I occasionally read Nick Malik‘s blog, Inside Architecture, and his latest post about ‘Business Capability’ reminded me of IT people’s general ability to take a perfectly understandable word, such as capability, and turn it into something confusing. This is not a criticism of Nick or Paul Harmon who wrote the article, Capabilities and Processes, that promoted Nick to write – but merely used as an example to illustrate my point.
Now, IT’s definition of ‘Business Capability’ is ‘what a business does at its core‘, and its description (e.g., model) captures ‘what the business does (or needs to do) in order to fulfil its objectives and responsibilities‘. The idea is to focus on ‘what‘ an organisation needs to do, rather than the actual ‘how‘. A conceptual view, if you like. And so the discussion continues in search of the ‘what’ and what it really is.
I think the confusion around ‘Business Capability’ stems from the fact, that a noun can refer to an entity, a quality, a state, an action, or a concept. The above definition uses capability (the noun) in the meaning of an action, entity or concept, whereas ‘capability’ in its literal definition is a noun in the sense of a quality. Webster defines ‘capability’, as ‘the quality or state of being capable‘‘ – i.e., the degree to which an organisation is able to perform the ‘what’ rather than the ‘what’.
Within the management (rather than IT) literature, we find, that Grant (2002, p. 145) uses the term ‘capabilities’ in reference to an organisation’s capacity to undertake a particular activity. Similarly, Hanson (2002, p. 20) views organisational ‘capabilities’, as the capacity to deploy resources integrated to achieve a desired end state. In other words, a capability is a qualitative measure of an organisation’s skill and abilities, rather than what an organisation does – which is why they are often difficult to imitate. For example, Apple‘s capabilities in designing a new tablet are hard to imitate as evident by the poor reception of competing Android based tablets. Although the competing organisations know the required design activities (the conceptual view of ‘what’), their capacity to perform those activities are less than Apple’s.
No wonder people get confused.
Grant RM, 2002, Contemporary Strategy Analysis: Concepts Techniques and Applications, 4th edn, Blackwell, Oxford.
Hanson D, Dowling P, Hitt M & Ireland RD, 2002, Strategic Management: Competitiveness and Globalisation, Pacific Rim edn, Nelson, Melbourne, pp. 85-115.