In the digital economy, organisations will prosper or not largely based on their ability to transform to align with ever-changing market or societal dynamics. Transformation encompasses the adaptation of an organisationâs value proposition and business & operational model to the fundamental changes brought by global trends, digital technologies and increasingly demanding stakeholders needs and expectations. Transformation will become a must-have core capability for success, be that for commercial or governmental organisations: given the raft of upcoming challenges those that are Gulf-based have a pressing need here.
In this white paper we argue that instilling the capability requires the creation of a dedicated Transformation Office, responsible for driving complex, disruptive change initiatives that have a profound impact on both operational structures and the strategy of the organisation. We outline the required remit and key focus areas of a Transformation Office (led by a Chief Transformation
Officer) and how it differs from, yet works alongside, conventional Project Management or of Strategy Delivery Offices.
2. The Transformation Office: a new organisational capability for the digital economy.2
In the digital economy, organisations will prosper or not
largely based on their ability to transform to align with
ever-changing market or societal dynamics.
Transformation encompasses the adaptation of an
organisationâs value proposition and business &
operational model to the fundamental changes brought
by global trends, digital technologies and increasingly
demanding stakeholders needs and expectations.
Transformation will become a must-have core capability
for success, be that for commercial or governmental
organisations: given the raft of upcoming challenges
those that are Gulf-based have a pressing need here.
In this white paper we argue that instilling the capability
requires the creation of a dedicated Transformation
Office, responsible for driving complex, disruptive
change initiatives that have a profound impact on
both operational structures and the strategy of the
organisation.
We outline the required remit and key focus areas of
a Transformation Office (led by a Chief Transformation
Officer) and how it differs from, yet works alongside,
conventional Project Management or of Strategy
Delivery Offices.
2
3. 3
The digital economy is driving unprecedented disruption for businesses and
governments across the globe. Global forces ranging from an exponential
technological change, steady shifts in the demographics mix, increasing
role of cities (replacing the countries as power houses) to the shift from
business executed in the âreal worldâ to the âdigital worldâ, have changed
the basic fundamental assumptions that structure the core value proposition
of both private and public sector organisations.
This fast changing environment has particular significance in the business
and government environments of emerging economies. The implications
are even more profound for GCC countries, where the economies are highly
dependent on fossil fuel. Organisations are facing an imperative - either take
the lead in transforming how value is delivered or lag further and further
behind in competitiveness, profits and/or citizen/consumer satisfaction.
While increasing numbers of business and government leaders across
the region acknowledge that transformation is key, the challenge they are
grappling with is precisely how to make this step-change happen. Based
on rigorous research, this white paper from ShiftIN Partners introduces
a new approach for driving transformation and one befitting the digital
age. Central to this is the establishment of what we call a Transformation
Office, led by a Chief Transformation Officer. But first we need to define
âtransformationâ.
The
Demands
of the
Digital
Economy
SHIFTIN PARTNERS Knowledge Library 3
4. Transformation encompasses the adaptation of an
organisationâs value proposition and business & operational
model to the fundamental changes brought by global
trends both economical and societal, digital technologies
and increasingly demanding stakeholders needs and
expectations.
Transformation nowadays is a balancing act between
adapting to new realities and maintaining the agreed course
of action. It requires organisationâs focus to the new ways of
living, doing business or providing services while it already
drives towards agreed long term achievements â strategy -
and during the execution of its key tactical and operational
action plans â projects.
From our perspective 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 residents. We categorize transformation into
three core verticals and three transversal transformations:
Core Vertical Transformations
âą Turnaround / Financial: The transformation that is
driven mainly by a seriously underperforming business or
organisation: as much as anything a survival imperative
âą Mandate / Core: The transformation that is driven by
changes in policy, mandates or of the Vision of the senior top
leadership (e.g., board, owner, heads of government)
âą Business Model: The transformation that is driven by
fundamental changes on the value proposition and/or the
way that products/services are delivered, the markets that
are served and the cost/revenues (or value) structures.
Transversal Transformations
âą Digital: The transformation driven by digitalising the
organisationâs DNA as well as key aspects (partially or fully)
of its value proposition.
âą Operational: The transformation driven by changes at the
core of the operational processes in pursue of efficiency
and optimisation, usually deep rooted in supply chain
transformation.
âą IT & Technology: The transformation of the current
technology and IT backbone of the organisation, driven
by an increase on demands from the business (or social)
environment
âą Support functions: The transformation of legacy structures
in terms of support (such as legal, HR, finance) driven by an
increase on demands from business (or social) environments,
as well as the continuous seek for efficiency, cost reduction
and service level increase.
In practice there are no clear boundaries between these
transformations, and most likely a core vertical transformation
is pegged by a good share of transversal transformation. For
instance, the change in a business model, where an entire
new value proposition will be introduced (e.g. moving from
physical products to digital services), will be dependent on a
set of internal transformations in terms of digital, operational
and IT components.
Transformation
Described
The Transformation Office: a new organisational capability for the digital economy.4
6. When discussing transformation, we cannot but consider
strategy. As transformation, whatever the scope, represents
such a substantive change for an organisation, it will
always be anchored to the longer-term strategy. Running
a transformation program will likely be encompassed within
the span of the strategic planning horizon and transformation
initiatives (typically mid-term in nature) will be the key
strategic initiatives that deliver breakthrough performance
improvement.
For many organisations today the requirement to transform
or fail (even die) is so critical that there is a pressing need
to re-think how organisations manage such mission-critical
initiatives. Transformation initiatives bring an additional layer
of complexity that other projects do not and often have a deep
disruptive impact on the organisationâs prevailing structural
and cultural dynamic. Transformation efforts can (and most
likely will) fail if is not properly and exclusively managed as
a unique set of initiatives. Such efforts can be made without
interfering with the ongoing tactical or operational action
while maintaining the direction towards agreed strategic or
long term outcomes.
We argue therefore that there is a pressing need for a
dedicated Transformation Office, responsible for driving
such complex, disruptive change initiatives.
Why Not The Project Management Or
Strategy Delivery Office
Many would counter-argue that prevailing organisational
functions already assume responsibility for transformation
programs. Most organisations already have well-
established Project Management Offices (PMOs) and/
or Strategy Delivery Offices (SDO â often called an Office
of Strategy Management; OSM). Both are essential for
driving performance improvement, but given their inherent
complexity and criticality, managing transformation cannot
and should not be done using the same approach used for
managing projects, strategy or performance. Both offices
sustain key responsibilities that should not be compromised
through additional mid-term complexity that may distract
the organization from the agreed direction or jeopardize the
ongoing actions on the ground.
While key decision makers could be tempted to embed a
transformation program within the scope of responsibilities of
the PMO or the SDO/OSM, we would strongly advise against
this route. The PMOâs mandate is to ensure that projects are
managed efficiently and to established procedures - be they
strategic initiatives or large tactical or operational projects.
As case in point, assume the implementation of a new
finance and accounting system within an organisation: this
can, and should be, steered by the PMO. It is typically a
complex project with many involved stakeholders (internal
and external) and so robust project management disciplines
will be key to successful implementation. But this is not a
transformation initiative.
Now when it comes to strategy implementation, a major
transformational effort can be seen as a key strategic
initiative, hence the natural owner is often seen as the
Strategy Delivery Office and this is often the preferred vehicle.
However apparently logical, we argue that this is no longer a
fit-for-purpose approach.
Transformation requires large amounts of change
management, coordination of complex stakeholders, and
more importantly people committed to make it happen and
that have the right skills. Organisations canât expect to deliver
a list of âtransformationâ, projects to the PMO and tell it to
get on with it, or expect that the SDO will do this with the
required focus, at the same time it executes its other key
processes (e.g., managing performance, strategic alignment,
managing risk, review and update the strategy, etc.). So we
argue for three distinct offices that have their own remits but
work together in driving performance.
The Need for a
Transformation
Office
The Transformation Office: a new organisational capability for the digital economy.6
7. Transformation Office: Case Examples
Consider the case of a large Government entity with a clear
Government to Citizens model, where service delivery is
critical - letâs assume a Health Organisation. If this entity
decides to shift its âbusiness modelâ to a regulatory model
where all of its services are no longer delivered by them but
are spun off into a set of different entities and companies,
it will have a profound impact on the way the organisation
is managed. The transformation that this entity will have to
endure will be substantial, and the need to maintain focus
and manage change will overriding success prerequisites.
Or consider a large financial institution, which operates in
retail banking, corporate banking, wealth management and
investment banking. If the bank decides to reorganise its
operations by creating two subsidiaries - one in charge of
centralising all its operations and other in charge of re-shape
all its digital banking services - the impacts on the entire
business will be profound. The expected implementation and
the degree of change associated will be very challenging,
hence having a proper governance of this transformation
and a stand-alone structure can bring that focus and help to
navigate through complexity.
When organisations merge, as a further illustration, the
transformational process is exclusively managed by a
dedicated office to guarantee success but also to allow the
merging organisations to maintain their short term and long
term course or journey. A similar case can be considered
when a governmental organisation is privatised: value or
service provision is maintained while a complex internal -
both operational and cultural - transformation is structured
and executed.
One-Size Does Not Fit All: Positioning The
Transformation Office
Note that we are not necessarily suggesting that all
organisations will require three standalone offices - one
size does not fit all. Organisational preferences regarding
structure and culture will come into play. In many cases the
role of the PMO can be well embedded into the SDO (most
of the cases) as can, the role of the Transformation Office
(TO). What is more important is to recognise the distinct,
yet complementary roles of the three offices. Each requires
its own remit and charter, whether merged or not. By being
fully cognisant of the specific requirements from all three
offices then joined-up, impactful end-to-end enterprise
performance management becomes achievable (from short-
term operational planning, through mid-term transformation
planning to long-term strategic planning): confusion, turf-
wars and the overlapping of efforts are eliminated with the
three offices laser-focused on what it has to deliver and how
this positively impacts the organisation more broadly.
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8. The PMO, SDO and TO: Key focus
Focus is on steering
profound / disruptive
change. âWe are
adapting to change
while remaining
relevant to our
stakeholdersâ
Mid-term, focusing
on complex initiatives
that profoundly
impact operations and
strategy.
Based on strategic
planning, the shaping
of mid-term plans
driving significant
change.
Performance managed
by project milestones
as well as for
strategic/operational
KPI achievement
Co-operate and
actively engage
stakeholders within
the transformation to
make the change
Deep understanding
of technology,
change management
and a knowledge of
present and emerging
disruptive elements.
Focus is in
delivering value and
manage strategy
implementation.
âWe are gradually
realising our expected
outcomesâ
Long-term, focusing on
delivering the ultimate
strategic vision
Big picture planning:
ensuring that
projects, processes
and actions are always
aligned to the strategy
Performance managed
by overall results
achieved and outcomes
delivered (strategic
KPIs)
Communicate and
engage stakeholders
for strategic reasons:
align everyone to
successfully execute
the strategy
Deep understanding
of Strategy Execution,
Performance
Management and
associated skills
Focus is in achieving
project efficiency.
âOur projects are on
time and on budgetâ
Typically short-
term, focusing on
operational/tactical
change. Though has
a role in ensuring
efficiency of longer-
term initiatives
Planning and execution
of work on projects/
initiatives and
deliverables
Performance managed
by project/initiatives
milestones achieved
Communicate and
engage stakeholders
for operational
reasons: run projects
without disruption
Deep understanding of
project management
world
Main Focus
Timespan
Approach
to planning
Approach
to performance
management
Stakeholder
& communication
Main skills
required
Project
Management
Office
Strategy
Delivery
Office / Office of
Strategy Management
Transformation
Office
The Transformation Office: a new organisational capability for the digital economy.8
9. Regardless if it is a business model transformation, an IT
transformation, or any other type of transformation, the TO
performs three core processes:
Global Steering
Anchored to the longer-term strategic vision, the more mid-
term transformation efforts must be well designed, managed
and subjected to effective governance models. Key sub-
components of Global Steering include:
. Architect Of Transformation
Given the inherent challenges and complexities and resource
requirements it must be clear from the outset how the
transformation initiative supports ultimate strategic goals.
Also critical is the design of a robust governance mode for
the duration of the effort.
. Coordination And Custodian Of The Transformation Plan
To steer successful execution a well-designed transformation
plan is required that is âownedâ by the Transformation
Office and has clearly identified roles, responsibilities and
accountabilities.
. Risks Management During The Transformation
It is important that the key risks that might derail the
transformation effort are identified, monitored and mitigated
through a risk management methodology.
Transformation Management
For the Transformation Office, process management has to
be considered through the transformation lens. This is quite
different to classic approaches to process management or
improvement. Key sub-components of this Transformation
Process Management include:
. Assess Trends And Technology That Hinders/Boost The
Transformation
A critical, and differentiated capability of the Transformation
Office is the ability to constantly monitor disruptive trends and
where appropriate apply proactive or reactive interventions
to counter/exploit these trends. In particular technological
trends and disrupters appear on the TOs radar screen.
. Identify Process That Need To Be Changed
Be they dealing with trends or disruptors or transforming
existing processes within the organisation, the TO identifies
those processes that have the greatest impact on the
transformation effort.
. Re-Design Processes That Support Transformation
The identified processes need to be redesigned to deliver to
the transformation goals. Clear as-is a to-be states need to
be described, with clarity around how these will be bridged.
Change And Stakeholder Management
A transformation initiative will always be a major change
program impacting multiple stakeholders. Failure to
recognize this reality will lead to marginal, if any, success in
delivering to the transformation goals. Key sub-components
of Change and Stakeholder Management include:
. Communication Planning
At the outset of a transformation initiative it is critical that a
strong communication plan is created, with clarity around
the messaging vehicles to be used for different audiences:
from face-to-face to digital. Although the overall message
needs to be consistent the language will differ according to
audience needs.
Transformation
Office
Framework
SHIFTIN PARTNERS Knowledge Library 9
10. . Stakeholder Engagement
As transformation profoundly impacts multiple stakeholder
groups, there must be a clear plan and process for ensuring
buy-in and engagement. Questions such as âhow does this
affect me?â âhow does this help me deliver greater value?â
and âwhat do I need to do?â need to be addressed.
. Capabilities Building
Transformation, by implication, requires upskilling of current
organisational capabilities and skills and/or the inculcation of
new ways of working.
. Change Management
Underpinning everything above is the recognition that
transformation is about change. It is by design a change
program. Transforming structures, processes, introducing
new technologies etc., can be extremely disconcerting to
an organisation and its employees. Carefully and sensitively
managing this change is paramount for success and
something the TO must always keep front-of-mind, especially
when they get engrossed into the more technical aspects of
transformation.
Communication
planning
Stakeholder
Engagement
Capabilities building
Change management
Assess Trends and
Technology that
hinders/boost the
transformation
Identify processes
that need to be
changed
Transformation
Management
Re-design processes
that support
transformation
Architect of
Transformation
Coordination and
custodian of the
transformation plan
Risks management
during the
transformation
Global
Steering
Transformation
Management
Change and
Stakeholder
Management
TRANSFORMATION
OFFICE
The Transformation Office: a new organisational capability for the digital economy.10
11. As the ultimate responsible of the Transformation Office, we
suggest a Chief Transformation Office (CTrO), who will be
well versed to perform four main macro roles: become the
transformation architect, provide digital expertise, manage
key stakeholders and act as positive disrupter.
It is important to emphasise that we are not positioning
the CTrO as a permanent C-Level role. In keeping with
broader changes that will be required to drive agility in
the digital economy, the CTrO position can be established
in an ephemeral time span, usually across the life of the
transformation. To an extent, the role of the CTrO mimics
the role of the head of a new product (such as the head of
a new product device in mobile communications) or when a
new disruptive project is launched (e.g., the head of a new
space mission).
1. Transformation Architect/Planner: Defining
and planning a transformation program is
similar to defining and planning a large urban
development: the ideas, concepts and master
plans put in place, once executed will have
profound impacts on the citizens/residents
of the urban development. Same with a
Transformation Office: the definition of the
Transformation (which will usually come from
the new strategy) and its implementation details
will have deep impacts in all the employees
as well as in a wide range of stakeholders
(from suppliers to clients). The office should
act as the Transformation Architect and
Transformation Planner, which from the outset
incorporates an understanding of the feasibility
and usability of the plan.
2. Digital Savvy Expert: While we believe
there is not such concept as a digital strategy,
just strategy in a digital world, itâs a must for
the officer to be digital savvy in order to be
able to cope with all the technological of the
transformation.
3. Stakeholders Manager: Change is
embedded in transformation, and the degree
of change that needs to be properly managed
in the implementation will be significant and
must not be underestimated. Having sound
change management processes and equally
robust stakeholder management processes
are not just an important role of the officer, but
perhaps the most critical role.
4. Positive Disrupter: The âpositive disrupterâ,
is perhaps the most challenging of the four
roles. This consists of challenging the status
quo of the organisation structures (and its
stakeholders) without antagonising the different
responsibles (e. g., executives/managers) that
are being disrupted.
Role of
the Chief
Transformation
Officer
SHIFTIN PARTNERS Knowledge Library 11
12. The Transformation Office: a new organisational capability for the digital economy.12
As we sequence through the early decades of what
is being called the âdigital economyâ, organisations
(be they commercial or government) are challenged
to adapt structures and working practices to the new
realities. The demands are heavy and unprecedented
and how organisations will be reconfigured going
forward is still work in progress â and will be for some
time.
But what is already glaringly evident is that agility and
the required focus on transformation will become
hallmarks of the most successful organisations -
and increasingly a perquisite for survival. Building
the structures, governance and process models that
make transformation a core organisational capability
will become an organisational âmust-haveâ. A
dedicated Transformation Office, that is distinct to a
more conventional Project Management or Strategy
Office, is, we argue, a critical step in building this
must-have capability.
Call to Action /
Transformation
Implementing the
Transformation Office
The implementation of an office to manage
transformation is on its own is a complex process,
which requires accurate planning and master
execution. Once the transformation intent is defined
at the strategy level then, and based in our experience,
a Transformation Office implementation span ranges
between five to eight months (depending on the type,
size and characteristics of the organisation) and
is divided in three different stages: Design Phase,
Establishment Phase and Operation Phase.
The design phase spans across 1.5 to three
months, and the establishment phase between
3.5 and five months. In both phases the TO
organisation structure is defined, the transformation
management methodology decided, the project
portfolio management governance (and interactions
with other areas -in particular the PMO and SDO)
and the tools needed to manage the transformation
identified.
13. Rafael Lemaitre â Partner and
co-founder at ShiftIN Partners.
A seasoned strategy management
consultant who has led projects in a
variety of industries and cultures in
the Americas, Europe and the Middle
East. His areas of expertise are Strategy
Execution and Innovation Management.
He holds a MSc by the Rotterdam
School of Management, and currently
is pursuing a PhD on Innovation at the
United Nations University â Maastricht
Economic Research Institute on
Innovation and Technology (UNU-
MERIT).
You can reach Rafael at
rlemaitre@shiftinpartners.com
James Creelman â Founder Creelman
Strategy Alliance
James Creelman is an author,
practitioner and advisor specialising in
strategy management and the founder
of Creelman Strategy Alliance. Having
advised corporations across the globe,
he is a recognised thought leader in the
Balanced Scorecard and related fields.
He is the author of 24 in-depth research-
based management books, including
Doing More with Less: measuring,
analyzing and improving performance in
the government and not-for profit sector,
(Palgrave Macmillan, 2014), Risk-based
Performance Management: integrating
strategy and risk management (Palgrave
Macmillan, 2013) and Creating a
Balanced Scorecard for a Financial
Services Organization (Wiley & Sons,
2011).
You can reach James at
james.creelman@gmail.com
Roberto Wyszkowski âPartner and
co-founder at ShiftIN Partners.
An entrepreneur, experienced practitioner,
trainer and management coach in
the fields of Strategy Planning and
Execution, Performance Management
and Innovation. He has trained and
coached over a thousand managers
in both for profit and non for profit
organisations across the world. Chemical
engineer with an M.S. in Environmentally
Sustainable Process Technology and
postgraduate studies in Finance and
Statistics at Northwestern University
(Chicago, USA).
You can reach Roberto at
rwyszkowski@shiftinpartners.com
About The Authors
SHIFTIN PARTNERS Knowledge Library 13
14. ShiftIN Partners is a leading strategy management consulting firm
focused on helping clients manage strategy and innovation programs
that enable the organisation to achieve the necessary Shift, working from
withIN.
With decades of accumulated experience from around the world, our
consultants have a track record on helping organisations in the emerging
markets to overcome the challenges related to strategy execution. We are
recognised for our obsession towards implementation, simplification and
results.
ShiftIN Partners has Offices in Abu Dhabi, Dubai, Riyadh, Chicago and
Lisbon.
For more information visit:
www.shiftINpartners.com
@shiftINpartners