Business-capability models, business-process models, and business-organizational models define the foundation of your business partner’s business. We’ve all seen them. Some look amazingly complex, and others you wonder if they were stopped half way through the process. Together, these models are the cornerstone for tomorrow’s success, as they define the present and future state of a company.
- Business capability models: define the what
- Business-process models: describe the how
- Business-organizational models: frame the who.
Identifying business capabilities, processes, and organizations establishes the starting point to begin the design of your business and technology architecture.
We can look to W. Edwards Deming for insights about business-capability models: “Learning is not compulsory…neither is survival.” A business-capability model (BCM) defines the complete set of capabilities an organization requires to execute its business model. The model articulates a common language for change. This common language connects executive intent with specific operational activities to realize that change. The concepts and capabilities are no longer theoretical. Each capability is actionable. This transparency provides a framework for assessment and prioritization of capabilities.
Business-capability models answer these questions:
- Which capabilities are our strongest vs. our weakest?
- Which capabilities facilitate operational vs. strategic efficiencies?
- Are we investing the right resources?
- Do opportunities to lower costs exist by removing duplicate capabilities?
- Can technology enable capabilities realization?
Business-capability models can be hierarchical and provide multiple levels of abstraction depending on the level being represented. Each level has more detail than the basic elements of a strategy but doesn’t dive into the business processes. The process of visualizing a strategy sequence highlights missing capabilities or capabilities that are no longer needed for business operations.
Business capabilities are free from the constraints of how they’ll be realized; e.g., whether they’ll be done manually or by automation. This freedom allows stakeholders to focus on what’s required to achieve the desired business outcomes.
Einstein nailed the insight about business process models: “Everything should be made as simple as possible, but not one bit simpler.”
Business-process modeling (BPM) is the activity of representing processes of a company so we can study, recognize, analyze, optimize, monitor, and automate them. Accurate business-process models decrease waste and rework and improve alignment within a company through improved efficiencies.
Interested in how drone operations can improve your business? Have you explored blockchain as an approach to improve provenance? What about the impacts of machine learning or cognitive intelligence on automating existing business process for improved customer delivery? Start with business-process models. Each exploratory step into the world of innovation demands a clear understanding of your enterprise business process and its interactions. Business-process models are the building blocks of innovation.
Business-process models answer these questions:
- Which process is our first step toward change?
- How would we implement a given change to impact our processes?
- Where could automation have the biggest impact?
- Do we model business process from a human-centric or system-centric perspective?
- How do we roll out policies, standards, guidelines, and procedures most effectively for minimal business disruption?
Lewis Carroll may have unwittingly reflected on business-organizational models when he said: “If you don’t know where you are going, any road will get you there.”
Business-organizational models or structures are patterns of business organizations. Patterns illustrate how an organizational creates, delivers, and captures values. Businesses follow patterns for five reasons. First, businesses have similar external influences. Second, businesses have common internal influences and goals. Third, pattern reuse encourages and reinforces consistency. Fourth, interoperability between systems offers benefits for better outcomes. And, fifth, patterns account for the ability to deviate from a normal pattern for competitive advantages. For example, having a selection of patterns to choose from allow variation from the usual pattern.
A pattern’s characteristics of being adequately general, adaptable, and worthy of imitation frame the degree of abstraction required for an effective business-organizational model.
Business-organizational models or structures provide value by defining lines of authority, responsibilities, communications, and organizational alignment. The base of the organizational structure sets the framework for how the organization will operate and perform.
Business-organizational models answer these questions:
- Which individuals participate in decision making?
- How do roles fit into the overall system?
- How will information flow within your organization?
- How was agility designed into the organization?
- How are responsibilities delegated, controlled, and coordinated?
The organizational cliff
The disaggregation of business capabilities, processes, and organizations has made constructing business models extremely difficult. The increasing relevance of technology has made conventional business or technology towers an ineffective approach to business design.
Optimal organizations factor in which business capabilities are required, how business process creates a baseline for process improvements, and who business organizational models identify as role-essential for tomorrow. Success isn’t random; it’s architected into forward-looking companies.
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