Transform Magazine #1

BT Summit Round Up

Dec 2014 / Jan 2015 Issue # 01bi-monthly magazine for successful business transformation

A report on the business transformation event of the year, as transformation leaders from around the world met in Berlin.

Why transformation intent does not lead to transformation success for many

Digital is appealing, but how do you avoid falling off a digital wave?A look at value management philosophy

Maximising Investment Value of Transformation

Strategic Intent Without Transformation Capability

Ready To Ride a Digital Wave?

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First IssueWelcome to Transform

For 22 consecutive months I published ‘Business Transformation Monthly’ as an electronic newsletter via email and I am extremely pleased by how the subscriber base grew in that time. From CEOs to Project Managers, in countries right across the world, every day a few more people would sign up to receive insights on business transformation management. Some have gone on to become good friends and colleagues in the business transformation community, while others have become clients and partners.That publication has undergone its own transformation and evolved into what you are now reading, which is the inaugural issue of “Transform”.

Rob Llewellyn- encouraging better business transformation

What’s Ahead

Every two months, “Transform” will provide short articles and small chunks of information that will resonate with C-suite executives who need to realise strategy, and transformation managers who are charged with enabling strategic intent.

Every month I engage with executives and transformation managers who are responsible for achieving successful business transformation in their respective organisations. Whether they come from manufacturing, banking, energy, technology, or another sector, they all share similar challenges.

Transformation is never easy, but by applying a proven transformation management approach, using the right calibre of people, executives will immediately help de-risk their efforts to realise strategy, and look forward to enhancing not only their company’s reputation, but also their own.

Whether you feel the need to reach out to me to discuss an article, a transformation challenge, or seek some help or collaborate; I will be delighted to hear from you.

Enjoy the read!

Rob LlewellynFounder and

DirectorCXO Transform

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Summary

BT Summit Round Up04

Maximising Investment Value of Transformation

06

Recent Books on Transformation

07

Strategic Intent Without Transformation Capability

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Ready To Ride a Digital Wave?

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Risk – The 4th Dimension of Business

14It is becomingly increasing common for executives who sponsor transformations to work with certified business transformation advisors. These trusted advisors help executives make the informed decisions required to achieve transformational success.

Even the best businesses can get stuck doing what they believe is a timeless solution to profitability. Then their customer-base begins to shrink, they fail to attract new customers in the way they used to, and the best of their workforce start jumping ship. When this happens, businesses are confronted with the harsh choice of transforming or withering away. But transforming is not quite so easy because while the companies might have a competent operational workforce, the specific capabilities required to undergo successful transformation, are not what operational staff are experienced and trained in. Leaders who believe their teams can become overnight experts as business transformation professionals usually find themselves becoming another statistic among the 70%+ of transformations that are unsuccessful.

The Business Transformation Challenge

While many C-suite executives and directors are keen to prove their transformational leadership capabilities, if they want to be among the minority 30% that succeed, they need to facilitate a holistic approach to business transformation, and steer clear of the common pitfalls that most fall into. The most successful leaders adopt a proven business transformation methodology and engage experienced and certified business transformation management expertise. These are the leaders who recognise that business transformation cannot be run as a series of technology projects, if their business transformation is to be successful. These are the leaders who understand that transformation requires innovation capabilities, transformation management capabilities, IT excellence and the right business goals.

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The 4th Global Business Transformation Summit was hosted by SAP in the sensational Adlon Kempinski Hotel in Berlin on 10 and 11 November. Those who arrived on the Sunday were fortunate enough to soak up some of the festivities put on to celebrate the 25th anniversary of the fall of the Berlin Wall.

SAP Services and the Business Transformation Academy certainly demonstrated how exceptionally well they look after their customers and community. From start-ups to some of the world’s greatest brands, and from academics to global executives, an energetic blend of transformation passion filled the air.

Coined as “Innopreneurship”, an exciting fusion of innovation and entrepreneurship was the focus of this year’s event. Traditional businesses were given the opportunity to learn from entrepreneurs about new collaboration and communication models and how a start-up-like mind-set and culture can foster innovation in both large and small organisations. Similarly, start-ups were given the opportunity to learn from those with more experience in the world of business.

BT SUMMIT ROUND UP

Meeting Conclution

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This was an event where some of the world’s most committed business transformation experts gathered to exchange views, expand their networks and hear the mixed experiences of those who have been at the centre of some of the world’s most complex business transformations.

The Business Transformation Academy and SAP also used the opportunity to leave a copy of the new book “Digital Enterprise Transformation” in the hotel rooms of those attending the event. Read more about this exciting new book on page 9.

The eclectic line-up of speakers included the phenomenal speed-climber Alexander Huber, executives from Landcover, SAP, BMW, and one of the most cutting edge banking CEOs in Europe - Matthias Kroener. These and many others shared their successes, failures and learnings, in an effort to help others approach transformation in a better way.

The event provided hundreds of transformation practitioners with the opportunity to expand their global networks, meet top thought leaders, build a mindset for the future, and take away new ideas that can help shape their companies’ DNA.

Above: Lalit Jagtiani and Rob Llewellyn

Above: Ian Kingstone, Rob Llewellyn and Michael von Kutzschenbach

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Maximising Investment Valueof Transformation

he likes of the CEO and CFO can often be heard asking, “are we maximising the value of our investments?” – and quite rightly so.

But those overseeing transformation programmes sometimes struggle to provide data-driven responses to their stakeholders, often because the maturity of their organisation’s Value Management is low or even non-existent.

A lack of Value Management, which also consists of Benefit Management, has been one of the typical root-causes of the infamous gap between IT and the Business. While the world is talking about digital transformation, organisations should never lose sight of the fact that the end-goal of their digital initiatives is to deliver benefits and value for money - whether that is for customers, operations or workforce.

Bi-products of mature Value Management include conversations and reports that heads of business functions can relate to, and which provide C-suite executives with the data they need to make more informed decisions and increase their levels of confidence. However, while Value Management is one of the nine transformation management disciplines required for holistic business transformation, it is often missing or subjected to a light-

T

BUSINeSS TRANSFORMATION IS UNDeRTAkeN TO geNeRATe VAlUe, BUT OFTeN TheRe IS lITTle cORRelATION BeTWeeN The VAlUe DOcUMeNTeD IN A BUSINeSS cASe, AND The VAlUe ReAlISeD.

touch by being treated as a “tick in the box” exercise.The underlying philosophy of Value Management involves creating a shift towards benefit-oriented management as follows:

• From technology delivery to benefits delivery• From value for money low level task monitoring to value for money benefits tracking• From IT implementation plan to change management plan• From business managers feeling like victims to business managers feeling involved and in control

By making this shift, combined with good organisational change management and stakeholder management, relationships between IT and the business will automatically improve, and the value of the CIO’s function will also increase in the eyes of business stakeholders.

Philosophy

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What is Value Management?

Value management involves establishing the transformation objectives and engaging key stakeholders in defining the business benefits and changes needed to realise them, evaluating the feasibility of making the changes successfully, and producing an evidence-based, rigorous business case and supporting benefits realisation plan. This includes reviewing and evaluating achievement of the benefits against the investment justification.

The BTM² Value Management discipline consists of four phases:

1. Value identification2. Benefit realisation planning3. Execute benefits plan and evaluate results4. Establish potential for further improvements

Within each of the phases is a detailed set of activities - all based on proven techniques for identifying, planning, managing and evaluating the benefits of a business transformation programme.

The State of Value ManagementWhen the Business Transformation Academy (BTA) assessed 13 large-scale European transformation programmes, Value Management was one of the most poorly performed management disciplines, with value estimation, benefits realisation planning and transformation business case assessment being common shortcomings. If some of the most mature organisations in Europe fail to get Value Management right, can you imagine the scale of the problem among the vast majority of smaller and less equipped firms?

Value Management done right, is hugely beneficial to transformation executives, their stakeholders, and the overall success of the transformation programme. Value Management is not rocket science, but neither is it a capability that is found in any abundance. However the smart transformation executives know that a truly successful transformation programme cannot be achieved without it.

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The authors explain how true digital masters have embraced the digital age and found increased profits as a result. This book is a must-read for any executive who is determined not to be buried six-foot-under in the pre-digital graveyard, along with those that were complacent enough to become slaves to the models of yesteryear.

The book shares research conducted with over 400 companies, and explores the DNA of digital masters and what they do differently. These are the companies that go beyond the likes of mobility and social media. The companies that understand they need to excel in both digital capabilities and leadership capabilities. The book provides how-to examples and case studies for leaders who are looking to venture into the true digital age, and is split into three parts:

• Building Digital Capabilities• Building Leadership Capabilities• Back at The Office - a leader’s playbook

A solid reference for everyone involved in digital transformation, the book is ideal for C-suite executives, managers, consultants and academics, and the 300+ pages unfold the value of new technology and how Digital Enterprises do business with these technologies. The rich and insightful pages also present readers with a stream of new business opportunities that are based on digital technology.

The book provides readers with The Digital Capability Framework (DCF), which is a strategic management toolset that helps define a customised plan to transform an organisation into a Digital Enterprise. The DCF does this by enabling organisations to obtain clarity about what maturity level they have in terms of six Digital Capabilities, what maturity level they wish to attain, and how they intend to achieve this. The DCF is also comprised of four building blocks.

Leading Digital Digital Enterprise Transformation Turning technology into business transformation

By Didier Bonnet, George Westerman and Andrew McAfeePublished by Harvard Business Review PressISBN: 978-1-62527-247-8

a business driven approach to leveraging innovative IT

By Axel Uhl and Lars Alexander GolleniaPublished by GowerISBN: 978-1-4724-4854-5

Discover more at: www.leadingdigitalbook.com

Discover more at: www.gowerpublishing.com/isbn/9781472448545

Recent Books on Transformation

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Strategic Intent Without Transformation capability

BUSINESS TRANSFORMATION MANAGEMENT CAPABILITYA prerequisite for transformation success

Until recent years, many companies relied upon project management approaches to achieve successful business transformation. There was the assumption that the evangelised and widely adopted project management approaches were not only fit for project delivery, but that they could also be adopted as an approach to transformation.

The harsh reality couldn’t be further from the truth as painful and disastrous transformation programmes riddled organisations throughout the world, leaving company executives with egg on their faces as they struggled to explain to Chairmen and other stakeholders, why they were unable to realise the strategic intent they had promised.

The fact is that traditional project and programme management is only one of nine components of successful business transformation management. They are key components, but so much more is required if a company is committed to being among the minority 30% that achieve successful business transformation.

ith a world that requires companies to transform or step away from the table, executives are highly focused on strategy

that includes innovation, digitalisation and ambitious transformation. Every company needs great strategy, but research and the history books repeatedly demonstrate that those who create strategy that can truly improve their business often wrongly assume that they have the capability to realise that strategy. The reality is that over 70% of executives commit to realising strategy that they fail to achieve - largely because their organisation lacked the right transformation management capability.

This is not dis-similar to the keen sailor who has the passion, ambition and money to purchase a yacht that’s fit to sail around the world, and assumes his regular sailing-mates will be capable of successfully undertaking a round-the-world voyage with him.Because the passionate sailor with a healthy budget is missing one key component called ‘capability’.

The fact that over 40% of the companies that were at the top of the Fortune 500 in 2000, were no longer there in 2010, should be encouragement enough for executives to invest in the right transformation capability, and not simply assume that their operational teams have what it takes to enable strategic intent.

WProject Management is not Business Transformation Management

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After extensive research and collaboration with transformation practitioners and leading academics, the Business Transformation Academy in Switzerland addressed this widespread issue and in October 2012 published the BTM² Business Transformation Management Methodology Handbook (available from Gower).

Since then, around 200 senior business consultants and transformation executives have become certified as Global Business Transformation Managers (GBTM) who are equipped with the leadership and management qualities, BTM² knowledge, and transformation experience required, to act as a trusted advisor to C-suite executives and help them achieve their strategies.

Transformation Management DisciplinesMeta ManagementStrategy Management:Value ManagementRisk ManagementProgramme and Project Management Business Process Management:IT Transformation ManagementCompetence and Training ManagementOrganisational Change Management

BTM²

Certified Transformation Management

When seeking the right expertise in any profession, it is always wise to ensure the professional you engage with, has the relevant certifications required in that profession. This applies when looking for a Solicitor, Project Manager, Architect or Business Transformation Manager. Then of course you look for their experience in their respective field, testimonials and their published expertise across the Internet.

Around 200 BTM² certified Global Business Transformation Managers in the World.

A good start …but not enough to go around.

BTM² PractitionersTo find a certified BTM² consultant to help your organisation ensure it has the capability required to achieve strategic intent, search for BTM² consultants on LinkedIn, etc.

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Ready To Ride a Digital Wave?A DIgITAl ReVOlUTION hAS AlReADy BegUN AND The WORlD IS AWASh WITh START-UPS DISRUPTINg BUSINeSS - SOMeTIMeS SeTTINg OFF SOMe STARTlINg WAke-UP cAllS FOR eSTABlISheD cOMPANIeS.

While larger, not all firms can be as nimble as start-ups, neither can they afford to simply get left behind on the shore and watch their younger more agile competitors catch the digital waves. The complacent “we don’t need digital” approach is what will see many a firm get left behind the same way that Kodak once did, after years of feeling their were unstoppable.

In many organisations, the gap between the level of desire to ride a digital wave and the level of ability required to ride it is often a frightening one. Despite ambitious strategies, many firms are by no means equipped with the right level of innovation and transformation capability, and fundamental IT excellence required to successfully transform themselves into a digital enterprise.

The Digital Transformation FrameworkIn November 2014, SAP and the Business Transformation Academy published the Digital Transformation Framework (DCF) in the book

On no account should the digital transformation be limited only to the topic of IT Transformation. Without addressing the business site, and the identification of business needs and capabilities, digitalisation might be doomed to failure

“ “

“Digital Enterprise Transformation”. The DCF is a strategic management tool that helps define a customised plan to transform an organisation into a digital enterprise. It does this by enabling organisations to obtain clarity about what maturity level they have in terms of six Digital Capabilities, what maturity level they wish to attain, and how they intend to achieve this.

Thought leaders who contributed to the book clearly state, “on no account should the digital transformation be limited only to the topic of IT Transformation. Without addressing the business site, and the identification of business needs and capabilities, digitalisation might be doomed to failure”.

Six Digital CapabilitiesThe six digital capabilities specify the key functions and skills that are required to become a Digital Enterprise, and they are classified as ‘Digital Transformation Enablers’ and ‘Digital Transformation Goals’, as illustrated below.

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Digital Transformation Enablers

Innovation Capability enables an organisation to generate, identify, assess, and realise new products, services and processes facilitated or driven by digital technologies and management practices.

Transformation Capability is defined as the holistic management of extensive, complex changes on which the organisation’s future success strongly depends.

IT Excellence means that an organisation’s IT function is capable of providing excellent IT solutions to support its overarching digital transformation goals. IT excellence can include areas from data security to mobile devices, and from IT platforms to IT staffing.

Digital Transformation GoalsOnly when a company has the appropriate skills for digital transformation, should it pursue the desired Digital Transformation Goals of Customer Centricity, Effective Knowledge Workers, or Operational Excellence. For Digital Enterprises these goals involve achieving high-level skills in understanding customers, having a close relationship with them, to be able to provide highly motivated and collaborative working environments, and ensure process execution is highly effective and efficient.

A Digital Enterprise excels at innovation and has the business transformation capability to derive real financial benefit out of leveraging digital technologies. But even if a company can both rapidly sense and want to take advantage of new technologies, it must have the capabilities to do so, which is where many companies trip over their own naive assumption that their existing team can suddenly become overnight transformation management experts. Compromising on capability can almost guarantee a company a troubled transformation.

Closing the Capability GapDigital Capability Maturity Models are the structured assessments used to evaluate the digital maturity of an organisation. You can engage a BTM² business transformation consultant to work with your teams to undertake an assessment of your organisation’s current DCF maturity levels, and identify the improvements required to close any gaps, in order that the organisation is properly prepared to embark on the achievement of its Digital Transformation Goals.

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ome have said that Risk is becoming the fourth dimension of business. People were the first dimension; Process the second;

Technology became the third, and embedding Risk as the fourth dimension of business has the potential to fundamentally transform how organisations connect risk to reward.

Many organisations achieve results from risk by mitigating overall enterprise risk, increasing efficiency and reducing overall cost of controls, and creating value via a blend of risk mitigation and cost reduction

A study by Ernst & Young found that while most organisations perform the basic elements of risk management, the top performers do more. The study revealed that risk practices that were consistently present in the top 20% of performers, were not present in the bottom 20%. The risk practices that were found to be critical to transforming risk and driving better business performance were:

• Enhancingriskstrategy• Embeddingriskmanagement• Optimisingriskmanagementfunctions• Improvingcontrolsandprocesses• Enablingriskmanagement• Communicatingriskcoverage

The most successful leaders know that turning risk into results gives them a competitive advantage. Those who have not grasped the advantages yet, often have no idea what the return on risk investment could be. These leaders need expert guidance to adopt the risk practices prevalent among top performers, and to better understand the value of good risk management.

RISk – The 4th Dimension ofBusiness

S After 576 interviews with companies around the world and a review of more than 2,750 analyst and company reports, the positive relationship between risk management maturity and financial performance was established, suggesting:

• The top-performing companies (from arisk maturity perspective) implemented on average twice as many of the key risk capabilities as those in the lowest-performing group.

• Companies in the top 20% of riskmaturity generated three times the level of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) as those in the bottom 20%.

• Financialperformanceishighlycorrelatedwith the level of integration and coordination across risk, control and compliance functions.

• Effectively harnessing technology tosupport risk management is the greatest weakness or opportunity for most organisations

Operational Risk, Transformational Risk, Governance & Compliance, Strategic Risk, Financial Risk and Opportunity Management, should all appear on the executive’s radar. The challenge for many companies is, “how do we get there?“

Business Transformation Management (BTM) is the holistic management of extensive, complex changes on which an organization's future success strongly depends.

30% DISCOUNT FOR TRANSFORM READERS ON THESE TITLES ALL PUBLISHED WITH THE SUPPORT OF SAP

www.gowerpublishing.com

‘In my opinion this handbook encompasses all relevant aspects of a professional approach to business transformation.’

Reza Nazeman, CIO Europe, Middle East & Africa, Microsoft

‘The handbook brilliantly combines art and science marrying the experience and expertise of highly successful practitioners with multi-disciplinary methods, underpinned by the best practices of the leader in enterprise technology solutions.’

Lilian Corvington - Global Director EVO Program at Vodafone

‘Many congratulations to Axel Uhl, Lars Gollenia and their extended team for the wealth of business transformation guidance they have provided throughout this book…’ Rob Llewellyn – independent consultant

This book provides an integrative Business Transformation Management Methodology, the BTM², with an emphasis on the balance between the rational aspects of transformation and the often underestimated emotional readiness of employees to absorb and accept transformation initiatives.

Using a variety of case studies, this book provides unprecedented insights into characteristics of current transformation programs and their potential benefits.

In order to embrace recent challenges and changes in the governance of IT strategies, SAP and its think tank – the Business Transformation Academy (BTA) – have jointly developed the Digital Capability Framework (DCF). Digital Enterprise Transformation outlines this framework which supports companies in analyzing their business potential generated by systematic usage of innovative technologies.

READERS OF TRANSFORM CAN BUY ANY OF THESE BOOKS AT 30% DISCOUNT SIMPLY QUOTE G14JDA30 AT THE CHECKOUT.

Rob Llewellyn - Transformation Consultant

GET THE RIGHT CAPABALITY ON BOARD

Because no ambitous journey will succeed with less

As trusted advisors to transformation executiveswe provide the capability

which enables strategic intent

business transformation advisory & management programme start-up,

management and recovery

contact us for information or to request a free consultation +44 20 3239 3525 [email protected]

www.cxo-transform.com