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Transformation programmes are massive undertakings – heavily reliant on time and money, and riddled with risks; but it will all be worth it to unlock those short-term wins and ever-elusive long-term strategic benefits, right?
The case for transformation is often framed as an existential one – “disrupt yourself or be disrupted”, “optimise your cost base to remain viable”, “go digital or go obsolete” – all themes that run deeper than just your position in the market. The internal aspirations of cost optimisation, productivity enhancements, operational effectiveness etc. are all highly valid but tend to be the drivers of only around half of all CXO transformation agendas.
In speaking to CXOs, the other half of transformation programmes tend to be organised around 3 outward facing drivers:
1. Exploiting new growth opps (adjacencies, new markets, export, etc.)
2. Ensuring relevance as the market evolves (new business models, digital etc.)
3. Achieving greater customer-centricity as a route to capturing growth and margin
Where does this disconnect stem from that leads to transformation programmes becoming disjointed from their initial drivers?
Simplistically, as time goes by, the weighting of external conditions (transformation drivers), design principles (operating model), and delivery programmatics shifts.
The start of the process sees the external metrics as being the holy grail; the key to everything that follows. These are then distilled into a set of design principles against which the operating model is designed; the operating model therefore acting as the blueprint for the future organisation. The delivery process then begins to track metrics against time and cost, placing dependencies on human and other resources. As time goes by, and incentives are aligned to programmatic delivery, gaps begin to form between actions on the ground, and the initial drivers for change.
This complexity scales exponentially with the size of an organisation, and which/how many op model levers are engaged. Also, add to this complexity changes in scope, cost and time overruns, the involvement of multiple transformation specialists, the need to run a BAU organisation whilst prioritising change; all exacerbating those weakened/broken links.
So, how do you re-establish the elusive golden thread?
To get the job done, there are 3 critical components:
1. Maintain a near-live/assumption driven model of the external environment: Competitors, customers, supply chains, etc. are all constantly evolving and undertaking their own transformations. The ability to gather insights, identify changes, and prioritise the impacts is critical
2. Develop a common, multi-tier language: Metrics at all levels of the programme must tie back into a common thread; benefits. Deriving programmatic activity from an overarching benefits realisation plan ensures planned delivery of meaningful value
3. Hold your vendors to account: Organisations will be operating multi-vendor, cross-disciplinary, cross-workstream transformation teams, and coherence across this is a must.
The role of a transformation office must incorporate these elements, and not just be considered a “PMO” body, focused on tracking programmatics. The mandate for any transformation office must incorporate a focus on benefits, coherence, and at its heart must protect the golden thread between the need for transformation, and the allocation of resources at a working level.
Transformation is tough, but is a necessity in an evolving market place. Advancing technology and open, global markets means there are few industries immune to disruption. It is critical to focus on value, remain nimble, and maintain control regardless of where you align on the in-house vs. augment vs. outsource scale.
Anirudh is a Principal at BCE Consulting based in London UK. Anirudh’s experience spans Strategy through to Transformation, covering Corporate and Business Unit Strategy, M&A advisory, Operating Model design, Change management and complex Programme and Project management. Anirudh’s industry specialism is across the A&D supply-chain where he has worked on various Strategy and Transformation engagements for the likes of Airbus, Babcock, Leonardo and the various arms of the UK Ministry of Defence. Anirudh holds an MBA from Warwick Business School.