapping’!
Let us look at Capability mapping in bit more detail.
First, refer to below; business overview diagram.
At a high level, business creates ‘Value’ (in form of products and services) for one or more customer segments. Each customer segment returns some form of ‘Benefit’. The benefit can be in the form of currency, promotion or anything else depending on the Business Model.
There is a direct relationship between Value and Benefit. More value the business is generating, more benefit it is likely to receive and vice versa.
Now, let us see how business delivers value?
Refer to following diagram.
Business delivers value by its capabilities. Capabilities can be grouped into following types:
- Core Capabilities: Directly responsible to produce products/services for customers
- Support Capabilities: Internal business management capabilities.
- Corporate Capabilities: Provides direction, vision and long term sustainability to the business.
Let us dig deep and see, what does capability mean?
Refer to following diagram.
Capability is the ecosystem of various resources utilised together under predetermined protocol to produce some sort of value.
Different business capabilities collaborate to deliver value.
Capabilities can be further subdivided into Level-1, 2 and 3. In the following example, Retail Management capability includes Level – 2 capabilities. Each Level – 2 capability can have Level – 3 capability and so on.
So, now we know bit more about Capability, let us bring up our previous example and identify business initiatives using capability thinking:
Strategic objective is – ‘Improve Customer Experience’
Step 1 – Prepare Capability map for your business. Map level -1,2,3 level capabilities.
Step 2 – Identify capabilities that directly affect customer experience
Step 3 – Identify capabilities that indirectly effect customer experience
Step 4 – Use reports/surveys to identify areas where improvement is required in existing capabilities
Step 5 – Identify missing capabilities. There capabilities do not exist currently in your business. However, they will improve customer experience. For example, using drowns for goods delivery etc.
Step 6 – Collate above information and analyse:
- Which capabilities needs to be in scope?
- Which capabilities needs to be improved?
- Which new capabilities are required?
- Within each capability which ‘function’ needs to be in scope. It is important to note that improvement may be required one or more functions within each capability. Refer above diagram detailing function areas within capability. For example, business processes, procedures, fixed assets etc.
The above steps are not complete by any stretch. They are in fact a humble attempt to promote capability thinking within business.
I believe, every business must have well maintained Capability maps. Executives, Department heads and Project teams should communicate in terms of capabilities. This will help executives to translate corporate objectives into meaningful business initiatives.
Following are the few list of benefits of this approach.
Benefits of Capability Mapping:
- Capability mapping is simple
- Capability mapping provide common ground
- Capability mapping helps project, programme and portfolio planning
- Capability mapping hides complexity during initial planning
- Capability mapping is a great tool for root cause analysis
- Capability mapping helps separate strategy from business improvement
If you want to explore more, refer to following resources:
If you like to discuss this topic further, please leave me a comment below.