Business Capability Mapping for Real Estate

1. Building a Business Capability Map for Real Estate www.capstera.com 1

2. Transform your real estate organization through capability- based planning. Organizations face unprecedented challenges in today's ▪ dynamic real estate market: digital transformation pressures, changing customer expectations, market volatility, and intensifying competition. Success requires a clear understanding of organizational capabilities and how they align with strategic objectives. A Business Capability Map provides the architectural ▪ foundation for strategic transformation in real estate firms. By documenting what your organization does (capabilities) separately from how it operates (processes, systems, organizational structure), capability mapping creates a stable reference point for investment decisions, transformation initiatives, and strategic planning—enabling your real estate business to adapt and thrive in an evolving marketplace. www.capstera.com 2 2

3. The Foundation of Capability-Based Planning 1 Business capability mapping fundamentally changes how real estate organizations approach transformation by focusing on stable capabilities rather than volatile organizational structures or technologies. This architectural approach provides clarity and structure to complex transformation efforts. ▪ Strategic Alignment: Business capabilities provide a direct connection between corporate strategy and operational execution, ensuring investments support strategic objectives. ▪ Common Language: A capability map establishes a shared vocabulary that bridges communication gaps between business and technology stakeholders in the real estate ecosystem. ▪ Stable Foundation: Unlike processes or technologies that change frequently, capabilities remain relatively stable over time, providing an enduring foundation for transformation planning. ▪ Investment Focus: Capability assessment reveals where investment will deliver maximum strategic value, preventing scattered or misaligned initiatives across the real estate value chain. ▪ Complexity Navigator: The capability perspective simplifies the complexity of real estate operations into manageable, understandable components that can be systematically addressed. www.capstera.com 3

4. Understanding Business Capabilities in Real Estate 2 Business capabilities represent what a real estate organization does to deliver value, independent of how those activities are performed. This distinction is crucial for effective capability mapping and strategic planning. ▪ Definition Clarity: A business capability describes what a real estate organization does (the "what") rather than how it performs activities (processes), who performs them (organization), or which tools are used (technology). ▪ Outcome Orientation: Capabilities focus on business outcomes rather than activities, connecting directly to the value created for customers, investors, and other stakeholders. ▪ Hierarchical Structure: Capabilities are organized hierarchically, from Level 1 (most abstract) to Level 3 or 4 (most detailed), allowing for appropriate depth based on planning needs. ▪ Cross-Functional Nature: Capabilities often span multiple departments, revealing interdependencies that might be overlooked in traditional organizational analyses. ▪ Capability Components: Each capability comprises people, process, information, and technology dimensions that must be aligned for the capability to perform effectively. www.capstera.com 4

5. The Real Estate Capability Landscape 3 The real estate industry encompasses a unique set of capabilities that reflect its distinctive business model, value chain, and market dynamics. Understanding this landscape is essential for effective capability mapping. ▪ Core Real Estate Capabilities: Property acquisition, development, marketing, leasing, sales, property management, and investment management form the foundation of real estate operations. ▪ Supporting Capabilities: Finance, human resources, legal, and information technology capabilities enable core operations but aren't unique to the real estate sector. ▪ Strategic Capabilities: Market intelligence, portfolio optimization, customer experience, and sustainability management represent areas of potential competitive differentiation. ▪ Emerging Capabilities: Digital twin creation, predictive analytics, ecosystem orchestration, and platform business models are reshaping the future of real estate operations. ▪ Industry-Specific Nuances: Real estate capabilities often have unique characteristics based on property type (residential, commercial, industrial) and business model (development, investment, services). www.capstera.com 5

6. The Capability Mapping Process 4 Creating a comprehensive business capability map for a real estate organization requires a structured approach that balances thoroughness with practicality. This systematic process ensures complete coverage while maintaining stakeholder engagement. ▪ Scope Definition: Clearly establishing the organizational boundaries, level of detail, and strategic focus areas frames the mapping exercise and prevents scope creep. ▪ Research Foundation: Gathering industry reference models, existing documentation, and strategic materials provides a starting point that accelerates the mapping process. ▪ Collaborative Development: Engaging cross-functional stakeholders through facilitated workshops ensures comprehensive coverage and organizational buy-in. ▪ Iterative Refinement: Starting with Level 1 and progressively decomposing to deeper levels allows for stakeholder validation and course correction throughout the process. ▪ Visualization Creation: Developing clear, accessible visual representations of the capability map makes the information usable for different stakeholder groups and purposes. www.capstera.com 6

7. Did You Know According to Gartner, organizations that use capability- ▪ based planning are 76% more likely to achieve their strategic transformation objectives than those using traditional planning approaches. www.capstera.com 7

8. Level 1 Capabilities for Real Estate 5 Level 1 capabilities provide a strategic view of the major functional areas within a real estate organization. This high- level perspective creates the framework for more detailed mapping. ▪ Strategy & Planning: Encompassing market analysis, portfolio strategy, investment planning, and corporate development capabilities that set direction for the organization. ▪ Customer Management: Including customer acquisition, relationship management, experience design, and service delivery capabilities across the customer lifecycle. ▪ Property Lifecycle: Covering acquisition, development, marketing, leasing/sales, and management capabilities that form the core real estate value chain. ▪ Asset & Portfolio Management: Comprising valuation, performance monitoring, optimization, and disposition capabilities that maximize portfolio returns. ▪ Enterprise Support: Containing finance, human resources, legal, technology, and other capabilities that enable core business operations. www.capstera.com 8

9. Decomposing to Level 2 and 3 6 Deeper capability levels provide the detail necessary for effective transformation planning, revealing nuances specific to real estate operations and strategic priorities. ▪ Property Acquisition Decomposition: Breaking down into market research, opportunity identification, due diligence, negotiation, and closing capabilities reveals specific areas for process optimization. ▪ Property Management Detail: Decomposing into tenant relationship management, maintenance, financial administration, and compliance capabilities highlights potential technology enablement opportunities. ▪ Customer Management Breakdown: Dividing into prospect nurturing, transaction support, relationship development, and retention capabilities identifies experience enhancement possibilities. ▪ Financial Management Specificity: Detailing budgeting, accounting, reporting, treasury, and investment analysis capabilities exposes potential for analytics maturity advancement. ▪ Digital Capability Elaboration: Specifying digital marketing, virtual touring, online transaction, and digital twin capabilities reveals areas for digital transformation investment. www.capstera.com 9

10. Assessing Capability Maturity 7 Capability assessment brings the map to life by evaluating current performance and identifying improvement opportunities across the real estate value chain. ▪ Maturity Dimensions: Assessing capabilities across dimensions such as process efficiency, technology enablement, resource adequacy, and performance measurement provides a comprehensive view of current state. ▪ Scoring Methodology: Establishing clear, objective scoring criteria (typically 1-5 scales) with real estate-specific examples ensures consistent evaluation across the organization. ▪ Heat Map Visualization: Creating visual representations of assessment results highlights patterns, clusters of weakness, and potential opportunity areas for transformation focus. ▪ Gap Analysis: Comparing current maturity against target levels required for strategic success reveals priority investment areas in the capability landscape. ▪ Competitive Benchmarking: Evaluating capability maturity against industry peers and leaders identifies potential competitive advantages or disadvantages in specific capability areas. www.capstera.com 10

11. Capability Prioritization for Investment 8 Not all capabilities deserve equal investment. Strategic prioritization ensures resources flow to capabilities with the greatest impact on real estate business outcomes. ▪ Strategic Alignment: Evaluating how capabilities contribute to corporate strategic objectives identifies those most critical to organizational success in the evolving real estate marketplace. ▪ Customer Impact: Assessing how capabilities affect customer experience and satisfaction reveals those most visible to clients and tenants, often deserving priority attention. ▪ Financial Contribution: Analyzing how capabilities drive revenue generation, cost management, or asset value appreciation identifies those with greatest bottom-line impact. ▪ Risk Exposure: Identifying capabilities with significant compliance, safety, or reputational risk highlights areas where maturity gaps create organizational vulnerability. ▪ Differentiation Potential: Determining which capabilities offer potential competitive advantage helps focus investment on areas that create market differentiation rather than just operational parity. www.capstera.com 11

12. Did You Know A study by MIT Sloan found that real estate firms with ▪ mature business architecture practices (including capability mapping) achieved 25% higher ROI on technology investments compared to industry peers. www.capstera.com 12

13. Connecting Capabilities to the Technology Landscape 9 Business capabilities provide the ideal framework for rationalizing the application portfolio and guiding technology investments in real estate organizations. ▪ Application Mapping: Connecting each business capability to its supporting applications reveals redundancies, gaps, and integration needs across the technology landscape. ▪ Technical Debt Identification: Capability-based analysis highlights where aging systems or fragmented architecture impede important business capabilities, creating investment priorities. ▪ Build vs. Buy Decision Support: Understanding capability criticality and differentiation value informs whether to develop custom solutions or leverage industry platforms for specific functions. ▪ Integration Prioritization: Capability dependencies reveal where system integration delivers highest business value by enabling end-to-end processes across the real estate value chain. ▪ Technology Roadmap Development: Capability maturity gaps and strategic importance create a logical sequence for technology investments aligned with business priorities 13 rather than technical factors. www.capstera.com 13

14. Capability-Based Transformation Planning 10 The capability map provides a powerful foundation for structuring and sequencing transformation initiatives across the real estate enterprise. ▪ Initiative Definition: Capability gaps translate into clear, outcome-focused transformation initiatives with defined scope and measurable business objectives. ▪ Dependency Management: Capability relationships reveal logical sequencing requirements, ensuring foundational capabilities are addressed before dependent capabilities. ▪ Resource Allocation: Capability-based planning helps balance investments across different parts of the real estate value chain based on strategic importance and current gaps. ▪ Transformation Roadmap: Organizing initiatives by capability creates a coherent transformation roadmap that connects disparate projects to an overarching capability evolution plan. ▪ Benefits Tracking: Capability metrics provide a framework for measuring transformation outcomes in terms of improved operational performance and strategic contribution. www.capstera.com 14

15. The Value of Pre-Built Capability Maps 11 Starting with a pre-built, industry-specific capability map dramatically accelerates the mapping process and provides a comprehensive foundation that can be customized to your organization's unique needs. ▪ Time Acceleration: Beginning with an established real estate capability model reduces mapping time from months to weeks, allowing faster transition to value-adding assessment and planning activities. ▪ Completeness Assurance: Industry reference models incorporate capabilities that might be overlooked in internal development, ensuring comprehensive coverage of the real estate value chain. ▪ Best Practice Integration: Pre-built maps embed industry best practices and standard capability definitions, elevating the quality of your capability model beyond internal knowledge. ▪ Customization Efficiency: Adapting a reference model to your specific organizational context provides both standardization benefits and alignment with your unique business model. ▪ Resource Optimization: Leveraging external expertise through a pre-built map reduces the internal resource commitment required for capability identification and definition. ▪ Risk Reduction: Starting with a proven model reduces the risk of structural flaws or gaps that might compromise downstream transformation planning and execution. www.capstera.com 15

16. Operationalizing the Capability Map 12 A capability map delivers value only when actively used across the organization for decision-making, planning, and communication in ongoing real estate operations. ▪ Governance Integration: Embedding capability-based thinking into investment approval, project prioritization, and strategic planning processes ensures sustained use of the capability perspective. ▪ Leadership Alignment: Educating executives on capability- based management creates leadership advocates who reinforce the approach through consistent messaging and decision-making. ▪ Capability Ownership: Assigning clear ownership for each capability establishes accountability for performance management and continuous improvement across the capability landscape. ▪ Regular Assessment Cycles: Establishing periodic capability maturity reassessment creates visibility into progress and highlights emerging gaps as the real estate market evolves. ▪ Capability Communities: Creating forums for practitioners across different capabilities facilitates knowledge sharing and cross-functional collaboration on improvement initiatives. www.capstera.com 16

17. Did You Know McKinsey research indicates that pre-built industry ▪ capability models can reduce mapping time by up to 70% while increasing comprehensiveness by 30-40% compared to starting from scratch. www.capstera.com 17

18. Extending the Capability Map 13 Once established, a capability map can be extended in various dimensions to increase its value for real estate transformation and strategic planning. ▪ Customer Journey Connection: Mapping capabilities to customer journey stages reveals how capabilities collectively create customer experiences across the real estate lifecycle. ▪ Process Alignment: Connecting business processes to supporting capabilities shows how operational activities collectively deliver capability outcomes and where process redesign should focus. ▪ Data Mapping: Linking data domains and entities to capabilities creates visibility into information requirements and helps prioritize data governance and quality initiatives. ▪ Innovation Planning: Using the capability framework to organize innovation initiatives ensures new technologies and approaches address strategically important capabilities. ▪ Ecosystem Enablement: Extending capability thinking to partners and suppliers reveals where ecosystem relationships can enhance capability delivery or create new business models. www.capstera.com 18

19. Common Pitfalls and Success Factors 14 Awareness of typical challenges in capability mapping for real estate organizations helps ensure project success and maximum value realization. ▪ Scope Management: Avoiding the temptation to map at too detailed a level initially prevents the project from becoming overwhelming and ensures completion of the baseline map. ▪ Business Engagement: Securing active participation from business leaders rather than delegating to technical staff ensures the map reflects business reality and strategic priorities. ▪ Capability vs. Process Confusion: Maintaining clear distinction between what the organization does (capabilities) and how it operates (processes) preserves the strategic value of the capability perspective. ▪ Implementation Focus: Moving quickly from mapping to assessment and action planning maintains momentum and demonstrates tangible value from the capability approach. ▪ Ongoing Maintenance: Establishing clear ownership and update processes for the capability map ensures it remains current as the organization and industry evolve. www.capstera.com 19

20. The Future of Capability-Based Planning in Real Estate 15 Emerging trends in the real estate industry are increasing the strategic importance of capability-based planning and creating new opportunities for competitive differentiation. ▪ Digital Transformation: As technology reshapes real estate operations, capability mapping provides the crucial framework for connecting digital investments to business outcomes and managing transformation complexity. ▪ Ecosystem Evolution: The growing importance of partnerships and platforms in real estate requires a capability perspective to identify where to build internal capabilities versus leveraging external providers. ▪ Sustainability Imperative: Embedding environmental and social responsibility into real estate operations demands new capabilities that must be integrated into the overall capability landscape. ▪ Data Monetization: The increasing value of real estate data assets requires new capabilities for data management, analytics, and insights generation that capability mapping helps identify and develop. ▪ Experience Economy: As customer experience becomes a primary differentiator in real estate, capability mapping reveals where experience enhancements require capability investments across traditional organizational boundaries. www.capstera.com 20

21. Takeaway Business capability mapping provides real estate organizations with a powerful framework for navigating transformation complexity and aligning investments with strategic priorities. By creating a stable, business-focused view of what the organization does—independent of how it operates—capability mapping bridges the gap between strategy and execution. The capability approach simplifies communication, focuses investments, reveals interdependencies, and creates a foundation for sustainable transformation across the real estate value chain. For organizations seeking to accelerate time-to- value, starting with a pre-built capability map dramatically reduces effort while ensuring comprehensive coverage and industry best practices. 21 www.capstera.com 21

22. Next Steps 1. Assess your strategic challenges to determine how capability-based planning could address specific pain points in your real estate organization. 2. Start small with a focused capability mapping exercise in a strategically important area to demonstrate value before expanding enterprise-wide. 3. Evaluate pre-built capability map options available for the real estate sector to accelerate your mapping journey and reduce implementation risk. 4. Assemble a cross-functional team combining business domain expertise with architectural thinking to lead your capability mapping initiative. 5. Develop a capability governance approach that sustains the value of capability-based planning by embedding it in ongoing decision processes. 6. Connect your capability map to current initiatives to demonstrate immediate relevance and create momentum for broader adoption. 22 www.capstera.com 22

23. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 23 www.capstera.com 23

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