LEVERAGE IT TO CREATE BUSINESS ADVANTAGE

Part III
Analyzing Capabilities

After strategic goals are defined, the next step is to get resources to build capabilities needed to achieve these goals. Capabilities let company fulfill the current strategy and to grow.

 A business model capability audit frames analysis in the four areas:

Analyze processes and infrastructure: includes evaluation of core operating processes to produce products, deliver services, acquire and serve customers, manage relationship with key stakeholders and deliver innovations. It also includes analysis of processes where company involved with suppliers, customers, and partners. Then a question "do end-to-end support processes  (payroll, finance, HR, etc.) enable the efficient and effective strategy execution?' should be answered. "Do participants at all levels have needed information and infrastructure required to support them? Are operations defined as the best in class for speed, quality, cost, and production? Is IT structured to form the foundation for execution? IT should not only enable firms to coordinate activities and share information within the organization and across extended network of suppliers, customers and partners, but also let have an up to day current information for executive to take action which will create value,

Evaluate people and partners:  with all core processes defined company needs to identify if there is needed expertise withing company resources and how easy it it to attract, develop, motivate, and retain the expertise to carry the core processes execution. Some questions to answer:

• Does company have the image to attracts talents?
• Are culture and incentives in place to enable leadership to engage and inspire?
• Are performance targets, measurements systems, rewards, and punishments in place to provide fairness and transparency?

Examples of salesforce quality and productivity  measurements are sales per employee, customer retention per employee, and customer profitability per employee. IT is a tool for increasing business intelligence.

Assess organization and culture: identify if organization design makes it easy or harder fro people to make decisions and get work done. Questions to answer:

• Do people have grouped into right units?
• Do they have accountability authorities to make their  decisions about the work they are doing to meet performance targets?
• Are roles and responsibilities are clear?
• Are mechanisms like formal reporting relationship, steering committees and liaison positions, information and communication systems in place to coordinate work across units?
• Does the informal culture support individuals and groups?
• Do shared visions and values enable employees and partners to work effectively together?
• Does everyone understand boundaries for decision making and actions beyond which they should not cross?

The ability to use IT to supports sharing information related to above challenges and monitor decisions and actions makes company agile and flexible to changes.

Evaluate leadership and governance: assess  the level  of company's leadership strength. Effective leaders use governance structure and system that includes:

• strategic control - observing the environment, determining strategic positions,  setting goals,  prioritizing projects and investments
• operating control - setting clear short-term objectives, and controlling business operations and projects
• effective risk management - identification and management of key risks
• effective development and management of the shared culture and values that helps in decision making

Questions to answer:

• Have leaders communicated compelling and clear vision for the future that unites people and partners around common goals?
• Do leaders at all levels balance creativity and innovation with disciplined execution?
• Can they set goals and deliver results?
• Are leaders well connected and have they demonstrated a track record of success?
• Are there a high-performing board of directors and an executive team that closely monitor strategic and operating performance/
• Do the board and executive team have a systems in place to identify and manage risks while also ensuring that the organization's culture and values guide decisions and behavior levels?

Resources:
L. Applegate, R. Austin, D. Soule. Corporate Information Strategy and Management, 2009