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In this blog, we want specifically to answer the question: How does the enterprise’s operating model deliver capabilities? Let’s start by clearing up an important misunderstanding: a Capability Map is not a functional decomposition of the enterprise! We have written about this confusion in our blog: Capabilities vs Business Functions: Same difference?
Many Business Capability Maps are full of business functions or, even worse, resemble organizational charts. Business functions describe the day-to-day operations of the enterprise. Now, anything you do is something you can do. So, you could define a 1-to-1 related capability for each business function. But that isn’t a great way to use the concept since there are many things your enterprise could do that it doesn’t do on a day-to-day basis: it has capabilities beyond mere business functions.
As an example, we can use the military, which uses the expression ‘Boots on the ground’ to describe its potential to deploy troops anywhere in the world in 24 hours. However, it doesn’t have a business function, let alone a ‘Boots on the ground department.’ But ‘Boots on the ground’ is a capability.
Business functions express the concrete activities performed to deliver capabilities. In an ArchiMate model, you express this using a realization relationship: one or more business functions realize a capability. Next, you can define which departments perform these functions and which information and technology use them. That provides a line of sight between a capability and its realization.
The next figure provides an example: The capabilities “Money Management,” “Asset Management,” and “Policy and Claim Management” are realized by three business functions, with the “Investment Management” function involved in two capabilities. These functions are, in turn, performed by two responsible organizational units. This is the basis for your enterprise’s operating model.
Figure 1 Capability realization by business functions (and actors)
A similar mapping can be made between value streams, which describe your enterprise’s high-level value creation steps and the business processes that realize them. But we will leave that for another blog post.
In Business Architecture, the capability concept supports the collaboration of people from different disciplines. People’s ways of thinking vary depending on their background. We would like to share some observations from our practical experiences.
Managers often think about groups of people and their work (e.g., span of control, ownership, and responsibility). They, therefore, tend to interpret such a map as an organizational or functional structure. Similarly, people with an engineering background (especially in IT) think of functional decomposition. Both management and engineering have a design perspective where “this bit” of the enterprise or system (e.g., a department or component) needs to do “that piece of work” (e.g., perform a function or execute a business process). Neither of these worlds is natively familiar with the potentiality and dispositional nature of capabilities. The military are more advanced in their capability thinking. However, we have observed a tendency for them to mix up capabilities and resources, e.g. calling an aircraft carrier a capability (perhaps betraying the military’s obsession with hardware), rather than a resource (or collection of resources) that supports a capability like “Power Projection”.
Nevertheless, even if a capability map is too ‘functional,’ it can still be useful and offer a way for people to adapt to and adopt the concept. Just make sure it does not depend on any specific technology implementations or organization structures and stays focused on the ‘what’ rather than the ‘how’.
Our advice is to go back to the roots of Business Architecture and the capability concept and use it as you originally intended: Describe what the enterprise does or can do, in other words, its potential. That’s what gives it strategic relevance. Business functions performed by the various parts of the organization can contribute to realizing these capabilities but don’t create both a detailed capability map and an equally detailed business function map that covers the same ground. It is advisable to use them at their abstraction levels within a joined-up structure, e.g., using capabilities at the topmost two or three levels to express the high-level abilities of the enterprise.
Use business functions for more detailed levels, closer to implementation, to express the concrete activities you perform to deliver these higher-level abilities. In this way, different parts of the organization may also have their own distinct business function structure to deliver the same capabilities. If you then relate the various other operating model elements, such as the people (e.g., departments, teams, roles), processes, technology, and information to these business functions, you create traceability between capabilities and their realization(s).
Now you know how to relate a Capability Map to the operating model and which pitfalls to avoid when collaborating with different stakeholder groups. This was just one of the blogs in our series, which aims to show you how Business Architecture and Capability-based Planning help you support strategic planning and decision-making in your enterprise.
Please schedule time with one of our experts if you want to learn more about how capabilities relate to your operating model. We have a wealth of experience in enterprise and business architecture and are happy to demonstrate the powerful features of our Bizzdesign Horizzon platform, which supports these disciplines.
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.
Managing Consultant at Bizzdesign
Bernd has held various roles during career, including consultant, trainer, and global solutions manager. His expertise includes Business Architecture, Enterprise Architecture, Portfolio Management, and Business Intelligence, where he has guided customers in maximizing value from Bizzdesign Horizzon predominantly in finance and manufacturing sectors in DACH and EMEA region.
