I recently had a delegate on our Business Architecture Mastery Programme ask the above. It is a deep question with a number of dimensions. We have some ideas and a bit of experience...

Capability

First, we have a different take on what a Capability means. Most methods define it a bit fuzzily as "something a business can do" or similar. That is not too different from a Business Function. They use Capability so people don't get confused with Functions used in Organisation Design, which might refer to “HR” or “Finance”.

We think a Capability implies quite a bit more. It implies delivering something of value to a client (potentially internal). There is much more detail in an earlier post. See comments for link.

Motivation

When we want to start discussing improvement, we then also need to think about motivation. What do we want to change (improve), why and how? These motivations could come from a number of sources and will be different for various stakeholders. We need to find a way to merge them and reach consensus on what "improvement" means. Please see the blog entry for a view on merging motivations (link in comments)

Metrics

Once we understand what we value and how it should be improved, we then need suitable metrics. These will depend upon the agreed goals. One stakeholder group (eg investors via the stock exchange) may only be interested in financial performance this quarter. Another stakeholder group (say employees) will be interested in job security. Another group (the community) will want to be assured that we have improved our environmental footprint, etc.

There are a variety of ways we can measure a business, its performance and its health, including traditional financial measures, balanced scorecards, customer satisfaction, sustainability metrics, strategic health checks, maturity models and industry metrics frameworks, etc.

Baseline

Next we need to know the baseline we are improving from. That involves gathering the facts for the chosen metrics via a variety of methods including accounting, scorecards, business intelligence, survey, workshop, etc.

Run the Initiatives

Finally, we can the implement our changes and then measure again.

Tracking

For tracking, we like to use a hierarchical model proceeding through layers of mission/goals/objectives which we then colour code based upon current performance (red for poor to green for excellent). This give a visual "heat map" of where to focus attention. Put it on a wall! Then measure again in about 3-6 months, depending upon the volatility of your industry. Using the new measures, update the colour coded model. Of course, also update the model itself with new concerns, insights and learning.

#capability #improvement #metrics #businessarchitecture

Capabilities are fashionable. Everyone is modelling them, but not always well… And just what is a capability?

Popular business and EA methods use it more or less interchangeably with a “Business Function”, i.e. something we do. I differ.

Capabilities are often listed below a value chain/network to support the delivery of the value adding steps. This is all well and good. Often stated in simple phrases such as “Attract Talent”, “Create Desirable Products”. In this form they are equal to business functions. Less usefully, they will sometimes be stated as nouns, e.g. “Human Resources” or “Accounting”. These are vague at best and equate more to organisational units or departments.

Other methods include goal, process and service modelling. How do we make sense of all these? Are they competing or complementary?

One technique useful for all of them is decomposition - breaking down higher level goals / concepts / requirements to more detail or more concrete ones.

We can decompose Mission into Goals and Objectives; Mission into Functions; Processes into sub-processes and activities; Services into service components, etc. Can they be integrated? Fortunately, yes! Mission, Goals and Objectives are about what we want to achieve, independent of what needs to be done or how. They can provide a starting point for our decomposition. One mission breaks down into goals (broad directions) which break down into objectives (specific, measurable, achievable, realistic, time bounded). Mission (or objectives) can also be decomposed into functions: what must we do to achieve the goals? Functions should have a verb (doing something), an object (to what?) and qualifying clauses (how, with what constraints).

Functions can be sequenced on dependencies to form end to end business processes. Functions and processes can be packaged as services, with providers (who does it?), consumers (who uses it?), inputs (what is necessary to do it?), outputs (what is expected as a result?) and service levels. We need a catalogue of available services, and a designated way to invoke them.

Ah, but what of capabilities? Well, functions, processes, services can all deliver capabilities. A capability implies the ability to do something (function) for someone/thing (consumer) producing a desired result (service/product) at a particular location, with a certain service level (e.g. volume, efficiency, accuracy, etc. ) and potentially other requirements (e.g. in a particular language). To deliver a capability will typically require resources, such as skill, information, application support, infrastructure and physical presence.

There is nothing wrong with defining business functions (proto-capabilities) at a high level below the value chain. We should ensure, however, that they are expanded into full capabilities during later design to deliver all the dimensions required.

#Capability #EnterpriseModelling #BusinessModelling #EnterpriseArchitecture

How to measure business capability improvement objectively after transformational projects have been implemented?