It’s a sobering situation: many organizational transformation programs fail to deliver the hoped-for results.
Why do so many organizational transformation programs fail? Some organizations cite weak project management and reporting, inadequate focus on the effort, mid-stride changes in leadership and poor budgeting. And some people view change efforts through a narrow lens, overlooking the new behaviors and attitudes required for the change.
What’s more, people often don’t understand the business strategy behind the effort and the operational changes required to support execution. They may try to over-customize the change approach, processes and tools — or senior leaders may try to force a one-size-fits-all approach on every part of the organization.
Wanted: a better way
To overcome these difficulties, an organization could benefit from establishing what we call an enterprise process governance (EPG) model, a common understanding of its business and who has authority over what key decisions and processes. It details the way in which an organization’s people decide how business processes should work to meet important requirements and to sustain the transformation. The model clarifies who has decision authority — and their levels of decision authority — across the end-to-end (E2E) processes that the change involves.
With the right EPG model, organizations can effectively execute the business process changes that come with major transformation programs. An organization should create an EPG model that drives standardization only where appropriate and accounts for its unique attributes.
A good EPG model guides process decisions and actions while helping everyone agree on who should lead which steps in each E2E process. Such consensus promotes an overall sense of commitment and ownership, and effective management of new or reconfigured processes then emerges organically.
These gains lead to an organizational culture of accountability for results and commitment to ongoing improvement, along with an ability to flex in a changing environment. The result is an enterprise that can seize opportunities and surmount emerging challenges — before rivals can.
A closer look at EPG
Sound EPG models establish process decision rights that take into account the complexity of both business processes and businesses. For each E2E process (and subprocess), an organization must define decision rights for seven key governance elements:
- Process design. What steps, activities and key decisions are required?
- Delivery model. Who should execute, or perform, the process (or sub-process)? Where should it be performed?
- Policies and controls. What must be done to mitigate risks to the organization’s operations?
- Platforms and technology. What hardware, software and other tools will be needed?
- Data definitions and standards. What do the process’s data elements mean, and how should they be represented?
- Improvement opportunities. How does the process currently work? What problems does it have, and how might they be corrected?
- Performance measurement. What KPIs will we use to monitor the process’s efficiency and effectiveness?
Ownership of any E2E process is not necessarily all-or-nothing. An organization’s EPG model and choices about decision rights should be informed by an understanding of the unique similarities and differences between the organization’s distinct business models. In a large, complex organization, business units (BUs) often have their own business models, which defines how they create, deliver and capture value.
Those business models have their own sets of operating requirements, which should influence organizational choices about the operating model and the levels of authority they assign to process owners. BUs often share common processes and process requirements, but they may also need to tailor such processes to meet the distinct requirements associated with their business models.
Aligning on the roles
E2E processes that are common across business models can be scaled, repeated and executed consistently across the organization. A single Global Process Owner (GPO) determines where the organization wants to go with a process.
With a highly differentiated E2E process, a BU leader will most likely retain decision rights on the process’s execution, with input from a GPO. The GPO may set common standards for the process, but execution differs to accommodate the BU’s needs and requirements.
To determine which processes should be either common or differentiated, executives must consider how similar or different the BUs’ requirements are, and how crucial a process is for competitiveness.
Designing the right EPG model for E2E business processes requires thought and time. Executives must build a clear, shared understanding of what their respective BU requires from such processes. That means articulating what they need from their units’ processes in order to extract the most value from their chosen business model. They must also let go of any impulse to optimize their own performance at the expense of other BUs’.
Managers who do this stand the best chance of helping their organizations capture maximum value from their most important business processes.
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