Capabilities

Company capabilities or enterprise business capabilities are what a business does and can do and is an encapsulation of end-to-end functions into an abstraction that is agnostic to the underlying process and supporting system. The capabilities of a company are the building blocks of what constitutes the enterprise and necessary to operationalize the strategic intent and achieve business results.

Not all company capabilities are the same. Not every company needs or has all capabilities. The sector, the industry, the geography, the types of products/services, the customer segments, the competitive dynamics are some of the factors that influence and shape the capabilities a company needs. For example, today’s retailers are desperate for omnichannel capabilities to compete with the e-commerce giants. On the other hand, for a B2B (Business to Business) company, while online commerce may play a smaller role, digital capabilities which optimize the supply chain – the procure to pay value chain – are extremely valuable.

Let’s distinguish various concepts:

Company Business Capabilities: In essence, a capability is an articulation of what a company does, not how it does it.

Business Process: A business process is a detailed activity of various actors and the flows that take place to consummate a business operation.

Value Streams: Value Streams are high-level stakeholder oriented flows – which are a step above detailed process maps – that reflect an outcome.

All the above are an integral part of the enterprise business architecture.

Company capabilities can be soft capabilities or hard capabilities:

Soft Capabilities Examples:

Hard Capabilities Examples:

The business capabilities of a company are of various stripes – Strategic Capabilities, Core Capabilities, Context Capabilities, Foundational Capabilities. This categorization is of relative importance and value of the capabilities, and the segmentation helps in the level of executive focus and the amount of capital allocation, among other things.