@note 23 Understanding Capability Maturity & Models 1-0

Capability Management Series Advantage Note 23
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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.

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

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

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

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

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

(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

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

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)

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:

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

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.

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.

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

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

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

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

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

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:

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

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

@note 23 Understanding Capability Maturity & Models 1-0

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@note 23 Understanding Capability Maturity & Models 1-0