Capability Modeling Guidelines | How to Structure a Capability Map
Capability Categories
Capability categories enable a strategic dialogue about balancing focus across different dimensions. They organise capabilities according to their contribution to the purpose of the enterprise:
Customer-facing
These capabilities are needed to deliver a product with the intended experience to a customer.
Examples: train restaurant service, railway station service
Operational
Operational capabilities are needed to create the products directly, but are often not visible to the customer. Focus on improving the efficiency of these capabilities, especially for high-volume work. Aim to perform these capabilities at industry parity below competitors’ cost.
Examples: shunting, train scheduling, track maintenance
Support
Support capabilities are in direct support of other capabilities. Aim to perform these capabilities above industry parity at competitive cost.
Examples: HR, Accounting, IT operations
Change
The previous three types of capabilities are needed to run the business efficiently. Change capabilities, on the other hand, are needed to adapt to changes in the ecosystem (new technologies, new competitors, changes in society and customers’ demands). By making them an explicit category, companies can focus their investments on an intentional run/change ratio, depending on the business domain and situation in the market.
Examples: Enterprise Design, R&D, Innovation, Product Design, Strategic Management
Using capability categories to enable a broad strategic dialogue
Capability categorisation provides insights that are not available when examining capability areas, groups, or specific capabilities alone.
- “Customer-facing” enables capability discussions around differentiation and customer experience.
- “Operational” makes clear where to optimise for efficiency and enables the calculation of production costs.
- “Support” fosters a dialogue about which activities to centralise as shared internal services.
- The "Change vs. Run" balance is crucial for discussions about innovation vs. operational excellence.
Capability categories create natural groupings for leadership attention as they enable a broad strategic dialogue of alignment and balance per category. Benchmarking capability categories and focussing your resource allocation between these different categories enables strategic discussions that greatly affect your business model and help to discuss questions like:
- “What are we currently doing to provide a convenient customer experience? Is this enough?”
- “Shall we focus more on changing than running the enterprise?”
- “Shall we invest more in our support capabilities to make our operational capabilities more efficient?”
Practical Tips
Use categories that best fit your business.
The categories mentioned above are recommendations that are helpful in many business domains. Feel free to adapt them to your specific context.
Examples:
- Start by using established categories (e.g., “Management”) and transition to more meaningful categories as people begin to accept them.
- Subdivide “Operational” or “Customer-Facing” if you want to model a high-level view of a large corporation with multiple distinctive lines of business.
Introduce change Capabilities.
Organisations are often not explicit enough about their change capabilities, assuming these activities are carried out within other capabilities. Introducing “change” as a separate category may feel unfamiliar to people in your enterprise, but it is invaluable for clearly highlighting the capabilities needed to adapt and evolve.