Thursday, May 4, 2017

Mapping Business Competency with Digital Transformation


Organizations have to stretch out in every business dimension for driving the full-fledged digital transformation based on the set of digital capabilities and its unique business competency.

Digital capabilities are the fundamental building blocks in digital transformations with which companies can transform business models, customer experiences, operational processes, and talent development to reach the high-level business agility and maturity. Digital capabilities cut across all functional pillars. The often described attributes of business capabilities include such as robustness, speed, comprehensiveness, responsiveness, agility, improvement, sensitivity, optimization, resilience., etc. Traditional organizations are often process driven or operation oriented, but digital organizations should be capability -driven to execute business strategy and leapfrog digital transformation. The core business competency is an integrated set of capabilities contribute directly to the competitive advantage of the business, organizational maturity, enable and accelerate digital transformation.


Strategy execution takes both capabilities and disciplines: Enterprise capability management, in essence, consists of a portfolio or matrix of capabilities that are used in various combinations to execute the business strategy and achieve expected business outcomes. The success in executing a strategy depends on the level of capability maturity as well as the management assumptions that go into strategy formulation. So, what is more important and relevant is the set of business capabilities underpinned by business processes. The hyper-connecting nature of digital offers particularly fertile ground for developing dynamic and recombinant digital capabilities cross-industry ecosystems and business opportunities, in part because ways of doing business and customer expectations both tend to be more flexible than the siloed industrial age. A digital transformation is achieved via dynamic Strategy-Execution-Change life cycle management driven by a set of operational and strategic business capabilities.


The core business capabilities are an integrated set of capabilities contribute directly to the business competency and strategy management: Enterprise capability management, in essence, consists of a portfolio or matrix of capabilities that are used in various combinations to implement the business strategy and achieve outcomes. An organization or company may be in business for many years but has not matured its management practices - lack of well-defined sets of business principles and differentiated business capability. The dynamic digital organizations need to get away from letting things fall through and start creating and “integrated wholes” by utilizing the correct processes to solve complexities and underpin the core business capability. The set of core business capabilities will build the business competency and drive the digital transformation via an iterative continuum, improve strategic performance, achieve operational excellence, and gain business advantages for the long term.


Business capability mapping is about measures of “importance,” “maturity,” and “performance” attached to each capability, and mapping to strategy management: Business capabilities underpin strategy execution. Strategy management and performance management should go hand-in-hand. Define how you will measure the capability maturity as well as performance satisfaction. Ensure that these measures are quantitative, and implement whatever mechanisms you need to be able to gather the relevant information. Your measures should cover all areas that contribute to operational excellence and strategic value, including service quality, employee engagement, customer satisfaction and financial outcomes. The effective way to track the achievement of strategic goals is to cascade those down throughout the organization with the use of operational KPIs. In addition to having some kind of basic measure in each level, it's critical for the company to share that information among its primary stakeholders. Having the right performance indicators is very important, so does a well-designed scoreboard. But acting on what those indicators are telling you is vital to sustaining and improving capabilities driven business results


Organizational maturity is not just about technical excellence or process efficiency, but more about capabilities based business achievement with desired attributes such as effectiveness, agility, innovation, intelligence, and people-centricity. Digital transformation is a journey rather than a destination. At the high maturity level, organizations have to stretch out in every business dimension for driving the full-fledged digital transformation based on the set of digital capabilities and its unique business competency.


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