Capability-based Planning in 7 moves! (3/7)

Move #3: Asses strategic importance

After the previous move…

Now, it’s time to assess the strategic importance of BCs.

Although all BCs are necessary for keeping the organization functioning, it is not true that all BCs are equally important from a strategic viewpoint. Take “Resellers Network Management” capability in telecom operators, for instance. Although it is a necessary BC for all telecom operators, the strategic importance of this BC in a certain operator depends on whether the operator adopts a mass market reach-out business model requiring management of a vast network of resellers, or it chooses a niche target market with a direct sale strategy. So the strategic importance (SI) of BCs varied between businesses and depends directly on the specific business model and strategic direction of the enterprise.

There are various approaches to measuring SI of BCs. The simplest way is to survey top managers or strategy-setting team members’ mental evaluation of SI of every single BC and quantify and consolidate the results. Alternatively, one can take a more analytical approach as follows:

1. List all strategic elements (e.g., strategies) of the organization and assign a weight to each element, if necessary;
2. Map BCs against the above list elements and assign an “impact score” to each BC – STRATEGY couple. For example, use this range:

• 0 = BC has no significant effect on the execution of the STRATEGY
• 1 = BC has a significant but indirect effect on the execution of the STRATEGY
• 2 = BC has a direct effect on the execution of the STRATEGY

1. Calculate the weighted sum of all impact scores for each BC;
2. Normalize BCs total impact ranks in a reasonable range (e.g., 0-4);
3. Visualize the results in a SI heatmap.

Following is a simple example of ML heatmap:

This heatmap shows the relative SI of all BCs in a one-page view, with red BCs showing the most important and green ones showing the least important BCs.

Let's go to the next move...