Capability Management: Understanding the Organisation’s
Readiness for Change
The description below explains the challenge of an organisational readiness and how capability management can help to address a complex challenge and a concept to manage.
As the global economy starts to recover, there are many opportunities
for organisations that are prepared to move fast to capitalise on them. But the
downturn of the past few years, combined with stringent new regulations, has
made senior executives more risk-averse than previously. One of the main
problems preventing CEOs from initiating major new strategic initiatives with
confidence is a lack of insight and understanding into the organisation’s
readiness for change.
Why it’s so hard to get a reliable ‘big picture’ of the organisation, and how that’s affecting the speed and quality of decision-making at the highest levels. It introduces the emerging discipline of capability management to overcome these issues, and shows how Action4Value methodology and solutions is enabling capability management at some of Europe’s largest financial services organisations.
Why it’s so hard to get a reliable ‘big picture’ of the organisation, and how that’s affecting the speed and quality of decision-making at the highest levels. It introduces the emerging discipline of capability management to overcome these issues, and shows how Action4Value methodology and solutions is enabling capability management at some of Europe’s largest financial services organisations.
The Perils of 'Not Knowing'
Large enterprises run a huge risk every time they implement a new
strategic initiative.
The risk is that something important will have been overlooked in the planning stage that will cause the initiative to fail, run over time or over budget, or fall foul of regulations, laws, and codes of corporate governance or internal policies.
Many organisations see this as a fact of life. That’s because identifying every single risk and gap is next to impossible, especially if the organisation wants to move quickly. It’s simply too difficult to amass, analyse and agree on the mountains of information from across the business – and beyond – that might have some impact on how the new initiative could roll out.
The result is that major strategic programmes are implemented without senior management being fully confident that they will happen as intended, or that the outcomes will be the desired ones. The economic climate and tightening regulations have made senior management more risk-averse. They want to act, but they want to be confident that a new business model, product launch, merger, or geographical expansion will be a success from both a commercial and reputational perspective. They also want to be sure they are prioritising the right initiatives in terms of the value and return they will provide for the business.
The risk is that something important will have been overlooked in the planning stage that will cause the initiative to fail, run over time or over budget, or fall foul of regulations, laws, and codes of corporate governance or internal policies.
Many organisations see this as a fact of life. That’s because identifying every single risk and gap is next to impossible, especially if the organisation wants to move quickly. It’s simply too difficult to amass, analyse and agree on the mountains of information from across the business – and beyond – that might have some impact on how the new initiative could roll out.
The result is that major strategic programmes are implemented without senior management being fully confident that they will happen as intended, or that the outcomes will be the desired ones. The economic climate and tightening regulations have made senior management more risk-averse. They want to act, but they want to be confident that a new business model, product launch, merger, or geographical expansion will be a success from both a commercial and reputational perspective. They also want to be sure they are prioritising the right initiatives in terms of the value and return they will provide for the business.
The Emergence of Capability Management
This desire for better insight into capabilities and better control over outcomes is leading to the emergence of capability management as a management discipline. Pioneered in the defence industry, capability management is the practice of analysing the organisation’s ability to carry out a planned strategic initiative or change programme successfully, understanding the risk factors involved, and making adjustments and investments based on that insight.
What is a capability?
Organisations that have pioneered capability management have identified eight distinct elements which together make up a capability.
Those elements are:
1. Strategy: the business objective that the capability is meant to achieve
2. Requirement: the documentation of what’s needed to perform the capability
3. People: the job roles responsible for performing the capability.
4. Processes: the individual sequences of steps that describe how the capability is performed.
5. Information: the information needed to carry out the capability
6. Systems: the IT hardware and software needed to support and enable the capability
7. Products: the products or services that the capability supports
8. Regulations: the external laws and regulations affecting the capability
The Obstacles to Enterprise-Wide Capability
Management
Summary
Board-level executives want to optimise business, improve productivity and move quickly and confidently to address new business opportunities, whether through geographic expansion, introducing a new product or changing the business model. With clear insight into the entire operation of the business, they’re able to identify the best course of action and understand the risks and mitigating factors that can ensure success. For the first time, the tools are available to provide that insight into critical business operations, enabling executives in complex organisations to use a capability management approach to understand risk, analyse the impact of strategic decisions and choose the best course of action.