Organization Capabilities
What are organizational capabilities?
A capability defines an organization’s ability to successfully carry out a specific business activity. Capabilities:
- are the building blocks of the company. represent stable business functions
- are unique and independent of each other. are abstracted from the organizational model. capture the interests of the company.
What are capabilities for?
Organizational capabilities serve to develop a common vocabulary, e.g. between IT and the business units. Some other concepts are often used, but each has specific disadvantages:
- Processes are too detailed
- strategies and projects are too variable
- applications are functionally isolated and too technical. The business units cannot relate technology costs and business value.
Capabilities provide a “sweet spot” of stability and level of abstraction for a common vocabulary.
What are organizational capabilities used for?
Organizational capabilities serve to develop a common vocabulary, e.g. between IT and the business units. Some other concepts are often used, but each has specific disadvantages:
- Processes are too detailed
- Strategies and projects are too variable
- Applications are functionally isolated and too technical. The business units cannot relate technology costs and business value.
Capabilities provide a “sweet spot” of stability and level of abstraction for a common vocabulary.
Capability Maps
Capabilities are often visualized using a capability map.
A capability map is a model of the company that shows the business capabilities, processes and functions required for business success, along with the IT resources that enable them.
This is what a capability map of a training company might look like.
Capability maps can be hierarchically refined. They should describe disjunctive areas.
Here is an example of how marketing and sales of our training company described above could be structured.
Capabilities and organizational structure
It is a good idea to structure teams around capabilities. This helps to achieve a loose coupling and simplifies coordination along processes and value streams.
Developing capabilities
The required capabilities depend heavily on the portfolio. This in turn forms the basis for strategic workforce planning.
- Teams should be aware of the expectations regarding their capabilities
The provision (e.g. as teams and their capabilities) in turn depends on the team structure and the skills of the individual employees.
This is countered by the personal preferences of the employees. Good planning takes these influencing factors into account.
