Capability based Planning: Kick-start, implement and grow

Dec 7, 2022
Written by
Marc Lankhorst
Marc Lankhorst
Jeeps Rekhi
Jeeps Rekhi

Capability based Planning: Kick-start, implement and grow

Summary of our blog series on Capability based Planning

Our ongoing blog series on capability based planning has covered a lot of ground. We started by explaining the basic concepts and the value of capabilities, addressed the design of capability maps, how to relate capabilities with your strategy and operating model, explored capability assessment and roadmapping, discussed their use in investment decision-making and directing strategic change, investigated capability governance, and talked about overcoming obstacles and challenges, such as organizational resistance.

All of these topics are building blocks of an overall capability-based planning approach. In this blog installment, we address how you can establish and grow the use of Capability-based Planning in your organization.

10-step approach to implement and grow Capability-based Planning

Some approaches advocate creating a full Capability Map of your entire organization as a starting point. While we see the benefits of that, for instance, to avoid overlapping capabilities, we think that 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. You need to have easy access to the relevant stakeholders and subject matter experts for this scope.
  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 and validate this with the stakeholders and SMEs. Refine this 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 specific strategic goals of your enterprise.
  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 existing 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 

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 used, 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 process of maturation 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 all the time, manage resistance when it occurs, and evaluate the return on investment of your CBP effort. Don’t overdo it! Not everyone needs to become a CBP champion (but being at least a runner-up is an excellent position to aim for).

Business Capabilities as the Cornerstone of Your Digital Transformation Strategy

Business capabilities help architects give decision support to the C-level to execute the organization’s transformation strategy

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 when it comes to 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 succeed in piquing their interest, you may be surprised by the traction you will gain with such an architectural approach to business change.

This concludes our blog series on Capability-based Planning. Look out for our forthcoming e-book on the subject!