Step D: Create target capability/heat map

After having defined and described the Level 1 business capabilities, they are placed in a capability map that is specific to ArchiSurance and gives a high-level overview of what the company needs to be doing to achieve its strategic goals. The organizing model that was adopted was a categorization of the business capabilities according to whether their value is strategic, tactical or operational, as shown in Figure 33. During scheduled sessions with the business the Level 1 capability map was validated and published in the company’s internal repository.

Next, interviews with the business stakeholders determined the decomposition priorities, or in other words whether some specific foundation capabilities will be further analyzed and decomposed now and the remaining later or if all the foundation capabilities will be. The majority of the stakeholders expressed interest in decomposing all Level 1 capabilities into their lower, Level 2 capabilities, as shown in Figure 34. These are also named capability groups, because they encompass the Level 3 capabilities, which are ArchiSurance’s capabilities at the lowest level of the hierarchy and are the ones that are actually implementable. In Figure 35 the same capability map is expressed in a Capability Map View, where the composition relationship is expressed by nesting the capabilities and the categorization by grouping them.

The next step in building the capability map is to establish the Level 3 capability decomposition priorities. While it is important in general to establish and document Level 3 capabilities for value-add and strategic capabilities, it was decided that, for now, the vision statement of the organization (as formulated in 7.2) should dictate the focus on a subset of capabilities as a priority. The vision statement set the strategic direction towards: i) offering the best value in products and services to the customer, ii) responding proactively to changes in the customer needs and iii) providing excellent customer service. For each of these, a number of Level 2 capabilities were selected to be further decomposed, shown in Table 24 below.

Table 24: Level 3 capability decomposition priorities

Best value offering Response to customer needs Excellent customer service

2.1 Product and service portfolio management

4.1 Market & customer understanding

5.1 Customer service strategy development

2.2 Products and services development

4.2 Marketing strategy development

5.2 Customer service operations planning & management

4.3 Marketing plans

development & management 4.4 Sales plans development & management

Following a similar approach as before, the above eight Level 2 capabilities are decomposed into a total number of 45 Level 3 capabilities. For this decomposition another level of business professionals below the management layer that worked on Level 2 decomposition was involved. This was necessary because the decomposition to Level 3 uses and encapsulates information better known to that particular level within an organization. After the decomposition, the capability map is once again published in the appropriate communication channels of the organization. Gathered feedback can help further refine and improve it before it is finalized. An excerpt from the Capability Map View for capability ‘2.0 Products and Services Development and Management’ is presented in Figure 36. It shows the decomposition of the Level 1 capability into its Level 2 and Level 3 capabilities. (Note: normally all 45 Level 3 capabilities must be

included into the same capability map, but doing so here would render the map difficult to read).

The following table (Table 25) is an example of the set of the attribute descriptors of one of the Level 3 capabilities. It is based upon Table 11 and shows the description of a business capability, together with the supporting human resources, the related high-level processes, the supporting technologies, the supporting information, and the operational metrics.

Table 25: Attribute descriptors for capability 4.1.2 4.1.2 Market opportunities evaluation & prioritization

Description: The marketing capability includes all aspects of identifying new markets to enter, sales approaches, competitive positioning, and brand management. It also includes the development and management of the company’s overall marketing and sales approach.

Supporting human resources:

•Market strategists •Market analysts •Statisticians

•Creative content developers •Media buyers High-level processes: •Market segmentation •Market targeting •Competitive analysis •Brand management •Contract management Supporting technologies:

•Market survey tools •Analytical tools •Social media •Traditional media

Supporting information:

•External market research data •Current client profiles

•Consumer trend reports •Competitor data

Operational metrics:

•New customer acquisition rates •Percent of wallet growth •Current customer loss rates

Figure 36: Excerpt from the Capability Map View of the Level 3 target capabilities of ArchiSurance The next activity is to assign a value from 1 to 5 to each and every Level 3 capability that

expresses its target maturity level. Each value will then correspond to a specific color, which will enable the heat mapping, by projecting them onto the capability map view. The color coding that was adopted depicts capabilities at maturity level 1 in red color, at level 2 orange, at level 3 in yellow, at level 4 in light green and at level 5 in deep green. An excerpt from the heat map again for capability ‘2.0 Products and Services Development and Management’ is shown in

Figure 37 and excerpts of the heat map for the other two (‘4.0 Marketing and Sales Management’ and ‘5.0 Customer Service Management’) are included in Appendix H.

Figure 37: Excerpt from the Level 3 target capability heat map view of ArchiSurance