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@note 23 Understanding Capability Maturity & Models 1-0


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Capability is an effective way of viewing organisations at all levels, but what is capability? How do we measure it? and how can we use capability frameworks to build and manage capabilities to target specific organisation outcomes

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@note 23 Understanding Capability Maturity & Models 1-0

  1. 1. Capability Management Series Advantage Note 23 Advantage Note 23 What is an organisations capability? (Capability Maturity, Frameworks & Management) By Declan Kavanagh Capability is a widely used and misused term when looking at organisations, individuals and processes, so what is a capability? and how can we measure, build, use and adapt capabilities to achieve target outcomes and deliverables to a required standard? How does the “Process Model” differ from the “Capability Model” In this paper we explore the concepts and introduce a model to assist you in your thinking about your own domain capabilities.
  2. 2. Capability Management Series Advantage Note 23 Contents What is Capability? .................................................................................................................................3 Capability Model.....................................................................................................................................4 Capability Maturity .................................................................................................................................6 Measuring Capability Maturity ...........................................................................................................9 Aggregate Maturity Levels................................................................................................................12 Primary Capabilities versus Fundamental & Foundation Capabilities.............................................12 Capability Building & Management .....................................................................................................14 Capability building Program..............................................................................................................14 Capability and the organisation system............................................................................................16 Capability Management implies change management ....................................................................17 Capability Maturity Frameworks ..........................................................................................................19
  3. 3. Capability Management Series Advantage Note 23 What is Capability? We use the term capability in two contexts the static context and the dynamic context. The static context: describes the ability or potential of an entity or group of entities to produce an outcome (Output) in the environment it exists in, if it was activated under certain assumptions. i.e. the potential to do something to a specific standard or level, or the entity by its existence has certain characteristics that if activated can respond to a certain level or standard. The dynamic context: describes the behaviour of the entity when activated (one or more entities act on each other) to perform at some level within its potential depending on the circumstances and environment of its activation/operation. So the first point we must be clear on when we use the word capability is in what context we mean its use is it, Static which infers a possibility/potential or is it Dynamic which infers its actual performance and outcomes at a point in time under known or unknown circumstances. So the capability of an entity is defined by its specifications, characteristics, behaviours and limits. What do we mean by an entity? This is something that exists as a discreet unit. In the context of this paper where we are looking at organisations of all types in all sectors we will interchange the term resource for entity as that tends to be a more common term and may defined an individual resource or group of resources. Resources Men: People Resources; Individuals, Teams, Groups, Departments, Units Materials: Tangible & Intangible components, sub components, raw materials, data, consumed and or processed Machines: Tools, equipment, software programs, infrastructure, capital, data, Information, Methods: Policies, Procedures, Guides, Work Instructions, Approaches, Techniques, Processes Money: Financial resources and related sources, cash, credit, credit worthiness Measurements: Indicators, Information, Signals Groups of Entities/Resources We discussed capability above in relation to an entity, each entity may have a certain ability/potential (Static and/or dynamic) which we call its capability and we measure in terms of the specification of the entity and related standards of its outcomes/outputs. We also are concerned day to day with the capability of a group of entities that come together at a point in time in a certain environment/context and are operated on and/or together to produce an outcome/output the capability of that combined group can be understood in a similar context to a single entity , however it cannot be assumed that there is some combined or summed capability of the individual entities in
  4. 4. Capability Management Series Advantage Note 23 that the group of entities will have their own unique characteristics, specifications, behaviours and limits. What we can conclude is that the entity group capability can be greater or lesser than the sum of the individual entity capabilities nor will it be limited by the limit of one or more characteristics/limits of any specific entity though that may be the case in many circumstances. Capability Model Basic Model Key Basic Model Example Model Entity Type Relationship Attribute Outcome ActualEntity 1 Attribute 7 Attribute 2 Attribute 3 Attribute 1 Entity 2 Attribute 5 Attribute 6 Attribute 4 Relationship Consequence Outcome Actual Potential Range & Limits Reject Rate Person 1 Input material compliant Experience Attitude Skills Machine 1 1000 Units/Hr Configured Calibrated ConsequenceOperator M/C set up process Latest revision Calibration check Control settings 2% 0.01% Input/output Signal/Measure Stimulus/ Operator Control
  5. 5. Capability Management Series Advantage Note 23 The relationship box indicates how entities interact and influence each other and gives an indication of the dependencies and relationships direct and indirect between entities. When looking at capability management in an organisation a good lens to use is “The systems” approach. It best helps to understand how entities relate and interact and that impact on the capability of the target being considered. A supporting view from TQM techniques (Crosby, Deming etc.) Process Model view(For example) The process model guides us overall assuring each key input and any related controls are in place , measurements are central to its success both measurements on the inputs and the outputs coupled Manufacturing Process Station 1 Sub Assy. xx Fabrication Inputs Materials: stainless steel (to Spec) Information: Job sheet Outputs Materials: conforming sub- assemblies , data on process perf. Information: Job sheet
  6. 6. Capability Management Series Advantage Note 23 with key process variables and control information. Typically a process will be designed to a specification, characterised to validate its behaviour under various allowed conditions and then monitored within limits often statistically determined which act as control signals to take action and make changes as some input or process variable or a combination are going out of specification. The process model is important when considering process design and operation, however it acts largely in a sequential manner and as output accuracy, consistency, and variances deteriorate this feeds into the system reducing a systems performance. Contrast Process model is “design and operate to specifications” , whereas the capability model is about as is “potential” and what needs to change to achieve a predictable outcomes. Or to look at it a different way Capability is a way to have a single measure for the whole of a group of interacting resources/entities with a view to producing an targeted outcome, which includes tangible and intangible variances such as behaviours, whereas a single measure for a process is a mathematical engineering calculation of the tangible characteristics of the inputs and the process itself and can only be reflected in the specification range for the output of the process. The organisations capability model So the way we think about capabilities in an organisation is in the context of resources/entities which have attributes and when they act on each other they have the potential to produce an outcome to some standard. Capability Maturity Is a measurement of the potential, normally on a Scale of 1 to 5 where one or more resources may act on each other. The measurement is determined normally by audit, assessment, observation, and review of the specific entities being targeted. The key is that there is a system of interacting entities and entity groups from the lowest level of action in the organisation that builds up to the highest level often summarised through averaging to a single indicative rating for the organisation or some unit/component of the organisation. There are many different maturity models, and in many cases they are organised into 5 levels as below. Each level is supported by descriptions of the observable characteristics for the target entity(s) being reviewed (Organisation, Process, activity, function etc.). The measurement (whether it be survey, Assessment, Audit etc.) provides the input to apply the rating or level for the target entity or entity group. Purpose of capability measurement  To understand the current capabilities at a specific level for a specific entity or set of entities.  To identify target capabilities to achieve specific outcomes and performance levels.  To identify problem causes or opportunity areas relevant to business goals  To prioritise and focus improvement investment and actions
  7. 7. Capability Management Series Advantage Note 23 (Figure above is an example of the Highest Level Maturity description for an Organisation) So how does it work? Capability is underpinned by the humans/people in the system and the actions they take. Underpinning any entity capability maturity is the underlying competence of the Resource “Men”. So if we look at a capability model is as follows. People competence underpins the model and is a unique entity in that it’s the underpinning of all entities in that people put resources in place and people determine how they are intended to
  8. 8. Capability Management Series Advantage Note 23 behave and people activate the interaction between entities/resources where people are also one of the system resource types. Relevance of Capability Measurement and levels of measurement We use the Measurement as a general term when considering capability quantification, using the 5 levels above. There are many assessment types with different objectives and outcomes. For every measurement we need to set the following:  Scope breadth  Starting point  Depth of measurement Most Capability Measurement models are descriptive, few are normative apart from the Holignment Organisational Maturity Index Scope Start point Depth Purpose of measurements (Some or all of the following).  Understand current capabilities and related potential.  Understand the entity relationships and impact of practices.  Identify improvement priorities to achieve target outcomes/performance  Set capability maturity targets  Take immediate action on potential obvious improvements highlighted
  9. 9. Capability Management Series Advantage Note 23 Measuring Capability Maturity - Survey:- Look over, look at, observe, often perceptions and attitudes. - In capability management this level of measurement is directional and the application of a true and accurate maturity measurement is inappropriate , however an indicative measure can be applied. It can often be done by questionnaire and/or interview or straight observation. Consider a survey as a quick high level review to provide direction and perhaps identify strategic management capability shortfalls. The terms of reference for entity review then to be at a high level. (Descriptive model basis) - Assessment:- Observation by expert which determines the test, to support diagnosis. Systematic gathering, analysis and use of information to draw inference about characteristics. - An assessment tends to be a broader and slightly deeper measurement than a survey, which will include questionnaire, some observation and interview process. The terms of reference tend to be more specific in detail than a survey and can provide some diagnostic validity for Organisation & Management capabilities with a view to accurate prioritisation and perhaps more detailed measurement and diagnosis at an operational level. (Descriptive model basis) - Audit:- A prescriptive approach to compare the actual against a defined standard. - An audit is normally a deep and detailed measurement on a statistical sample basis that enables a measurement accuracy inference across the whole of in scope capabilities having validated to a detailed standard some fundamental capabilities that assure the capability management and measurement process is robust and credible along with sample additional measurements, - Evaluation:- Systematic gathering, analysis and use of information from different sources to judge, infer worth and/or rate. - An evaluation is a deep and more accurate measurement than a survey, which will include questionnaire, detailed observation and interview process. The terms of reference are specific in detail. For the in scope evaluation the measurement value can be assumed precise . ( Normative and/or Descriptive model basis) - Diagnostic:- A practice or routine that helps distinguish or identify distinctive characteristics - An measures and records quantitative and qualitative of the in-scope resource/entity chain to its lowest level. It is normally focused based on earlier directional analysis and information that changes the primary front line (Primary) capabilities. Its diagnostic value gives very detailed and broad information relating to the primary entities and competencies for analysis and improvement. The terms of reference are very specific in detail. For the in scope evaluation the measurement value can be assumed precise . ( Normative and/or Descriptive model basis)
  10. 10. Capability Management Series Advantage Note 23 We have seen from Figure above the highest level of maturity descriptions which may be applied to an organisation, below we can see what the model might look like for a lower - deeper level measurement. This is a sample model that looks at the management capability downwards for “Agile Software Development Maturity” from ThoughtWorks Inc. Maturity Level Key processes relating to Agile As we can see in very general terms the statements are getting more precise as we drill down from the organisation level of understanding capabilities. Behind each cell will be the relevant detailed guidance that allows both an actual measurement, a target to be set and descriptions of the entities , their attributes or in other terms the specification of the resources at that level. The next example is an even more detailed level drill down drawn from the IVI’s IT-CMF model where we are looking at measurement at the level of diagnostic for a sample capability building block. The example used is for User Experience Design as an entity:
  11. 11. Capability Management Series Advantage Note 23 Returning to the basic Capability Model, we need to understand how do the entities relate to each other in the system and how do we connect this to the performance of the system as targeted by the organisations leadership. Capability Maturity (1 to 5) Output Performance Standard
  12. 12. Capability Management Series Advantage Note 23 Aggregate Maturity Levels As mentioned earlier in the paper you cannot add up lower level capability maturities (or building block capability maturities). However research has found that there is a correlation between lower level and higher level maturity and models are included in most frameworks which identify the relationships and dependencies. We also must understand that up a level the resources and capabilities combine into a higher level of capability that has its own influencers . Primary Capabilities versus Fundamental & Foundation Capabilities Primary capabilities are those capabilities that are front line operational capabilities, or the lowest level capabilities in an organisation. Examples are: In a Bank:- The system must have the capability when a teller is situ to accept deposits and lodge them into an account. In a Software Company:- The system must have the basic capability that when a programmer is at their workstation they know what code they need to develop, and for whom and they can develop that code (Competence, Systems, Process and Tools in place). Primary Organisation level/Management Capabilities would be the lowest level/ front line management & Control processes. In any organisation the capability to pay accurate wages , needs to assure attendance, time, salary are recorded and processed each period of payment. In fact the time recording is probably even a lower level process the ability for the employee to tell and the relevant management and support staff to know the attendance at work details for each employee. Fundamental Capabilities are those capabilities that must exist in an organisation so it has the capacity to recognise shortfalls and make improvements. These would normally be identified as having a minimum level of average maturity across some key capabilities such as:-  Customer/User/Citizen Management  Performance Management  Project/Program Management  Financial Management  Business Development  Change Management  Delivery Foundation Capabilities (Core Capabilities) are those capabilities that are based on the organisations core offering, core competence and underpin their potential to successfully operate and improve. Foundation capabilities will differ from Industry to Industry and organisation to organisation . An organisations advantage will be found in those unique capabilities they have and the highest level of maturity relevant to their peers/competitors.
  13. 13. Capability Management Series Advantage Note 23 Some examples are:-  Retail:- procurement and merchandizing  ecommerce:- on-line marketing  Social Media: Software development & Analytics  Automotive: Robotics & Automation, procurement, Process design The key to successful capability management is to identify those capabilities whose impact by changing and improving will add up in the system to achieving the target outcomes firstly and overall organisation maturity average secondly. In considering this scenario we will identify based on our starting points and progress where we want to measure capability, the scope and depth of that measurement to ensure the right primary and aggregate capabilities are improved.
  14. 14. Capability Management Series Advantage Note 23 Capability Building & Management In this section we look at the organisations system as it relates to capabilities Firstly we look at an improvement model for a Capability Capability building Program So what are the key steps in managing and building the right capabilities:- Mobilisation 1. Define Problem/Opportunity : statement of driver for change 2. Define target organisation outcomes for your capability program 3. Choose most appropriate Capability Management Framework : (Ref page XX for list) 4. Complete training/familiarisation with chosen framework: (Participants & Framework Practitioners) 5. Complete Business Case: Assign capacity, Resources, Money 6. Complete initial discovery measurements cycle (EG Survey, Assessment, Evaluation, Audit) The entities & Relationships The outcomes  Metrics Capability Assessment Improvement Planning Improvement Execution
  15. 15. Capability Management Series Advantage Note 23 7. Activate any obvious agreed improvements from discovery: don’t delay impact of very obvious improvements that can proceed. 8. Establish Capability Program Governance and Performance Standards: (Leadership & Management) 9. Agree Program Focus, Goals, KPI’s & Structure: (For Pilot, Scaling & Optimised) 10. Define target Improvements and (pilot) improvement teams : Team Charters. 11. Improvement Team Cycle (Forming, Norming, Storming, Performing) I. Training & Familiarisation II. Measurement (Additional if required) III. Plan Improvements, Changes etc. IV. Implement Improvements V. Monitor Outcomes, Measure, adjust, enhance & Report Scaling 1. Continuous Program dashboard review : Learning from Pilots 2. Re-Measurement: if elapsed time and improvement actions have impacted outcomes and capabilities, and/or to review priorities and expand scope. 3. Update Program scope, statement and targets: for scaling phase 4. Re-confirm Business Case: Assign capacity, Resources, Money 5. Start next Capability improvement cycle at organisation, unit and team levels 6. Mobilise & Support additional Improvement teams Understanding how it all adds up (Example from the Collaboration Maturity Index model) A simple overall view
  16. 16. Capability Management Series Advantage Note 23 A Process capability view Capability and the organisation system Earlier we discussed the architecture of Capabilities and the entities and their relationships. To help explore how looking at capability building is a strong approach to having a single view of all the system variables. By understanding capability coupled with an effective framework it simplifies what are complex scenarios with many interdependencies in the organisation that creates the target outcomes. Process Capability (Resources & Entities interacting) Performance range of Outputs Measurement implies benchmarking appropriate capability and related building blocks to determine the appropriate maturity level by enquiry, observation and/or testing to determine the appropriate focus and action to improve maturity and hence the output performance. Maturity Level (Range 1 to 5) Actual Potential
  17. 17. Capability Management Series Advantage Note 23 Capability Management implies change management An organisation adopts a Capability Management approach to enable the outcomes of the combined resources of the organisation achieve the best possible performance as defined in the target outcomes and performance standards. Capability Management enables the organisation identify those key capabilities that contribute to the target outcomes, understand the level of maturity for each and build or improve the right capabilities to achieve their goals. Current key Capability Maturity that reflects todays performance Target key Capability Maturity to achieve target outcomes Organisation Outcomes Gap The size of the Gap, Scope & Ambition/Strategy determines the nature of change required Transformational Transitional Incremental Change Type
  18. 18. Capability Management Series Advantage Note 23 The strategy influences how the change is approached in that leadership may decide even though the extent of the change is transformational that they wish to use an incremental approach which may be less disruptive and take longer. Alternatively the signal and manage a more rapid and structured transformation change cycle. Unfreezing – Changing-Refreezing- and then continuous incremental improvement thereafter. The nature of change required Source Innovation Value Institute
  19. 19. Capability Management Series Advantage Note 23 The principals for capability management 1. Manage as a continuous improvement and/or change program 2. Focus on those Capabilities that create or enhance the target Value 3. Choose a Framework that:- a. Is based on sound research b. Has been adopted by known Industry Leaders c. Is flexible to adapt to your organisations unique needs d. Has a detailed Body of Knowledge to guide implementation e. Has available training and Education f. Has a methodology for adoption and implementation g. Has a pragmatic tool kit , including measurement, analysis and reporting h. Has a community of users and service providers 4. Has broad commitment up/down and across the organisation 5. Pilot Capability Maturity Frameworks There are different types of Frameworks, when considering a Capability Maturity Framework you should understand there are 2 categories/groupings 1. Independently Researched and Open 2. Proprietary with limited visibility on the basis Below is a list of some of the available models many from Wikipedia, many are IT centric. Maturity model may refer to:  Organisation Development & Business: o Capability Maturity Model Integration (CMMI) o Performance Management Maturity Model o The IT Capability Maturity Framework (Innovation Value Institute & Industry consortium) o The Organisation Maturity Index (Holignment) o The Scaling Capability Index (Intelligentorg) o The Business Advantage Model (Intelligentorg) o The Collaboration Maturity Index (Intelligentorg) o The Management Capability Index (New Zealand Institute of Management)  In PM: o OPM3 (Organisational Project Management Maturity Model) o P3M3 (Portfolio, Programme and Project Management Maturity Model)  In Quality Management: o Quality Management Maturity Grid (QMMG) o Quality Maturity Model  In BPM:
  20. 20. Capability Management Series Advantage Note 23 o Process Maturity Model (Eden) o Business Process Maturity Model  In Strategy: o Strategic Management Maturity Model  In Change Management: o Change Management Maturity Model  In IT: o Capability Maturity Model (CMM, focusing on software development) o Open Source Maturity Model (for open-source software development) o Service Integration Maturity Model (for SOA) o Modelling Maturity Levels (for software specification) o Enterprise IT Performance Maturity Model o Software Product Management Maturity Model o The Testing Maturity Model o The SharePoint Maturity Model o Application Performance Management Maturity Model o Darwin Information Typing Architecture (DITA) Maturity Model o DevOps maturity model o ITIL Maturity Model  In Learning: o E-learning Maturity Model (EMM) o Mobile Learning Maturity Model o Learning & Performance Maturity Model  In HR: o People Capability Maturity Model (PCMM) (for the management of human assets) o Virtual Team Maturity Model (VTMM)  In Testing: o Testing Maturity Model (TMM) (assessing test processes in an organization) o Test Maturity Model integration (TMMi)  In Analytics: o Big Data & Analytics Maturity Model o Business Intelligence Maturity Model  In Enterprise Architecture: o enterprise Architecture Capability Maturity Model (ACMM) o Dynamic Architecture Maturity Matrix (DyAMM)  In Energy Infrastructure: o Smart Grid Maturity Model (SGMM)  In Sustainability o Sustainability Maturity Models  Supply Chain
  21. 21. Capability Management Series Advantage Note 23 o Supply Chain Maturity Model  In Social Media o Social Media Maturity Model  In Marketing o Organic Search Marketing Maturity Model  In Continuous Delivery o Continuous Delivery Maturity Model  In Support o Performance Support Maturity (PSM) Model  In PLM o PLM Maturity Model  In Security Assurance o Building Security In Maturity Model (BSIMM) o CYBERSECURITY CAPABILITY MATURITY MODEL (C2M2) o Systems Security Engineering Capability Maturity Model (SSE-CMM) o Software Assurance Maturity Model (openSAMM) Further reading on capability management Wikipedia. Leading proponents from academia and industry include:  Dorothy Leonard  David Teece  Ric Merrifield  Dave Ulrich  John Kay  McKinsey  BCG  Intel  Bain  EY