Discovering the 'Capability Model'
Why is it that two organizations implementing the same technical solution (hardware and software) can generate very different results? One implementation may be a disaster and threaten the existence of the organization, while the other generates massive, positive returns.
When we found this discrepancy in business results from common technology in 1993-96 we went back to see why this was occurring. What we found was that different organizations had different approaches to implementing projects in general, and systems projects in particular, and that there was a direct correlation between these approaches and the results consistently obtained.
Through further work we identified five measurable levels of ‘Value Delivery Capability’.
NOT a maturity model
Now models which describe maturity abound in and around IT—the SEI and COBIT maturity models are the most well known. However, these maturity models seek to improve the same processes until they are ‘optimized’.
The Value Delivery Capability model found that there was a break point between capability levels three and four where the whole foundations and thinking about projects changed. And the results changed too, increasing exponentially.
The five capability levels
At level-1 there are few repeatable project delivery processes. The organization relies on ‘heroes’ to bring the projects in. Therefore there are some successes (where the stars line up) and many non-successes, to varying degrees. Over time, the nett return on investment, once you’ve taken into account the ongoing operating and support costs, is negative.
Level-2 brings rigor. Fed up with the hit and miss approach of level-1, organizations install methodologies, governance and approval processes. These processes are rigorously enforced, almost making following the process an end itself. The results improve generating a break-even investment return. Many organizations are still struggling to get to and sustain this level of capability today.
Level-3 adapts the rigor and processes of level-2 to get even better results — a return of 1.3 to 1.5 on funds invested. Good, but not great. The highest IT maturity levels of SEI and COBIT will, by themselves, only allow you to get to this level. At least the returns are positive, but they can be doubled by changing to level-4.
At Level-4 the whole approach to projects switches from IT, project or quality-improvement to strategy and value delivery. The returns double from level-3 (to 3:1), the time taken to do projects reduces and the time and effort wasted is minimized. Organizations at level-4 can generate two to three times the returns from the same level of investment as their peers — a sustainable cost advantage.
If your organization is not at level-4 you’re giving away significant value on each and every project and leaving the potential for a competitive advantage to your competitors. For most organizations, level-4 is the target level of capability.
Level-5 is when the disciplines and approaches of level-4 are embedded in how the organization does business, competes and makes money — it is in its DNA. The returns increase exponentially again.
Determines the types of projects you can successfully deliver
The other significance of the Value Delivery Capability model is that it determines what types of projects you can successfully deliver. Large-scale, complex, innovative projects require higher levels of ‘capability’ than smaller, simpler projects. Taking on projects beyond your organization's capability to deliver is a frequent reason why so many large projects fail in organizations.
What level of capability is your organization?
So, you need to determine your level of capability, the level of capability your project demands and check that you do have the wherewithal in capability terms to deliver and realize the value. If not, don’t start.
For a complete description of the Value Delivery Capability Model, read “Value Delivery Capability — the next competitive battleground”.