Having established the design of the enterprise, expressed through an Operating Model, the next step is to assess the capabilities needed to support the operating model and the extent to which these exist already or need to be established for the operating model to work effectively.

What is a capability?

Ask yourself:

  • what comes to mind when you hear the word “capability’?
  • what is an example of a capability that first comes to mind?
  • what is another example of a capability?
  • what is an example of a distinctly different capability?

Now take a look at your definition and your examples.  What do they have in common?  How well do they match with the following simple definition?

capability = the ability to do “x”

Typically, people agree that capability indicates:

  • an “ability”
  • to “do” something

For us, this indicates that:

  • capability is an attribute of an entity
  • capability is an attribute not the entity itself
  • the entity must be able to do “things”

Too often, it seems, we treat capability as if it is a thing, when it is actually an attribute of a thing and …

Since the thing is able to do something, it is reasonable to consider the thing is a “system” that is able to do something.

How do we assess a capability?

Now that we can think of a capability as an attribute of a system, we can ask ourselves:

  • What systems do we need to put our operating model into effect?
  • How well does this system support our operating model?
  • What are the gaps in performance of each system in supporting our operating model?

For each system capability, we can assess the adequacy of its resources, processes and outputs, including giving attention to:

  • people (and their skills, competencies, knowledge, behaviour and attitudes)
  • processes (efficiency, effectiveness)
  • information (quality, currency, integrity)
  • underlying systems (in a systems of systems environment)
  • property, equipment and other fixed resources
  • products and services, outputs and outcomes


This enables us to identify needs for capability improvement and to estimate the investment necessary to improve these capabilities, establishing an investment profile for enhancing our overall capability portfolio.

Bringing it all together

Having developed and refined an assessment of the capability portfolio of the enterprise, this can prompt the refining of the articulation of:

  • the design of the enterprise
  • the needs of prospective consumers
  • the offer being made by the enterprise
  • the motivations and purpose of the enterprise

This can result in the dynamics in following diagram.


Enterprise modeling

Applying the capability step to the undertaking of the articulating the enterprise transformation lifecycle on this site prompts attention to:

  • our capabilities in developing this blog site
  • the capabilities available within the blog platform

This has led to identifying gaps in relation to:

  • incorporating more dynamic content
  • linking existing content to a graphic
  • engaging external resources to provide support in areas of key need

Enterprise transformation lifecycle

The application of the capability step takes leaders from the articulation of the operating model to the development of the capability portfolio, where the capability portfolio gives expression to the investment necessary to realise the operating model and business model in practical terms.

This takes leaders through the third step in the enterprise transformation lifecycle shown below.


Lifecycle links

In outlining the capability element of “bringing it all together”, an example has been provided for one of the key steps for any enterprise – developing an expression of the capability portfolio through which the enterprise will develop and deliver its product and service offerings.

Further elaboration can be found through the following links: