1. Introducing INPACT Integrated Process and Culture Transformation

2. 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  A recent survey of change programmes in over 400 European organisations found that:  90% of faced major implementation problems  Only 30% expected to deliver measurable business improvements by the end of the programme  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  Other research shows that three quarters of change initiatives fail to deliver their intended result  Why is this?

3. Why do transformation projects fail?  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  In developing INPACT we focused on three key aspects of change projects:  The organisation’s management culture  The organisation’s process capability  The relative complexity of the project  These are discussed, together with some other factors, in the following slides

4. Why do transformation projects fail? 1. Management culture  One of the most important secrets of success to delivering a transformation project is paying attention to the way that people interact with the organisation – the 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, if we want to be successful in bringing change into the organisation  INPACT maps the management culture of an organisation and assesses aspects such as the level of trust

5. Why do transformation projects fail? 2. Process capability  Another 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 process capability  The majority of larger organisations are working with a piecemeal set of systems and processes  Where ‘core’ systems such as finance and operational processes have been standardised, there are many instances of non- compliance  Those that have introduced sophisticated enterprise-wide systems are not operating these consistently across the organisation  Ad-hoc systems and processes still proliferate

6. Why do transformation projects fail? 3. Project complexity  Having looked at the organisation’s capability to manage people and process, the third area of focus is the project itself  The literature is full of cases where IT-based change projects failed 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 fail  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  It also considers other aspects such as clarity of objectives and the how well benefits realisation is being handled

7. The INPACT approach  So the INPACT assessment focuses on:  The Organisation Management culture and the effect of distrust Process capability maturity  The Project Complexity Clarity of objectives Benefits realisation  Other Factors Include: suitability of an IT system, the relationship with partners and other external stakeholders

8. The INPACT Assessment  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  The following slides illustrate some of the models and tools we use

9. Mapping the organisation’s management culture  The 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 next slide NB The next slide is automated – please wait for it to finish before clicking to continue

10. 3 Dialectic INTERNAL FOCUS (Individual) EXTERNAL FOCUS (Organisation) 8 Systemicist Imaginist 7 6 Empiricist The INPACT Management Culture Model We all start by doing everything ourselves = 1. Pragmatist Style This works for a while, but… As we grow, we need to delegate. This needs rules and processes = 2. Structuralist Style 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 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 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 And when everyone is pulling in the same direction, we can relax the rules, give people more control over how they achieve results = 5. Pragmatist Style again, only this time it’s not anarchic, as it was in the first cycle. 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 A manager in an Empiricist style organisation has the information to make radical ‘leaps of faith’ and innovative decisions = 7. Imaginist Style 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 Style 9 5 Did you notice the way these styles are distributed in a spiral? There’s a reason for that. Watch… 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. In order to progress up the management evolution spiral we have to recognise and fully deal with the underlying tension between INTERNAL and EXTERNAL – the individual, playing a meaningful role in the organisation and the way the organisation uses people to succeed. Pragmatist 1 And notice where this needs to fit… 2 Structuralist 3 Rationalist 4 Aligned 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 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. We use this tool as the first step in the INPACT Project Readiness Assessment and in the INPACT Healthcheck for ongoing projects

11. Mapping the organisation’s process capability  The model we use to assess an organisation’s process capability is the Capability Maturity Model, originally developed by Brett Champlin at the Software Engineering Institute (SEI), Carnegie Mellon University  It is a generic model, comprising 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

12. Capability Maturity Model 0.Initial Ad hoc process Chaotic 1.Repeatable Stable process Controlled environment Basic management control 2.Defined Standard process Consistent Execution Process definition 3.Managed Measured process Quality and Productive Improvement Process measurement 4.Optimised Effective process Continuing Improvement Process control 5.Integrated Coordinated process Cooperative Optimisation Process integration Source:Brett Champlin

13. 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

14. Organisational capability: Putting them together In this example, management culture is Aligned and process capability is at level 3 Capability Maturity Management Culture Level 12345 1. Pragmatic/ Anarchic Low 2. Structuralist Low Med 3. Dialectic LowMed 4. Aligned Med High 5. Pragmatic/ Aligned High 6. Empiricist High 7. Imaginist High V.High 8. Systemist HighV.High 9. Pragmatic/Empowered V.High

15. Project complexity  The complexity of projects depends largely on the combination of three factors:  1. Number of People or functions involved  2. Number of Business Activities or processes affected  3. Elapsed Time (in months) to implement  Put these into an equation: P x A x T  Where does this put your project on the Complexity scale?

16. Exponential Complexity Tool Complexity Factor Simple 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

17. 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

18. 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 Simple Not SimpleComplex Too Complex Complexity

19. The Trust/Cost relationship  Trust is the ‘oil’ that helps people to accept change in an organisation.  It empowers them to remove the barriers that block change, with a minimum of friction (that’s why having a highly visible senior manager at change project meetings is so important)  An absence of trust between managers and staff and between parts of an organisation will slow down and even stop a project  The higher the levels of distrust, the more time and effort the project will require and the higher the cost

20. Complexity Distrust Low distrust x Low complexity = Speedy change = Low cost of change and success High distrust x High complexity = Slow or no change = High cost of change and failure The starting point for many change projects is a combination of high distrust and high complexity - they are almost guaranteed to fail

21. Dynamic Benefits Realisation  Who is responsible for realising the benefits you want from your change project?  The Project Manager?  The consultants helping to plan and implement the changes?  The supplier of the new system/process?  The Chief Executive?  Or is it the operational managers and staff who will be using the new system/process?  So why is that the change always seems to be being PUSHED on these managers and staff by the Project Manager?  Wouldn’t it be better if the changes were being PULLED by the operational managers and staff?  That’s what the Dynamic Benefits Realisation model helps us to do.

22. Dynamic Benefits Realisation Model Deliverable: start measuring the £ benefits… 5. Prioritise roll-out based on the relative value of the benefits identified in [4] 1. What is impact on processes? eg Speeds up or eliminates process (Normally 50% average time saving achievable) 2. Resources released & available for redeployment Who (how many affected in group)? How much time saved? 3. Agree measurable improvement and by when Quantify value; use existing service level improvement KPI wherever possible 4. Who is accountable for its realisation? Identify key System/ Process users and ensure representatives are on Project Management Board 6. Manage project with System/Process user representatives driving it, not Project Manager

23. INPACT Integrated Process and Culture Transformation For more information contact peterd@imaginist.co.ukpeterd@imaginist.co.uk Or visit our website: www.inpactuk.netwww.inpactuk.net