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As featured on BusinessMirror:  The art of continuous transformation

Companies need to orchestrate an ever-evolving set of initiatives to reshape the enterprise

Transformation is no longer a choice for businesses. It is a necessity. To keep up with rapid changes in their markets and with new ways of doing business, companies in every industry are transforming both internal and go-to-market functions. Transformations are significant change programs that require substantial resources, expertise, and leadership commitment—and they are a fundamental part of the top leadership agenda.

In a recent KPMG survey of transformation leaders, 82 percent of respondents said the pace of transformation is accelerating. The survey also found that organizations are typically running multiple change programs simultaneously and 60 percent of respondents said transformations have essentially become continuous; never or rarely are there no transformations under way.

Running multiple and continuous transformations is a complex challenge. It requires the ability to orchestrate multiple massive projects and sustained leadership that keeps each transformation focused on clear strategic objectives. When companies don’t do this well, it is much more likely that these costly and time-consuming efforts will not deliver the expected value. Indeed, in the same survey, more than 80 percent of executives who have been involved in transformations said that the No.1 reason for failure is lack of alignment between transformation efforts.

Chances are your company is already experiencing continuous transformation

Look around. Chances are your organization has multiple transformation programs under way. Executives in many areas may already be looking at the transformative power of generative AI. Technology and risk teams are executing cloud modernizations, cyber security initiatives, and digitization programs. Marketing and sales are re-imagining the customer experience and rethinking customer segments, and operations teams are re-engineering their functions and supply chain. The constant evolution of industry regulations and compliance requirements further increases this complexity; decarbonization may require a change in your logistics strategy, for example. Meanwhile, many companies are transforming their portfolios—divesting old businesses, investing in growth, and exploring new business models.

Each of these initiatives probably has a program established to drive a specific outcome. Yet all need to be aligned to a broader set of goals such as fueling growth, improving cash flow, driving operational efficiencies, reducing risk, improving employee experience, or re-skilling the workforce. Complicating matters, each team and function are on a different journey with unique complexities, using a different approach and impacting a wide range of stakeholders. Keeping all these projects on track, getting buy-in for the changes they require, and consistently capturing the value of transformation constitutes a massive management challenge.

Four capabilities needed to manage continuous transformation

So how can you navigate this complexity and make sure your organization succeeds in its transformation efforts? In our experience, there are four capabilities you need to get right to succeed in continuous transformation:

Tracking value

Given the current economic environment, it is probably no surprise that organizations are under significant pressure to realize value quickly (68 percent of respondents in our survey said there is an increased focus on short-term ROI). If you have successfully navigated a multi-year program, you have likely experienced the inevitable question of whether the program delivered the expected outcomes, both in terms of cost savings and performance improvement. Measuring and quantifying impact is fundamental. Yet, we hear time and time again how organizations fail to validate the benefits once an investment is complete.

How to do better? Start by investing more time upfront in identifying and quantifying the potential value beyond the financial case. By decomposing your objectives and key results (OKRs) into lower-level operational improvements, you can understand how specific changes contribute to business value.

This enables measurement of progress during implementation, not just at the end, when all the financial benefits are achieved (or not). This more granular measurement and tracking is even more critical when you are operating in continuous transformation mode, so you can understand the impact on your portfolio of any strategy pivots or leadership changes (change of leadership is another prime reason for transformation failures, our survey respondents say). It’s not easy to accurately predict benefits when so many variables are in play, but it’s impossible to track value if you have no way to quantify or measure.

Building roadmaps

Most business leaders know the importance of having a clear vision and building a compelling case for change when embarking on any transformation. What sets leading organizations apart is their ability to break down the strategic vision into quick, measurable outcomes and develop a meaningful sequence of releases that are prioritized by potential value. Such a roadmap requires understanding the target state, business and technology blueprints, and the desired customer or employee experience. And since roadmaps are helpful at every level (technology, solution, function, or enterprise), it is essential to have compatibility and consistency in how they are all built. Combined with lean but effective governance, these roadmaps provide the foundation to seamlessly orchestrate one comprehensive, fully integrated approach that enables better, faster outcomes and helps mitigate transformation risks.

Orchestrating multiple initiatives

We no longer have the luxury of executing major change initiatives sequentially or independently. So, organizations need to manage the many moving parts and evolving goals of multiple, simultaneous initiatives and ensure connectivity across programs, without forcing unnecessary conformity. Previously disparate initiatives have become increasingly interconnected. Multiple initiatives may focus on customer journeys or aim to improve integration between functions or create multi-purpose technology platforms. The resulting complexity requires a more thoughtful approach to driving transparency beyond simply tracking dependencies.

We call this the “orchestration mindset.” It involves moving beyond process standards (stage gates, checklists, and templates) towards well-defined connections. A good analogy for these connections is the API (application programming interface), the bedrock of modern technology architectures. An API provides a mechanism for one software component to interact with another without needing to understand the other component’s code or even be written in the same language. The same concept can be applied to the connection points across transformation initiatives. For example, by aligning around standard planning intervals, establishing a common definition of what constitutes a release and having an enterprise-wide taxonomy to describe impacts on the operating model, you have a common language to communicate between initiatives on what to expect—and when—without needing each team to fully understand the other’s solution.

Guiding people on the journey

Anyone who has worked on transformation initiatives knows the importance of leadership buy-in and alignment. The stresses of continuous and multi- threaded transformation elevate people and culture issues. Transformation burnout is a real risk: our research shows turnover is higher in organizations with multiple transformations that add hours to the work week. By carefully managing the people experience, you can avoid burnout. Start by understanding the capacity for change in the organization and how transformation initiatives interact with each other. Think about a company that is redesigning its HR operating model and employee experience in parallel with updating sales performance metrics, adding new services, and moving to a cloud-based CRM platform. In this case, different initiatives will likely impact sales reps multiple times. If you provide communication and training at the individual project level, you risk disjointed and confusing messaging or, worse, conflicting requests that impact productivity. By aggregating various data points from each initiative (impacted roles, impacted groups, type of change, the magnitude of change, etc.), you can better assess the risk of change fatigue and incorporate all changes across the enterprise into a coherent change journey for each stakeholder.

How KPMG can help

KPMG brings practical guidance and solutions to help you navigate the journey and realize value quickly—whatever your starting point or industry. We help clients achieve greater value from business transformation by helping accelerate the process of turning vision into reality, improving performance and profitability, and increasing operational efficiency and resilience.

Our people make a difference by becoming deeply ingrained in your business using data-led insights and advanced technologies to drive change, efficiencies, and resilience. From strategy through execution and beyond, we help clients integrate multiple transformation initiatives to create the smooth orchestration of a complete transformation. Doing so allows us to provide better, faster outcomes and greater organizational agility.

The excerpt was taken from the KPMG Thought Leadership publication: https://advisory.kpmg.us/articles/2023/art-continuous-transformation.html

© 2023 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.