How to Create Effective Business Capability Maps

There’s been a lot of talk recently about organizations evolving to a business capability-based planning approach.  There are a lot of benefits of such an evolution – tying the investments you make and the work you do directly to the capabilities that are being supported provides clarity.  Executives can better see how they are driving the business forward, and employees will better understand how their work delivers value.

But moving to a business capability-based planning model isn’t easy.  It requires a number of different elements to come together, most obviously it requires an understanding of an organization’s business capabilities.  And that’s where a lot of businesses go wrong.  This guide provides you with an effective approach to define and map your capabilities, providing the foundation for the strategic planning and investments that can come from that.  The concept is called business capability mapping, so let’s start with the most obvious question.

What is Business Capability Mapping?

Business capability mapping is the process of defining business capabilities, the relationships between those capabilities, and a number of key characteristics surrounding those capabilities that define relationships with other organizational entities.  We’ll look at the details of those below.  This level of understanding of business capabilities allows for analysis of them and in turn leads to the ability to identify areas of improvement, provides indicators of maturity, and potentially identifies gaps and redundancies.

Defining a business capability

While the definition and description of a business capability is the fundamental building block of the mapping process, and of large elements of the larger discipline of business architecture, it is often where organizations struggle, often around the inability to identify what a business capability is.

A business capability simply defines what a business does, or what it aspires to do.  It is simply a description of the ability to do something.  Everything else is addressed when the various questions listed above are considered.  Business capabilities are stable – they don’t change much and are generally consistent across all companies within an industry, regardless of whether the company is a large, conservative blue chip or a small, dynamic startup.  Business capabilities generally only change as the result of a major event – a merger, acquisition or divestment for example.  They may also change as a result of significant disruption – as with the COVID-19 pandemic for example.

“A business capability simply defines what a business does, or what it aspires to do.  It is simply a description of the ability to do something.”

As part of the definition of a business capability there should also be identification of relationships with other capabilities within the organization.  These are generally parent-child type relationships and allow for the development of a hierarchical taxonomy of capabilities.  With those definitions, relationships and basic descriptions of the capability in place, organizations can move on to addressing the six key elements of mapping business capabilities.

How to create a Business Capability Map / Model

1. Who’s responsible?
2. Why do we do this?
3. What does it create and require?
4. How is it done?
5. When is it needed?
6. Where is it applied?

The answers to these questions help develop a picture of how organizational elements map to the capabilities, and vice versa.  This mapping can then be analyzed and modeled to help identify appropriate strategies to mature and improve existing capabilities, add new capabilities and transition away from others.

1. Define who’s responsible?

Every business capability needs to have a single accountable owner, sometimes referred to as the capability steward.  This individual will have defined responsibilities, that are common across all capabilities, to monitor, update any pertinent information or relationships as they evolve.  This helps to ensure that the capability map is always current, complete and accurate.

2. Why do we do this?

Answering the why question helps to define the relationship that a business capability has to the business – why do we do this?  Broadly speaking business capabilities fall into one of three categories:

• Core Capability – the fundamental operations of the business
• Strategic Capability – the priorities that the organization has to improve the business
• Supporting Capability – the business functions that are needed to support and enable the other two elements

Note that where something fits is dependent on the nature of the business.  For most organizations, the ability to conduct legal contract reviews is going to be supporting, but if it’s a law firm, that particular capability is core to what you do.

All of the questions around business capabilities are important, but understanding the “why” is fundamental.  If a capability doesn’t roll up to support one of the three categories, then it may indicate that it is no longer needed.  Or it may indicate that there is a need to adjust the strategic priorities of the organization as they may be misaligned with what the business does.

3. What does it create and require?

The what question is focused on context.  What does this capability create?  What does it require?  Capabilities should map to a business object – a customer, a supplier, etc., providing insight into the stakeholders that are supported by the business capability.  This is essential in understanding the overall capability map as it indicates the areas that are impacted by, and that impact, each capability.

4. Define the value stream

This question is one that often causes confusion as many organizations define their business capabilities to include the how.  It’s important to remember that a capability is simply the ability to do something.  How that is done is described in terms of value streams and business processes.  That’s what is addressed with this question.  Value streams represent the higher-level flow of value while business processes operate at a more detailed layer, combining into value streams.

If business capabilities are stable, value streams and processes are dynamic.  This is the characteristic of a capability that is the focus of change – when organizations seek to mature, enhance or expand a capability they do so with new, improved or altered processes and value streams.  These elements impact many critical elements of a business capability – its cost to the business, the time it takes, and so on.

5. Establish the right timing

While this is a distinct question, it ties closely to the business processes considered above.  This question focuses more on the logistics of those business processes and provides insight into cadence, sequencing, scheduling, etc. to provide a more complete picture of the operations of the elements that deliver the business capability.

6. Determine where the capability is applied

This question is particularly important for global organizations, but can apply to any business that operates in multiple locations.  It identifies where capabilities are applied and allows for identification and analysis of variations between locations.  Understanding why a particular capability is strong in one area and less mature in others allows for the development of plans to improve.

Leveraging Business Capability Maps

Once all of these questions have been addressed for all business capabilities, there is a comprehensive map that shows how capabilities relate to each other and the business, how they operate, where the strengths and opportunities are, etc.  Business capability models can be built from these but in and of themselves, those models are of limited benefit.

The real strength comes from the ability to further analyze the maps and the connections between capabilities to determine the required strategies and actions to improve the business.  The use of heat maps, consideration of characteristics and relationships, etc. allow for collaborative planning that will then drive updates to the strategic roadmap and feed the larger strategic portfolio management (SPM) approach of the organization.

Barriers to Effect Business Capability Mapping

Business capability mapping is not a fundamentally complex task, but it does take an understanding of what a business capability is and what the important characteristics are.  The biggest problems organizations face stem from the vary start of the process:

• Failing to accurately define every business capability
• Failing to build a complete and accurate hierarchy of capabilities

In addition, there are often gaps in the answers to the questions, with inconsistent identification of the business objects supported, the value streams used, and so on.

Delivering Effective Business Capability Mapping

Business capability mapping, as a critical element of the larger concept of enterprise architecture, requires the use of skilled resources to develop, and maintain a complete, consistent view of the business.  Only when this is in place, and when stakeholders trust the information, can business capability maps drive strategic improvements in the organization.  Additionally, there must be an ability to integrate with the SPM elements that take those opportunities and turn them into investments, work, and ultimately business outcomes.

At UMT360, we can help you achieve that.  Our Strategic Portfolio Management platform combines both powerful enterprise architecture capabilities and strategy execution management functions to enable a complete end-to-end SPM approach that optimizes performance.  Our expert consultants can help you mature your business using our proven VIC framework, and our solution can mature and adapt as you deliver the improvements that we help you achieve.

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