Business Capability Map: A Tool for Mapping Business Capabilities
Published: 15 February, 2023
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To create successful innovations, it’s crucial to leverage the existing strengths of your organization. By doing so, you can gain a competitive advantage that others in the market cannot replicate. However, without leveraging your own strengths, you’ll find yourself in a red ocean filled with competitors. Your strengths can come in two forms: assets and capabilities.
- Assets can include patents, machinery, equipment, or a well-known brand that can sell a product on its own. Cash is also an asset.
- Capabilities, on the other hand, refer to the types of abilities and expertise that your organization has developed to perform core functions. For example, superior marketing skills, the ability to develop artificial intelligence software or the efficient installation of a unique type of asset can all be considered capabilities.
While it’s important to leverage your organization’s strengths, it can be challenging to identify the most valuable assets and capabilities. This is where a business capability map comes in. By creating a capability map, you can get a clear picture of your organization’s core and differentiating assets. This, in turn, can help you identify areas where you can innovate and create new products or services that build on your existing strengths.
Although we recommend separating the innovation team from the rest of your business, leveraging the strengths of the parent company gives corporate innovation an edge over a startup. With a capability map, you can develop an innovation strategy that builds on your organization’s strengths and helps you stand out in a crowded market.
Digital Leadership AG Partners can help you in your organization’s digital transformation by leveraging your existing assets and capabilities. Their team of experts can work with you to identify your strengths and develop a customized digital strategy that aligns with your business goals.
What is a Business Capability Map?
A business capability map is a tool used to identify and document the various capabilities of an organization, It is a visual representation of the organization’s capabilities and how they relate to each other. The map can be used to provide a high-level overview of the organization’s current capabilities, as well as to identify areas where new capabilities are needed.
If you’re looking to better understand the concept of capability mapping and how it can benefit your organization, you’ve come to the right place. Our post is designed to provide a comprehensive overview of this tool and its advantages.
One useful capability mapping resource is the UNITE Business Capability Map, which presents a visual summary of your organization’s strengths and assets. This can help you to identify areas where innovation initiatives and digital transformations can be most effectively implemented.
Business Capability Mapping Definitions
There are several business capability mapping definitions. Here is a compilation of the most prominent business capability mapping definitions from experts in the field:
“Business capabilities is the articulation of the capacity, materials, and expertise an organization needs to perform its core functions. Enterprise architects use business capabilities to illustrate the over-arching needs of the business. Thus they can better strategize IT solutions that meet those business needs.” – Margaret Rouse
“A business capability is a particular ability a business may possess or exchange to achieve a specific purpose or outcome. A capability describes what the business does (outcomes and service levels) that creates value for customers; for example, paying employees or shipping products. A business capability abstracts and encapsulates the people, process/procedures, technology, and information into the essential building blocks needed to facilitate performance improvement and redesign analysis.” – Ulrich Homann
“A business capability is what a company needs to be able to do to execute its business strategy. Examples of those are enabling ePayments, tailoring solutions at the point of sale, demonstrating product concepts with customers, combining elastic and non-elastic materials side by side, etc.). In other words, the capability is a collection of people, processes, and technology that is addressable for a specific purpose. Capability management is an approach that uses the organization’s customer Value Proposition Template to establish performance goals for capabilities based on value contribution. It helps drive out inefficiencies in capabilities with low customer impact and focus on areas with high financial leverage.” – Wikipedia
What do others say?
“Capabilities are the fundamental elements that provide an organization’s capacity to achieve the desired outcome. They can be thought of as describing the organization’s potential. Taken together they form a model representing all the functional abilities a business needs to execute its business model and fulfill its mission.
From an IT perspective, Capability models provide a stable overarching view of what is important to business leaders that can link business and IT initiatives together. These relatively simple views of the business provide the foundation for complex discussions on strategy and resource allocation. Capability models don’t reduce business complexity, but they do illuminate the complexity in ways that provide higher levels of insight and perspective.” – Jeff Scott
“It is the most important diagram in all of the business architecture” — the Business Capability Map
“The Business Capability Map is the what of business architecture — defining your business’ ability to execute.” – Anna Mar
“A Business Capability Map is an analysis of an organization’s structure and resources, aimed at identifying its inherent abilities and potential.” – Business Dictionary
“Business-capability mapping is the process of modeling what a business does to reach its objectives (its capabilities), instead of how it achieves IT objectives (its business processes). Business capability mapping is being used more and more by information architects and can help align IT strategy with business strategy.” – Enfocus Solutions
Things to Consider When Creating your Business Capability Map
A business capability map is not just a wish list of arrows and boxes but a coherent and integral set of items that a business does. A business capability map is a tool that companies use to map activities to achieve their strategic goals. It helps analyze the company’s structure and resources, which in turn will help understand its potential and capability.
Building a business capability map is an iterative exercise. Regardless of the approach you choose, you should take note of the following:
- Begin by capturing the value chain of your business. Value chain refers to the chain of activities that a business performs to discover what it needs to provide valuable products and services for the market. Establishing a value chain itself is an iterative exercise. Once you’ve defined your value chain, creating a business capability map becomes easier.
- Invite a cross-functional team with technology and business expertise to brainstorm and come up with a unique capability map for your organization.
- Review your organization’s goals and strategies to understand where you’re currently and where you’re heading to.
- Map out your value chain or set of activities that you perform to provide valuable products and services to your target market.
- Use real-time collaboration to work with team members from other teams to complete your value chain.
- Identify the major business capabilities your company needs to operate.
- Additionally, decompose these capabilities into lower levels while assessing them. Here you can relate capabilities to various stages of the value stream.
What Does an Organization Need to Know to Develop its Capability Journey?
There are two factors you should look out for:
First, discover what core capabilities are needed by the organization and which ones are strategic.
Second, how is the organization performing currently? You begin by taking a stat of all the critical capabilities you need as an organization at the moment. For example, program delivery, employee skills, content development, people skill, etc.
Then pick the one that is of utmost priority at the moment and start developing in that area.
There are a few questions you need to ponder:
If there were past efforts to create a capability map for the company,
- What lessons can be learned from the previous effort, and how can you improve it to get a better result?
- Do you intend to create the business capability map from scratch?
- Are you considering buying a model from a business capability vendor?
- Is the Business capability map based on a digital transformation strategy?
- What is the organization’s desired outcome from the business capability mapping exercise?
Business Capability Map Approaches
Assuming you decided to carry out the capability mapping exercise from scratch, you have two options to consider:
Straw model-based approach
In this approach, you will need to assemble a cross-functional team of experts from business and technology fields to brainstorm and create a business model from scratch.
The best business models are tailored to the needs of your customers as well as the business objectives and characteristics of your industry. Therefore, whenever you want to create a business model innovation for your company, it’s important to benchmark what the most innovative companies in the world are currently doing. Understudy the top 5 leading companies in your industry are doing and pattern your innovation after what they’ve done so far. This way, you will develop something more improved that customers will be willing to pay for.
So, What is Business Capability Mapping?
Business capability mapping is a critical step in business process management (BPM). Business process management is an overarching modality that includes the Mapping of business capabilities to draw insights for optimization and improvement.
Before achieving optimization and improvement, businesses must understand what they do best and what they stand for. That’s where capability maps come to play. Business capability mapping is also referred to as business process mapping.
When a business engages in capability mapping, it is closely examining its existing digital transformation strategies that are at the core of the value they deliver to its target market. This differs from business process management in that it includes both existing processes and those yet to be implemented in the business. In reality, business process management is a strong business capability map that offers enterprise businesses insights as to what business processes are their greatest assets.
To create a business capability map, businesses must reflect on the following questions:
- What business processes do we operate the most?
- What business processes are imperative to our value proposition and value creation?
- Which existing elements of the business models are most stable?
Business Capability Mapping: Demystified
Business capability focuses on “what” rather than “why” or “how.” When you’re creating a business capability map, you should focus on identifying capabilities while structuring them in a hierarchical way. The goal of this is to connect strategic vision with realized value.
Business capabilities are existing practices essential for the core functioning of the business while mapping them, placing emphasis on prioritizing their value in terms of executive vision and day-to-day operations.
Business capabilities include the following:
- Sales and marketing
- Production chain management
- Client management
- Service delivery
How to Use Business Capability Map?
There are different ways organizations can benefit from the use of business capabilities once defined. Having a concrete capability map serves a number of purposes. Here are some:
Planning for Investments
If your organization is planning for investment and you already have capabilities mapped out from the previous years, a strategic vantage point can tell where your money would best be spent. A business capability map is the bedrock of capital investment planning as they offer a broad look at the current state versus the future.
Merger and Acquisition IT Consolidation
Identifying areas of overlap can help organizations disassemble an existing IT unit in the event of an acquisition or merger, where one enterprise is becoming a part of another organization with an existing IT unit.
Essential functions can be duplicated throughout the business unit, and that’s not cost or resource-efficient. Uncovering areas functions that may not be working in a business’s favor is another outcome of process mapping.
Drafting Business Capability Map Process
Now that you know what a business capability map is and what it does, let’s look at how to draft one.
Step 1: Determine Business Architecture
You can determine your business architecture by refining and documenting your capabilities as an organization. Get all the best minds in different fields and start compiling your highest priority capabilities.
After compiling the list of capabilities, break them down into subcategories of the existing capabilities. At this point, your list should look like a tree or outline with primary and secondary capabilities.
You should continue this path, analyzing the capabilities into their smallest units. During this process, business leaders should also look for opportunities to define the semantics and dissolve duplication. If two business capabilities have different names but serve the same function, a single consistent business term should be listed and defined, and the unnecessary capability should be dissolved.
When the capability tree is complete, it’s time to start connecting the dots. That is looking for connection points and using visuals/drawing lines between the business capabilities to show their relationship.
At this point, you’ve determined the framework at the core of your business.
Step 2: Overlay Technical and Business Architecture
With your business architecture in place, it’s time to overlay your technical architecture. Implementing IT in correspondence with business capabilities is an important aspect of the capability mapping process. Discover the technologies you will need and the way to implement them.
Step 3: Capability Mapping to Service Oriented Architecture
Service-oriented architecture can be achieved once a capability map is laid out and designed to include technical support and capabilities. Ultimately, what you’ve achieved by laying your capabilities out in this way is that you created a map, gearing your company’s framework and IT infrastructure at services.
This final stage goes beyond map design accomplished in steps 1 and 2, emphasizing an organizational structure that the map’s insights can drive.
Whether or not you apply a service-oriented model, following these three steps will allow you to move away from rigid, prescriptive modeling in your enterprise business and toward modeling based on value and service.
Capability mapping helps companies understand the things they need to do to achieve their desired results. Properly defined business capability maps can help to save money, decrease risk and enable business growth.
With a business capability map, you may link your execution to strategy by connecting which capabilities support the core strategy pillars, aligning funds to core capabilities, and assigning, monitoring, and measuring key performance indicators.
Focusing on capability mapping gives your company a competitive advantage, allowing you to outsource and standardize your commodity capabilities.
We hope the information presented in this post has given you a better understanding of the concept of capability mapping.
Leave a comment below, and we’ll respond to your questions.
Cheers to your continued business success.
Frequently Asked Questions:
As we have said, capabilities are the processes, systems of knowledge, and specific skills that a firm possesses based on which it operates, earns revenue, and competes with other firms.
Business Capability Maps summarize the capabilities of a firm visually. They can exist at different levels of an organization—from an abstract list of capabilities at the enterprise level (such as in the chart we see here), or a much more detailed visualization when focusing on the particular capabilities of organizational units or even something like the IT system.
Assets are things that you possess, such as patents, machinery, equipment, or a strong brand that
will practically sell a product on its own, Cash is also an asset.
Capabilities are the types of abilities and expertise that your organization has developed to perform core functions. Simply put, it is what you can do as an organization. The particular kinds of capabilities your firm might have are superior marketing skills, the ability to develop artificial intelligence software, or being able to efficiently install a unique type of asset.
Assessing your assets and capabilities is critical. These will provide the boundaries for any future innovation and transformation initiative. If you do not leverage your unique assets and capabilities, you are likely to end up in competition with quite literally everybody—a fight that is hard to win. By leveraging your strengths, you can outline a unique Search Field and Opportunity Space for your innovations.