By Vivian Kane
Business Transformation is a formal initiative to change the fundamental components of a business. Its focus is to improve some aspect of the business intent, structure, products and services, or the people, processes, and tools on which these depend. Because these components are interdependent, a change in one impacts all others. Thus, business transformation is complex with changes across functions and levels of an organization.
This complexity is at the root of most obstacles in a transformation. It makes it difficult for the participants in a transformation to define a solution that works well for all. No one has deep knowledge of all areas affected by the transformation and no single perspective is complete, so no one can define a solution that covers all critical gaps. The participants are pushed by the situation to envision several solutions as they struggle to find a compromise that works. This can lead to confusion and long cycles of debate at each step of the transformation process. The initiative gets bogged down by an inability to crystallize the Vision, or lengthy reworking of the Strategy or Tactical Plan, or excessive problem-solving in execution. This stretches out the timeline, exhausts everyone involved, and dramatically increases costs.
How should the organization approach transformation to achieve optimal success?
This article outlines a framework that leadership can apply to initiate a business transformation. It provides insights on how to clarify the Vision, Strategy and Tactical Plan of the transformation, and recommends which participants and areas of expertise to involve in each step of the process.
Creating a Vision of the Transformation
The critical first step is to create a complete Vision of the transformation. This is a before and after picture of what will change in all the fundamental components of the organization, and not just those targeted for change. The goal of the Vision is to enable leadership to see transformation of the whole organization, so it can assess the overall results achieved.
Creating the Vision strips away complexity, examines the organization in basic terms, and imagines the transformation from a bird’s eye view.
The Vision looks at three strategic components of an organization: (1) Intent (why it does what it does), (2) Structure (how it organizes to do it), and (3) Products and Services (what it exchanges to get it done). How leadership changes these components impacts the organizational strategy and can alter the nature of the organization.
The Vision also looks at three tactical components of an organization: (1) People (who does all the work), (2) Processes (what steps they take to do it), and (3) Tools, including IT (what aids they use to get it done). How leadership changes these components impacts the tactics used to achieve the organizational strategy. A radical change here can hamper leadership in achieving the organizational strategy and fulfilling its intent.
A transformation may modify any of the fundamental components of the organization, but it will only succeed if in the end: (a) the strategic components have not been altered (except as planned), (b) the tactical components together achieve a higher performance, and (c) the organization is better at fulfilling its intent.
Creating the Vision of a transformation requires leadership to make decisions that affect organizational strategy and tactics. Thus, leadership can delegate the work to an expert resource, but must always control the Vision.
To create the Vision, leadership should involve input from a diversity of stakeholders, but should focus only on details needed to make strategic and tactical decisions for the organization.
Example:
An organization is replacing complex legacy IT systems and business processes. This should not alter organizational strategy provided the new IT and business processes do exactly what the previous ones did. If that is the case, the organization is not undergoing transformation but simply an IT upgrade and business process improvement.
More likely, the new IT and business processes will replace some legacy components but not all, and may add new capabilities. This will fundamentally impact organizational strategy by increasing or decreasing the organization’s ability to exchange products and services within its defined structure and achieve its strategic intent. This elevates the IT and business process upgrade to a business transformation.
Should the IT and business process improvements be included in the Vision of the transformation? Only the portions of IT and business processes that affect organizational strategy should be included in the Vision. Leadership needs to decide whether it wants to make these changes or not, but should not choose between options for IT or business processes at this point. Instead, several optional Visions may be created.
The process of creating the Vision takes several iterations. When organized and controlled, it is efficient and produces stakeholder buy-in and a higher quality result, both of which substantially increase return on investment and evidence of success.
Once leadership can see one or more Visions of the organization after transformation, the next step is to define the Strategy for transformation.
Defining a Strategy for the Transformation
Defining the Strategy for transformation involves eliminating all but one option for the Vision, then assessing a bird’s eye view of the Tactical Plan for transformation to confirm that the Strategy is executable.
Defining the Strategy requires leadership to assess how each Vision affects the fundamental components of the organization. Considerations might include: Does the organization need to transform? What does it gain or lose? Is it worth the ROI? Can it be transformed in more than one way? Is there an optimum speed of transformation? Should transformation be phased for strategic reasons? And so on.
Example:
The organization discovered that it had many options for IT solutions. Every solution reduced existing capabilities but also added new ones, and required different modifications in the business processes.
Leadership had a Vision for each of the IT solutions. Each identified major modifications to: human resources, business processes, IT systems, and other tools or infrastructure. Each identified all changes to strategic intent, organizational structure, and products and services.
In defining the Strategy for transformation, leadership debated all the Visions, eliminating many for diverse reasons: cost of the IT system, scope of business process changes, impact on human resources, forced changes to the organizational structure, limited delivery of products or services, and so on. Finally they settled on an option that had not been the most exciting in any one area, but was the best overall.
As with creating the Vision, defining the Strategy for transformation is most efficient as an iterative process.
After leadership finalizes a Strategy for transformation, the next step is to define the Tactical Plan for transformation.
Defining the Tactical Plan for the Transformation
The Tactical Plan for the transformation determines how to evolve all fundamental components of the organization to achieve the Vision. Its goal is to organize all participants effectively so that the initiative can achieve maximum ROI with minimal complication.
The Tactical Plan develops a mid-level action plan and timeline. It calculates costs, analyzes risks, and anticipates how to use tactics to solve issues such as logistics, financing, resource availability, complex scheduling, policies, IT implementation, business continuity, cross-dependencies, and so on. It may organize the initiative into phases or projects within one overarching timeline.
Example:
Historically, the organization grew by merging several organizations and forming other joint ventures. Its business units were a complex patchwork of legacy IT and business processes, organizational structures, business cultures, services and delivery methods, all of which had to be addressed differently in transformation. The joint ventures had unique legal issues, and several services had regulatory constraints.
The Tactical Plan divided the transformation into 3 phases over 5 years with 20 projects – 8 for the IT systems and business processes, and 12 for everything else. There were 6 projects in phase I, 10 in phase II, and 4 in phase III. Cross-dependencies were identified, and efficiencies created by concurrent scheduling of projects. The Tactical Plan enabled the organization to transform one phase at a time, and to terminate transformation after any phase without adverse impact.
The Tactical Plan is developed with significant stakeholder involvement. Once it is complete, the transformation process moves on to define the charters for all projects in the initiative, and then to execution of each project.
Executing the Transformation
The transformation initiative requires input from leadership and stakeholders of all impacted IT and business units, as well as expertise from specialists including: transformation strategist, business strategist, business engineer, IT solutions architect, IT solutions team, IT implementation team, change specialist, and project manager.
Example:
The transformation was larger than any the organization had attempted before. Leadership had directed small transformations in the past, but the scope, scale, expertise and demands of the new transformation were beyond their capacity. Leadership wanted continuity of key resources through all phases to ensure success. It committed internal and contracted resources to carry out the entire transformation process.
Vision: The initiative started with the transformation strategist guiding leadership and key IT and business stakeholders to create the Vision of the transformation. They incorporated excellent ideas from several draft Visions the organization had previously attempted but found unsatisfactory, and the advice of specialists. The business strategist and business engineer advised on redesigning the organizational structure, products and services, and major business processes. The IT solutions architect advised on redesigning IT systems and software, including assessment of custom or commercial solutions.
Strategy: The transformation strategist then guided all these participants to define the Strategy by assessing several options on the Vision and settling on one. The change specialist joined the initiative, adding advice on people and process change issues that affected vetting of the Strategy.
Tactical Plan: The transformation strategist then guided all of these participants to define the Tactical Plan, including guiding the IT solutions team, IT implementation team, business engineer and change specialist to develop a phased process for replacing the legacy IT systems and business processes with the new solutions. Many stakeholders representing all impacted areas of IT and the business units provided input and vetted the Tactical Plan.
Execution: To initiate execution, the transformation strategist set up a transformation program, then guided the project managers to write the project charters and execute the projects in accordance with the charters. The transformation strategist monitored the projects to ensure they executed the Strategy and Tactical Plan as defined, and facilitated any changes to the Strategy and Tactical Plan. The project managers coordinated the business engineer, change specialist, IT solutions team, IT implementation team, project teams and stakeholders of every impacted IT and business unit to carry out all project activities. The business strategist and IT solutions architect were called back to give advice on a small but significant change to the Strategy.
After 5 years, the organization completed the transformation, and the transformation strategist closed out the successful initiative.
A business transformation involves far more than what this article describes. The process of creating a Vision, then a Strategy, and then a Tactical Plan – with each step completing before the next proceeds – enhances control of the complexity, significantly improves clarity, understanding and buy-in for the transformation, and enhances the ability of leadership to optimize results.
Copyright © 2009 by Vivian Kane. All rights reserved.
This article is printed with permission of the author and Kane Systems Inc.
About the Author
Vivian Kane is a senior consultant and former executive with a specialty in transformation and business start-up. She has been involved in transforming organizations of all sizes, from start-ups to global leaders, and has deep expertise in several key areas needed to design, lead and execute a transformation, including executive leadership, transformation strategy, business strategy, business engineering, change leadership, program management, and IT & business project management. Through her company, Kane Systems Inc., Vivian produces programs to train leadership in business transformation, and is available as a consultant or leadership coach for business transformation.