June 22, 2021

Part 1 – Ambition and Enthusiasm

Many businesses are engaged in some type of Transformation Program at the direction of their board or executive leadership with the expectation for huge synergies, a dramatically improved company image, or an aggressive response in a disrupted industry. Strategic consultants lay out the significant benefits of massive change and the dire consequences of not transforming their enterprise to battle the competition.  These programs may focus on customer experience, digital engagement, technology and automation, supply chain optimization, industry evolution, process efficiency or all of these.  The promised result may be measured in terms of revenue lift, CSAT scores, cost reduction, organizational effectiveness, working capital reduction, or merely survival.  This paper will not look at the advisability of taking on an ambitious Transformation program since in reality most of these programs stall out, underperform expectations, or completely fail. The focus of this paper will be on how to transition Transformation efforts into the actual operations of the business.  The term “Operations” includes the front-line business, middle office, and the supporting services.  I have had leadership roles in each of these Operations for various Transformation efforts.  At times, I was the driving leader for the project and other times I was trying to make the program work in the day-to-day business.  For one ambitious multi-year project, I was playing both sides – Transformation and Operations.  This paper explores that critical time surrounding Transformation “Go Live” or what I like to call the “Messy Middle.”

The Transformation Program needs to be intricately linked to the Strategic Plan.  Make sure the operations leadership clearly understands how Transformation enables both the Strategic Plan as well as operational strategy.  More importantly, Operations must realize how far the executives are willing to take the level and pace of change.  Lofty transformation goals need to be balanced with risk tolerance.  For example, is sales leadership willing to deliver enhanced digital customer engagement solely through self-service, chat bots, and offshore online agents and make that transition in six months?  Or is there a role for trimmed down customer service team and sales associates for an extended period?  Usually, this risk tolerance needs to be placed on a sliding scale from no risk to high risk.  A high-risk project puts much more pressure on Operations.

Frame the strategic intent with Guiding Principles that are directly aligned with Vision, Mission, and Strategy of the business and are clearly linked to the operational priorities.  A high-level strategy is ineffective if it does not translate down to the day-to-day operations and, more importantly, the front-line workers.  Do not allow the business case to be the overriding theme of the Principles.  Likely, the business case benefits will erode over time. Communicate these Guiding Principles early and often to the operations team. The change management program will use these as its foundation to link specific principles to the changes that are occurring.   Use the Guiding Principles as a tagline for every presentation.

The structure and staffing of the Transformation project team will determine the success of the efforts.  Depending on the organization, Operations groups participating in the effort will include shared services (GBS), field support functions like finance and HR, middle office groups like sales, supply chain, and procurement, and corporate functions like internal controls and IT.  The scope and impact of Transformation drives the participants.  Regardless, Operations must have a regular voice and provide both dedicated resources who understand broad operating issues and subject matter experts with deep, detailed knowledge.  Free up team members from their day jobs.  Groups of parttime volunteers will not transition the Transformation to Operations successfully.  This team will be especially useful during detailed design, testing, initial operations, and issue resolution.  They need to be heard and supported if Operations is going to buy into the transformation.  This type of grass roots effort is critical.  Finally, designate a well-known, respected leader as the key, consistent spokesperson for Transformation.  This leader will serve as sort of a sentry to the project team to prevent Executive stakeholders from becoming overly intrusive and as caretaker for the interests of the impacted Operations stakeholders.  If you are that person, be positive, earnest, transparent, and resilient but most of all have a strong tie to Operations.

In any Transformation, there are a wide range of ownership and accountability issues, but Operations must have clarity on what group has ownership of Process.  Companies with “Global Process Owners” have fewer issues but this structure is the exception.  Try to establish how Process is managed.  Is it truly End-to-End (e.g., Order to Cash) or divided (e.g., Order to Invoice, Invoice to Cash)?  Is it Functional (e.g., Sales, Purchasing, Accounting, etc.)? Or like in many companies just undefined as “everyone owns process.”  Listen at your next Transformation meeting how many times people use the word “Process.”  Then ask the question, “Who owns process?”  When I did that at one C-Level meeting, the conversation pretty much died.  I proposed that our company needed a Chief Process Officer.  That concept never got traction and Transformation efforts struggled.  Businesses need to grapple with process ownership if Transformation is to become operational.

Once Process Ownership is resolved or at least unambiguous, prepare detailed current and future operating task and process execution maps typically at the L2/L3 process level.  This represents who is doing the work, where the work is being done, and who has Operations accountabilities.  While these Process Execution maps will reflect the current organization, this phase must quickly move to designing the future organization model.  The team must focus on the end state based on what is possible via technology, industry best practices, and automation to drive process and control efficiency.  This step is especially critical when work is moving from one group to another, when your company is outsourcing the work, or when there is large scale disruption in the staffing and organization.  You need to include groups like field, corporate, shared services, outsourcer, et al when pushing through process mapping.  Begin to identify “stranded” and non-standard work which will not be completely identified until change management or later.  Often these “one-offs” are critical to key customers, suppliers, or Operations and will come back to haunt the transition.  Future exceptions will create noise that drowns out the Transformation story.  After the Process Execution maps are complete, build role profiles from tasks, not vice versa.  Starting with names in boxes or positions that is a step-change from current state rarely leads to the optimal structure.

This phase of the Transformation Program builds a foundation to move forward but much of the work is higher level with optimistic, simplifying assumptions.  Within the team, there is much enthusiasm to deliver significant change, provide an improved future state, achieve that lofty business case.  As the team starts pushing on process and the impacted organizations, reality begins to sink in.  Many people call this time the start of the “Messy Middle.”  Part 2 of this paper will address some of the key issues during the next phase.

By:  Chris K. Davis | Affiliate