transformation and governance preso 09
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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
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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
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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?”
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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
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