Jason West: Welcome to the Underscore Transformation Podcast. This is episode three, my name is Jason West.
Joe Ales: My name is Joe Ales
Jason West: And together we’re the founders of Underscore. This week we consider the problem that your transformation programme is seeking to address. Transformation initiatives often start due to external events, whether that’s a change in CEO or some other senior exec. Perhaps there’s a merger and acquisition, or changes in regulation, or perhaps the financial performance of the organisation either isn’t quite where it should be, or in fact it’s over performing. Senior execs often have a pretty clear idea on why we need to change, but it’s not always clear at the top of the organisation exactly what needs to change. So, the mandate comes down from on high that we must transform, and people often jump straight into designing solutions. It’s really important that you resist this temptation, because if you don’t really define the problem you’re trying to solve, you often end up fixing the wrong problem, and the business case that you put forward for investment is fundamentally flawed. So where you get this pressure to transform coming from the top and you know people are really clear about why we need to transform, what are the things that people should stop and do, instead of rushing straight to solution design?
Joe Ales: Take time. You absolutely need to take time; this is a really, really interesting point because you do talk about people jumping straight into solutions, and naturally when a mandate comes from the top to say “right we must do something different”, there is tendency to go “okay well the exec wants something to happen, let’s make it happen quick”, without taking perspectives from other parts of the organisation, without really understanding what are the key drivers across the business. Organisations know that they need to transform; they need to become something different. What they don’t know is what needs to change. So “I want to become I want to become a more digitally savvy organization”. Okay, but what does that mean? You have to get into some level of detail about what are those key things that we need to change, to allow us to become a digitally more savvy organisation or more profitable one? A more profitable organisation is a common one, but just sledgehammering cost out of an organisation without taking due care about what processes are going to be affected; how are things going to be done in the future with fewer people and less capability?
So, you’ve got not just jump into let’s solve the problem that the executive told us we need to solve. Take time. I know it’s hard for sponsors to sort of hear this, but actually take a little step back, just look at the key things we need to do.
Jason West: I think at a macro level, there’s this really important point where you’ve got to understand where are we today first, and then define where do we need to be tomorrow. And then work out how you bridge the gap between those two things. It’s often easier to jump straight into where we need to be tomorrow, and you can end up in a very odd place: either you define something based on your view as a single function, or a leadership team, or even individual that’s divorced from what the business actually thinks and needs and wants. So it’s much better at the very beginning to really start off with “well, where are we today and what problems do we have today? What is it that we need to solve that’s going to have a meaningful impact on the business?”
Joe Ales: Organisations or functions that are trying to transform become a little bit insular and start trying to do things in dark space. They say “right to get we’ve been given a task to do X, let me now go and do it”. Let me go in and do X without really engaging and the organisation sort of broadly about okay if I change X, what’s the impact on you guys? So one of the things in Underscore that we truly, truly believe is that in this phase of the programme you have got to engage the executives of an organisation. You’ve got to make sure that you are taking their perspective into account. If you’re transforming your finance function or procurement function, or an HR function or an IT function for that matter, engage other parts of the organisation; the customers of your function to make sure that you understand their pain points, their drivers, their key objectives. What are they trying to do to achieve? What are their goals? And somehow try to fit your transformation agenda around these, to help those functions deliver what they need to deliver.
Jason West: Yes, because a transformation in a single function rarely exists in isolation.
Joe Ales: Yes, and it’s rarely successful.
Jason West: Absolutely. So I think when you’re speaking to those execs and actually having a formal sit down, at least an hour with each of the key execs, to really goes through a structured process of interviewing them. Document what they’ve got to say, play that back to them send them the document. It’s essential to understanding “the why”, and that starts to do some of “the what”, because they’ll have a view as to what needs to change, and it will be an exec level view that is really well connected to their organisation. They’re not going to understand the nuance of every detail, but they should have a pretty clear view. But the other thing that spending time with the exec does, as a programme leader, is it gives you a real insight into the politics. The who’s in, who’s out, who’s going to be a potential ally who is going to be a potential blocker? Like you said, what are they trying to achieve and how you can align what you’re trying to do as part of your transformation with their agenda, their objectives? And that’s something that’s a sponsor has to be absolutely all over, but as a programme lead, you need to be working those angles as well.
Joe Ales: Ultimately, this is where you’re going to find some points of resistance as well. So some of your transformation objectives, or some of the things you’re trying to achieve, might play against some of the other members of the executive team. So this is a good opportunity to start looking at where am I? What are going to be my challenges at an exec level when I’m starting to drive this programme through later on? And start building a bit of the coalition among the exec. Do the exec pay as much important to this activity, this programme as you do? Because, frankly if it’s not as important to anybody else other than you, really question why you’re doing it. So it’s a good way of validating that actually that we’ve got enough support from the exec to make their successful, because ultimately when you’re going through the change and when you’re implementing the change, they are the people that you want to be behind what you’re trying to do. Because any transformation programme is painful, so the business is going to account to pain way down the organisation has felt all the way through the business, so having the execs absolutely supporting it and standing behind what you’re trying to achieve is really, really important.
Jason West: And on that topic of engaging down throughout the organisation it is important to get input from not just the exec, but other people.
Joe Ales: Yes absolutely. The execs’ view (and will will pick up this probably in a lot more detail in some of our future broadcasts around requirements gathering and so on) but the execs have got a view of the world that is different from the operational view of the world. And some of the inefficiencies and ineffectiveness of process, whether finance processes, people processes, or HR processes are not felt at the very top, but are felt throughout the organisation. And we’ve got an awful lot of people out in the business there sometimes, who have to live with this pain, and just think “actually were living with the pain because it’s the way it is”, and don’t often voice their discontent to the exec about why are things so broken.
Jason West: I think one of the things that works well is where you use anonymous surveys to go out to a broad group of people and you asked for their input, and their opinion on what’s working well, what’s not working. So you’re gathering it in a really structured way and you’re looking at a HR function or finance function, whatever it may be, you have a very clear set of processes and you want that structured feedback that says “okay how important are these processes? How effective are we at delivering them today? And what are your key priorities for if we were going to change something? What should we change?” And then really analysing that data, and what you can then do is compare that against “how we deploying our resources today?” Using that same set of structured processes, we understand from the business that okay these things are important, these things were perhaps really effective or not so effective. Getting that structured view from people within the organisation shows that these are the processes we spend our time; on how does that marry up to what the customer says is important? And when you’re looking at that, how do we spend our time, you can then start working out from that, what’s the cost of delivering these processes? And those are things that you can compare against other organisations and that starts building up your business case. But there’s a real notes of caution around these activity analysis.
Joe Ales: And voice of the customer as well. Actually a in lot of organisations, sponsors are always nervous about going out to the broader business. That’s one of the one of the challenges, one of the barriers that we come across, when we’re talking to sponsors. The way we should approach our problem definition as a sponsor is we need an engage with the exec. That’s often not an issue. When we then start to propose the fact that we actually need to engage the broader business (e.g. we need to survey 300 managers per country), and the more tricky point is us receiving feedback on the effectiveness of process delivery in their function. So as a sponsor you need to be comfortable that you’re going out and getting views from people that may not necessarily be positive. It’s a good thing to be comfortable that people across the organisation are going to give you some feedback then you may concur with or now. But take it on board, and frankly if you then ultimately change something, and if your transformation is successful and you change that person’s point of view from actually the way you deliver this particular business process (and when you talk about business process I don’t mean a transactional process, it’s about business strategy that cover a whole bunch of different things process in its broadest sense) and actually if you execute your transformation three years later, you rock up to the same individual and that individual then turns round says “actually do know what, last time this process was totally ineffective and now it’s partially effective or actually highly effective”, it’s a good thing.
[Intermission: you’re listening to the underscore transformation podcast this podcast is brought to you by underscore the transformation capability specialists to find out more visit underscore-group.com.]
Jason West: I think the other thing it does, is it gives you insight into the “so what?” So this is ineffective; for example, it takes too long to hire people – well so what? The business will tell you “so what”. I might mean we’re not hitting our sales numbers, it means that these programmes are failing, it means customers aren’t being served correctly. So you get that real granular detail that you can put into a case for change, and it says that if we address these things then XY&Z will get better, and it will be reflected in the language of the business because they will be the ones telling you what needs to change.
Joe Ales: And when you get this feedback, it’s rich information, don’t be afraid to tell the world. Tell them; give the feedback back to the individuals that were involved in this survey – “these were the results”. And be comfortable when you say “you told us that we are effective in these things, and we’re not so good in these things, and now got programme that will shift the dial on the things we’re not very good at”. It’s probably not going to shift the dial to the absolute best performance in the world, unless that business process is so critical to the success of the business. But it allows you to look at those areas of your function that you’re not the best at in the eyes of the customer, and it allows you to shine a spotlight and say as part of the transformation programme we’re going to shift the dial on these ones. And tell them that was part of your objectives is to shift the dial on these ones, because that’s what you told us we needed to change. It’s so, so powerful; it just puts so much meaning and purpose behind your programme.
Jason West: So, the other thing that needs to happen, once you’ve understood what the customer really wants and needs and their views and what’s effective and what’s not effective, is to get this external view. Using those same processes that you looked at how your people are spending their time, you looked at what was important and effective from the customer’s perspective, you then benchmark how efficient and how effective are we compared with other companies? How quick are we to deliver these processes? How many people do we deploy to them? What’s the cost? And then how does that compare to the external market? Actually benchmarking and providing hard evidence to back up either you’ve got a business that saying “this really isn’t working, it’s taking too long, it’s too expensive and it’s causing me this pain”, you can then look at the external market and say “you know what you’re right, you know we’re at the 25th percentile; it’s costing us 75% more to deliver this process than other organisations, but if we got to average then we could save X million or X 100,000”. And it’s often hundreds or thousands of millions in any organisation of any size. So actually spending time gathering data, using an external benchmark provider, structuring your data so you’re comparing apples with apples, and then making us had a decisions about what are we going to dial up, what are we going to dial down? What are we absolutely going to address because the customer says it’s important? There might be some things that perhaps we’re gold plating, “we’re gold plating our P2P process do we really need to? Could we perhaps reinvest some of that that resource were deploying into another area that’s more important?” So actually understanding how are you compared to the excellent markets is really key and that’s something that, again, people can be a little bit uncomfortable with. But it forms the basis of your first business case
Joe Ales: You’re absolutely right. Individuals are cautious and reluctant to sometimes compare how do we stuck up against the external market? And people sometimes can sort of get a little bit emotional. And who am I comparing myself against? My organisation is fundamentally different to other organisations. Where actually in its broadest sense the people process, a finance process, an IT process, or procurement process are largely the same. There will be some nuances, absolutely, from industry sector to industry sector, from country to country. But actually comparing how your hire to retire process, it takes you 50 days to bring somebody into the organisation, and the benchmark is telling you that externally organisations out there they’re bringing individuals into their organisation in 35 days is important. Forget the fact that they are a different sector, the reality is that it will have different sector process is different technology and different capability behind the resourcing that allows him to bring those people in quicker. So don’t be don’t be fooled by the fact that they are in a different sector, it’s largely irrelevant. For benchmarking, when we’re engaging with the organisations we work with, we also want to open their eyes and understand the capability of benchmarking within your industry. But actually how do we stack up against all businesses? And then of course we have means of cutting data into different regions, different sectors and compare against organisations of similar size and shape and so on. So you can sometimes get paralyzed by lots and lots of data, so if organisations out there or engaging in any benchmarking activity, be careful. Absolutely embrace, but be absolutely objective about what you’re trying to achieve, and what are you comparing yourself with, because that’s really, really important.
Jason West: I think the final thing on benchmarking, (it’s a massive topic we could bore you on all day) but it’s really important to remember when you do go out and do some benchmarking, it’s not possible to be world class in everything. You’re not going to be in the upper quartile of every single measure, and that’s fine. That’s your strategy. “Strategically we’re going to be this sort of organisation, we’re going to focus on these things because we understand that’s important to our customers”.
Joe Ales: Like we said earlier, don’t gold-plate absolutely every single process in your organization. One other point actually, when we’re talking a little bit earlier about activity analysis, that’s another area that we’ve come across where there comes some resistance. And actually if it’s not done correctly, it can really cause a downstream impact in the function in which you’re doing the exercise on. We talked earlier, in the previous episode on sponsorship, and the whole authenticity of a sponsor and this becomes really important in this space. Because this is an activity that’s going to help to understand where our team are spending their time, and how does that align to the business product, the tool, to what the customer would want us to do. It allows us to do the benchmarking, and so on, but actually what’s really interesting is when you start looking at what does the business say is important in the world of HR for instance? They see talent management and succession planning as really important and when you overlay that with how much effort is my organisation spending across those two areas and you see they actually very little is being spent – we’re spending all our time managing absence or paying people or doing transactional activities – it allows sponsors the story to tell: “we pay importance to these topics, but my team were spending time doing other things”. Then it allows a programme team to delve deeply into that. Do we have issues around policy? Do we have issue around people capability? Do we have issue around systems technology? Could we automate or digitalise more? And it’s at that point that technology becomes an enabler. You don’t start with the technology transformation, you work out that actually technology is going to enable technology me to transform based on the set of data that we’ve now gathered.
Jason West: So hopefully we’ve given our listeners some view of how important we think this area is to the success of your transformation. Actually defining the problem that you’re going to solve upfront is really key. Also given some thoughts and ideas on the sorts of activities that are useful to carry out during this phase, and the fact that you’re going to have to put time and resource into it before you start rushing off and designing solutions. Hopefully we’ve made that case. I think some of the key outputs from here, obviously it’s your high level business case: here’s where we are today versus the market, versus where we want to be over there in the future. And we want to do that because you, the business, have told us that’s what’s important. Really being conspicuously customer driven and customer centric and using that as the basis for your case for change.
So next week we’re going to look at problem definition through a slightly different lens and it’s actually a separate episode that we’re looking at requirements gathering. It’s absolutely essential to defining the problem but it’s such a big area we actually pulled that out as a separate episodes. Please tune in for that,
Joe Ales: We hope you found this episode useful and would love to hear feedback to know whether you’re a programme sponsor, transformation professional, or an individual who’s being impacted by transformation, please get in touch with our show via our WhatsApp group website underscore-group.com. And please remember to like and share via your favourite