Building Business Transformation Capabilities Our perspective on the building blocks, structure and critical success factors to impact change Gillian Richards James Miller UBC Centre for Operations Excellence and Tree Island Steel Business Transformation 2014 Conference

Drivers of Business Transformation There are many driving forces, within and across industries, contributing to an increasing need for business transformation services Drivers of Business Transformation A Clear Mandate Changing Customer Preferences Regulatory Reforms Globalization & Increased Competition Industry Consolidation Macro Economic Forces Technology Innovations Accelerate a necessary change and enable key business strategies Quickly and effectively course correct key areas of the organization Today we will talk about building business transformation capability from two perspectives – an internal industry perspective, and the external consulting partners that help support…

The Role of Business Transformation Before we talk about the capabilities required to build an internal consulting function, it is important to first establish our understanding of the business transformation ‘service offering’ The Role of Business Transformation Strategy Execution Business Optimization Program Design Full Transformation Target Operating Model Decision Rights and Structure Alignment and Accountabilities Performance and Rewards Productivity Cost Optimization Process Intelligence Lean Six Sigma Policy and Procedures Business Case Analysis Program Design and PMO Post Merger Integration Implementation Planning Business Model Redesign Technology Implementation Post Merger Integration

Interaction Model ‘Archetypes’ We believe building capability first begins with defining the role a business transformation team will play within an organization Interaction Model ‘Archetypes’ Span and Scope of Authority Low High Centre of Excellence Hybrid Shared Service Facilitate the definition and execution of a standard process, approach, alongside corresponding tools and templates to support business initiatives Derive authority based on expertise, experience and executive mandate to influence capability building Structured into large cross- functional teams to help lead and support select business transformation programs and/or initiatives Employ dotted-line relationships over specific activities such as program management and process facilitation, working alongside business partners Responsible for delivery of select business transformation programs and/or initiatives based on required expertise and experience Authority is based on reporting structure, and a connection to enterprise-wide program definition Examples PMO Process Redesign Finance Transformation

The resulting interaction model helps to provide a framework for the team structure, capabilities and governance model required to support this defined role Dimension Spectrum of Choices Centre of Excellence Hybrid Shared Service 1 Management and Decision Making Influencing role, advising Business Partners Facilitate, working for and with Business Partners Definition and delivery of specific programs or projects 2 Methodology and Tools Documented methodology and tools to support Project-specific approach based on defined methodology Heavy reliance on subject-matter expertise | experience 3 People Small dedicated team, relationship-building skillset Enabling function, with key quantitative and qualitative skillsets Dedicated function, with proven expertise and experience 4 Metrics and Reporting Defined functional performance metrics aligned to business Help to define business benefits and track realization Performance metrics tied to program or project success

What are your target capabilities? In addition to definition of the role and interaction model required, it is important to remember that capability will be built over time, regardless of which model is chosen Capability Level Characteristics BT Capability Function well defined Dedicated resources trained and in place Processes and tools are optimized Core resources support functions and LOBs Processes fully documented and followed Metrics and targets defined Resources identified but little central expertise exists and/or ongoing coordination Processes are defined but not always consistently followed Common tools exist and are used Success depends on key individuals Processes performed intuitively Resources not linked or coordinated across organization or projects/initiatives No dedicated resources Processes and tools do not exist Ad hoc projects and performance Ongoing excellence in managing an array of programs and/or projects concurrently Able to manage smaller ad hoc projects and initiatives “Initial” Level 1 “Repeatable” Level 2 “Defined” Level 3 “Managed” Level 4 “Optimized” Level 5 Objective What are your target capabilities?

Based on our time working together, and our experience with other organizations, we would offer the following lessons learned… Critical Success Factors Benefit Risk Driven by the Business Ownership of the problem definition and solution needs to be by the business Unclear accountability and decision-rights Ensures relevance, sustainability Linkage to Enterprise Projects Function should be aligned with broader identification, definition and prioritization of organizational priorities Marginalizes function and capability Builds pipeline of opportunities Focus on Qualitative Skillsets Strongest competency to help build function and role will be driven by ‘soft skills’ Ability to navigate dynamic process Builds culture of collaboration Define and Track Value Creation Well-defined business benefits defined upfront, alongside mechanisms to monitor and track value creation Mitigates cost centre impact Measures ‘functional’ contribution

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