How to Create a BCM
Follow these key steps to build a Business Capability Model (BCM) that aligns capabilities with strategic goals and drives organisational effectiveness.
Step By Step Guide
1. Define the Purpose and Scope
Establishing a clear purpose is essential for developing a Organisation Capability Model. A well-defined purpose ensures the model delivers value by focusing on the right aspects of the organisation and aligning with its long-term objectives. Whether the BCM is used for future planning, improving efficiency, or supporting decision-making, the purpose must be clear from the start.
2. Engage Stakeholders
Engage StakeholdersIdentify Key Stakeholders Effectively engaging stakeholders is vital to creating an accurate Business Capability Model (BCM). This process ensures that the model represents the organisation's actual capabilities and reflects input from the right...
3. Identify Organisation Capabilities
Once you have engaged stakeholders and gathered input, the next step is to identify and document the core organisation capabilities. A organisation capability defines what the organisation needs to do to function and deliver value, not how it gets done or who does it. Capabilities are stable over time, unlike processes or personnel, which frequently change.
4. Validate with Stakeholders
After identifying and organising the organisation capabilities, the next critical step is to validate the model with the key stakeholders. Validation ensures that the model accurately reflects the organisation’s operations and objectives. It also helps secure buy-in from leadership and other departments, confirming that the model is useful for both strategic planning and day-to-day operations.
5. Communicate and Maintain the Business Capability Model
Once the business capability model is built and validated, it’s important to communicate it effectively across the organisation and set up a plan to maintain it over time. A well-communicated model ensures that everyone understands its purpose, how to use it, and how it fits into the overall strategic framework. Additionally, keeping the model up to date ensures that it continues to provide value as the organisation evolves.
Use Cases for Business Capability Modelling
Business Capability Modelling provides organisations with a structured approach to align technology investments and operational improvements with strategic goals. By mapping capabilities and assessing their maturity, organisations can make informed decisions to drive performance and efficiency.
In this use case, we’ll explore how an organisation can use the BCM to prioritise technology investments. By mapping existing systems to capabilities, identifying gaps, and evaluating redundancies, the model provides a clear framework for making informed decisions on where to allocate resources.
Context
The organisation is undergoing a review of its technology landscape as part of a broader digital transformation effort. Leadership has requested an analysis of the current systems in place and recommendations for where technology investments should be focused. The BCM, which provides a stable view of the organisation’s capabilities, will be used to assess how well the current technology infrastructure supports organisation operations and where improvements are needed.
Process for Using the Business Capability Model
- Map Existing Systems to Capabilities
- Identify relevant systems: Begin by identifying all the systems, platforms, and technologies currently in use across the organisation. Each system is then mapped to the organisation capabilities it supports.
- System capability mapping: Once the systems are identified, map them to the appropriate level in the capability model. For example, a CRM system might be mapped to the “Customer Relationship Management” capability, while an ERP system might map to “Financial Management” and “Supply Chain Management.”
- Document overlaps and gaps: During this process, document areas where systems overlap or where no system is currently supporting a particular capability.
- Analyse Gaps in System Support
- Identify unsupported capabilities: Once the mapping is complete, review the model to identify capabilities that lack any supporting systems. These gaps are critical areas where the organisation may need to invest in new technology or process improvements.
- Assess organisation impact: Evaluate the importance of the unsupported capabilities. Capabilities directly tied to revenue generation or customer experience, for example, should be prioritised for technology investment.
- Evaluate Redundancies
- Review overlapping systems: Identify capabilities where multiple systems are in use. Redundant systems can lead to inefficiencies, higher costs, and integration challenges. For example, if two different tools are being used for the same function (such as payroll or marketing automation), this could be a candidate for consolidation.
- Determine system effectiveness: For each system, assess whether it effectively supports the capabilities it is mapped to. Systems that are outdated, difficult to use, or not fit for purpose should be flagged for potential replacement or upgrade.
- Prioritise Technology Investments
- Develop a prioritisation framework: Based on the gaps and redundancies identified, develop a framework to prioritise technology investments. Capabilities with critical gaps or outdated systems should be prioritised for investment. Conversely, redundant systems can be considered for consolidation or elimination.
- Align with organisation strategy: Ensure that technology investments align with the organisation’s broader strategy. Capabilities that are essential to strategic goals (e.g., improving customer experience or expanding into new markets) should receive the highest priority for technology enhancements.
- Create a Technology Roadmap
- Build the roadmap: Use the insights from the BCM to develop a technology roadmap. This should outline key initiatives, such as system upgrades, new implementations, or system retirements. Each initiative should be mapped back to the relevant capabilities in the model.
- Phased implementation: Organise the roadmap into phases, prioritising high-impact areas first. For example, gaps in customer-facing capabilities may be addressed before back-office functions, depending on organisation priorities.
Benefits of Using the Business Capability Model
- Holistic view of system support: The BCM provides a clear, structured view of how technology supports the organisation’s core and supporting functions. This allows decision-makers to see where technology is well-aligned with organisation needs and where improvements are required.
- Targeted investment: By identifying specific gaps and redundancies, the organisation can target its technology investments more effectively, ensuring that resources are allocated to areas that will deliver the greatest impact.
- Improved decision-making: The model serves as a diagnostic tool for making informed decisions about technology priorities. This reduces the risk of over-investing in non-essential areas or missing critical gaps.
- Alignment with strategy: The model ensures that technology investments are aligned with the organisation’s overall strategy, supporting the capabilities that are most important to long-term goals.
Challenges to Consider
- Resistance to change: Teams that rely on existing systems, even if they are redundant or outdated, may resist efforts to consolidate or replace them. A clear communication plan is needed to address concerns and demonstrate the benefits of the changes.
- Complexity of legacy systems: Mapping legacy systems to the BCM can be challenging, particularly if documentation is poor or the systems have been customised over time. It’s important to have a clear process in place to identify these systems and understand their current role.
- Ongoing maintenance: The BCM will need to be maintained and updated as the organisation’s technology landscape evolves. Ensure that governance structures are in place to manage these updates.
This use case demonstrates how to assess the maturity of an organisation’s capabilities and visualise these maturity levels within the BCM. By understanding the maturity level of each capability, the organisation can identify strengths, weaknesses, and areas for improvement. Visualising this information on the BCM makes it easier for leadership to make informed decisions about where to invest resources and how to drive continuous improvement.
Context
The organisation aims to evaluate the maturity of its capabilities to optimise performance and align with strategic goals. This involves assessing each capability’s current maturity level, highlighting areas where processes are not fully developed, and identifying capabilities that are operating at an advanced level. The goal is to ensure the organisation has the capability strength to meet its organisation objectives, with a visual representation of maturity to facilitate decision-making.
Process for Assessing and Visualising Capability Maturity
- Define Capability Maturity Levels
- Establish maturity criteria: Start by creating a maturity scale that applies across all capabilities. A typical model includes five levels:
- Level 1: Initial – The capability is ad hoc or unstructured, with no formal processes in place.
- Level 2: Developing – Basic processes exist, but they are inconsistently applied.
- Level 3: Defined – The capability is supported by documented, standardised processes.
- Level 4: Managed – The capability is actively monitored, measured, and improved.
- Level 5: Optimised – The capability is fully integrated, with continuous improvement driving high performance.
- Tailor maturity levels to organisation needs: Depending on the industry or organisational goals, adjust the criteria for each level. For example, a technology-focused organisation may emphasise automation at higher maturity levels, while a service-based company may focus on customer-centric processes.
- Assess Current Capability Maturity
- Gather stakeholder input: Engage department heads and subject matter experts to evaluate the maturity of each capability. This will involve reviewing existing processes, systems, and outputs associated with each capability. Key questions include:
- How consistent are the processes supporting this capability?
- Are there clear ownership and accountability structures?
- Is the capability measured and regularly improved?
- Score each capability: Based on stakeholder input, assign a maturity score to each capability, using the defined maturity scale. This will give a clear indication of which capabilities are fully developed and which need further work.
- Visualise Maturity on the Business Capability Model
- Map maturity levels onto the model: Once the capabilities have been assessed, visually overlay the maturity levels onto the BCM. Use colour coding or shading to represent different levels of maturity. For example:
- Red for Level 1 (Initial)
- Orange for Level 2 (Developing)
- Yellow for Level 3 (Defined)
- Green for Level 4 (Managed)
- Blue for Level 5 (Optimised)
- Create a heatmap: A heatmap can visually represent where the organisation’s strengths and weaknesses lie. This allows leadership to quickly identify capabilities that require immediate attention or those that are performing at an optimal level.
- Analyse Gaps and Prioritise Improvements
- Identify gaps: Review the capability maturity heatmap to identify which capabilities are at lower maturity levels. These capabilities may be under-resourced, lack formal processes, or require system upgrades to improve performance.
- Prioritise capabilities for improvement: Focus on capabilities that are strategically important but show lower maturity levels. Capabilities that directly impact customer experience, revenue generation, or organisation operations should be prioritised for investment and improvement.
- Develop an action plan: For each capability that requires improvement, create a detailed action plan. This might include process optimisation, system upgrades, training, or governance improvements to move the capability to a higher maturity level.
Benefits of Assessing and Visualising Capability Maturity
- Clear understanding of strengths and weaknesses: The maturity assessment and visualisation provide a clear, structured view of where the organisation is strong and where it needs to improve.
- Targeted investments: The heatmap helps focus resources on areas that need the most improvement, ensuring that investments are made where they will have the greatest impact.
- Improved decision-making: Visualising capability maturity allows leadership to make informed decisions based on a clear understanding of capability performance. It also supports more strategic planning for future growth.
- Continuous improvement: By regularly assessing and visualising capability maturity, the organisation can track progress over time and ensure that capabilities are continuously evolving in line with organisation goals.
Challenges to Consider
- Subjectivity in assessments: Capability maturity assessments may involve a degree of subjectivity, especially when gathering input from different stakeholders. Standardising the assessment process can help mitigate this risk.
- Resistance to change: Some departments may resist efforts to improve lower maturity capabilities. A clear communication strategy that highlights the benefits of maturity improvements can help overcome this resistance.
- Maintaining the maturity model: As the organisation grows and evolves, maintaining accurate assessments of capability maturity requires regular reviews and updates to ensure the model remains relevant.
By assessing and visualising capability maturity, the organisation can focus its efforts on developing the capabilities that are critical to its success. This process provides a clear, actionable path for improvement, ensuring that resources are directed toward the most impactful areas while tracking progress over time.