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Business Capability Mapping Methodology

Business Capability Mapping Methodology

Business Capabilities are all the rage as a part of the business architecture discipline. Is there a particular business capability mapping methodology? At Capstera, we believe there is no universal methodology or methodologies on how you build a business capability map. Instead, there are several approaches and ideas.

Besides postulating that business capabilities define “What” a firm does and has the abilities required to do, and not the “how,” “what” “why” “when” “who” “where,” we are not going to touch upon that topic too much. The latter set, while extremely valuable in their right, is not pertinent to the current discussion of what methodology or approach to use to build a business capability map.

Business capability mapping is more art than science, and except some guidelines, there are no super rigid rules. For some guidelines and a cheat sheet, you may find Ulrich’s article to be useful. For example, do you use nouns, verbs, noun-verbs? While at Capstera we believe using noun form distinguishes the capabilities from value streams and processes, it is not as though inviolable.

An outline of Capstera’s Business Capability Mapping Methodology:

While we don’t claim any evidence of any particular business capability mapping methodology is better than the other, it is clear teams need a framework and a structure to get going. 

  • Start with the Value Chain: A Value Chain, as defined by management guru Michael Porter, may be a good starting point. The reason is the leadership team, and the business stakeholders are more familiar crafting frameworks and business literature than pure business architecture frameworks and concepts. Using value chain, which may already have been defined for your enterprise, will help ensure alignment between strategic architecture and execution architecture.

While a complete definition of a value chain is beyond the scope of this insights article, suffice it to say a lot can be gleaned from the value chain to influence and shape the business capability map of your organization.

Example Value Chain:

Business Capability Mapping

 While it is not necessarily a 1:1 match between the value chain and the business capability map. But conceptually, the value chain and the business capabilities at level 1 will and should align.

Derive your Primary Capabilities:

Thinking about what your enterprise does in a life cycle concept will be a good starting point for deriving the primary capabilities. For example, if you are a pharmaceutical company, here is how you might think about it. (Caution: These are not refined capabilities for the pharma industry, though.)

Level 1 Capabilities for a Pharmaceutical Company:

Core Capabilities:

  • Strategic Planning
  • Research and Development
  • Drug Discovery
  • Regulatory Approval Management
  • Manufacturing
  • Distribution
  • Sales and Marketing
  • Drug Portfolio Management

Supporting/Context Capabilities:

  • Human Resources
  • Finance and Accounting
  • Legal, Risk, Compliance, and Governance
  • Supply Chain Management

Decompose Capabilities to Lower Levels of Granularity and Modularity:

Typically, when business architects have tenure and understanding of the domain, they can help decompose the capabilities to the next stage, which can act as a straw reference model for further decomposition and rationalization. On the other hand, most functional experts will be comfortable with taking a pillar, and with the help and guidance of the business architects and analysts, drill down further. At each stage, a life cycle view or concept to completion type view will help frame the capabilities in a logical order. This is just a guideline so that one does not miss out if we think sequentially and logically. However, capabilities are capabilities, and as long as they are grouped rationally, the exact flow does not matter.

Below is an example of a decomposition of Human Resources capability into level 2.

Sample Business Capability Model - Human Resources - Level 2

At level 2, you can start to relate capabilities to various stages of a Value Stream, which is the “How” lens in the world of business architecture.

Fleshing out the Details:

Many folks stop at this level, which may be OK. However, this provides a strategic view that the executives will like and probably live with/under.

There may be a need to go further deep so as to make the capabilities link the strategic view to the execution, operations, and IT enablement views.

Taking the human resources capability as an example, this is how one night detail out the capability. We are taking just a sliver here to illustrate the example.

Sample Human Resources Capability Model - Decomposition of a capability

Business Capabilities: Drilldown of HR Capabilities into lower level detail

Enrich the Capabilities:

Once you’ve created a business capability model that represents the essence of your enterprise, the next step shall be to a) define each capability b) add rich semantics to add color, context, and texture to the capabilities such as capability level goals/outcomes, the assessments, and other related information.

Iterative Refinement:

Once you have the draft business capability map, it is time to start iterative refinement to make sure the business capability model is structurally strong, has internal coherence, and meets the MECE (mutually exclusive, collectively exhaustive) test.

Packaging and Presentation:

Irrespective of what Business Capability Mapping Methodology you have used, capability models make nice wall art. (Alas, sometimes they remain just that.) Hence, it is essential to craft blueprints, views, and viewpoints, which juxtapose capabilities and other entities so as to map the relationships and footprint.

Executives love heat maps and generating capability-based heatmaps – strategic importance, funding and budgets, level of IT enablement, Footprint of systems/applications et al. – will be helpful.

Business capability maps make nice wall art. (Alas, sometimes they remain just that.) Hence, it is essential to crafting blueprints, views, and viewpoints, which juxtapose capabilities and other entities to map the relationships and footprint.

Regarding capability model representation three types of visualizations work well: a) nested boxes with lower level capabilities ensconced inside the higher-level capabilities b) a tree map and c) Hierarchical representation.

Powerpoint works well for communication with management teams and business groups. However, managing these lists in general office productivity documents leads to complexity in maintenance. So here is a plug for Capstera Business Capability Mapping Software Tool to create, manage and harness your enterprise business capabilities.

Ongoing Capability Management:

While capabilities, by definition, are “What” and hence are stable and long-lasting entities, the capability model does require ongoing management and governance.

The changes in the external and internal environments do lead to the emergence of new capabilities. Eisenhardt and Martin postulated dynamic capabilities as “organizational routines of strategic nature through which firms obtain new configurations of resources when markets emerge, collide, divide, evolve and die.”

The ongoing maintenance includes periodic assessments, assisting project teams with leveraging the capability models in their work, measures and metrics to determine the efficacy, and budgetary analysis. Last but not the least, a lightweight governance structure which helps manage the capability creation, management, and leverage across the enterprise.

Capability Construction Feedback Loop

(Source: Brits, Botha, & Herselman)

Business Capability Model

Things to Keep in Mind about the Business Capability Mapping Methodology:

  • Remember the simple adage: Don’t do it for the business, do it with the business.
  • Have some rigor to make sure the model has structural integrity and content coherence.
  • Follow a value chain and a life cycle approach to flow thru the capabilities.
  • Decompose to lower levels of granularity and keep levels similar.
  • Do not think processes, functions, systems and business units. Keep thinking “What” a dozen times to focus on capturing the essence of what the business does, which is the core of a capability.
  • Use nouns, as opposed to verbs, to denote capabilities. This is a best practice and not set in stone. At lower levels, things will morph into looking like processes, activities, tasks and that is OK.

What Business Capability Mapping Methodology do you use at your firm? 

Please consider some of the following products from Capstera to help you in your business architecture and capability modeling efforts. 

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