Perspektiver

Orchestrating complex transformations

How do organisations ensure effective transformation leadership and governance?

Contributors: Maria Aunsholt Storgaard, Maya Kousholt Schmitt, and Annie Gisslen

Transformation is a critical enterprise capability for organisations to be able to navigate in their industries. However, many are failing to realise the expected value, especially when the transformation is enabled by technology. In previous articles, we have outlined the importance of having an aligned transformation vision and ambition across the organisation, how to apply the capability model as a tool to configure the transformation, and how to design fit-for-purpose business solutions. This is the fifth article in our miniseries that goes through the key topics to ensure a lasting, positive impact when pursuing a business-led digital transformation. This article provides a perspective on how to structure transformation leadership and governance to ensure a successful business-led digital transformation.

Business-Led Digital Transformation one-page summary

KEY TAKEAWAY 

  1. A Transformation Office and a robust governance structure are essential components to consider when embarking on any transformation journey but are specifically important for business-led digital transformations
  2. The core capabilities of a Transformation Office are transformation orchestration, change management, deployment leadership, value realisation, and business- and enterprise architecture 
  3. Efficient governance requires a robust frame for decision-making and a good structure to ensure the right prioritisation and design decisions can be taken
  4. The two-in-a-box setup promotes business-led, technology-enabled transformations as it ensures joint accountability across business and IT

A TRANSFORMATION OFFICE IS CRITICAL TO SUCCESSFUL EXECUTION

From experience, there is no one-size-fits-all structure for a business-led digital transformation. Two elements are however worth considering to enable successful execution: the establishment of a Transformation Office and the setup of a robust governance structure responsible for organisation-wide change.

A centralised Transformation Office (TO) with dedicated resources is essential to achieve transformation goals and secures an integrated program delivery mechanism across the transformation. However, a TO is not a project management office (PMO) doing status-tracking and risk escalation – it requires robust capabilities to drive execution focusing on value realisation. Fundamentally, the Transformation Office orchestrates large-scale business transformations end-to-end, ensuring alignment with organisations’ strategic focus and ambition. In this sense, the Transformation Office has several critical responsibilities:

  • Orchestrates and oversees planning and execution of initiatives across the transformation
  • Continuously secures the transformation is aligned with the defined ambition and strategy
  • Defines dependencies across the transformation portfolio and provides input and prioritisation
  • Articulates business value and what the program means for individuals
  • Ensures visible executive support and consequent alignment of their subordinates
  • Follows up on, monitors, and secures value realisation

In our experience, orchestrating the transformation through a Transformation Office brings several benefits. It reduces the risks in large multi-dimensional and multi-year transformations, promotes ongoing stakeholder alignment on a common vision of the transformation, and builds enterprise readiness. Finally, it supports the full organisation to continuously innovate, transform, and coordinate complex transformation activities.

A centralised Transformation Office (TO) with dedicated resources is essential to achieve transformation goals and secure an integrated program delivery mechanism across the transformation.

A TRANSFORMATION OFFICE SHOULD INCLUDE A SET OF CORE CAPABILITIES

From experience, an efficient Transformation Office should be underpinned by a core set of capabilities:

Portfolio Orchestration
An organisation-wide transformation will often consist of a portfolio of programs with many interdependencies. Without tightly managing such dependencies and ensuring all programs run in the same direction, organisations will struggle to deliver the full transformation. Having a strong portfolio orchestration capability enables the Transformation Office to provide oversight and track transformation progress, milestones, issues, risks, and dependencies across initiatives. Additionally, this capability also enables the Transformation Office to communicate status, decisions, and dependencies to stakeholders across the portfolio, promoting an integrated approach to the delivery of a transformation.

Change Management
The change management capability of an organisation drives change and adaption across the enterprise, maximising benefits without disrupting productivity. Anchoring change management within the Transformation Office, allows for coordinated change across different business units, teams, and projects, reducing the risk of change overload and increasing overall organisation readiness.

Deployment Leadership
In the context of a portfolio consisting of digital transformations, it is critical to tightly control the order in which new digital solutions are introduced. Deployment leadership ensures alignment of deployment of waves and go-lives across programs, initiatives, and the portfolio.

Value Realisation
To secure anticipated benefits are realised from the transformation, accountability for value realisation must be clearly defined. Having such a capability within the Transformation Office allows for a structured approach to allocate ownership for, follow up on, and monitor value realisation across the transformation portfolio.

Business & Enterprise Architecture
Business and solution design often reside within the projects established to deliver individual transformation initiatives. To ensure the development of integrated solutions that deliver value to users and the business across the end-to-end value chain, it is critical that individual solutions are aligned to the wider enterprise architecture and operating model. It is therefore beneficial for a Transformation Office to have an enterprise and business architecture capability to ensure consistency of design decisions and solutions across the full transformation portfolio.

If the Project Management Office is merged with the Transformation Office, then the following capabilities are also necessary and should not be disregarded: program design and support, planning and reporting, and risk and issue management.

TRANSFORMATION GOVERNANCE SHOULD BE UNDERPINNED BY A ROBUST FRAME AND AN EFFICIENT STRUCTURE FOR DECISION MAKING
Successful transformations require decisions to be aligned around a strong governance structure responsible for business-wide change. With multiple components in a transformation program, it is imperative that all elements are connected and working in sync to deliver the expected benefits. This supports the importance of having a robust and efficient governance setup to drive business-led, technology-enabled transformation decisions. Our perspective is that an efficient governance structure requires:

1. A robust frame for decision-making to ensure the right decisions are made

Artifacts discussed in prior articles serve as a good foundation for making the right decisions and complement considerations to be made in relation to the budget, timeline, and risk profile of the decision. Specifically, prioritisation and design decisions should take into consideration the following: transformation vision and ambition, the transformation roadmap, and design principles.

2. An efficient structure to ensure decisions are made by individuals having the mandate and insight to make the right decisions

A robust and efficient governance structure typically has two different layers: 1. Individual program/project governance forums consisting of Program Steering Committees (Steer Co’s) and Program Design Authorities, and 2. Organisation-wide governance forums. Organisation-wide governance will vary significantly across organisations as this is highly dependent on the organisations’ operating model. Most importantly, decision-makers must have the mandate to make decisions as well as the insight to make the right decisions.

For decisions related to digital transformations, it is imperative for both business and IT representatives to be jointly accountable for the outcomes. This is sometimes referred to as ‘two-in-a-box’, in which business and IT departments take the following roles:

  • The Business Lead owns the business requirements and decisions pertaining to business requirements and needs for a specific area
  • The Technology Lead owns the corresponding IT solution development for a specific area and decisions pertaining to the technology solution

An illustrative example of two-in-a-box ownership is showcased in Figure 1.
 



Figure 1: Illustrative example of a two-in-a-box ownership

From our perspective, it is recommended the two-in-a-box concept cuts across all levels of the organisation and transformation program. Unfortunately, we see many instances where this setup is established but where the business representative(s) are not necessarily the right profiles. Our experience is that successful business representatives must have the ability to build strong relationships with counterparts in the organisation, promote buy-in, have the necessary insight and mandate to drive decisions through, and be able to dedicate sufficient time to the transformation. It may be rare to come by these profiles but they are vital to drive successful business-led digital transformations.

MAXIMISING VALUE REALISATION
This article summarises the importance of setting up a Transformation Office and implementing robust governance structures to successfully promote the delivery of business-led, technology-enabled transformations where joint accountability is established between business and IT. In the next and final article in this series, it will be highlighted how organisations can realise the full potential of transformation by focusing on value realisation prior to, during, and beyond the transformation initiative.

Read the remaining articles in our series on business-led digital transformation:

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Digital Transformation here

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