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Everything you need to know about Capability Mapping

Capability Mapping: Everything You Need to Know

A business model clearly describes the business strategy and logical context of how a company intends to operate to generate value for itself and its customers. The detailed plan and illustration of this logic make the business model assessable and visible. Therefore, the business model of a company is an analytical unit to identify the starting point for innovation systematically. This means companies can change different parts of their business model and create an advantage over their competitors. A business model innovation is thus the strategic change of an existing business model or creating a new business model that satisfies customers’ needs than the existing business models. We live in an ever-evolving world, and as things keep changing, businesses need to adapt to new demands and trends. Any valuable business needs to be innovative to survive changes in market trends. A useful trick to help your business stay relevant amidst this transformation is the business model innovation. It helps you understand what to focus on as a business. By understanding business model innovation, you will be able to effectively structure everything you need for your business to thrive. Keep reading this article to know more about business model innovation.

What Are Business Maps?​

Business maps are diagrams that guide an organization’s journey. Capability maps are designed to guide an organization in its capability journey.

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 capability is the expression or the articulation of the capacity, materials, and expertise an organization needs in order to perform core functions. Enterprise architects use business capabilities to illustrate the over-arching needs of the business in order to better strategize IT solutions that meet those business needs.” – Margaret Rouse.

A business capability is a particular ability or capacity that 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, pay employee or ship product. 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

“Business-capability mapping is the process of modeling what a business does to reach its objectives (its capabilities), instead of how it does it (its business processes).” – Denise Cook.

“A business capability is what a company needs to be able to do to execute its business strategy (e.g., enable ePayments, tailor solutions at point of sale, demonstrate product concepts with customers, combine elastic and non-elastic materials side by side, etc.). Another way to think about capabilities is they are a collection or container of people, process, and technology that is addressable for a specific purpose. Capability management is an approach that uses the organization’s customer value proposition to establish performance goals for capabilities based on value contribution. It helps drive out inefficiencies in capabilities that contribute low customer impact and focus efficiencies in areas with high financial leverage; while preserving or investing in capabilities for growth.” – Wikipedia.

“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 Capability Mapping

A business capability map is not just a wish list of arrows and boxes but a coherent and integral set of items of what a business does. A business capability map is a tool that a company uses to map activities it needs to engage to achieve its strategic objectives. 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 into 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 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 (such as 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 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 it be improved 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 digital transformation strategy?
  • What is the organization’s desired outcome from the business capability mapping exercise?

Business Capability Mapping 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, a cross-functional team of experts from business and technology fields will be assembled to brainstorm and create a business model from scratch.

Whiteboard Elicitation

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.

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 optimization and improvement can be achieved, businesses must understand what they do best and what they stand for. That’s where capability mapping comes 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 digitl transformation strategies that are at the core of the value they deliver to their 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
  • What 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 Mapping

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:

1. 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.

2. 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.

3. Duplicated Efforts

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.

Steps to Drafting Business Capability Map

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.

Conclusion

Capability mapping helps companies understand the things they need to do to achieve their desired results. Properly defined business capability mapping can help to save money, decrease risk and enable business growth.

With business capability mapping, 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.

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