Business Transformation the process of altering the way in which an organization does business - can be a complex and overwhelming task. However, in todays environment many organizations are forced to undertake more comprehensive transformation efforts than typical systems implementation have traditionally required. Although overall business transformation is the appropriate course of action for most firms, there are numerous roadblocks that surface during the planning and execution of these efforts. The ever-changing demands of customers, the proliferation of competition, and the increase in regulatory and compliance regulations are just some of the issues that contribute to the difficulty of a business transformation effort. However, all hope need not be lost. There are several key steps an organization can take that will increase the likelihood of success.Many organizations take on strategic, process, organizational and\/or technology projects and may complete many of these projects each year with incremental benefits. However, Business Transformation is defined as the combination of strategic, process, organizational change and technology development focused around one clear vision, resulting in a significant change in the organization and substantial financial benefits. Only when an organization has this breadth of activities combined with a focused result can an effort be deemed Business Transformation. Figure 1 outlines the key factors in identifying a Business Transformation effort.Three Phases of Business TransformationThere are three basic phases to Business Transformation: planning, execution and transformation. Although fairly simple at its highest level, each phase can be deceptively complex. This article discusses in depth the planning phase of Business Transformation. Subsequent articles will address the execution and transformation phases. PlanningThe planning phase seems as if it would be simple and intuitive - how can you execute anything without some sort of plan? Many organizations treat planning as a no-brainer and fail to invest adequate time, energy and resources. Once the wind of a Business Transformation effort gets out into an organization it is very difficult to hold back on the reins the horses want to run, they want to get going, but they really do not know where they are going, how they will get there or what they will do when they are there they just want to run.Consequently, communication to the organization is intentionally put last on a number of planning activities. Because organizations are used to doing rather than planning, it makes sense to begin communication to a broader audience only after adequate planning, sponsorship, resources and timing are worked, reworked and worked again.Understanding that there are numerous activities that need to be planned for a successful Business Transformation, there are six actions that have a greater influence on success than the others: Align with Business Strategy Establish the Proper Metrics Develop a Roadmap Involve Business Unit and\/or Functional Leaders Accumulate Key Business Transformation Resources Communication Align with Business StrategyBefore any enterprise-wide Business Transformation effort begins, there should be a clear understanding of what the Business Transformation effort is proposed to accomplish. Alignment with an established business strategy and the goals of that strategy is the key for the Business Transformation to be successful. Establishing a mission statement for the transformation effort allows the organization to explicitly state how the Business Transformation effort will accomplish the strategic goals. Mission statements are meant to clearly articulate the spirit of the Business Transformation effort. The Business Transformation mission should be developed and communicated by the most senior levels of leadership within an organization to ensure alignment across business units and functional areas, as well as give the statements the executive weight needed.Typical Business Transformation mission statements include both a statement about the business strategy: become more customer centric; and a statement on how the transformation effort will enable the strategy: by developing processes and supporting tools that enable a differentiated customer experience. Please note that the mission statement of a Business Transformation should not be all-encompassing, such as installing an enterprise-wide technology system, pursuing a large new client or customers, or the development of a shared-service organization.Failure to align a Business Transformation effort with business strategy can be disastrous. During one Business Transformation engagement, the client focused on their organization becoming more customer-centric, even though that was not the adopted business strategy. After significant strategic, process and technology efforts and investment were completed, all with the customer-centric mindset, the organization declared their strategy to be operationally efficient, almost the complete opposite of customer-centric. Processes and technologies needed to be reworked in order to support the shift in strategy. Had the sponsors of the Business Transformation effort aligned the effort with the strategy and\/or demanded that the strategy be explicitly stated, the organization would have saved both the programs reputation and millions in investment. Establish the Proper MetricsOnce the alignment to the business strategy is complete the appropriate metrics for the Business Transformation can be established. Unfortunately, many organizations limit these metrics to project-based or execution-based metrics such as: on-time on-budget, user adoption, user satisfaction, and so on. These project-based metrics fail to capture the breadth and intent of the Business Transformation effort. In addition, project-based metrics usually do not effect more than the program team, discounting the importance of business leaders involvement. Due to the substantial investments in Business Transformation efforts, metrics need to be tied to business, operational and financially-based metrics such as market share, new product penetration, productivity improvements, process efficiencies, return on investment, revenue and profitability increases, etc. in addition to the project-based metrics.Operational and financial metrics need to be established before any official investment is expended. Specific Key Performance Indicators (KPIs) need to be set at the onset of the program. More importantly, the KPIs need to be sponsored and supported by senior leadership. At most organizations, it is senior leadership that has the authority to make sweeping strategy, process, organizational and technology changes in their respective business and\/or functional units. Senior leadership needs to sign on the dotted line for the Business Transformation KPIs. Only when this commitment and sponsorship occurs should further investments be made in the effort.One important note, KPIs must be directly linked to the Business Transformation effort. For example, at one client engagement, the client had already established a customer growth KPI of 5 percent without Business Transformation efforts. To take credit for that 5 percent would not be an accurate measure of the success of the program, so an additional 2 percent of customer growth was agreed upon as the uplift from the Business Transformation effort.Develop the RoadmapNot to be confused with a project plan or program charter, the roadmap is a high-level outline of the major activities that must be accomplished in order to enable the mission statement and meet the KPIs established for the transformation effort. Successful Business Transformation efforts need to have a combination of quick wins and longer term benefits. Quick-wins can include the implementation of interim technology solutions, or the implementation of new process steps in areas of significant inefficiencies. Longer term benefits are generally linked with the overall mission and metrics discussed previously. An important note, quick wins usually can be implemented in parallel with the longer term effort. Another way to think of this dual effort is while the organization is striving for long term capabilities to work stronger, they can execute on components of the Business Transformation to work smarter and work faster (see Figure 2).When developing the roadmap it is important to logically group enhanced and new capabilities to deliver distinct value over time and not attempt to accomplish a big bang transformation. In addition to the Business Transformation effort itself, the Roadmap should include dependencies with other enterprise initiatives or events. Typically, roadmaps include coordination and collaboration across business and\/or functional units strategic plans, annual budgets, annual operating plans and so on. This integration of transformation effort and strategic planning is another touchpoint to ensure the effort is in alignment with business strategy and goals.Involve Business Unit and\/or Functional LeadersThe alignment to business strategy and the development of the metrics and roadmap have most likely occurred at a fairly senior level within the organization. Usually these activities include the senior leaders from multiple business units and across functional areas. Alignment of this leadership level is critical, but equally important is the involvement of the next level of leadership and management. Unless the business and\/or functional leaders are involved with the program in at least a part-time capacity the effort is destined to fail. Involvement of the leaders is more than attending steering committee or status meetings on the programs progress, it is getting involved in many of the day-to-day activities of the program and management of the business unit resources dedicated to the effort.During a particularly difficult Business Transformation effort at a financial services firm, key senior leadership from the sales and service organizations where not intimately involved. Although they participated in monthly status meetings, they never had any ownership in the program. Rather then dedicating the needed time and effort, they delegated the tasks and decisions to lower-level managers who had no authority to make the decisions necessary to keep the Transformation progressing. Repeatedly, decisions made by the lower-level managers were overturned by senior managers or not supported by senior leadership. This issue could have been addressed if the Transformation was initially aligned to the business strategy and metrics were established to tie senior leadership compensation to the Transformations success.Accumulate Key Business Transformation ResourcesNo Business Transformation can succeed without the appropriate resources dedicated to the effort. Again this statement may be fairly obvious, but due to day-to-day business and\/or customer pressures, many organizations are reluctant to commit their best and brightest. This reluctance is primarily because senior leadership fails to view Business Transformation as something more than a large project. Again, there is a common theme if the transformation is tied to the business strategy and the Business Transformation program is critical in enabling that strategy, the appropriate attention will be paid to the program. If it is clear to senior leadership that the Business Transformation effort will lead to a new way of operating in the future, they are more apt to dedicate the resources. Additionally, as outlined by the development of the Roadmap quick-wins can also build excitement and commitment.In order to support a Business Transformation effort properly, the organization must be willing to back-fill resources and account for this additional investment in the overall business case. Additionally, Transformation effort incentives need to be established. The team needs to understand and be rewarded for their success and dedication to the effort. Business Transformation must be the number one priority for dedicated resources.Finally, what exactly does dedicated mean? Resources allocated to the effort should be dedicating approximately 80-100 percent of their time. The key to a successful team structure is that members of the team delegate their day-to-day roles and responsibilities, but do not disengage from their business unit or functional area. It is important that team members retain these relationships throughout the Transformation effort and attend business unit and\/or functional area formal and informal meetings. This will allow the Business Transformation resources to provide updates on the progress and\/or challenges of the Transformation effort.CommunicationAlthough the steps in the planning process are sequential in nature, communication needs to occur throughout. As each step in the planning process becomes defined, whether it be the mission statement or the dedication of resources, the remaining organization needs to be intimately aware of the activities.Successful Business Transformation efforts combine a combination of push and pull communication methods. Typically communication is sent to the entire organization weekly or bi-weekly, depending on the phase of the effort. The communication highlights the key accomplishments, tasks to be completed the following period, examples of how the enterprise in general can aid the transformation effort and an update on the metrics. Pull communications include an internal knowledge repository (an intranet, for example) that includes all non-sensitive deliverables, the roadmap, metric dashboard and other program management documents.One rule of thumb that has been successful is the 3 Cs of communication concise, consistent and constant. If communications to the organization are not a burden to read and understand (concise), contain messages that align to the goals of the transformation (consistent) and are delivered on a regular basis (constant) the enterprise should be well informed of the progress and challenges of the business transformation effort.ConclusionAs with any major effort, planning is a critical step; however with Business Transformation this phase is even more critical. Many Transformation efforts have failed because adequate planning was not completed. The desire to do something overrode the prudence to plan. Taking the time and investing in the planning phase will lead to a better organized, better aligned and better staffed Business Transformation effort. Additionally, the discipline established during the planning phase most likely will be carried out during the execution and transformation phases. In subsequent articles, you will learn the key factors that make the Execution and Transformation phases successful because as we all know the best laid plans sometimes are not enough.