When trying to start a business, you are probably going to focus on what your possible target market is first. You will then start to look at gaps in that market and what the various opportunities and outcomes are, which can be achieved based on this research.
All that seems pretty sensible to me….
However if you speak to a business architect the likelihood is the word capability will come up first. The architect will tell you how important business capabilities are and how they help define what a business does.
In their next breath they will tell you that the business capability model is the place to start.
You are told you need a capability model.
There is value in a capability model but when creating a new business model or a new product or service is this really the best place to start?
Before we go into the detail lets first explore what a business capability actually is.
If you happen to type business capability into any internet search engine you will be returned pages upon pages of definitions and examples. My intention is not to add to that long list.
The cutter consortium provides a very concise definition of what a business capability is and its purpose:
Business capabilities are the core of the business architecture. A business capability defines “what” a business does. This is different than “how” things are done or where they are done. Business capabilities provide a vocabulary for business leaders to communicate and collaborate with each other and with information technology planning and deployment teams.
Capabilities can be described through a capability map, which is a hierarchical description of what the business does. Businesses usually refer to Level 1, Level 2, and Level 3 capabilities where each level is a decomposition of one or more capabilities at a higher level. We typically order these maps according to three categories of capabilities: strategic, value-add, and support.
What is interesting when looking at capabilities is that a capability can exist only once.
The rational for this is that we are trying to capture what the business does and not how it does it. By taking this approach we focus less on variation but more on the distinct things the organisation does.
To understand variation and total cost we are able to map all the processes which deliver the single capability. In addition to processes we can also map information assets, organisation units and IT resources, which are responsible for delivering the capability.
Business capability mapping benefits
Specifically, creating a capability map will:
- Establish a common vocabulary across business units and product lines
- Remove organizational and technological complexities from issue analysis and decision making
- Provide a holistic baseline for developing roadmaps that avoid the trappings of silo-based budgeting and deployment
- Serve as basis for planning and deploying priority business initiatives, including business/IT transformation efforts
This all sounds straightforward enough but something is missing… Where is the customer? How do we know we are delivering the capabilities our customers actually need and want?
What customers want
The reason customers use our products and services, is to get jobs done in their lives.
An example of a job could be as simple as:
- A man needs to shave every day.
To achieve this job he may need to purchase a razor blade and shaving cream, or he may buy an electric razor.
The question is, how can ensure we understand this customers need but still leverage the capabilities that we have as an organisation.
Looking at other fields I stumbled across a great book by Anthony W. Ulwick which focuses on what the customer wants. In the book Anthony outlines three areas which should be considered:
- Customers buy products and services to help them get jobs done
- Customers use a set of metrics (performance measure) to judge how well a job is getting done and a how a product performs
- These customer metrics make possible the systematic and predictable breakthrough products and services.
So what are the implications of these three areas? Only after knowing what jobs customers are trying to get done, and what outcomes they are trying to achieve, are companies able to systematically and predictably identify opportunities and create products and services that deliver significant value.
Aligning this approach with business capabilities provide us with a new perspective.
The business is designed around the experience
By understanding the jobs our customer performs we are able to align these to the various products and capabilities the business requires to put in place to enable the customers needs.
Through traceability we are also able to understand the following:
- The customer job
- Desired outcomes when performing the job
- Constraints which need to considered
- Customer experience when performing the job
- Product innovations required to support the job
- Products and services these innovations relate to
- Business capabilities which are needed to deliver the product
As we start to understand the jobs in more detail we can also align desired outcomes to various customer segments. Why is this important you may ask?
Well, let’s take the smart phone you are using.
The reason you use it and the jobs you need it to do for you might be different to me.
Being able to group people into segments ensures that the product which is delivered aligns to the majority of customer needs but with full alignment to the business delivery.
The ‘so what’ moment
Technology and Social Media offers us greater options and the demands of people like you and I grow on daily basis. Being able to align our needs with the business delivery ensures that as customers we get what we want.
Importantly we can then align this need with the delivery which means the organisation gets what it wants which is happy customers and profit.
Clearly this is a significant so what moment but there are some additional benefits worth mentioning:
- Business capability gaps – Focusing on the jobs customers need to achieve allows us to identify gaps in our capability delivery i.e. do our capabilities align to the jobs people need to perform?
- Pull rather than push – We provide the products and services which attract customers to our organisation due to an understanding of their needs.
- Segment the market – We are able to discover segments of opportunity in markets where few, if any opportunities appear to exist
- Focused areas of opportunity – We know where to focus employee creativity to create customer value
- Branding – Messaging connects solidly with customers and enhances the sale of existing and new products
- Prioritise projects – We know which initiatives will create the most value.
- Breakthrough ideas – We don’t waste time on generating ideas which do not add value to the customer.
- Management focus – Management can focus on the jobs which needs to be supported by the organisation. This also allows for employee competencies to be more focused on value delivery.
What separates the truly innovative companies from the average ones is the deep understanding of the jobs people need to perform in their lives. Focusing on the desired outcomes, constraints and experiences enables organisation to design and deliver the products that people need, but in ways that they never thought possible.
As an architect I value and appreciate the need to capture business capabilities but as a customer I hold a greater value for products and services which are designed in such a way that they meet my needs, which is something I am sure we all want.
- Organisation Image, Milan Guenther / Intersection, published 2012 by Morgan Kaufmann
- Anthony W. Ulwick/What the Customer Wants, published 2005 by McGraw Hill
- Cutter Consortium