What is Capability?

I recently gave talk at the London Scrum User Group (LSUG) describing Kanban Thinking and had a very interesting conversation about what I mean by the impact on capability. I realised I needed to think it through in a bit more detail, and this is an attempt to articulate it better.

Defining Capability

In his book Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation, Ric Merrifield used the term capability to define the outcomes which drive business performance. One of the dictionary.com definitions is that a capability is a quality, ability or feature which can be used or developed. Additionally, to be capable of something is to be predisposed to, or inclined to, which ties in with the idea that complex systems have disposition. Putting all these together, we can say that a systems capability is its degree of disposition, which can be used and developed, towards create a business outcome.

Doing the Right Thing and Doing the Thing Right

We can think of capability in two ways – that of the business, and that of the people. The business’s capability is its ability to do the right thing, while its people’s capability is their ability to do the thing right. This can be visualised in a 2×2 matrix, where ideally we want to be in the top right quadrant where we are aligning business capability with human capability.

Capability

Developing Capability

When I first described Kanban Thinking, I said that “to build capability is to develop people and knowledge as a foundation for business success. Kanban Thinking looks to develop people as problem solvers rather than their tools to solve problems”. Capability is more than just how good the flow of value is. It is also how well the flow and value can be sustained and improved over time. Simply swapping in and out different people to an existing process (flow) with existing requirements (value) will not work. Businesses are social and cognitive systems where people have tacit knowledge, and they share and use that tacit knowledge to deliver the work. That is why teams are such as core part of making an agile approach work.

Capability Teams

Feature teams are a great example of how to build capability, collaborating to delivering customer value directly. A more debatable approach, however, is the use of component teams, and the idea of capability can provide guidance on when this may be appropriate.  Where a component or architectural layer provides some direct impact on organisational capability, then it may be worth having its own team. The decision on team structure becomes one of whether the team is a Capability Team. Taking a cue from “Rethink”, a Capability Team as one whose outcomes have a resultant improvement on the business performance, as opposed to one whose activities are needed to achieve a business outcome.

An Example

A financial services organisation had a team dedicated to developing an SOA capability which would be used by a variety customer facing applications to access a common data repository. The ability to effectively manage customer data was a key capability for the organisation, and development of the data repository was a business outcome which enabled a better customer experience by providing cross-application consistency. The same organisation also had a QA team. This is not a capability because on its own it does not deliver a business outcome. Rather, it is an skill or activity required to deliver quality, and which should be built into the work performed by capability teams delivering business outcomes.

Even with the notion of Capability Teams, its not necessarily a simple black or white decision, hence the interesting conversation at LSUG. When unsure about what team structure to go with, I think the more interesting question is “how will I know if the structure is having a positive impact?” As I mentioned at the end of the post on Impact, Outcome and Output, I believe Geoffrey Moore’s hierarchy of powers offers some insights here, which I hope to expand on in a future post.  I’d also be interested in hearing of any other interesting examples of Capability Teams. Please leave a comment if you have one!

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Impact, Outcome and Output

As I alluded to in the previous post, one of the changes in thinking, and in particular language, for me recently is the idea of impact. Specifically that impact is different from outcome which is itself different from output. I’ve differentiated outcome from output for some time, as have others, but I believe impact is a further step in understanding how we approach change.

To relate the three ideas to each other, I would say that:

Outputs create outcomes which have impact.

This mapping also ties in nicely to Simon Sinek’s Golden Circle model that I have referenced before.

Outputs (or sometimes activities) are the things that we do in order to achieve something. They provide the details about what gets done, such as specific practices or implementation details. In the Golden Circle, they are the WHAT.

Outcomes are the future state we hope to achieve by completing the outputs. They provide the details about what goals we hope to achieve, such as end results or behaviours. In the Golden Circle, they are the HOW.

Impacts are the tendencies or dispositions of an outcome. They give an indication of whether the future state is a positive or negative one, without limiting the scope of what that future state might be.  In the Golden Circle, they are the WHY.

As Simon Sinek recommends with the Golden Circle, we should always Start with Why, and thus when implementing any process or product it is useful to know what impact we want to have. I have realised that the notions of Flow, Value and Capability that I refer to as part of Kanban Thinking are actually the primary impacts that I hope that a Kanban System will achieve.

  • A positive impact on flow might be one which results in earlier and smoother delivery and might be seen in a reduction in lead time or variability.
  • A positive impact in value might be one which results in a better return on investment or improved margins and might be seen in improved economic outcomes
  • A positive impact in capability might be one which results in better business performance and might be seen in improved quality, throughput, or customer and employee satisfaction.

Another recent and related influence has been Geoffrey Moore’s Escape Velocity, where he talks about a hierarchy of powers.

  • Category Power relates to the relative demand for a class of product.
  • Company Power relates to the organisation’s relative position within a category.
  • Market Power relates to the relative company power within a specific market segment.
  • Offer Power relates to the relative demand for a specific product.
  • Execution Power relates to the relative ability to outperform competition.

This has got me thinking about how impact might be the effect a change has on one or more of these powers. While flow is more aligned with execution power, value and capability are aligned to the other powers.

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