Business Capability Modelling – Benefit Realization

Both in the workplace and through feedback on other articles, I have encountered various criticisms about the validity of Capability Modelling. In this article, I unpack what a Business Capability Model is and explore what it is and how to gain benefit.

What is Business Capability Modelling?

In short, capability models define what an organization can do; it should not be concerned with how it does it. When documented it provides a blueprint of what the organization offers.

It is important to distinguish Business Capability Modelling from other types of capability modelling, such as Service Delivery, Supply & Transfer, and others. They are not the same thing; this represents one of the first failings to note.

The Structure of a Business Capability Model

Business Capability Modelling generally comes in Levels from 1 to 5, although levels 4 & 5 are often left for a more matured organization.

• Level 1 is the umbrella and often refers to a functional department such as Finance, or HR.
• Level 2 allows more detail providing context and detail to high level functions created in Level 1.
• Level 3 drills deeper still, this time providing core capabilities of the functional area defined in Level 2
• Level 4 describes how a core capability is executed.
• Level 5 is the Process or Activity level providing the deepest view of a capability.

Hierarchy Levels in The Enterprise Modelling App

The Common Pitfall

This is where a lot of people stop, they have spent a considerable time in developing a capability model and believe this is the last step. They present it to leadership, expecting immediate action, but often receive no meaningful response.

What the heck is the point? I’ll tell you, nothing of real worth! Because the real value comes after the model is built.

The Important Missing Step

Once the model is complete, the next crucial step is to understand how the business executes each capability, that means what are the systems and processes and importantly, how do they map to the capabilities.

And you need to rate them for completeness, relevance, and success.

When done correctly it can provide valuable insight to assess where gaps exist, it helps highlight opportunities to develop and optimize. It can help identify duplicated efforts, room for consolidation and pin-point money saving measures.

Now you have something that the top brass care about.

Turning Insights into Priority & Strategy

With your assessment complete, the next step is to prioritize areas for improvement. There are many ways to approach this such as by the areas that rate lowest; the aggregated lowest rating per capability level; maybe an identified area that does not have a process or system as its adhoc and completely manual or even targeting opportunities to consolidate.

This is the opportunity to become strategic. What is the business direction or vision? What is the commercial plan? Use these factors in your prioritization.