6 minute read 30 Apr 2018
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How to equip your business for successful transformation

Establishing an enterprise process governance model around the key decisions and processes is crucial to operating effectively. 

Change projects can fail on so many criteria — including cost, schedule, and quality. Some companies cite weak project management and reporting, inadequate focus on the effort, changes in leadership in mid-stride, and poor budgeting as the culprits.

There’s also the inevitable resistance from people who are heavily invested in the status quo — along with widespread fear of the unknown, plus sheer exhaustion from previous failed programs that initially seemed exciting.

Equally troubling, in some organizations, people view change efforts through a narrow lens (e.g., “It’s only a technology project” or “It’s just a new leadership structure”). Consequently, they overlook the human side of change — namely, the new behaviors and attitudes required to make the change succeed.

What’s more, in all too many companies, people simply don’t understand the business strategy behind a transformation effort and the operational changes that will have to be made to support execution of that strategy. Without such understanding, they may try to over customize the change approach, processes, and tools for their own ends. At the other extreme, senior leaders may try to force a one-size-fits-all transformation approach on every part of the company.

Wanted: a better way

To overcome these difficulties, organizations must establish a common understanding of their business and who has authority over what decisions. Establishing the governance around the key decisions and processes is crucial to operating effectively. We call this an enterprise process governance (EPG) model that is further discussed in our report, Is your business equipped for successful transformation? (pdf)

Such a model spells out the way in which people in the organization will decide how business processes should work to meet important requirements and to sustain change beyond the initial implementation.

The model clarifies who has decision authority (e.g., a global process owner, a business unit leader) across the end-to-end (E2E) processes — both new and redesigned — that the change involves.

Transformative change efforts can turn into a battle of wits over what the program’s outcomes should be. With the result that the focus is on tactical, not strategic, themes.

Without clear decision authority on E2E processes, transformative change efforts stand little chance of getting off the ground. They turn into a battle of wits over what the program’s outcomes should be. Discussions about the transformation effort are fragmented throughout the organization, and focus on tactical, not strategic, themes. And people in different parts of the enterprise talk past each other. That’s because there’s no common language (such as process taxonomies for their business) to use in discussing the processes affecting them all.

As a result, the intention behind a change effort often gets lost in translation. Conflicts erupt over who’s responsible for which parts of which processes, and over which process changes will generate the right business value. Under such conditions, any momentum for change that upper management has built up begins to erode. And any hope that the transformation effort will deliver value dies.

Enterprise process governance: the key to successful transformation

It doesn’t have to be this way. By putting in place the right EPG model, organizations can effectively execute the business process changes that come with major transformation programs — so the programs deliver the promised business outcomes. A robust EPG model is a vital component in an organization’s overall operating model. However, a one-size-fits-all approach to building the EPG model can backfire. Instead, the organization should create an EPG model that drives standardization where appropriate — while also accounting for their unique attributes, needs, and competitive position.

A good EPG model can help everyone in the organization agree on who should be responsible for which steps in each E2E process.

A good EPG model not only guides process decisions and actions but also helps everyone in the organization agree on who should be responsible for which steps in each E2E process. Such consensus, in turn, promotes commitment to and a sense of ownership over the changes the organization seeks to make. As a result, effective management of new or reconfigured processes emerges not from the top down, but in a more organic way — drawing on input from managers and employees throughout the organization.

Setting up the right EPG model amplifies value in other ways for an organization, too. For instance, it:

  • Helps the enterprise optimize E2E processes to deliver value for the entire organization (such as improved overall productivity or operational efficiency) instead of just a few businesses or functions
  • Fosters a clear vision of E2E processes, so the organization can adopt complex ERP applications and implement new commercial processes across multiple historically siloed operations; results include new cost-saving efficiencies and the ability to exploit fresh growth opportunities (such as through enhanced cross-selling and deeper intimacy with customers)
  • Enables the company to quickly adopt and get the most from IT tools and technologies it wants to incorporate into its business
  • Strengthens business leaders’ understanding of the enterprise’s commercial engine and focuses their attention on it, so that the engine can better drive execution of the company’s strategy and managers don’t get distracted by day-to-day operations
  • Helps the organization swiftly integrate new acquisitions and continue running them smoothly with common, established processes
  • Improves decision-making speed and quality while enhancing process controls; that’s because decision-makers understand which business requirements the processes they’re responsible for must satisfy and what constitutes top-notch performance from those processes

Processes across business models

Designing the right EPG model for E2E business processes is a transformative change, one that requires considerable thought and time. Executives must build a clear — and shared — understanding of what their BU requires from such processes. That means articulating what they need from the processes performed in their unit in order to extract the most value from their chosen business model. They have to know which business processes they should share with other units and which should remain unique to their own unit, as well as how local and global process owners can best serve the organization overall. Perhaps most importantly, they must be willing and able to let go of any impulse to optimize their own performance at the expense of other BUs’ performance.

It’s akin to sports: in football, for instance, an individual running back on Team A can have a very successful 100-plus-yard game and score multiple touchdowns. But if the defense isn’t doing their job, Team B may outscore them. The success of any one individual is moot if the team doesn’t win. Similarly, the success of any one team or BU at a company is moot if the company can’t achieve its goals. Managers who grasp this stand the best chance of helping their organizations capture maximum value from their most important business processes. As a result, they drive transformation of their organization from the inside out. And that form of transformative change will always prove more enduring than change imposed from the top.

Summary

Organizations must establish a common understanding of their business and who has authority over what decisions. Referred to as an enterprise process governance (EPG) model, this spells out the way in which people in the organization will decide how business processes should work to meet important requirements and to sustain change beyond the initial implementation. Such a model promotes commitment to and a sense of ownership over the changes the organization seeks to make. 

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