But we shall use the term for a moment to analyze the situation. Digital transformation is nothing new. It is a daily reality for all companies. Some are the disruptors and others are disrupted. And Covid made this even more clear.
All understand that digital transformation—not evolution—is required to maintain a competitive edge. That is why so many digital transformation initiatives have been started around the world.
But it seems that 70 percent of all digital transformation initiatives do not reach their goals. In 2018, of the $1.3 trillion that was spent on digital transformations, an estimated $900 billion went to waste. [1]
Companies need to shift their approach to ensuring they reap business value and desired business outcomes from digital transformation initiatives. Across industries, most organizations are using standardized project management practices such as a traditional Project Management Office (PMO).
But digital transformation requires much more than status-tracking and risk escalation—it requires a robust capability that drives execution with a value-realization focus: A Transformation Office.
This is not just semantics, not just a lift-and-shift, not just a glorified PMO. It is a truly different undertaking to ensure digital transformations deliver on their promise.
And the same is valid for any other critical transformation initiatives your organization is planning. Not just digital transformations.
Transformation can take many shapes, from transforming business models to cater to a shared economy to transforming the way that critical services are delivered to clients.
The Transformation Office
A Transformation Office enables organisations to manage multiple program and project management initiatives towards one common goal. It is more than a PMO with a fancy name – it’s about bringing strategy to life.
The Transformation Office is responsible for driving complex initiatives on both operational structures and the strategy of the organisation. It is a critical link between the executive vision and the work of the organization.
Some companies call this function a Strategic Implementation Office, while Gartner refers to this as a Strategy Realisation Office.
Regardless of the name, one element that sets a Transformation Office apart from most PMOs is that the C-suite proactively supports the Transformation Office’s mandate to transform the organisation entirely, which ensures it has the highest priority when implementing and affecting change.
They will be the strategic architect working with the CEO to integrate and drive and choreograph a transformation agenda. They will have to play the integrator function as well because often if you are driving customer agendas on one part of the organization, cutting costs in another part, going after a digital agenda in a third, all of those will be interrelated, and there will be interdependencies that someone will need to play air traffic controller for.
Core Competencies
The most effective Transformation Offices will house several core competencies necessary for successful transformation, including:
Enterprise Architecture to define an updated or even an entirely new structure for the organisation with which transformation activity can be planned around and clearly communicated to everyone involved. This includes Design Assurance to safeguard its integrity across projects and alignment with the vision set out in the business architecture. This critical role aligns IT and other support functions behind the business design.
Project Portfolio Management including prioritization to ensure investment flows to the highest value initiatives and that the investment method is transparent and collaborative.
Project Management to track, govern and manage the transformation whilst reporting progress.
Change Management to ensure users and other stakeholders adopt the changes that the transformation brings.
Benefit Realization Management to ensure execution delivers the intended benefits and outcomes, by continually monitoring progress and adjusting to keep the delivery on course.
The Transformation Office not only sets the schedule and the tone of the transformation, but it also keeps score, with consistent ways of measuring and tracking business value. It ensures everyone has access to the same simple rulebook and is trained to understand its unambiguous processes and policies.
The Transformation Office is a coach to help the organization grow and get better with the responsibility of ensuring that efforts are not stifled by old-fashioned bureaucracy that the company might have become accustomed to.
Single Source of Truth
Any organization undergoing a transformation will have a pipeline of improvements, subdivided into actions, owners, and dollars at stake. An important role of the Transformation Office is to ensure that all participants have a “single source of truth.” A transparent view of what flows through the pipeline and a central record of the progress of each initiative owner.
Tracking and approving initiatives can be done through a structured stage-gate process that goes from initial identification to final realization.
Armed with the truth, the Transformation Office has the credibility to spot potential conflicts or overlaps among work streams, raise the issues with stakeholders in its regular meetings, and work with owners and executives to achieve the best outcome for the business.
Without this sort of planning and intervention by the Transformation Office to remove bottlenecks, one or two project teams can cost an organization millions of dollars.
Parallel Organization
The Transformation Office exists in addition to the line organization. Now why is that?
Most organizations rightfully say, "We prefer that the line should just implement the change. The line organization needs to own and embrace the change."
And that's an understandable and very aspirational ambition that you should have for a well-run company. But the reality is that while in a transformation phase the line organization will need to change as well.
The operating model, the kind of executives you had, the skills in the organization that made them successful in the past may not be the same as what you will need to have in the future.
And so, as you are transforming the line organization, you will need this kind of office to create a bridge until the newly transformed line organization—the redesigned and transformed organization of the future—can actually inherit the initiatives and operate them smoothly.
In a nutshell: A well-executed Transformation Office can improve your transformation across four areas: value, design, execution and business adoption. Think of the Transformation Office as a risk mitigation insurance policy on your most critical transformation initiatives.
References
[1] Harvard Business Review, "Digital Transformation Is Not About Technology", March 13, 2019
Posted on Saturday, January 02, 2021 by Henrico Dolfing