transformation and governance preso 09

commercial in confidence BSR www.bsr.com.au

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Author: Grahame Flynn

a Transformation and Governance

Workshop with BSR


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1. Introduction“Business Transformation and Governance

…using benefit realisation techniques”

• The case for governance• BSR real life case study• Look at XYZ Case study

• A ‘day out on the river’ experience• A sub stream of IT governance• Conclusions re XYZ Case study


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the cold facts on business…

• It is said that the average company (or key line of business lifecycle) has an expectancy of circa 2 years

• …and that a well run company lifecycle averages…only 5 years!

• So what is the key to long term success?• Renewal…and• Managed Growth!!! 5 yrs 5 yrs 5 yrs


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The people barrier

Only 25% of managers have

incentives linked to strategy

The management barrier

85% of executive teams spend less

than one hour/month discussing strategy

The resource barrier

60% of organisations don’t link budgets to

strategy

The vision barrier

Only 5% of the work force understand the

strategy

But 9 out of 10

companies fail to

execute strategy

2. The case for (Transformation &) Governance

Source: Balanced scorecard cooperative

Many firms plan for strategic growth in some way but:


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Understanding the current state…and where we need to go

Current State Future State

Capabilities

Enablers

Objectives

Capabilities

Enablers

Objectives


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Back to basics…

Elements of successful transformation…

"Before I built a wall I would ask to know:What I was walling in and what I was walling out?" - Robert Frost


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BHAG provides a clear high level message to anyone who is interested…And a definite message as to intent…

“I’m building a bloody castle mate!”


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*BHAG • the ‘big hairy audacious goal’

• a clear target for all

• reduces goal anxiety

• great for marketers

• anchors the vision statement

• anchors strategy

*Tom Peters

See Toyota example:

‘stretch goals’‘fuels innovation’‘harmonious resolution’


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“A company can certainly try to be what it is not…and it can!But if it is too rapid and matter of fact,The market conversation will be mercilessin exposing the phoniness it sniffs…”

“Disruptive innovation is the key…Not the latest whim of the marketing departmentIt needs to match suitable goaling with the core values and ambitions of all concerned”


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“the vision” needs to be

•Worthy•Clear

•Reflective• Attainable• Quantified • Sponsored• Time fixed • Integrated• Resourced

•Uncompromised• Value based

TRANSFORMATION


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The ‘Vision’

“A vision is usually a description of a ‘future state’; what the organisation will be like when it has achieved it’s goals – a common goal not just what the leader wants”

- Stephen Denning

It will be somewhere on the ‘line of best fit’ to the BHAG…

Whilst the goals should be measurable and manageable it does

not include how one plans to get there…we have to build that!


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Organizational Change

Transformation initiativesProjects

Business

Risk

Technology

Organisation

People

Processes

Governance the 5 P’s

BRTOPP

Objectives & Strategy

“Things are always at their best in the beginning” – Blaise Pascal

The Vision


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‘everything’!

is

ALIGNMENT

but it is an

output

and initiatives

of governance

of objectives

alone


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Workshop/Case Topic: “Business transformation…

?

via Enterprise

Governance

using the 5 P’s- the key ingredients”

Board & CxO’s

Business Units & Project Teams

our XYZ case can be directly tied to the need for our 5 P’s…

The 5 P’s:The tools of governanceLong term success isstymied without them

Multi disciplined teams embracing transformational

change elements (BRTOPP)

the partialoftenusedsolutionset


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3. Assess current position

• stakeholder objectives…mandate agreed?• BHAG understood• Vision formalised with planned timeframe • Csf’s & issues assessment (based on BRTOPP)• Discovery & documentation• Value case


164. The Key Ingredients - 5 P's

Governance needs to be put in place so as to ensure successful

transformation

Beyond BRTOPP…

The 5 P’s

governance should provide a sturdy framework for conformance so as to ensure resulting return of stakeholder benefits during the full lifecycle

implementation of the new business capabilities


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5P1. Policies

Policies should be the centre-piece of your communication strategy…the vital link in

your alignment chain


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Performance manage

Why reinvent the wheel?Conformance is dramatically enhanced by standards!!!


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5P2. Planning

• Benefit realisation goals within mandate

• Formal plans

• Business outcome roadmaps

• Innovation


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Stakeholders objectives should be

in high level terms ‘a mandate’ but will include:- Elements of required business strategy- Appetite for risk- key preferred standards and methodologies - Succession planning expectations- Investment management and return guidelines - Information assurance requirements- Cultural and policy guidelines


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A wall of words can be a barrier to strategic achievement…once written,…seldom read


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Beginning with: understanding stakeholder

objectives:

The business must develop agreed target outcomes to meet

expected value return Value mapping is the basis of how this is done!

We call it Business Outcome Mapping


23Prepared for

CC Training

Example of a simple Business roadmap

Have adream

Establish termsof agreement forsales channel

Begin massproduction of

units for Australia

Launchsecond

product line

Rent and fitout

premises

Create testmarket product

sample

Administertest market

Patentproduct

Sales and Marketing- Australia

New productdevelopment

processcreated

Marketing mixaligned with

company direction

Pricingrequirementsunderstood

Establishbrand strategy

EstablishMarcomms

planMarket

awareness iscreated

Developcapacitymodel

Marketingstrategy

developed

Productionenvironmentestablished

Refinefinancialmodel

Open doors forbusiness

Patent protectionestablished

Potentialdemand

understood

Units availablefor test market

Import filterfrom Japan

Sourcelocal BOM

Partnershipassumptions

documented andagreed

Commonunderstanding ofsales and volume

demandRefine detailsfor Australian

launch

Sales toAustralian mass

market

Defendable businessopportunity isestablished

Sourcebusinesspartners

Company directionis established

Valuecompany

Working capitalcreated

Sell equity toraise funds

New marketsaccessed

Cash flowcreated

Reducecosts

Increasedefficiency of

business

Improvedfinancial

management

Establishfinancialreportingsystems

Increased salesat improved

margins

Increasedcompetency of

all staff

Implementstaff

training

Recruitstaff

Implementformal

managementprocess

Businessmanagement

improvedExemplary

safety record

EstablishOH&S

program

Corporateexposurereduced

Establishcorporate

governanceprocesses

Increaseorders tosuppliers

Increaseddemand

Reduced costof materials

Businessestablishment

Staffing

Initiative

Outcome

Contribution

Risk

Assume test marketfigures can be

accurately interpreted

Assume raw materialarrives on time

Sales and marketing

Business strategy

Operations

Staffing


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BOM (roadmap) foundation

Cause & Consequence structure

Cause Consequence Issue Cause Root Consequence Impact $’s

Why? Why? So what? So what?

EG: issue may be ‘ineffective sales people’

Transformation will prompt many obvious strategies based on vision they also need to address current issues as well as CSF’S

A cause and consequence chain


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5P3.

• Execution of strategy

• Benefit realisation management

• Measurement

• Service/Lifecycle management

• Conformance

• Risk management

• Communication & Culture


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Understanding execution of strategy

Investment Benefits Realised

Future environment?

Current environment?

A leap of faith….

The ‘Black Box’

Even when the future state is clearly articulated, the road tothe future is not always understood

…and a miracle occurs


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Roadmap to Deliver Business Value

Initiative FinalOutcome

IntermediateOutcome

IntermediateOutcome

Initiative

Implement CRM ?

Database of

names is

created

Sales productivity

improved

Train staffWhat about the impact of:

• Risk

• Warehousing

• Process reengineering

• Human resources

• Finances

• Marketing …..

What about the impact of:

• Risk

• Warehousing

• Process reengineering

• Human resources

• Finances

• Marketing …..


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Measurement is the essence of governance:

Compliance satisfies external regulatory demands…conformance must be embedded too as the foundation of appropriate performance management systems that feed back progress and exceptions (eg: scorecards kpi’s v kgi’s)

Once commissioned new capabilities need to be put into practice so as to deliver planned benefits:(from project to business unit)


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The Challenge for Risk Management

• OH&S• Continuity• Crisis • Operational • Compliance• Transparency• Accountability

“A company can become much more productiveby instilling a flexible risk ethic, making peopleaccountable not for compliance with process rulesbut for results” ‘Innovation Agility’ – Dehoff/Loehr

“Companies are no different to individuals…both are responsible for their own destiniesand behaviour. There are few constraints onwhat they choose to do in embracing either theopportunity or the risk” ‘The Hungry Spirit’

- Charles Handy

The umbrella of risk mitigation is being challenged by a new found and widely deployed enterprise risk management:

“Beyond compliance…an opportunity should first be treated as… an opportunity”

- AS 4360:2004


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• Benefits risks Sample Controls ITgovernance

– Are we doing the right things? VAL-IT– Are we getting the business benefits? MSP

• Delivery risks

– Are we doing things the right way? CobIT– Are we getting them done well? Prince2

The ‘Four Ares’ John Thorp – ‘the information paradox’

With Transformation… Risks come in two major varietiesThe harmony achieved is the key in achieving results


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Human nature plays a bigger role in business benefits realisation than any other factor - John Thorp (Chair ITGI)

Best ask this guy what he thinks…beforehand eh?

Honesty is the best policy…a bigger pie for all is a commonly well understood theme

I wonder what’s really going on?


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Very few organisations get major organisational change right at the first attempt!

WHO’sPerfect? Another revelation!!!

Why are we prepared to risk failure in such important issues as Organisational Change?

If employees are our most important asset let’s recognise it!


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“The operation was a complete success!The vital signs are very good…in fact excellent!!!

but I don’t know much about long term health… we don’t comment on such things”

Was that a doctor… or a marketing manager?


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“The operation was a complete success!The vital signs are very good…but I’m afraid I have no way of ensuring long term health…we don’t do that sort of thing”

YOU WHAT????

The Initial Implementation (transformation project)

was a success (by mutual decree)…no surprises there!!!but the patient died (several talented staff members usually)


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Organizational Change / project completion plans simplify sign off

One ‘much bigger’ Project(with change strategies embedded)

Governance

BRTOPPObjectives & Strategy

“It’s not dark yet… but it’s getting there” – Bob Dylan

new scaled downproject closureobjectives

“Where are the

others?”


36one can lose focus when faced with ‘too much of the

same’

Pro

jects

are

necessary

bu

t are

man

ifest

an

d

deta

iled

…

Th

ey c

an

mask t

he

ob

vio

us

Programme management delivers organisational changePROJECT MYOPIAPROJECT MYOPIA

5P4. Programme Management


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Understanding Business Benefits

Expected Business Outcomes

Clear understanding of measurable business outcomes based on a programme delivery

Scope

Clearly defined project scope & deliverables

Clear Actions

All initiatives are required to deliver on the skills, assets or capabilities required

Early Benefits

Some projects do deliver quick wins which are handy for validation

Business Ownership

Established business ownership for value outcomes in full lifecycle

Programme approach maximising the likelihood of successProgramme approach maximising the likelihood of success


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Implementation of assets,services, capabilitiesvia projects!

initiatives

benefit return

Programme managementdelivers planned change

Regular Programme management review for business outcome priorities

TRANSFORMATION & GOVERNANCE

Delivery via programmesValue meets business case ROI based on lifecycleUtilization beyond deployment

B

R

T

O

P

P

Value cases are to be full lifecycle justified – programme management is essential so as to drive homethe desired organisational capability and business benefits!The sponsor is accountable for the value case

B

R

T

O

P

P

Programmes are structured groupings of business initiatives designed to produce value for the stakeholders

Quick w

ins are vital


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Paradigm shift to value management

IT project focus

Projects deliver ‘automatic’ benefits

ROI is king at project level

Project business case

Passive benefits realisation

“It will be alright in the long run”

From a project mindset To a programme way of doing things

Business outcome focus (programme manager)

Value return from sponsor ex full investment lifecycle (concept to cash)

Benefits are a business responsibility

Broader view of a benefit (value)

Active benefits realisation

Proactive risk management

Balanced investment managementEx John Thorp:‘The Information Paradox -Realizing the business benefits of information technology’


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Once the business benefits start to flow…Hallelujah! Time to celebrate?Sorry, the work is just beginning really…

They must have gone back…?

“When the benefits are becoming apparent to all…it will be too dangerous for the opponents to launch outright attacks. You are now the establishment… they move to guerrilla warfare instead. But be aware, not outraged”.

- Stephen Denning

HAIL THE RETURNING WARRIORS!!!!!


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• Organisational control of key outcomes• Future state focus/strategy engaged• Value management focus/Sponsor driven • Ties with Investment Council - dynamic decision making• Turns project deliverables into full lifecycle benefits

The programme office


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5p5. Project Portfolio Management

• Develop hi level & detailed plans• Balance project priorities & resources• Develop alternatives• Maintain project standards• Maintain service initiatives• Maintain a balanced profile of risk


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A project governance model for SME

Corporate Governance

Project Management

GoPM

Organisation

APM’s GoPM -‘Governance for Project Management’

Excellent partner for MS project tool with simplified programme mgt


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Understand the status quo...BSR assessment of aims, strategy & key processes

(CMM: BRTOPP before & after)


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Understanding the current state…and where we need to go

Current State Future State

strategy Capabilities

Enablers

Objectives

Capabilities

Enablers

Objectivestransformation

governance


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6. Take away messages


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The people barrier

Only 25% of managers have

incentives linked to strategy

The management barrier

85% of executive teams spend less

than one hour/month discussing strategy

The resource barrier

60% of organisations don’t link budgets to

strategy

The vision barrier

Only 5% of the work force understand the

strategy

But 9 out of 10

companies fail to

execute strategy

REVIEW : Why transformation & governance?

Source: Balanced scorecard cooperative

Many firms plan for strategic growth in some way but:


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Bob Herbert CEO AiGroup (10,000 members)

CEO of business 12 years to 2005 (retired) “We need CRM…to revolutionalize the member experience”

• Commissioned BSR in 2002 to develop a member management solution for AiGroup• MIDAS Project• 400 staff around Australia • Three year change programme• Bob’s parting gift to the members

BSR case study


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7. Questions


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Prize draw!!!

Please join us for a drink afterwards!

Thanks for coming…

Grahame

transformation and governance preso 09

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