Mention the word capability and people ask you to define it. Define it and people ask you to tell them how it is different from a process. When you mention that many capabilities are named after processes they say “aha” so there is no difference. But, they miss the boat. So here goes.
A process is defined in Wikipedia as: (http://en.wikipedia.org/wiki/Business_process )
- Beginning with a customer’s need and ends with a customer’s need fulfillment, designed to add value for the customer and should not include unnecessary activities,
- Used as a tool to break down the barriers of structural departments and try to avoid functional silos, decomposed into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super-process, typically analyzed by the mapping of processes and sub-processes down to activity level.
The outcome of a well-designed business process is increased effectiveness (value for the customer) and increased efficiency (less costs for the company).
There is no Wikipedia definition for business capability. However, they do define capability in general as the ability to perform actions.
The ability to perform actions requires more than knowing process steps and actions, particularly in business. Performing actions requires thinking about different ‘resource sets’ an enterprise uses to perform the actions needed to achieve its strategy. The term resource sets sounds academic, but it’s essential in power behind the notion of a capability vs. process thinking.
A capability is the resources an enterprise uses to create outcomes.
Business process is one of those resources, but not the only one. Given that both processes and capabilities focus on outcomes, they may be defined in similar language. The figure below illustrates that while processes are important, even the most important part of a capability, they are still part of it.
A capability view uses processes in conjunction with other resources to achieve the outcome. This is in contrast to business process practices that tend to focus on making the process work, making process activities more efficient, and eliminating non-value tasks rather than realizing the outcome in the most effective and efficient way. Information is valued based on how it advances execution of the process; technologies are employed to perform tasks defined in the process. The assumption in process-based thinking is if I define the activities, control them, the results must follow – it is mathematic.
Process mathematics is well suited to environments where volatility and uncertainty are low. In these situations, process execution can create value because there results are less likely to be overwhelmed by changes in customer, economic or environment context. However, once those changes occur, process mathematics is back to the drawing board redesigning and re implementing new processes.
Thinking exclusively about processes creates rigidity leaving the enterprise vulnerable to competitors who think beyond “what has to be done” and toward “what are the different combinations of resources to create the outcome.”
This happened in the music industry. Where recording companies were perfecting their supply chain processes to meet the requirements for lower prices demanding by mass retailers like Wal-Mart only to be upset by a new configuration of resources known as Napster and eventually iTunes. The process focus contributed to a limited vision and execution.
iTunes illustrates capability thinking. First off, iTunes is build from a collection or resources: the Internet, digital rights management software, the store, the delivery vehicle (iPod) and a set of relationships with artists and record companies. Sure there is a process in there, but the process of how you sell digital media is not the focus, the outcome is the focus that lead to assembling a range of resources – most of which Apple did not own or exclusively control.
Process advocates and devotees will say that I am mincing my words, but look at the relative value of the physical supply chain the music industry invested so much in and the business value flowing through the alternative capability. There is an advantage in thinking broader and beyond processes.
The good news is that process thinking is an integral part of thinking about capabilities. It is just that capability thinking opens the door to new combinations required to create outcomes, rather than to support process steps.
So in my opinion a capability is more powerful than a process because a capability contains more than just processes and applying a capability way of thinking opens the door to creator innovation and performance enhancement opportunities.
Future blog entries will discuss how capability thinking helps enterprise achieve new combinations of performance, flexibility, integration and consistency that create core opportunities rather than core rigidities.
The purpose of this blog entry was to start the conversation and introduce the topic of business capability. Let the discussion begin.