Business Transformation: Doing It Right (Part II)

Business transformation, the process of transforming an enterprise to better execute on a new, or significantly modified strategic goal or objective, can be a complex and overwhelming task. However, in today’s environment many organizations are forced to undertake more comprehensive transformation efforts in order to remain competitive in their industry. In the first part of this series, Business Transformation: Doing It Right! (Part I), the critical success factors of the Planning phase of business transformation were articulated, including:

• Align with business strategy
• Establish the proper metrics
• Develop a Roadmap
• Involve business unit and/or functional leaders
• Accumulate key business transformation resources
• Communication

This article provides the critical success factors for the second phase of business transformation – Execution.

Execution

Even with comprehensive and detailed plans, a dedicated resource pool of the “best and brightest,” and the clearest communications, a business transformation effort will never meet its projected goals and will ultimately stall without proper execution. The execution of business transformation efforts need to follow a distinct and sequenced set of activities. Organizations that attempt to short-cut one or two of these activities are usually not successful. During the planning phase, we stressed the importance of “holding back the reins on execution” until the planning is complete and the proper resources are aligned with the effort. Now, it is time for executive management to “loosen the reins” and let the team execute!

Similar to the planning phase of business transformation, there are several success factors which stand out, these include:

• Continuous alignment to business strategy
• Maintain a current and transparent Roadmap
• Dedication to transformation
• Program management, program management, program management

Continuous Alignment to Business Strategy

In Part I of this series, the importance of aligning business transformation with an organization’s business strategy was discussed; however alignment with business strategy is not a one-time task. Because of the magnitude of change that business transformation efforts require, the execution phase usually takes anywhere from two to three years. During this period it is very likely that shifts will occur in an organization’s business strategy. Although these shifts may seem small on the surface, it is important that the leaders and sponsors of the transformation effort gauge the overall effect on execution. Seemingly small shifts may have profound impact on the transformation effort, which if ignored would result in an outcome that is potentially misaligned with business strategy.

During one rather complex transformation effort at a firm which supports the financial services industry, the organization shifted its business strategy in year two of a three year transformation. The firm traditionally offered more than 1,000 customized product configurations and pricing points to their customers and one of the original goals of the transformation was to simplify the firm’s product offerings. By simplifying the product offerings, the processes and technologies that supported the sales, marketing, and ordering functions could also be simplified, saving the company millions. Due to competitive and market pressures, and the fear of losing customers, the firm decided to roll-out additional product offerings in the hope of capturing lost market share. Unfortunately, the sponsors of the transformation effort did not recognize this significant shift in strategy soon enough and were unprepared for the additional complexity in processes and technology support needed to develop the new product offerings. In the end, the transformation effort failed because the processes and technologies failed to support the shift in business strategy.

To ensure that business transformation efforts do not “miss the mark,” the leaders and sponsors of transformation need to completely understand the implications of strategic shifts. Ensuring executive level commitment to the business transformation effort, as mentioned in the previous article, is one way to mitigate the effect from shifts in strategy as well as communicating to the executive level the inherent cost of shifting strategies, whether it come in the form of additional time or additional resources needed to complete the transformation.

Maintain of a Current and Transparent Roadmap

Just as important as keeping the effort aligned with business strategy, is keeping the organization informed on the progress of the transformation. In the first article, the development of a Roadmap is discussed in some length; however the initial development of the Roadmap is just the beginning. Anyone who has managed or tracked an effort of significant size or complexity knows that timeframes shift, resources move, milestones get reset during the execution phase. The Roadmap, which is comprised of multiple projects or initiatives with numerous interdependencies, needs to remain current and transparent to the organization at all times.

Keeping the Roadmap current can be a daunting task, especially if the business transformation effort contains elements of process, technology, and organizational change all occurring in parallel. Luckily there are several technology tools available that allow the transformation team to more efficiently keep the Roadmap current. However, keeping the Roadmap current is only half of the battle; the other half is allowing the organization access and insight into the Roadmap, or in other words allowing the Roadmap to be transparent.

A key success during the execution phase is allowing the organization beyond the transformation leaders, sponsors and team to have access to the Roadmap to inquire about specific projects, provide insight on complementary or contradictory efforts, and comment on transformation nuances that are unique to a business unit or functional area. During the execution phase, when many transformation resources are focused on delivery, they can lose sight of other activities occurring at the organization. Enabling transparency to the Roadmap can be accomplished with a number of technology tools and ensuring access though an organization’s intranet or other internal system.

Dedication to Transformation

In very simple terms, many transformation efforts fail, because they fail to transform. Business transformation is not an easy endeavor, but when executed properly it can be the most important strategic initiative an organization completes. That being said, technology implementation all too often becomes too much of the focus without enough investment made in process design and change management. Even though there are countless articles written about the importance of designing processes and completing the proper change management activities, organizations continue to gravitate towards technology solutions sooner than they should. Either because of frustration with process design and change management efforts, the transformation effort is being led by technology leaders within the organization, or the lofty promises of software vendors, many organizations seem to rush into technology implementation as a panacea. Implementing a technology without completing the proper level of process and change work, often results in an organization automating sub-optimal or ineffective processes which can compound the issues the transformation effort was intended to address.

In order to remain dedicated to true transformation, especially during the execution phase, executive leadership must continue to stress the strategic importance of the effort and continually challenge any investment in technology in the early stages. In addition, the transformation team needs to communicate the value they are delivering, even if they are addressing “low hanging fruit.” Therefore, mitigating the risk that the organization becomes “bored” with the effort and opts to implement technology solutions as a quick-fix solution.

Program Management, Program Management, Program Management

Aside from keeping aligned with business strategy, maintaining the Roadmap, and ensuring that execution does not focus on technology implementation, most of the other activities that make business transformation successful during the execution phase can be attributed to program management. Given the scope, complexity, and importance of business transformation efforts, program management usually needs to be stepped up a couple of notches from most organizations’ traditional program management competency.

The most important process during the execution phase of business transformation is governance to the metrics and timeframes, coordination of interdependencies and allocation of resources.

Again, as noted in the first article, one of the success factors was establishing the proper metrics to govern the transformation effort. The article pointed out the importance of using both project-based metrics such as: on-time on-budget, user adoption, user satisfaction, etc. and metrics 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.

During the execution phase of business transformation it is important that the metrics are continually tracked and communicated. One good practice used on a number of successful transformation efforts is the use of a program dashboard. The program dashboard is usually located in some centrally accessible location (i.e., intranet site), and frequently updated with new, up-to-date data on the program and business metrics. Although developing a program dashboard is an investment that many organizations fail to make, it is a critical tool to periodically judge the success of the program. The dashboard should also be developed with minimum and maximum thresholds for each metric, which trigger a set of activities for the executive leadership team. These thresholds usually relate to the more program centric metrics and may include such items as over/under budget, missed milestones, performance testing, etc. All too often business transformation efforts, especially during the execution phase, take on a “life of its own” and the business strategy and Roadmap get lost in the shuffle. By establishing a dashboard, executive leadership can gauge the success of the program while it is being executed.

Another key aspect of successful program management is the coordination of interdependencies between the initiatives that comprise the business transformation effort. During the execution phase when multiple projects are executing in parallel, a clear and comprehensive list of interdependencies needs to be managed. Again, there are several technology tools that allow collaboration on both Roadmaps and individual project plans, however the failure of transformation efforts can rarely be linked to an inadequate project planning or Roadmap software. The organization needs to invest in, and develop individual skills in program management, and have a dedicated staff to handle the more routine aspects of program management including risk and issue identification/resolution/follow-up, and reporting.

Finally, under the heading of program management success factors is the allocation of resources. In Part I, it was mentioned that business transformation efforts sometimes fail because the “best and brightest” are not dedicated to the effort. As the execution phase continues it becomes tempting for management outside of the transformation effort to pull some of the resources off the effort and have them return to their regular duties. In order to minimize the affect of resources leaving the transformation effort, a couple of alternatives are available.

First, since transformation efforts are usually long in nature, it makes sense for resources to be rotated in and out of the transformation effort. This accomplishes two goals: it helps mitigate the risk that resources get burnt out and it exposes more resources to the transformation effort and in turn assist with adoption of new processes, procedures, technologies, etc.

Second, using business and technology consultants to augment the team is always an option, especially during the execution phase. Outside consultants, providing an organization selects one that is a good match with their culture, can breathe new life into transformation efforts. Successful organizations utilize consultants in the areas they are weakest or have the least experience, but to be clear, consultants should only be used to augment the team. Having consultants manage and staff the majority of the transformation effort, no matter how good the consultants are, will result in resistance from the organization when changes in processes, technologies and organizational structures are implemented. In addition, ownership of the transformation is greatly diminished.

Conclusion

As with any major effort, planning is a critical step in implementing a successful transformation effort; however even with world-class plans, business transformation efforts still fail. The executive phase of any business transformation effort can be wrought with unclear or outdated Roadmaps, defecting resources, politically pressure to implement technology and other detrimental behaviors. The success factors detailed above are but a few needed to truly transform an organization, however, past experience indicates these criteria have significantly more impact than others.

In the last article of this series, you will learn the key factors that make the transformation phase.

About the Author

Brian Goonan is a Senior Principal at Inforte Corp, a Business and Customer Intelligence consultancy. He is a member of the Strategy Practice with more than fourteen years of experience in consulting, general management and financial analysis. He can be reached at Brian.Goonan@inforte.com.