How can a transformation office add value to your business?
Andrew Birch is the Executive Director of the Vantage Performance Perth office. For the last ten years, he’s been focused predominantly on business turnaround and performance improvement services. Andrew and the team at Vantage Performance are specialists in organisational change, having helped many businesses facilitate a successful transformation office.*
What is a transformation office?
Typically a Transformation Office is a dedicated department which is responsible for the improvement of existing workflows or processes. Even what appears to be small changes can be quite difficult, and need to be treated like a large-scale project. Much like building a highway or a website, transformation works best when implemented in phases across a project.
What types of organisation can benefit from a transformation office?
All organisations go through a change or transformation process. In fact, organisations should always be going through change; otherwise, you’ll merely be maintaining the status quo (which, when everyone else is accelerating, means you’re actually declining in performance).
The problem we see is that everyone, in just about any organisation, is overworked and time-poor just meeting their own KPIs. For most people, except for perhaps a CEO, their job description doesn’t include anything about transformation.
What benefits do a transformation office bring?
A transformation office will be skilled at enacting change.
Let’s take a motor mechanics as an example. They may need new customer management software and processes, but 1) they don’t have the technical proficiency, 2) they don’t have the time to learn that, and 3) it’s not in their job spec.
So they could try to integrate the new system themselves, it might take 6-months to a year to get done – if it ever does. Outsourcing it to a specialist, the job gets done quickly by people who treat it as a project with deliverables to meet.
The mechanics may choose to outsource it to a project manager or recruit a project manager to look after the transformation, possibly with the help of internal employees.
Regardless of whether you bring an external consultant in or use someone internally, realistically you have to think about a transformation office as a separate department. They will have a very different set of goals to the everyday ‘business maintenance’.
When is it valuable to create a transformation office?
A transformation office is valuable when there’s a need to step beyond ‘business as usual’. Depending on the scale of the organisation and their goals, most organisations might go through a sort of ‘renovation’ every three years, with the rest of the time being maintenance.
That’s not to say that improvements can’t be made continuously and consistently. The Japanese management methodology of kaizen stands for continuous improvement, even if that is incremental.
When there’s a need to reinvent a company – due to market changes or competition – there will be a massive benefit from a Transformation Department, as well as when an organisation has identified a need to overhaul its processes, operations or offerings.
No one does change for change’s sake. In some cases, an audit of practices, procedures and products can highlight the need for change. For example, a safety audit may lead to new processes that compound other benefits in the business, including new contracts won and efficiency gains.
How do you define a successful transformation?
We need to define what success looks like from the outset and how it’s going to be measured.
Other measurements may be set through surveying staff around their overall engagement, or aiming to increase the internal net promoter score.
Success-measures could be based on the end user: reducing complaint rates or increasing client satisfaction.
What is an example of a successful transformation?
One example of a transformation project that worked really well was a company that hired an external project manager for 18 months. Throughout that (and slightly beyond) the performance of the company went from recording a $2.5M loss to a $3.5M profit, driven through 10 individual change projects.
They had to close a business unit, sell a business unit and deal with OSMI (obsolete and slow-moving inventory). The transformation involved changes at the C-suite and board level, as well as technology implementation and culture change, so it was all encompassing.
All of these parts are, in a way, interlinked. So while the current board may have been able to facilitate a change in technology, the culture shift may not have happened or happened with nearly the same speed and ease. They may have clung to old processes that would have impeded growth.
That transformation involved a strategic, diagnostic review to work out what was required for a business turnaround. Success for us meant getting the business back to breakeven within 1-2 years and resolving the loss-making divisions. We exceeded those expectations.
What is the key to a successful transformation office?
You won’t get far without alignment on a strategy.
An analogy comes from the night markets of south-east Asia, where they often sell live animals for later consumption. The vendors don’t put frogs in cages. Instead, they tie three frogs’ legs together with a piece of string. When one hops away, it’s held in place by two that ‘have other plans’. It illustrates how we need to work together – row in the same direction – to make headway.
We believe that key with a transformation office is that everyone needs to get onto the same page – even if it’s not necessarily the best page to be on.
The benefits of being aligned are much greater than the benefits of pursuing the perfect strategy with incomplete alignment.
How do you get alignment for a transformation office?
Communication across teams is vital. We would never recommend pushing a particular strategy in a business; it will be met with resistance.
However, if you talk about the change with the right people for long enough, eventually they will be raring to get on board and get on with it.
For one of our recent projects, we presented our strategy to the board – explaining how we would need to take the plan to the next level down in management across 10 offices nationally and get their input.
We then showed the strategy to their 2IC management, refining the strategy and getting alignment at each stage. Upon presenting the final plan to the board, it was already endorsed by the management teams below, allowing instant buy in.
The benefit of bringing strategy discussions into the open is it allows us to identify all the issues and implications before action is taken.
There will always be blind spots in any business. What’s important is to have someone who can see the forest for the trees, raise awareness of what the current position is, define what the trajectory could be, and build a compelling case for change.
Leaders need to get clear about what needs to change, what the benefits and risks might be, and create an open dialogue with the key stakeholders. Through that, and forming a transformation office, an organisation can begin achieving beyond what may have previously seemed possible.
*This article is general in nature and is not to be taken as financial or governance advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Vantage Performance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly.