This is the second of three mini-articles outlining the elements required for successful transformation and change. In this part we discuss business case, operational structure, and business capability.
Whilst leaders are rightly concerned with delivering results through a motivated workforce – they will also recognise the importance of financial management, not least because it will partly govern the assessment of their own success. Yet the financial aims of a transformation are often considered only in terms of the overall goal, and detailed financial analysis is seen not just as secondary, but perhaps even superfluous to the end goal of transformation. This of course depends on the role and background of the leader – those with a financial or analytical background will be more inclined to engage with the benefits and costs of transformation. The CFO, and Financial Directors, are some of the most influential people in the organisation, and carry great power to support, or veto, programmes, investments and ideas. This is why it is always necessary for transformation to be accompanied by a business case which addresses a clear financial objective, linked to the thinking on goals outlined in part one, so it can be shown that the organisation is backing the right idea.
Without this, transformation plans will simply fail to achieve sign-off from the financial stakeholders of the organisation. Focus on the customer is central to this – Forrester notes how digital transformations are, by their nature, focussed on how change improves the customer journey(1). Identifying how this improves customer satisfaction, revenue income, costs of the customer relationship, whether in the private or public sectors, is ultimately how transformation investment will achieve sign-off.
Digital transformation is inherently uncertain. For example, the revenues and costs of opening new sales and delivery channels are difficult to predict and can lead to wide, often meaningless ranges in forecasts which serve only to prevent the forecaster from being proved wrong. Approaches such as risk analysis can be incredibly useful in turning a single point forecast, into an assessment of the chances of success. The risk and reward of different transformation approaches and business opportunities can be compared, and key risk drivers and how to manage them for success can be identified to inform collaborative design of governance, structure, capability, process, change messages, and rewards.