Capability Based Planning: Kick-start, implement and grow in 10 steps

Capability Based Planning: Kick-start, implement and grow in 10 steps

Editor’s Note: Business Capabilities are a cornerstone of Business Architecture, and understanding how to implement them is key to success. To guide you through Capability-Based Planning, we’ve created an ultimate eBook, filled with expert insights, strategies, and practical advice to ensure you’re on the right track. This blog post is an excerpt from our eBook.

Introduction: How to kick-start Capability-based Planning

This blog addresses establishing and growing Capability-based Planning in your organization. Some approaches advocate creating a full Capability Map of your organization as a starting point. While we see the benefits of that, for instance, to avoid overlapping capabilities, we think an iterative approach is more practical for most larger organizations, simply because of the scale of the effort. Moreover, such an approach will ease your stakeholders into this approach without forcing them to change their established ways of working overnight and avoid the pitfall of ‘analysis paralysis’.

Our approach consists of the following steps (though you may want to pick and choose which are most relevant to your organization and the resource capacity available):

1. Identify the initial scope: Pick a relevant part of the business for which it is feasible to start with a Capability-based Planning approach. For this scope, you need easy access to the relevant stakeholders and subject matter experts.
2. Lay the groundwork: Ensure stakeholders have a basic understanding of the capability and value stream concepts. Work with subject matter experts to identify the relevant capabilities down to a reasonable depth, say 2 levels. Don’t go too detailed for a first cut: 4 levels or more would typically be too much.
3. Create a draft capability map for the chosen scope, validate it with the stakeholders and SMEs, and refine it as needed.
4. Perform an initial assessment of the strategic importance of these capabilities. For instance, use a typical classification scheme of commodity vs. differentiating vs. innovating, or relate these capabilities to your enterprise’s specific strategic goals.
5. Do a basic analysis of the strategically most relevant capabilities from step 4. For instance, perform a high-level capability maturity assessment or calculate a roll-up of the IT cost related to capabilities. You may want to start with a simple t-shirt sizing metric assessed by a domain expert before going into more detailed assessments.
6. Relate the capabilities you analyzed in the previous step to change initiatives (e.g., projects and programs, agile value streams) that impact these capabilities.
7. Assess the expected impact of those initiatives on the analysis from step 5. Will an initiative, for instance, lower the IT cost or increase the maturity of a capability, and if so, by how much?
8. Using this impact to prioritize these initiatives. Initially, use this as additional information in the investment decision-making process to avoid too much resistance. Once stakeholders see that this approach contributes to better decision-making, this CBP-based information can become leading rather than merely supporting.
9. Use these priorities to identify new or realign existing change initiatives and define capability roadmaps to close the gap between current and desired capability maturity.
10. While implementing these change initiatives, track relevant KPIs and adjust priorities as needed.

Double-loop learning in implementing capability-based planning 

Additional points: how to extend our ten-step approach

Implementing this reusable approach is itself an iterative process. From a specific, confined scope, you can extend and grow in several directions:

Expand the scope 
For example, rolling this out across different business units. Growing your capability map also requires rethinking some parts since the additional scope may overlap in capabilities with the parts you already addressed. Make sure your capability map does not become a substitute for the organization structure since that would negate many of the advantages of capability thinking. Remember, a capability is not equivalent to a team, department, or another organizational unit.

Expand the stakeholders involved 
This could be from IT into the business, and it could be from senior business managers to business executives. Once senior leaders experience how this new way of thinking helps them focus investment decisions on the capabilities that are key to their strategy, they may even become advocates for this approach and convince their peers of its value. But the somewhat abstract nature of the capability concept will require a lot of communication: you will likely need to keep explaining this, and as they say, show, don’t tell: seeing it in action works best. On the other hand, you can emphasize how capabilities are a shorthand for people, process, technology and data, making complex topics easier to understand.

Increase sponsorship 
It should move from being a one-off exercise to being central to the business planning cycle. Business capabilities are generally static over time, so if they are used repeatedly, they become more recognizable and readily understood by stakeholders. It justifies the investment in defining them. Ideally, capability-based planning will move to the most appropriate team, e.g., the Strategy Planning team or equivalent in your organization.

Establish capability ownership 
An average organizational chart does not always lend itself to easily identifying capability owners since capabilities often cross organization functions. However, executives could become responsible for capabilities despite all the resources involved not being in their chain of command. Ideally, with ownership comes responsibility for planning, resourcing and delivery of the capability.

Extend and refine the capability analyses and assessments 
Use more metrics, obtain better/more precise data, involve more subject-matter experts, and integrate systems to pull the ‘official’ data to automate these assessments. By improving the data, decisions on investment in change become more based on facts and figures rather than hunches and intuition. That helps you move away from ‘decibel-driven’ decision-making, where the people with the loudest voices get their projects approved.

Formalize investment prioritization  
Formalize investment prioritization along the lines of capabilities rather than classical projects, typically in concert with other management changes. For example, this approach works well with moving from project to product-focused teams in IT. The key change here is that the strategy is linked to a capability outcome rather than a project scope which can contract easily.

Learn from this process of maturation  
Learn from this maturation process using feedback from the organization to refine your way of working. Capabilities are a new way of thinking, and while they offer numerous benefits that support what organizations are trying to do, you need to listen to the challenges and successes with this approach.

Of course, you need to keep your stakeholders informed and committed, manage resistance when it occurs, and evaluate the return on investment of your Capability-based Planning effort. Don’t overdo it! Not everyone needs to become a champion (but being at least a runner-up is an excellent position to aim for).

Political and emotional aspects of change

This blog series is focused on the rational aspects of Capability-based Planning and not on change management in general. However,  the political and emotional aspects of change are equally important to make Capability-based Planning a success in your organization. This includes:

• Understandability: Make your approach easy to comprehend and assess without detailed knowledge or direct experience for stakeholders.
• Simplicity: Remove the noise of details; the human brain can only take in so much information.
• Granularity: When making a decision, people will have questions; ideally, always be able to answer a stakeholder’s questions by really showing (e.g. by tracing it in your models) rather than just telling these stakeholders what the answer to their question is.
• Collaboration: Any change in the way of working requires persuading, challenging, arguing, agreeing, creating coalitions, and horse-trading.

We also addressed some of these aspects in our blog post on overcoming obstacles and challenges. Especially in organizational politics, architects are often ill at ease and out of their depth. Teaming up with someone more versed in this dimension of change (e.g., an experienced program manager or senior business leader) could be a good way to establish and mature a Capability-based Planning approach.

Most importantly, this should not be a ‘push’ effort from architects. Rather, you should aim to create a ‘pull’ from senior stakeholders by showing the added value of such an approach for their daily work and responsibilities. Once you pique their interest, you may be surprised by the traction you will gain with such an architectural approach to business change.

Schedule time with one of our experts if you need help with Capability-based Planning.

About the authors:

Marc Lankhorst

Managing Consultant & Chief Technology Evangelist at Bizzdesign

Marc contributes to Bizzdesign’s vision, market development, consulting, and coaching on digital business design and enterprise architecture. He also spreads the word on the Open Group’s ArchiMate® standard for enterprise architecture modeling, of which he has been managing the development. His expertise and interests range from enterprise and IT architecture to business process management.

Jeeps Rekhi

Customer Success Consultant

Jeeps has 25 years of experience in defining and delivering strategic and operational change. He is a senior enterprise-wide business architect who has specialized in data and digital transformation and knows how to harness value across business, operations and technology.