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Transformation And Governance Preso 09


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Transformation And Governance Preso 09

  1. 1. commercial in confidence BSR Author: Grahame Flynn
  2. 2. <ul><li>Introduction “Business Transformation and Governance …using benefit realisation techniques” </li></ul><ul><li>The case for governance </li></ul><ul><li>BSR real life case study </li></ul><ul><li>Look at XYZ Case study </li></ul>commercial in confidence BSR <ul><li>A ‘day out on the river’ experience </li></ul><ul><li>A sub stream of IT governance </li></ul><ul><li>Conclusions re XYZ Case study </li></ul>
  3. 3. the cold facts on business… <ul><li>It is said that the average company (or key line of business lifecycle) has an expectancy of circa 2 years </li></ul><ul><li>… and that a well run company lifecycle averages…only 5 years! </li></ul><ul><li>So what is the key to long term success? </li></ul><ul><li>Renewal …and </li></ul><ul><li>Managed </li></ul><ul><li>Growth!!! </li></ul>commercial in confidence BSR 5 yrs 5 yrs 5 yrs
  4. 4. 2. The case for (Transformation &) Governance commercial in confidence BSR Source: Balanced scorecard cooperative Many firms plan for strategic growth in some way but: 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
  5. 5. Understanding the current state…and where we need to go commercial in confidence BSR Current State Future State Capabilities Enablers Objectives Capabilities Enablers Objectives
  6. 6. commercial in confidence BSR Back to basics… Elements of successful transformation… &quot;Before I built a wall I would ask to know: What I was walling in and what I was walling out?&quot; - Robert Frost
  7. 7. commercial in confidence BSR 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!”
  8. 8. *BHAG <ul><li>the ‘big hairy audacious goal’ </li></ul><ul><li>a clear target for all </li></ul><ul><li>reduces goal anxiety </li></ul><ul><li>great for marketers </li></ul><ul><li>anchors the vision statement </li></ul><ul><li>anchors strategy </li></ul><ul><ul><ul><ul><li> *Tom Peters </li></ul></ul></ul></ul>commercial in confidence BSR See Toyota example: ‘ stretch goals’ ‘ fuels innovation’ ‘ harmonious resolution’
  9. 9. commercial in confidence BSR “ 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 merciless in exposing the phoniness it sniffs…” “ Disruptive innovation is the key… Not the latest whim of the marketing department It needs to match suitable goaling with the core values and ambitions of all concerned”
  10. 10. commercial in confidence BSR <ul><li>“ the vision” </li></ul><ul><li>needs to be </li></ul><ul><li>Worthy </li></ul><ul><li>Clear </li></ul><ul><li>Reflective </li></ul><ul><li>Attainable </li></ul><ul><li>Quantified </li></ul><ul><li>Sponsored </li></ul><ul><li>Time fixed </li></ul><ul><li>Integrated </li></ul><ul><li>Resourced </li></ul><ul><li>Uncompromised </li></ul><ul><li>Value based </li></ul>TRANSFORMATION
  11. 11. <ul><li> The ‘Vision’ </li></ul><ul><li>“ 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” </li></ul><ul><li>- Stephen Denning </li></ul><ul><li>It will be somewhere on the ‘line of best fit’ to the BHAG… </li></ul><ul><li>Whilst the goals should be measurable and manageable it does </li></ul><ul><li>not include how one plans to get there…we have to build that! </li></ul>commercial in confidence BSR
  12. 12. Organizational Change <ul><li>Transformation initiatives </li></ul><ul><li>Projects </li></ul><ul><li>B usiness </li></ul><ul><li>R isk </li></ul><ul><li>T echnology </li></ul><ul><li>O rganisation </li></ul><ul><li>P eople </li></ul><ul><li>P rocesses </li></ul><ul><li>Governance </li></ul><ul><li> the 5 P’s </li></ul>commercial in confidence BSR B R T O P P Objectives & Strategy “ Things are always at their best in the beginning” – Blaise Pascal The Vision
  13. 13. ‘ everything’! commercial in confidence BSR is ALIGNMENT but it is an output and initiatives of governance of objectives alone
  14. 14. commercial in confidence BSR 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 governance Long term success is stymied without them Multi disciplined teams embracing transformational change elements (BRTOPP) the partial often used solution set
  15. 15. 3. Assess current position <ul><li>stakeholder objectives…mandate agreed? </li></ul><ul><li>BHAG understood </li></ul><ul><li>Vision formalised with planned timeframe </li></ul><ul><li>Csf’s & issues assessment (based on BRTOPP) </li></ul><ul><li>Discovery & documentation </li></ul><ul><li>Value case </li></ul>commercial in confidence BSR
  16. 16. 4. 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 commercial in confidence BSR
  17. 17. 5P1. Policies commercial in confidence BSR Policies should be the centre-piece of your communication strategy… the vital link in your alignment chain
  18. 18. Performance manage commercial in confidence BSR Why reinvent the wheel? Conformance is dramatically enhanced by standards!!!
  19. 19. 5P2. Planning <ul><li>Benefit realisation goals within mandate </li></ul><ul><li>Formal plans </li></ul><ul><li>Business outcome roadmaps </li></ul><ul><li>Innovation </li></ul>commercial in confidence BSR
  20. 20. <ul><li>Stakeholders objectives should be </li></ul><ul><li>in high level terms ‘a mandate’ but will include: </li></ul><ul><li>Elements of required business strategy </li></ul><ul><li>Appetite for risk </li></ul><ul><li>key preferred standards and methodologies </li></ul><ul><li>Succession planning expectations </li></ul><ul><li>Investment management and return guidelines </li></ul><ul><li>Information assurance requirements </li></ul><ul><li>Cultural and policy guidelines </li></ul>commercial in confidence BSR
  21. 21. A wall of words can be a barrier to strategic achievement…once written,…seldom read commercial in confidence BSR
  22. 22. 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 commercial in confidence BSR
  23. 23. Example of a simple B usiness roadmap commercial in confidence BSR Prepared for CC Training New markets accessed Cash flow created Reduce costs Increased efficiency of business Improved financial management Establish financial reporting systems Increased sales at improved margins Increased competency of all staff Implement staff training Recruit staff Implement formal management process Business management improved Exemplary safety record Establish OH&S program Corporate exposure reduced Establish corporate governance processes Increase orders to suppliers Increased demand Reduced cost of materials Business establishment Staffing Initiative Outcome Contribution Risk Assume test market figures can be accurately interpreted Assume raw material arrives on time Sales and marketing Business strategy Operations Staffing Have a dream Establish terms of agreement for sales channel Begin mass production of units for Australia Launch second product line Rent and fit out premises Create test market product sample Administer test market Patent product Sales and Marketing - Australia New product development process created Marketing mix aligned with company direction Pricing requirements understood Establish brand strategy Establish Marcomms plan Market awareness is created Develop capacity model Marketing strategy developed Production environment established Refine financial model Open doors for business Patent protection established Potential demand understood Units available for test market Import filter from Japan Source local BOM Partnership assumptions documented and agreed Common understanding of sales and volume demand Refine details for Australian launch Sales to Australian mass market Defendable business opportunity is established Source business partners Company direction is established Value company Working capital created Sell equity to raise funds
  24. 24. BOM (roadmap) foundation commercial in confidence BSR 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
  25. 25. 5P3. <ul><li>Execution of strategy </li></ul><ul><li>Benefit realisation management </li></ul><ul><li>Measurement </li></ul><ul><li>Service/Lifecycle management </li></ul><ul><li>Conformance </li></ul><ul><li>Risk management </li></ul><ul><li>Communication & Culture </li></ul>commercial in confidence BSR
  26. 26. Understanding execution of strategy commercial in confidence BSR Future environment ? Current environment ? Investment Benefits Realised A leap of faith…. The ‘Black Box’ Even when the future state is clearly articulated, the road to the future is not always understood … and a miracle occurs
  27. 27. Roadmap to Deliver Business Value commercial in confidence BSR <ul><li>What about the impact of: </li></ul><ul><li>Risk </li></ul><ul><li>Warehousing </li></ul><ul><li>Process reengineering </li></ul><ul><li>Human resources </li></ul><ul><li>Finances </li></ul><ul><li>Marketing ….. </li></ul>Initiative Final Outcome Intermediate Outcome Intermediate Outcome Initiative Implement CRM ? Database of names is created Sales productivity improved Train staff
  28. 28. <ul><li>Measurement is the essence of governance : </li></ul><ul><li>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) </li></ul>commercial in confidence BSR Once commissioned new capabilities need to be put into practice so as to deliver planned benefits: (from project to business unit)
  29. 29. The Challenge for Risk Management <ul><li>OH&S </li></ul><ul><li>Continuity </li></ul><ul><li>Crisis </li></ul><ul><li>Operational </li></ul><ul><li>Compliance </li></ul><ul><li>Transparency </li></ul><ul><li>Accountability </li></ul>commercial in confidence BSR “ A company can become much more productive by instilling a flexible risk ethic, making people accountable not for compliance with process rules but for results” ‘Innovation Agility’ – Dehoff/Loehr “ Companies are no different to individuals… both are responsible for their own destinies and behaviour. There are few constraints on what they choose to do in embracing either the opportunity 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
  30. 30. <ul><li>Benefits risks Sample Controls ITgovernance </li></ul><ul><ul><li>Are we doing the right things? VAL-IT </li></ul></ul><ul><ul><li>Are we getting the business benefits? MSP </li></ul></ul><ul><li>Delivery risks </li></ul><ul><ul><li>Are we doing things the right way? CobIT </li></ul></ul><ul><ul><li>Are we getting them done well? Prince2 </li></ul></ul><ul><ul><li>The ‘Four Ares’ John Thorp – ‘the information paradox’ </li></ul></ul>With Transformation… Risks come in two major varieties The harmony achieved is the key in achieving results commercial in confidence BSR
  31. 31. commercial in confidence BSR 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?
  32. 32. commercial in confidence BSR Very few organisations get major organisational change right at the first attempt! WHO’s Perfect? 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!
  33. 33. commercial in confidence BSR “ 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?
  34. 34. commercial in confidence BSR “ 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)
  35. 35. Organizational Change / project completion plans simplify sign off <ul><li>One ‘much bigger’ Project </li></ul><ul><li>(with change strategies embedded) </li></ul><ul><li>Governance </li></ul><ul><li> </li></ul>commercial in confidence BSR B R T O P P Objectives & Strategy “ It’s not dark yet… but it’s getting there” – Bob Dylan new scaled down project closure objectives “ Where are the others?”
  36. 36. commercial in confidence BSR one can lose focus when faced with ‘too much of the same’ Projects are necessary but are manifest and detailed… They can mask the obvious Programme management delivers organisational change PROJECT MYOPIA 5P4. Programme Management
  37. 37. Understanding Business Benefits commercial in confidence BSR 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 success
  38. 38. Value cases are to be full lifecycle justified – programme management is essential so as to drive home the desired organisational capability and business benefits! The sponsor is accountable for the value case commercial in confidence BSR B R T O P P Programmes are structured groupings of business initiatives designed to produce value for the stakeholders Quick wins are vital Implementation of assets, services, capabilities via projects ! initiatives benefit return Programme management delivers planned change Regular Programme management review for business outcome priorities TRANSFORMATION & GOVERNANCE Delivery via programmes Value meets business case ROI based on lifecycle Utilization beyond deployment B R T O P P
  39. 39. Paradigm shift to value management commercial in confidence BSR 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 management Ex John Thorp: ‘ The Information Paradox - Realizing the business benefits of information technology’
  40. 40. commercial in confidence BSR 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!!!!!
  41. 41. <ul><li>Organisational control of key outcomes </li></ul><ul><li>Future state focus/strategy engaged </li></ul><ul><li>Value management focus/Sponsor driven </li></ul><ul><li>Ties with Investment Council - dynamic decision making </li></ul><ul><li>Turns project deliverables into full lifecycle benefits </li></ul>The programme office commercial in confidence BSR
  42. 42. 5p5. Project Portfolio Management <ul><li>Develop hi level & detailed plans </li></ul><ul><li>Balance project priorities & resources </li></ul><ul><li>Develop alternatives </li></ul><ul><li>Maintain project standards </li></ul><ul><li>Maintain service initiatives </li></ul><ul><li>Maintain a balanced profile of risk </li></ul>commercial in confidence BSR
  43. 43. A project governance model for SME commercial in confidence BSR Corporate Governance Project Management GoPM Organisation APM’s GoPM - ‘ Governance for Project Management’ Excellent partner for MS project tool with simplified programme mgt
  44. 44. Understand the status quo... BSR assessment of aims, strategy & key processes (CMM: BRTOPP before & after) commercial in confidence BSR
  45. 45. Understanding the current state…and where we need to go commercial in confidence BSR Current State transformation governance Future State strategy Capabilities Enablers Objectives Capabilities Enablers Objectives
  46. 46. 6. Take away messages commercial in confidence BSR
  47. 47. REVIEW : Why transformation & governance? commercial in confidence BSR Source: Balanced scorecard cooperative Many firms plan for strategic growth in some way but: 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
  48. 48. commercial in confidence BSR <ul><li>Bob Herbert </li></ul><ul><li>CEO </li></ul><ul><li>AiGroup (10,000 members) </li></ul><ul><li>CEO of business 12 years to 2005 (retired) </li></ul><ul><li>“ We need CRM …to revolutionalize the member experience” </li></ul><ul><li>Commissioned BSR in 2002 to develop a member management solution for AiGroup </li></ul><ul><li>MIDAS Project </li></ul><ul><li>400 staff around Australia </li></ul><ul><li>Three year change programme </li></ul><ul><li>Bob’s parting gift to the members </li></ul>BSR case study
  49. 49. 7. Questions commercial in confidence BSR
  50. 50. Prize draw!!! <ul><li>Please join us for a drink afterwards! </li></ul><ul><li>Thanks for coming… </li></ul><ul><li>Grahame </li></ul>commercial in confidence BSR