In the housing sector, the past few years have seen some significant ‘black swan’ moments, causing many to radically rethink how they do what they do and change their strategic direction. Rent reductions, Grenfell, regulation, digitisation, new technologies and so on – each of these is disruptive in its own right but when concurrent, they create a massively complex environment where organisations must adapt to survive and thrive, often requiring new approaches.
With all this change going on, generating so much instability and uncertainty, how do we ensure that we focus on what matters most to our organisations and crucially makes us fit and ready, not only to react to those challenges, but also to actively harness and exploit the opportunities presented?
People, process & technology
When it comes to business change, three words typically dominate: people, process and technology, and in many ways, rightly so because these elements must work as one to ensure that any major change programme delivers the expected results and is ultimately successful. We all know this and confidently recite the mantra (after all, it's never just about the technology, is it?), but still we get caught out, projects fail, benefits aren’t realised and customers suffer.
Why is this? There are many reasons but during times of dramatic change, people, processes and technology are precisely the areas subject to the greatest turbulence. They are fluid; organisational structures are 'streamlined', processes are optimised and new ‘silver bullet’ technologies are deployed, each time simply a precursor for more of the same in the next iteration of change. Yet, this is where many organisations wrongly jump straight in, building on very shaky ground before really understanding what the business actually needs in order to be successful.
Trips & missed steps
Today the stakes are higher than ever (often personally) and without doubt technology has a crucial role to play in business change, from clever analytics and forecasting, building information management, GRC dashboards, artificial intelligence, machine learning and the internet of things, through to process automation and so on. These all represent huge complexity with considerable opportunities for trips and missed steps.
With all that flux, how do we create much needed stability, a solid foundation and certainty on which to execute our strategy? Enter business capability modelling, a technique derived from developments in enterprise architecture that we have been successfully using now for some time to deliver valuable, actionable business and IT insights for our customers.
The capability model is the most important artefact in enterprise architecture and in its simplest and most effective form, it can be defined as the alignment of business design, people design and technology design.
It describes the complete set of capabilities an organisation needs to execute its business strategy or fulfil its mission. New strategies might require the development of new capabilities that would show up on the capability model before they were fully developed. Some capabilities might be outsourced to different organisations to gain efficiencies or to take advantage of unique knowledge and skills while others are retained in-house because they provide critical competitive advantage.
All of this is captured in language that the business understands and not abstract technology terms; as the CEO of one of our housing customers excitedly described it, “That’s a health check of my entire business on one page.”
The primary value of modelling capabilities lies in their ability to create new insights and perspectives for anyone who wants to understand the “what?” before embarking on any change exercise. Analogous to ‘current state’ and ‘future state’ analysis, it can drive development of the target operating model. Secondly, capabilities are versatile, easily applied to high-level strategic activities, such as scenario planning or outsourcing investigations as well as lower-level operational analysis. Finally, capabilities can be linked to other elements in the planning process such as people, processes, technology, information, projects and investment.
Business capability modelling deliberately ignores how something is done (that’s the preserve of business process models) or who does it (that being the responsibility of the organisation’s structure).
How something is done inevitably changes frequently, such as through continuous improvement initiatives, and who does things changes even more so with organisational restructuring happening at regular intervals.
However, what an organisation does is typically very stable and for any given business, well-defined capabilities rarely change over time. They provide a much more robust view of an organisation than projects, processes, applications, or even strategies. Capabilities only change when there’s a significant shift in the underlying business model or mission, such as through a business transformation initiative or in conjunction with a new merger or acquisition.
The right capabilities
Not all capabilities are equal in their value to the customer and/or financial performance of the organisation. This so-called value contribution is a vital part of understanding which capabilities support competitive advantage and when combined with an assessment of current performance, clearly identifies those capabilities that require attention in support of the strategic intent.
From this baseline, many other views of organisational and technology design can be related and assessed – IT aspects such as data and infrastructure architectures but also business design through business process models and organisation structures.
Additional contextually relevant heat maps can be overlaid to look at any aspect of interest to business. Doing so creates a visually compelling view of where focus is needed to yield the greatest strategic or competitive advantage, for example through resource allocation or redistribution, project spend or system development.
Optimised customer experience
Capability modelling provides a very effective and efficient basis for optimising the quality of customer experience, such as when offering multi-channel digital products and services. Overlaying the business picture in terms of capabilities, projects, applications and metrics allows you to identify where focus is required by whom in order to optimise the experience across all touch points through all available channels.
So, in a world of uncertainty where stability and a solid foundation are critical for success, capability modelling and diagnostics can provide be powerful tools for enabling strategic and operational dialogue, creating a foundation for objective analysis, generating an understanding of how and where value is created and ultimately ensuring that organisational resources and investment are applied where they will have the greatest impact.
Martin Joy is a director of Itica.