The SCF is divided into two Divisions: the Description Division and the Procedure Division. The Description Division describes the internal organization basically as a "trade space." The Procedure Division describes the decision issues and analytic tasks which are used to manage behavior of the organization as a whole. Together, they define the organization's "managemet doctrine,"
Description Division:
On the demand side, the SCF identifies the organization's Customers and aligns Customer Requirements with Lines of Business (LOB). The Framework requires a set of operational metrics for each LOB. Each LOB has a set of business processes comprised of Tasks/Activities that service its Customer Requirements.
On the supply side, organizational Resources are generally accounted for (but Cost must be aligned with the chart of accounts) and bundled into Systems/Systems of Systems. These Systems supply System Functions/Services to meet the Task/Activity demands and the performance requirements of the LOB processes.
The role of Core Capabilities is to identify those critical areas where the whole organization must perform well and then to focus on these high payoff areas to maximize the Yield on Cost. Each capability is “valued” based on its contribution to multiple LOB processes coupled with the perceived effect on LOB operational measures. (The value of a capability increases as the number of LOB's and operational metrics it supports increases). Each Core Capability is “costed” based on the totality of the systems functions or services it employs. The result is an overall performance improvement roadmap based on a business case which uses Core Capabilities as a primary unit of management.
Procedure Divsion:
Through its policies and procedures, management docrine describes both what the key decision issues are in the organization and the analytic agenda which feeds those decision-issues. The Procedure Division is typically constructed by synthesizing "management technologies" (like Lean Six Sigma, Balanced Score Card, High Involvement Management, Process Management, etc.) into a "philosophy of organization." The role of the Procedure Divsion is to resolve the doctrine into a set of key decision issues and an analytic agenda comprised of analytic tasks whose purpose is to inform decision-making. Typically, the analytic agenda in a Procedure Division will include Operational or Effectiveness Analysis, Functional or Efficiency Analysis, Gap Analysis, Yield Analysis, Risk Analysis, Capital Planning, Budget Analysis, and Acquisition or Outsourcing Analysis.
Click here to download a template you can use to begin to build your own Strategic Capabilities Framework. Download the template, and start to fill in the cells. You will also find a couple of examples in the download. For more information on how to build an SCF, go to the Publications page and access the SCF publication there.
The purpose of the Strategic Capabilities Framework is to help management craft effective Concepts of Operations (CONOPS) by providing a disciplined overview of the organization as a whole. It portrays the organization as a "trade space" in which decisions made in one dimension can be viewed in terms of their impact on other dimensions. This helps to reduce risk and foresee unintended consequences of management decisions as they cascade through the trade space. The area called "core capabilities" is intended to help management focus its trades on those aspects of operation which optimize the Yield on Cost, in other words, those areas of operation which have the highest impact on performance of the organization as a whole. These are the areas which have the most impact on the ROM.
