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INPACT

INPACTIntegrated Process and Culture

Transformation

Find out how our INPACT consultants could save you £000s

INPACT

What is INPACT Consultancy?

An INPACT consultant has the training in INPACT methods and tools and the experience to be able to rapidly and cost effectively:

Assess your transformation project Identify the barriers to success Quantify the impact these barriers will have on costs, timescales

and planned benefits Help you develop an action plan to overcome the barriers and save

you £000s

In this presentation we will show you some of the models and tools we use to achieve these results

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But first…

What is a transformation project?

The term “transformation” means different things to different people: “Making significant changes that fundamentally alter the way business is done” “Changing something for the better within our organisation” “Making continuous incremental improvements within our products and services”

Clearly there is a scale difference between: a project to re-engineer the way an organisation carries out core

business processes a small, incremental change to a particular aspect of its business

But the leading management gurus (Hamel, Kanji, Kotter, Pascale, Senge, Tushman etc al) recognise that the success of any business change project is dependent on how it changes the way people think and behave

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What is a transformation project, cont…?

We believe that it is this dual focus on a) business process and structure change, and

b) corporate culture change that defines a business change project as transformational

Hence we have adopted the term Transformation Project to mean:

“any change project or programme that introduces significant change to the way an organisation works”

This includes process improvement projects, introduction of new IT systems, restructuring and rationalising organisations and supply chains etc

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Why do transformation projects fail?

A recent CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases

Standish Group surveys confirm that: In large companies, only 10% of IT projects are completed on-time

and on-budget Average completion time exceeds twice the original estimate An average 90% project contingency is required to achieve 100% of

planned benefits

The Harvard Business School tracked the impact of change efforts among the Fortune 100 and found that only 30% produced a positive bottom-line improvement

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Why do transformation projects fail, cont…?

A recent survey of change programmes in <400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:

90% of change programmes faced major implementation problems Only 30% delivered measurable business improvements

Management consultant PricewaterhouseCoopers claim that 25% of IT projects succeed. 25% fail and 50% are late or over budget (March 2007)

Why is this?

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Here are some of the reasons we all know about: a focus on the technology instead of the business benefits poor specification of the system and lack of due diligence on supplier

capability failure to gain senior management championship Inadequate resources poor project management lack of user involvement

But if we all know about the reasons, why are transformation projects still going wrong so often?

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It turns out that success rests as much on the capability of the organisation to cope with change and take advantage of new systems, as on how well the project was planned and implemented

John McKean, Executive Director of the Ohio-based Center for Information Based Competition is quoted as saying that 85% of project success is dependent on factors related to people

AMR Research found that even amongst successful implementations, 47% of companies reported serious challenges with end-user adoption that often put projects in jeopardy

Gartner believe that companies that spend less than 17% of ERP implementation budgets on training put their projects at increased risk of failure

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The INPACT Approach

So the INPACT Assessment focuses on: The Organisation

• Management culture

• Business process capability The Project

• Complexity

• Benefits realisation

• Suitability of IT system

• The relationship with partners and other external stakeholders

• etc

INPACT

The INPACT Approach

The INPACT models and tools provide a framework for: identification of the barriers to successful delivery of a change project assessment of the impact these barriers can have on the costs,

timescales and planned benefits

The INPACT Assessment delivers a quantified output to enable objective discussion and mitigating actions to be agreed

at the planning stages of a project to focus attention on the actions needed to deal with the risks

as a healthcheck to an ongoing project, to monitor progress to rescue a project that has failed

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In this presentation we will describe how we use three of the INPACT models:

Mapping the organisation’s management culture Mapping the organisation’s business process capability Assessing the relative complexity of the project

The INPACT Approach

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1. Management culture

There is an underlying tension between the individual and the organisation which affects every aspect of the way that organisation works and its capability to introduce - and take advantage of change

The nature of this tension needs to be understood, brought out and dealt with, to be successful in bringing change into the organisation

The INPACT Management Culture model provides a framework for us to identify the dominant management style and indicate how well the organisation will cope with change

The model is based on an evolutionary spiral, with each style building on the previous styles, as shown in the following slides

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1 Pragmatist/Anarchic

We all start by doing everything ourselves = 1. Pragmatist Style

This works for a while, but…

Mapping the Organisation’s Management Culture - 1

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Structuralist2

As we grow, we need to delegate. This needs rules and processes = 2. Structuralist Style


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Structuralist


3Rationalist

The problem with the Structuralist style of management is that it becomes bureaucratic and ‘tribal’. So we reorganise, streamline our processes and develop a

3. Rationalist Style


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Structuralist


3Dialectic Rationalist

3

The trouble is, re-engineering processes doesn’t seem to work very well. Why?

Well perhaps we didn’t spend enough time gaining the ownership for the changes = 3. Dialectic Style

And notice where this needs to fit…

Mapping the Organisation’s Management Culture - 3a

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Structuralist


3Dialectic

4Aligned

Now we have aligned the aspirations and motivation of the individual with the policies of the organisation, the Rationalist Style becomes the 4. Aligned Style


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Structuralist


3Dialectic Aligned

4

5 Pragmatist/Aligned

And when everyone is pulling in the same direction, we can relax the rules, give people more control over how they achieve results = Pragmatist Style again, only this time it’s aligned, not anarchic, as it was in the first cycle.

= 5. Pragmatist/Aligned


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Structuralist


3Dialectic Aligned

4

6Empiricist


Now that the organisation is working as a team, communication can flow undistorted, across functions as well as up and down – so management decisions can be better informed and the organisation can focus on the real world outside itself = 6. Empiricist Style


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Structuralist


3Dialectic Aligned

4


7Imaginist

6Empiricist

A manager in an Empiricist style organisation has the information to make radical ‘leaps of faith’ and innovative decisions = 7. Imaginist Style


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Structuralist


3Dialectic Aligned

4


6Empiricist

Imaginist7 8

Systemicist Once the organisation is working as well as this, the captain at the helm can stop fire-fighting and intervening and start navigating = 8. Systemicist Style


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Structuralist


3Dialectic Aligned

4


6Empiricist

Imaginist7

9 Pragmatist/Empowered

8Systemicist Finally, we come back to the

place where we started, with the individual now not only being fully empowered but supported by visionary management = 9. Pragmatist/ Empowered Style

Did you notice the way these styles are distributed in a spiral? There’s a reason for that..


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Each of the styles on red axis focuses on the individual within the organisation and their INTERNAL responses…while each of the styles on the blue axis focuses on the organisation and its EXTERNAL or organisational responses.

Imagine a pendulum swinging from INTERNAL to EXTERNAL, and rising as it does so - each style builds on the last one, it doesn’t replace it.


3Dialectic

INTERNALFOCUS

(Individual)

EXTERNALFOCUS

(Organisation)

8SystemicistImaginist

7

6Empiricist

9

5

Pragmatist/Anarchic1

2

Structuralist

3

Rationalist

4

Aligned

Pragmatist/Aligned

Pragmatist/Empowered

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Mapping the Organisation’s Management Culture

In order to progress up the management evolution spiral we have to recognise and fully deal with the underlying tension between

INTERNAL FOCUS - the individual, playing a meaningful role in the organisation, and

EXTERNAL FOCUS - the way the organisation uses people to succeed

Having identified the dominant management culture, the focus shifts to the organisation’s Business Process Capability

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2. Business process capability

The second key factor affecting the capability of the organisation to cope with change and take advantage of new systems, is the way it manages its processes, or its business process capability

The majority of larger organisations are working with a piecemeal set of systems and ad-hoc processes still proliferate

Even where ‘core’ systems such as finance and operational processes have been standardised, there are many instances of work-arounds and non-compliance

And those organisations that have introduced sophisticated enterprise-wide systems report that they are often not being operated consistently across the organisation

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Mapping the organisation’s business process capability

So understanding how well an organisation is managing its business processes will provide a useful reference point for assessing its capability to manage the transformation project

The model we use to assess an organisation’s process capability is the Capability Maturity Model

It is adapted from a generic model, originally developed by Brett Champlin at the Software Engineering Institute (SEI), Carnegie Mellon University

The model comprises a 5-step classification system to describe processes, from Ad hoc to Integrated, and associates the capability to manage processes, from Chaotic to Cooperative Optimisation

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Capability Maturity Model

1.Initial Ad hoc process

Chaotic

2.RepeatableStable process

Controlled environmentBasic management

control

3.Defined Standard process

Consistent Execution

Process definition

4.Managed Measured process

Quality and Productive Improvement

Process measurement

5.Optimised Effective process

Continuing Improvement

Process control

Source:Brett Champlin

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Organisational capability:Putting them together

The majority of organisations that are at levels 1 and 2 on the Management Culture model are also at levels 1 or 2 on the Capability Maturity Model

Those that have moved up the management culture spiral to Dialectic and Aligned styles are also likely to have developed more defined and standardised systems and processes

Combining the two models provides a useful baseline for an organisation to assess its capability to manage change and how successful it will be in introducing cross-department systems and processes – see next slide

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Organisational capability:Putting them together

In this example, management culture is Aligned and process capability is at level 3

Business Process Capability

Management Culture Level 1 2 3 4 5

1. Pragmatic/ Anarchic Low Low

2. Structuralist Low Low Med

3. Dialectic Low Med Med Med

4. Aligned Med Med Med High High

5. Pragmatic/ Aligned High High High

6. Empiricist High High High

7. Imaginist High High V.High

8. Systemist High V.High V.High

9. Pragmatic/Empowered V.High V.High V.High

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3. Project complexity

Having looked at the organisation’s capability to manage its people and its business processes, the third area of focus is the project itself

The literature is full of cases where IT-based change projects failed or were late and over budget, due to a combination of factors. It didn’t seem to matter how well a project was planned, at some point, if it was too complex, it would ‘go off the rails’

So project COMPLEXITY is a key factor

The INPACT assessment looks at project complexity in its own right and in the context of the capability of the organisation

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Project complexity

The complexity of projects depends largely on the combination of three factors:

1. Number of People or functions involved• an approximation might be those stakeholders represented on

steering and project groups

2. Number of business Activities or processes affected • for example the number of manual processes an automation project

will ‘touch’ and change

3. Elapsed Time (in months) to implement • from issue of spec/ITT to planned roll-out

Put these into an equation: P x A x T Where does this put your project on the Complexity scale? (see next slide)

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Exponential Complexity Tool

Co

mp

lexi

ty F

acto

r

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7 8 9 10

P

A

T

FactorSimple project

Not simple - needs some

project management

A complex project – needs an experienced project manager

Beyond this point your project is too complex –

break it down into separate projects and employ a programme

manager

500

1500

1000

2000

2500

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Mapping project complexity on to organisational capability

Projects that are more complex than Not Simple are unlikely to be fully successful in an immature organisation i.e. level 1 or 2 Management Capability and anything lower than level 3 Process Capability

So the relative relationship between project complexity and organisational capability needs to be understood

This can be done by taking the combined Organisational Capability value and plotting it against the Complexity value as the two axes of a simple chart - see next slide

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Mapping project complexity on to organisational capability

In this example, project complexity is Complex and organisational capability is Medium

KEY Go ahead, the project looks as if it’s within your capability

Be careful, this project may not succeed fully in realising its benefits

Stop! This project is not within your organisation’s capability. Carry out an assessment and adjust your plans

Capability

High

Med

Low

SimpleNot Simple Complex

Too Complex

Complexity

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How can an INPACT Consultant help you?

Project Managers Planning a project? Or worried about a project that is not delivering planned benefits?

Solution Providers Facing the prospect of delays and lower than expected returns on a

fixed price contract?

An INPACT consultant has the training and the experience to: Assess your transformation project Identify the barriers to success Quantify the impact on costs, timescales and planned benefits Help you develop an action plan to overcome the barriers and save

you £000s

Contact us for more information – see next slide for details

INPACT

INPACTIntegrated Process and Culture

Transformation

For more information contact [email protected]

Or visit our website: www.inpactuk.net

Our consultants could save you £000s