Those of you who have been reading my blog will know that I have been worrying away at the concept of a capability map. Initially, as a business strategist, I could not really see the point of these time consuming maps, some of which extend to many pages of A3 sized paper. They seemed to me to be second class organisation charts. Second class because they defined the activities but not who reports to whom.
Over time I have understood more about capability maps and have almost arrived at a comfortable relationship with them. I say almost because I am still a little skeptical. So it is in this frame of mind that I am always on the look out for others worrying about the same issue.
William Ulrich and Jim Ryhne recently addressed this issue in an article published on the BA Institute website (standing for Business Architecture Institute). In it they critique “business capability architecture”.
“Business Capability Architecture is positioned as a framework for interpreting and enabling business strategy and business initiatives. We believe that the concept of value delivery should be elaborated using value streams and value networks. These value oriented perspectives are linked to capabilities to articulate how those capabilities are used to deliver stakeholder value. If this value oriented perspective is ignored, the ability to leverage business capabilities is significantly sub-optimized.”
In other words they are saying that capability maps are more useful if they are integrated with value stream or value chain maps.
They give an example of what they unhelpfully call a Value Stream/Capability Cross-mapping Blueprint.
I think I would call this a “capability chain” or “capability stream”: the mix between a value chain and a capability map. Its strength is that it lays out the capabilities in the format of a value chain, similar to my idea in my previous post. In fact I first coined the term “capability chain” in a session together with some PA Consultants at Henley Business School. I am still not entirely sure whether laying the process out in this way is any more helpful than the normal ways of laying out value chains or value streams. But I am sure that this puts capability mapping in its proper place – as a tool you use after you have done value chain mapping.
As the authors comment “Unless value streams are incorporated and tied to strategy, it will be difficult to see which capabilities are more important and which capabilities are less important in realizing a strategic objective. That this perspective is critical has been unquestioned since the publication of Porter’s work on competitive strategy.”
Hi, this weekend is good. At this moment I am reading this wonderful educational post here at my house.
You say “The value streams are linked to capabilities to articulate how those capabilities are used to deliver stakeholder value” (1). The literature says “Business capabilities allow an enterprise to combine resources, competences, information, processes, and their environments to deliver consistent value to its shareholders and customers.” (2) For my opinion this is the other way round. Maybe both are correct. A BC consists of low level capabilies, which are combined to processes (3). What is correct?
Hi, The quote you give … “The value streams …” is actually not a quote by me, but by William Ulrich and Jim Rhyne – and I agree, it is a bit confusing. Since I wrote this post, my understanding of “business capabilities” has taken another step forward.
First, you are right business capabilities exist like Russian Dolls: a high-level capability will be made up from lower level capabilities and so on.
Second, a business capability delivers some beneficial outcome. This means that it can also be viewed as a “value proposition”, if described in terms of the outcome and why it might be of value to someone.
Third, a value chain or value stream is a sequence of activities that together deliver something of value: a value proposition.
So fourth, a value chain or value stream is a sequence of activities that together deliver a business capability!! This is why we talk about capabilities being delivered by people, process and technology. The process bit, is just the value stream.
In Operating Model Canvas terms, each business capability requires an operating model to deliver it. A the highest level an organisation is a business capability: and hence needs an operating model. But this organisation is itself made up from many sub-capabilities, each of which requires a sub-operating model …. and so on …