is organisational capabilities

IS Organisational CapabilitiesThe source of sustained performance

A Formicio point of view

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The purpose of this slideshow is to share a point of view on the importance of developing IS Organisational Capabilities

The advent of new digital technologies – such as social media, mobile, analytics and embedded devices – requires new and different capabilities that are not yet fully understood or appreciated

In addition, the IT delivery model is changing to one that is more virtual and where the ecosystem is broadening and deepening in ways that require new and different capabilities to ensure delivery success

IT leaders need to equip their organisation with the capabilities required to meet today’s

challenges and realise tomorrow’s opportunities

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Our point of view is based upon insights

and experience that we have gained over time

The aim is to inform and inspire

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Traditional approaches to developing capabilities have focused on training, process improvement and structure

Examples include: Use of best practice templates like

ITIL, COBIT and TOGAF Process improvement with external

accreditation Technical, service and leadership

training Measurement and reporting Organisational redesign Governance Cultural change

While necessary, they are not sufficient

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Skills of individuals and maturity of processes do not

in themselves lead to sustained performance

“Ladies and gentlemen – this is the redesigned process. Any questions?”

????

An alternative approach is to focus on developingIS Organisational Capabilities

IS organisational capabilities: Include everything that is needed to

deliver an outcome of value Are not lost when key individuals

leave Are different from business

capabilities or IT capabilities Are developed through practise over

time Determine how the organisation

operates

Organisations have capabilities, individuals have competencies

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Organisational capabilities consist of shared mental

models; practices; common language,

mindsets and beliefs; shared experiences and individual competencies

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Organisational capabilities are like muscles – the more they are used the stronger they get

Examples of IS organisational capabilities include the ability to: Deliver reliable and secure IT services Manage the relationship with business

colleagues Manage a balanced portfolio of

investment programmes and projects Partner with external vendors and

partners Lead digital business innovation Upgrade IT systems and infrastructure

with no surprisesEach organisational capability delivers

distinctive outcomes of value © 2014 Copyright Formicio Limited

The stronger organisational capabilities

become the more they shape culture and

establish organisational habits

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Having the right organisational capabilities in place is key to successful strategy implementation

Existing organisational capabilities define an organisation’s current trajectory

Changing an IS organisation’s trajectory – away from its default future to a target future – requires different organisational capabilities

Having the necessary organisational capabilities in place enables an IS organisation to ‘pull’ itself from the present to its target future

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The ‘pull’ approach to strategy implementation creates a context where people can exercise their judgement and apply their

experience to change their organisation’s

trajectory

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The potential contribution of organisational capabilities can be assessed in terms of their maturity

Maturity is an indicator of knowing how and when to act appropriately

Lower levels of maturity signify a reliance on process and oversight

Higher levels of maturity signify an instinctive ability to sense and respond to changing circumstances and cultural context

The more mature an organisational capability, the greater its potential contribution to organisational success

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Levels of Organisational CapabilityMaturity

5 = Transforming: leading

transformation of the business function or enterprise, for greater business value

4 = Value-adding: making a significant contribution to business function or enterprise performance

3 = Sustained: self-sustaining, based upon shared language, frameworks and mental models

2 = Procedural: reliance on the application of procedures, manuals and training

1 = Ad hoc: not consistent and dependent upon a few individuals

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IS organisational capabilities need to be managed as a portfolio

IS organisational capabilities are one type of organisational asset

Organisational assets should be managed as a portfolio

Within the portfolio there are different asset classes, each defined by its contribution to strategy

Asset classes include IS organisational capabilities that: – Change the organisation’s trajectory

away from its default future– Sustain delivery of today’s services– Anchor the organisation to the

present, preventing change

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The aim is to have a balanced portfolio of

organisational capabilities that are aligned with strategy and actively

managed as circumstances change

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There are four ways of putting the necessary IS organisational capabilities in place

The chosen approach is dependent upon two criteria – urgency and difficulty:

Develop: through the application of best-practice frameworks

Partner: with organisations that have the required capabilities and are willing to share them

Acquire: through acquisition of other organisations with the required capabilities

Grow: organically through recruitment of individuals experienced in the required capabilities

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Urg

ency

Difficulty High

High

Low

Low

Partner Acquire

Develop Grow

The time and effort needed to put new

organisational capabilities in place is often severely

underestimated

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New organisational capabilities are difficult to understand and appreciate until they are experienced

An example of a new organisational capability, that is not yet understood or appreciated, is ‘being digital’

Being digital is different to traditional IT; it involves taking a different perspective on how the business can be digitally enabled and how digital enablement is provided

Like all new organisational capabilities, being digital needs to be experienced before it can be truly understood

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The challenge is that organisations – like

individuals – don’t know what they don’t know until they experience it, which

could be too late!

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Our point of view on IS Organisational Capabilities revisited

IS organisational capabilities:1. Are the source of sustained performance2. Determine how the IS organisation operates3. Define an organisation’s trajectory4. Are like muscles: the more they are used the

stronger they get5. Can ‘pull’ an IS organisation from its present to

its target future6. Can be assessed in terms of their maturity7. Are an organisational asset that needs to be

managed as a portfolio8. Can be developed, acquired, grown or

transferred through partnering

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Organisational capabilities are

rarely understood until

experienced

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Five questions to ask if you’re involved in developing the capabilities of your IS organisation

1. What IS organisational capabilities need to be in place to change the current trajectory and pull the organisation to its target future?

2. What is the importance and, more importantly, the target contribution of each of these capabilities?

3. How could the contribution of these organisational capabilities be best improved?

4. Which organisational capabilities currently in place have the potential of anchoring the organisation to its current trajectory?

5. How could these ‘anchoring’ organisational capabilities be best weakened or eliminated?

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The important thing is not to stop questioning.

Curiosity has its own reason for existing

Albert Einstein, 1879-1955

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The power that comes from having a shared point of view

Having a shared point of view is a powerful tool for collective leadership. It can bring clarity and balance. It can create a context where everything makes sense, people know exactly who they are, what is needed and why they’re here. Effectiveness is maximal, yet actions seem minimal. Everything flows as it should.

Developing a point of view takes time and effort, but the outcome will be worth it.

The Formicio Team

© 2014 Copyright Formicio Limited

14© 2014 Copyright Formicio Limited

We work with people who want to improve their organisation future by delivering transformational change

Specifically we can help you: Explore alternative futures that are not only better, but

achievable Establish the conditions for successful transformational change Develop capabilities needed to ‘pull’ your organisation into an

improved future.

One of our specialist areas is IT transformation

This is an Insight presentation by Formicio

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For further information contact ...

© 2014 Copyright Formicio Limited

David Trafforddavid.trafford@formicio.com

Peter Boggispeter.boggis@formicio.com

+44 (0)20 7917 2993www.formicio.com