Capability Definition

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Dragon1 Definition for Capability:
A capability is defined as the ability to do certain tasks (potentially) at a high level of performance, capacity or quality, yourself. But often with the aid of (external) resources. A capability decomposed is a strategic group of people (competences), processes and tools/technology of a system, such as a person, application or organization.

Let us define Capability

A capability is defined as the ability to do certain tasks (potentially) at a high level of performance, capacity, or quality, yourself. But often with the aid of (external) resources.

A capability decomposed is a strategic group of people (competences), processes, and tools/technology of a system, such as a person, application, or organization.

A capability can be seen as "acquired skills or competences" or something you can do because of acquired skills or competences.

Unlike an ability, function, or process, a capability is about being able to do something at a high level of performance or capacity. Often, this is only possible using other or external resources.

Example 1: To be able to run is an ability. To be capable of running a world record is a capability. Some people train or are trained to be capable of doing this. Normally, you do not run world records every day. It is something you only do when needed or when you are challenged.

Example 2: Handling customer calls is an ability. Handling thousands of calls per hour is a capability. Companies need to invest to be able to do this. And they will (need to) if it is part of their core business.

Example 3: Knowing approximately what your customers need and like (i.e., educated guesses) is an ability. Knowing exactly what your customers need and like, so they only buy from you, is a capability. A lot of effort goes into this. Not every company will succeed, but if it is part of your core business, there is no way around it.

The word 'Potentially' in the definition means that you can reach a certain level of performance, capacity, or quality, if needed.

For example, Google is capable of handling trillions of search requests. Every day, Google needs to be able to handle that, and they can and do.

With (external) resources, we mean the support of something or someone else. For example, as an organization, Google requires certain knowledge and hardware that it did not create or build itself, to be able to handle trillions of searches per day.

Let us define Business Capability

A business capability is a set of tasks or activities that a business process or business function of an organization is potentially able to perform (acquired skills or competences) at a certain level of performance (available capacity), but often at extreme level, only when it is needed.

To put it in a formula: business capability = skilled people/modern competences + lean process steps + tools & technologies; alternative: acquired skills + capacity of a business process or business function.

Often, but not always, a capability requires the use of (external) resources, like tools, technologies, other persons and organizations, their services, knowledge, and technologies.

Business Capability Map

To be able to execute your strategy (objectives, goals & initiatives) and realize your ambitions, an organization needs to build certain capabilities.

It is a common practice to visualize these capabilities in a business capabilities map.

Example Business Capability Map

What is an Ability?

Dragon1 defines an ability (being able) as what a person, system, or organization basically can do all by itself, without the mention of a performance level. An ability is a set of acquired skills (but without stating the capacity).

The abilities of humans are: talking, walking, running, and sitting.

The abilities of organisations are: product development, sales, marketing, communication, HR, logistics, and IT service management.

Business Capabilities vs Business Function

Where capability is about performance (HOW), function is about purpose (WHAT).

Organizations today identify business functions, business abilities, business capabilities, and business disabilities via business capability studies.

For example, the business function of Sales Management may need modernization. The strategy now requires online sales to be done. If the sales managers and the website cannot make online sales, the sales managers need to be trained, and the website needs to be turned into a webshop.

Once the sales managers are trained and the website is a webshop, online sales have turned from a business disability into a business capability. When 'online sales' is done (executed), 'online sales' becomes a business ability.

In practice, a business capability will be formulated more ambitiously than an everyday business function, process, or ability. For example, 24 x 7 full automated online sales in 100+ countries. That is a capability. Even though you are not doing this, it is a business capability if you could do it.

The importance of doing a business capability study is:

• 1. Identifying which business capabilities are needed because of the new strategy and new competition
• 2. Identifying the gaps with the current business capabilities, regarding skills and capacity
• 3. Understanding what partners, suppliers, knowledge, technologies, systems, and training you need to develop a business capability
• 4. Understand what it takes to turn a business capability into a business ability, or how to upgrade business abilities with it

Examples of Business Capabilities

Here follow example business capabilities that fit the Dragon1 definition for business capability:

• Google is capable of handling 300 trillion web searches every day
• Netflix is capable of providing streaming content conveniently and uniquely to over a billion people
• Microsoft and Amazon are capable of hosting a cloud for every living creature on earth
• NASA is capable of setting up a colony on Mars (pretty soon)
• Startup organizations are capable of competing with Fortune 500 corporations because of the smart usage of new technologies, like AI and (risky) investments. They need to do this to break open doors and gain entry into (frozen) markets. Fortune 500 corporations are, in turn, able to acquire startups (as they do when size, complexity, and age have turned innovation into a disability).

Business Capability Documentation Template

Dragon1 suggests the following template for documenting Business Capabilities:

• Name:
• Statement:
• Rationale:
• Required Skills:
• Required Capacity:
• Required Competences:
• Required Process Steps:
• Required Tools & Technologies:
• Literature reference:
• Internal Resources:
• External Resources:
• Owner:
• Workflow Status:
• Version:
• Source:

Examples of Non Business Capabilities

Often, the notion is that the business functions, business abilities, business processes, or business activities are business capabilities, but that is not true. They are nothing special, any organization does them, so they do not at all uniquely define your organization.

Below, business processes and business functions are often mistaken for business capabilities.

• Marketing
• Customer Contact
• Outbound Telemarketing
• Strategic Management
• HR
• IT Management
• Logistics

Many definitions for capability and business capability are vague or bad, and accept business processes and business functions to be labeled as business capability.

Why would you call business functions business capabilities? That would only create misunderstanding and confusion!

Definitions of Capability by Other Methods, Frameworks, and Modeling Languages

• ArchiMate 3.1: A capability represents an ability that an active structure element, such as an organization, person, or system, possesses.
• TOGAF 9.1: A capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and require a combination of organization, people, processes, and technology. For example, marketing, customer contact, or outbound telemarketing.
• BIZBOK 4.1: A capability is a particular ability or capacity that a business may possess or exchange to achieve a specific purpose or outcome.
• Bas van Gils (Strategy Alliance): CAPABILITY = CAPacity x ABILITY. - ABILITY refers to skills and proficiency in a particular area. It should be noted that ability is a relative term: one actor (human, machine, computer) may have higher proficiency levels than others. The ability level can be increased due to (formal) training and practice. - CAPacity refers to the degree to which actors (human, machine, computer) are available to use their skills to achieve a goal. Capacity can be influenced by freeing up / adding resources to the available pool. More information on the Strategy Alliance Website.
• Michael Poulin: - A business capability is the ability of an entity - person or organization - to create or deliver specific Real-world Effect (outcome) in a particular business execution context. If the context changes, yesterday's capability can vanish. The fact that you did something yesterday does not mean (itself) that you can do this tomorrow. A capability exists only if all the resources needed for capability realization are available. No resources - no capabilities; competencies/knowledge/skills are not enough for having the capability. You lose capability if you outsource it.
• Richard Hillier - A business capability is the ability to perform a business activity that is recognized as being required for success and which needs to be specifically managed

Also Read

Read more about business capabilities and the Function definitionin the resources section. Read about the Data Visualization tools

If you have comments or remarks about this Capability definition from Dragon1 or other terms, please email specs@dragon1.com.