February 5, 2024 | Change & Transformation | PMO | M&A | By Kapil Nagpal
In the world of corporate transformations, the story often begins with the establishment of a Project Management Office (PMO). Led by a spreadsheet-savvy analyst, these PMOs are tasked with tracking countless transformation initiatives. The transformation managers diligently attend PMO meetings, tick boxes, and generate reports. However, it's not uncommon to encounter roadblocks, like one memorable incident at a New York-based client, where the VP of Facilities & Ops adamantly declared, "We can't move the data center because we haven't received the server list from IT." The conversation stalled, and the PMO leader called for a time-out. There were no follow-ups. These delays are often attributed to external factors, new timelines are proposed, and discussions on root-cause analysis ensue, postponing the day of reckoning. Even when PMO projects progress, the organization remains stuck, operating sluggishly within the same traditional structures.
How is the Transformation Office different from a traditional PMO?
But then, enter the independent Transformation Office (TO), a unit that, when organized effectively, ushers in a new rhythm and pace to planning and execution. The best TOs become the heartbeat of transformation, propelling the company forward with a fresh culture of delivery. Like a highly effective PMO, a proficient TO identifies and captures value. However, it distinguishes itself by revving up the organization's metabolic rate and setting new rules for engagement.
"The TO is emotionless and fact-based. It coaches and pushes initiative owners with questions like 'What would you do if it were your money?' and 'Have you handed over your initiative so that it doesn't fall behind while you are on leave?" - Fortune 500 COO
Setting rules of the game
One striking example of the TO's impact was seen in a global dairy company's working capital team. For years, they struggled to reduce inventory at hundreds of plants worldwide. The operations group believed maintaining a buffer was the best way to serve customers. It took the TO's probing to unearth the facts and present a compelling business case to the CFO. Witnessing the value at stake, the CFO promptly adjusted limits, freeing up hundreds of millions of dollars in capital without harming delivery performance. The TO team requires a mandate from the CEO to challenge both upward and downward, even holding the CEO accountable if necessary. It must have the authority to impose consequences on sponsors and initiative owners who overpromise or underdeliver.
"The TO sets the schedule and tone of the transformation but also keeps score. A simple, consistent way of defining and tracking value gives us credibility when commending progress and calling out laggards." - M&A Consultant, Tier 1 consulting firm
Establishing a single source of truth
With clear rules in place, there's no room for debate about valuations or assumptions in a business case. Work must withstand external scrutiny, discouraging pet projects or subpar ideas.
Amidst the transformation, the TO ensures that everyone has access to a "single source of truth," offering transparency into the pipeline of improvements, action ownership, and financial implications. It's a language that swiftly becomes the transformation's lingua franca.
With the truth in hand, the TO has the authority to identify conflicts and bottlenecks among workstreams, addressing them proactively in regular meetings with stakeholders. Without such intervention, a couple of support teams can cost the organization millions.
Reinvigorating the culture and reinforcing change-management goals
An effective TO cultivates the transformation culture through various channels. The CEO or CTO personally makes weekly calls to frontline employees to celebrate success, fostering positive recognition in organizations where it's not the norm.
As the story unfolds, it becomes evident that the success of a transformation relies on the steady rhythm of the transformation office. TOs are not just instrumental; they become an integral part of a new way of working that endures long after the transformation is complete.
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