Identifying and developing core digital capabilities is essential for business models, particularly when it comes to enabling your organisation’s digital transformation. This is where a digital capability assessment comes into play.
In this guide we’ll walk you through exactly what a digital capability assessment is and how to run one to enable business success.
What is a digital capability assessment?
A digital capability assessment is a systematic evaluation of an organisation’s digital capabilities. It’s a capability assessment that focuses specifically on understanding the maturity of an organisation’s digital skills, knowledge, behaviours, tools and processes required for achieving business goals.
Why use a digital capability assessment?
A digital capability assessment helps your organisation keep pace with the evolving trends that can make it hard to enable your organisation’s digital transformation. You need it to understand your current capabilities to be able to base your L&D and professional development initiatives on them. Without a digital capabilities assessment, you’re going into any L&D or professional development activity blindly, and won’t be able to meet your future needs.
In other words, you need to conduct a digital capability assessment to ensure that your digital capabilities and training initiatives are delivering on organisational performance.
This is why we developed the first ever performance learning management system (PLMS) here at Acorn. It’s the only solution that guides learners step-by-step to master the specific capabilities of their roles (in this case, the specific digital capabilities) that accelerate organisational performance.
Running a digital capability assessment helps in:
- Creating digital alignment and direction, by highlighting the key digital capabilities you can use to create a capability building roadmap and ensure training is directed towards achieving tangible outcomes.
- Enabling informed decision-making by providing data-driven insights you can utilise in managing training investments and resource allocation, process optimisation, and strategic priorities, maximising return on investment (ROI).
- Creating an agile and innovative workforce through incremental changes in digital behaviour and actions over time, enabling organisational transformation. It de-risks your organisation for future change in the industry and digital technologies through continuous capability building that ensures organisations are always prepared for challenges.
- Improving your customer experience, by uncovering digital practices to enhance customer experiences and maintain your competitive advantage in the market.
- Developing a sense of shared accountability and ownership of digital capabilities and learning initiatives between business units and leaders, creating a stronger digital strategy.
- Proactive capability building and continuous improvement through repeated measurement and review.
How to run a digital capability assessment
A good digital capability assessment shouldn’t just be about assessing capabilities. It’s an important tool for continuously monitoring and improving capabilities in your organisation. Generally, these tasks are represented in three main steps:
- Defining digital capabilities
- Assessing digital capabilities
- Analysing the assessment.
Define digital capabilities
You know you want to capture information about your digital capabilities, but you still need to identify which digital capabilities are most important to your business. That is, which digital capabilities will help you achieve your business strategy (hint: These are the building blocks of a digital capability framework). The first step is to define them.
When you define your digital capabilities, you need to have a grasp of their context and purpose within the organisation. Ask questions like:
- What is your organisation’s greater mission, purpose, and values?
- Where does digital capability fit into that mission?
- What value does this digital capability generate for the business, now and into the future?
- Is there demand for the capability in the market?
- Does your company have enough resources (such as information, process, or technology) to sustain the capability?
- Does your digital capability complement or compete with the current capabilities?
- What are the potential risks that could arise (such as to finances or reputation) from building the capability?
Assess digital capabilities
Now it comes to actually assessing your digital capabilities in terms of competency (or proficiency, but we’ll get to that in a minute) and maturity. You’ll need a consistent, unbiased and objective method of scoring your assessment criteria to ensure that your reporting is accurate.
How you actually collect data is up to you. Interviews, self-assessments, manager assessments, or online assessments are useful here, especially when used in tandem with each other. The more sources you get your data from, the more objective the evaluation will be, and that will help you when it comes to targeting your training investment.
There are two types of assessments you can run here, depending on whether you’re assessing digital capability in individuals or the business overall.
Perform an individual capability assessment
In individuals, capability is measured in terms of competency (also known as proficiency). Competency is a levelled scale which should indicate logical room for improvement to close the gaps between individuals’ current level of competency and their desired level of competency. For example, a three-level capability assessment might score competencies as:
- Requires development
- Meets expectations
- Exceeds expectations.
An individual capability assessment doesn’t just mean you collect responses from the individual in question. Self-assessments are useful, but aren’t necessarily objective. That’s why you should use at least two of the following capability assessments in tandem:
- Self-assessments, where employees evaluate themselves against a capability framework
- Manager assessments, where managers score employees based on objective competencies
- Subject matter expert assessments, for assessment specialist capability sets.
Evaluate capability maturity
When it comes to assessing business capability, we measure maturity, rather than competency. It’s less about identifying capability gaps and more about—you guessed it—how mature your digital capabilities are.
Like capability assessments, maturity exists as a levelled scale. It comes in five levels:
- Reactive. Digital capability performance is unpredictable and ad hoc.
- Managed. Digital capabilities are managed project to project.
- Defined. Digital capability is managed through org-wide guidelines.
- Qualitative. Digital capabilities are aligned with business processes and objectives.
- Optimised. Digital capabilities are optimised through continuous improvement and talent stability.
Ideally, you want your digital capabilities to be optimised, meaning your digital capabilities are being continuously improved upon over time. So, you can use a maturity assessment to focus development efforts the most “immature” of your digital capabilities.
Let’s say that your organisation’s digital marketing capability is unplanned and has no long-term objectives. With a capability maturity assessment you’ll be able to see that your digital marketing is only at the reactive level, allowing you to prioritise digital marketing in your L&D initiatives and enabling its progression up the scale.
Analysing the assessment
Digital transformation can’t happen without a review and analysis of your digital capability assessment. The main purposes of analysing a capability assessment are to:
- Identify areas for improvement (like improving your digital marketing capability). The industry is constantly changing with the invention of new technology, processes, and standards, which your company has to keep up with to maintain its competitive advantage.
- Assessing the effectiveness of your digital capability building efforts. Training initiatives targeting your improvement areas should enable organisational transformation through incremental changes in behaviours and actions.
You can measure success of a digital capability assessment by looking at training ROI, performing a training needs analysis, and embedding performance management in training.
The crucial thing to remember is that a capability can’t be carried out just once. They not only need to be run regularly, but reviewed regularly to ensure continuous business success.
Impacts of not doing a digital capability assessment
Digital capability affects all aspects of your business from content creation, communication, leadership and strategy. Not assessing digital capability will impact your ability to perform in these areas, as you won’t know how to optimise them for your digital strategy. For example, digital security is pretty crucial, especially if your company deals with sensitive information. Without a digital capability assessment you won’t identify whether your digital security capability needs improvement, which can leave you open to potential threats.
Developing capabilities within the workforce requires buy-in from both business units and leaders, and both parties need capability assessments to see and prioritise the key capabilities that need development. Without one, they have no direction or alignment with business priorities. In fact, 71% of managers and leaders are already misaligned with their organisation’s strategy, meaning your capability development efforts will be ineffective and a waste of time and money.
Not assessing digital capabilities also leads to the problem of not knowing your current capabilities, or even the current level (in terms of competencies or maturity) that your capabilities are at. This just creates capability gaps over time as the industry moves on without you. It also you’ll be approaching your digital capability initiatives completely blind, blocking effective digital transformation from occurring in your workforce.
This, in turn, leads to:
- Lost workforce agility and ability to proactively respond to crises
- Decreased ability to innovate, leading to a loss in competitive edge
- Poor strategic decision-making
- Inefficiently allocated resources and missed opportunities for improvement
- Lower customer satisfaction
- Decreased productivity and performance.
Key takeaways
Running a digital capability assessment is crucial in facilitating your organisation’s digital transformation. It’s a structured process of identifying, assessing, and analysing your digital capabilities to enable innovation, business sustainability, and increased organisational performance. It’s a three-step process of:
- Identifying core digital capabilities, including their purpose and contribution to your company’s mission.
- Assessing digital capabilities in terms of digital maturity for the organisation, or individual’s competencies.
- Analysing the assessment to ensure that it continues to be aligned with company strategy and adapts to changes in the market.
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