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Business Capability Model

The IT Renaissance Enterprise Architecture Framework encompasses an organization’s Extended Enterprise Model and its Business Capability Model.  We define a Business Capability as the people, processes, technology, data, assets, and suppliers/business partners that provide outputs of value to its customers.as illustrated below:

Our Business Capability framework  originated from the idea of a “Value Chain” that was identified in Michael Porter’s book “Competitive Advantage”. We made two modifications to Porter’s original concept:

      

  • We broadened the definition of the components of a “Value Chain” from process to Business Capabilities, as defined above

   

  • We call it a “Business Capability Model” instead of a “Value Chain” so it doesn’t get confused with the concept of a “Value Stream” which comes from Lean/Six Sigma.

Porter defined two types of Processes in his Value Chain model:

  • Core Processes that actually make, market, sell, deliver and service the organization’s products or services; and

  • Supporting Processes that are necessary to support the Core Processes

We define an organization’s Core Capabilities in three categories:

  • Customer Facing Capabilities;

  • Internal Operational Capabilities; and

  • Supplier Facing Capabilities

So, the starting point for defining a company’s Level 1 Business Capability Model looks like this:

There are definitely patterns of Business Capability Model by Industry. However, every organization’s Business Capability Model could be unique, depending how they are organized, what parts of their Industry Ecosystem they participate in, what products and services they offer and how they go to market.

   

An organization typically has 10 to 20 Level 2 Business Capabilities in their Level 1 Business Capability Model.

Below is the Level 0 Business Capability Model we defined for a Distribution company:

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