It is no longer about doing things better, faster, or cheaper. Your business success requires bold ideas and leadership. It is that giant leap you take as a leader to commit to a new level of performance by transforming your organization to operate in fundamentally new way.
“If we want the new to have a chance, we must be willing to prune the old that no longer promises results.” – Peter Drucker, management consultant, educator, and author.
Business Transformation is the process of changing who your company is, and what it does, driven by an understanding of where value is shifting in your industry.
One of our recent engagements involved a regulated utility that needed to transform their Capital Delivery and Project Management function. This transformation fundamentally changed the utility’s organizational structure, the processes employed across the company to deliver projects, and the financial performance achieved through more effective project management. This included:
- Improved estimating accuracy 30% in first year, 33% in year two.
- Key enabler to a $200M cost reduction effort.
- Elimination of all regulatory fines from poor Project Management performance – Approx. $11M in the previous year.
- Earned value metrics being monitored and managed for all projects.
- Quality Management built into the process including a formal change review process and required field constructability reviews.
- Trained approximately 2000 employees on the new Capital Delivery Process.
As you can see, this Business Transformation identified a multitude of value creation opportunities. Business Transformation also comes with many risks. Inherent is the risks to culture, productivity and performance, unplanned attrition, damaged relationships, and an erosion of trust in leadership as your Business Transformation unfolds.
So, why do it? For many leaders, they have no choice. They must react to the changing demands of their customers and the marketplace. Perhaps costs have risen, margins eroded, and profitability suffered. For others, its pressure from investors, regulators, a merger or acquisition, the launch a new product or service, or an opportunity to innovate and grow.
Additional motives may include:
- Losing customers to competitors
- High process costs compared to benchmarks
- Cost containment efforts have failed
- Technology is draining costs not improving efficiency
- Data is poorly managed, often insufficient, or no single version of the truth
- Misalignment and around company strategy, and or roles and responsibility
- Market and regulatory conditions have become more challenging
Recognizing the need to change and figuring out what your need to do and where you need to be is the most difficult element. It requires creative and strategic thinking and leadership that empowers, motivates, and wins hearts and minds of the organization making good communications essential for success.
Your story must create a compelling value proposition and message. Central to this message is your “Why”. Why is the organization taking this on, and what are the risks of not transforming? It is important that your people understand that certain functions may be automated or eliminated – or changed in such a way that training or new talent may be required.
Engage believes the solution starts with asking five (5) fundamental questions:
- Do your objectives of the Business Transformation support the business strategy?
- What functions must transform to achieve your objectives?
- What does your governance leadership need to look like?
- Do you have the flexibility to be successful?
- Are the changes we made driving value, and can we track that value to the financial statements?
Bringing together all the elements needed to get your transformation right is inherently complex, it requires more than a roadmap and an elevator pitch – you need bold leadership. When we talk about leadership, it is easy to assume we are talking about the CEO or the executive leadership team. They are important, but the Business Transformation program leader will become one of the most important and influential people in the organization. Getting this assignment right will mean all the difference.
A strong leader needs the influence, credibility, and authority to make decisions about how work gets done. Your return on Investment (ROI) will be directly proportional to the caliber of talent assigned to lead your Business Transformation.
If you are not preparing yourself for the eventual changes that will be demanded by the marketplace, you risk the very existence of your business. If you have not begun to consider if it is time for a Business Transformation, there is no time to waste.