Business change should not be made without the context of current business performance, nor without key metrics to which to the impacts and outcomes of change should be aligned and measured.
Trying to change while running conjures up comical images that inevitably result in some form of chaos, stumbling or catastrophic mishap. While this may work well for the likes of Laurel & Hardy, the equivalent in business is rarely funny. However, as businesses undergo change to their operations, they cannot stop business-as usual (BAU) or “Run” activities. So, how do you avoid the mess and pain of changing while running ?
Before we get into that, it is important to recognize that business change should be made in the context of the performance of the business as-is, and the market as a whole. Without having reasonable metrics around how your business is doing now, how do you identify operational performance problems (e.g. poor customer retention, decreasing operating efficiency, resource utilization), assess the opportunities for improvement, or understand the impact of potential changes ? The performance of your current business operations, as well as external market forces, will drive the need for change. That can mean the automation, streamlining and optimization of processes. It can also mean putting new systems, procedures and controls in place.
So, change really needs to be assessed in terms of its specific impacts to the current business, what benefits will be realized, and at what cost. Therefore, change ought to be thought through the lens of a business case that drives specific outcomes that can be measured against strategic objectives and Key Performance Indicators (KPIs). Do you do that ?
Looking at change in isolation, without its impact on “Run”, really makes no sense at all. Yet, this is exactly what many change initiatives across many industries do — especially when re-evaluating ongoing change projects that may be behind schedule, for example. I have seen so many organizations create some initial business proposition, but once the program is off and running (and changing, sometimes with a lot of drifting), they do not tie back to the original goals.
By way of clarification, I am not suggesting that every last minutae of operational process or every “run” project is lumped together with strategic change initiatives. Rather, it is important that core business operations and processes and strategic change are considered together.
Change As A Business Case
Having strong controls and view of your whole business also gives you the ability to build strong business cases for change. The good news is that, increasingly, businesses are using data and analytics to operationally manage and measure performance of their business. Some are doing this under the label of “Digital Transformation”, whether or not the drivers come from internal strategy and optimization, or external market and competitive forces. Either way, as businesses and their markets evolve, businesses undergo both radical and incremental changes of their business model, operating environment, systems and processes, and culture.
Many organizations look at change initiatives in terms of Capital Expenditure (Capex) and Operational Expenditure (Opex), which is important. But less common is the modeling, management and measurement of the run and change environments together in terms of objectives, KPIs, impacts, benefits, assumptions, dependencies, risks, and deliverables. Nor do they look at change from the perspective of end-to-end alignment of suppliers and their products all the way through to front-line delivery. In other words, a proper change business case that ties back to key business processes and overall objectives and KPIs of the firm. By doing this, the business can then make a relative evaluation of all proposed changes, and weigh and consider different scenarios, investment strategies and ultimately the ROI of the change portfolio.
The Joined Up View
Change within an existing operating environment can be very complex and there is no silver bullet. However, I believe that there are some key approaches that should be adopted to help get to a reasonable first-order view of how change and run can be managed concurrently:
- Model Strategic Objectives and Key Performance Indicators (KPIs) from the business perspective.
- Model and instrument your current key business processes. This includes those processes that run on a continuous and/or cyclical basis.
- Identify Risks & Issues on those processes, through a centralized risk management and control function that can be “sliced and diced” across stakeholders, programmes, project, deliverables, strategic objectives, KPIs, and changes.
- Model and track change in the context of current processes (evolutionary change) and new initiatives (revolutionary change). Evolutionary change encompasses those simplifications, automations, refinements and removal of inefficient processes, often at a fine-grained level. That means changes that are applied to current processes. Revolutionary Change is where larger scale change re-aligns, resets or otherwise overhauls entire processes related assets and resources. These are typically associated with new projects, their requirements and deliverables.
Once you are able to do each of these you can then build a business-level macro view of how both Run and Change can be managed concurrently, with one affecting the other, while ensuring that all activities are aligned to the business needs.
Side Note: Requirements And Change
A common issue for organizations is that they are not very efficient nor effective at managing requirements: often there are terribly constructed documents, a lack of traceability of requirements through to deliverables, and often woeful version control. By taking a step back and thinking about how requirements are modeled and managed, organizations should really be tying business requirements back to key business processes, business KPIs and specifically to change deliverables. This provides both traceability as well as a holistic view of what a business wants and needs and how it is going to get there in a controlled and monitored fashion.
A contemporary business running one or more strategic change initiatives needs to be able to understand their key current operational process and proposed strategic change in an integrated manner since the two are intrinsically linked. Furthermore, strategy, goals, KPIs, existing operational processes, change, assumptions, risk and requirements need to be folded into well thought-out business cases that tie back to overall business objectives.
Doing so, with the correct business mentality, can provide a powerful and efficient way to provide meaningful insights, more transparency, better governance and controls, and alignment of the entire run and change efforts to strategic objectives and outcomes. When done properly, it can fundamentally change the way a business thinks and interacts with those who are executing the change, resulting in a constructive and data-driven dialogue that has minimal subjectivity.
Ross Hamilton is Chief Operating Officer at IDE-International, a product and services company that is transforming the world of change through data and analytics. For more information on IDE-International and its flagship product, PRIMED, please send an email to firstname.lastname@example.org, or Contact Us.