Common Challenges of The Transformation Office

Leading companies are banking on their Transformation Offices to lead them through difficult times.  To help them survive and ultimately strive.  Transforming their businesses from legacy to digital.  From slow to change to fail fast and iterate to success like start-ups.  From overweight to lean and from thin margins to lofty profits…but how are these transformation offices performing and what challenges do they face?

We spoke with transformation leaders to learn more about their most pressing challenges.  Leaders from all industries including financial services, manufacturing, oil and gas, retail, etc.  These leaders all agree that some of their most pressing challenges are:

  • Lack of funding – Budget commitments are a moving target
  • Building a team with strong project and change management skills is challenging
  • Difficult to deliver lasting change that truly upends the status quo
  • Justifying the overall value and spend of the transformation office
    • Communicating the business impact of the transformation programs
    • Identifying and tracking benefits (not double counting)
    • Lack of tools to keep track of all the moving parts; deliver reporting, scorecards and impact analysis that meets the needs of all the stakeholders

Our leadership team have spent years managing global transformation portfolios at Fortune 500 companies and can identify with all of these challenges.  So, let’s try to tackle each of these and propose some solutions.

The Budget Challenge

No one is expecting a blank check as they don’t exist.  Even Meta (formerly Facebook) had to rein in their massive capital spending after they were severely punished by wall street.  What we are hearing is that even though most companies are funding transformation because they view it as necessary to survive and strive, the overall budgets have become a moving target.

Project budgets are often reduced and many projects sit on the back burner because EPS is missed or some other area in the business is burning cash like a wildfire.  So how do we address the moving target of the transformation budget.  We recommend managing the transformation office through its business impact.  Less funding means less impact.  Impact such as lower revenues, slower speed to market, less competitiveness, less agility, etc.  In order to successfully communicate the business impact, we suggest the following:

  • Identify the most important KPI’s that your office is responsible for delivering
  • Tie the business impact to projects and their overall funding
  • Identify timelines for delivery
  • Map deliverables back to the company strategies, its financials and other key milestones related to the business
  • Communicate what will/not happen as a result of less/more capital allocated to the transformation office

This will help “tell the story” of the transformation office.  It will highlight how funding your transformation programs translates into business outcomes.

Building a Team

Building the transformation office from ground up is challenging.  There are many factors to consider when standing up a transformation management office.  An office that will ultimately have a large mandate, access to all business units and the big stick to make unpopular changes.

Particularly challenging is finding people with the relevant skills to impact change.  Transformation leaders’ flag this as one of their pressing challenges.  Finding people that have the business acumen, people skills, communication skills and the courage to take on business leaders that are comfortable with status quo and resist change.  To help address this transformation leaders are looking to large consulting firms such as McKinsey, Accenture, KPMG and other leading firms to fill the skillset gap.  Large consulting companies have nurtured these skills and created a pool of resources that developed deep rooted change management skills.  So, it’s no surprise that they are hiring talent from these firms.  Also, finding talent internally is challenging and therefore makes hiring externally a more viable option.

Delivering Lasting Change

The transformation office is responsible for delivering lasting change to the organization.  For example; Digital Transformation is meant to take legacy tools and processes and move them into a modern age with the latest technologies using modern capabilities such as machine learning, RPA, artificial intelligence, etc.  These changes are meant to improve the companies overall bottom line.  So why are transformation leaders meeting resistance within? We have identified two main challenges the transformation leaders face with leading change:

First, there are pockets of company leaders who oppose drastic change and tries to slow roll the process by offering intermediary solutions that will marginalize the business impact.  Why?  They may feel that they are protecting their careers or they are not comfortable with the new tech and therefore may make them appear out of touch or they are just afraid of change for change’s sake.  For these and many other reasons, business leaders have become a major impediment to change.

The second challenge that impedes lasting change is adoption.  People will fight tooth and nail to hold on to legacy processes and tools.  They end up partially embracing the new tools.  Learning the basics and using very limited capabilities the solution has to offer.  In conjunction they continue to hang on to their old processes and tools that they are familiar with.  This helps them feel more relevant and less likely to be replaced by the new tech.

So how do the best transformation leaders make lasting change.  They do so by exhibiting steadfast leadership and through inclusiveness.  The best leaders communicate a vision and rally the troops to follow through on execution.  Every transformation leader we spoke to are visionaries with a keen focus on building a better future.  The best leaders paint a future where everyone becomes part of the solution.  By including people in the decision process, getting their opinion, letting them weigh in at the appropriate times, they all feel like they are part of the solution and part of their decision to drive change.  This approach leads to greater acceptance and adoption.  This approach leads to lasting change.

Justifying the overall value and spend of the transformation office

Another major challenge is how to justify the value and spend of the transformation office.  So, you are a new transformation leader.  You have the full backing of the board and the CEO.  You identified some major areas that can benefit from transformation, you developed a transformation portfolio and the c-suite signed off on your budget.  Now what?

Your stakeholders are expecting you to use the scarce capital to deliver meaningful change and drive impact to the business bottom line.  So how do you identify, track and measure the business impact and benefits of the transformation office?

The best approach is to identify KPI’s that are important to the business and relate them back to your projects.  Your new AI based sales support system will improve online sales conversion by 25% leading to an increase of $100M in new revenues annually.  Once you have the metrics identified you will have to implement processes and tools to accurately track the delivery, spend and benefits of the project.  How much will the new AI sales support solution cost? How long to implement and go live?  What’s the run cost?  When will it start impacting revenues?  Gather as much information as you can and organize them is a way that “tells the story” about the business impact.

Once the individual project impact has been determined; pull all of the projects together to measure the impact of the entire transformation portfolio to the business.  It is always amazing to see the big picture impact over a 3 to 5 year span.  This is the story you want to tell.  Equally important is delivering ongoing monthly or quarterly reports on the progress.  Celebrate when things are going well and be transparent when things are not.  Either way it is important to have the right tools and processes to manage this on an ongoing basis.  With the lack of a purpose-built solution on the market to manage transformation projects, Inpensa has created GoTransform to provide the tools necessary to manage the transformation office and help it tell the story of its value and benefits.

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