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We’ve analysed some 670 change programs over the last 4 years, with detailed responses from 150 organisations in 2015. In partnership with the Process Excellence Network (PEX), we conducted two surveys in 2011 and 2013 to understand organisational maturity. We set out to understand the benefits of increased maturity and how firms have improved their maturity. In mid-2015, we conducted a third round of research to find out what it takes to achieve successful change programs within an organisation. In all of these surveys, we used a modified five-layer maturity scale roughly based on the Business Process Maturity Model (BPMM) standardized by the Object Management Group (see Figure).
Our hypothesis going into 2015 was that Business Architecture and Customer Experience (CX) oriented techniques help drive and improve organisational maturity. Secondly, we wanted to discover whether those approaches contributed to the ability to manage change successfully. The key headline from the full report (available with registration) was that change programs in high maturity organizations almost always succeed.
The story goes like this – most organisations grow up with a strong functional orientation. The managers of those organisations exercise their power to control their own fiefdoms. The scope and focus of processes evolve as you move up the levels – from the individual to business unit/functional levels to the enterprise. But as shown in the figure, at level 4 the emphasis moves back down a notch; now you are “specializing” those standard offerings for different segments of customers. Teams reinvest their learnings back in the standard ways of doing things. At the highest level of maturity, the individuals in the organisation not only understand the implications of this sort of specialization, they are empowered to respond to the needs of individual customers; potentially customizing the offerings of the firm for each unique customer. Individuals are adept at capturing key learnings, and they constantly feed them back into enterprise standards. But in the end, customers just love it (they become your sales people).
The challenges posed in reaching the highest maturity levels are immense. It’s a very challenging journey for most organizations, and the individuals within them; each transition sees an organizational transformation and a change in the power structures and governance. In the higher maturity levels, rather than just managing processes, the organisation is using “processes to manage” and deliver “compelling service propositions.”
Most organizations are on the initial transitions between Level 1 and Level 3; the most challenging of these transitions is enterprise level standardization. Associated with each maturity level is a whole set of subtly different management practices and behaviors. Each maturity level represents a sort of threshold; at these points organizational strategies and tactics evolve, as do the methods and techniques needed to support them.
- At Level 1, often called “Initial/Chaos” everyone has a subtly different way of doing things. Things are pretty chaotic until you get basic management controls. Organizations at this level tend to be run top-down with a command and control mentality. They focus on cost reduction and see problems in terms of technology and application deployment such as CRM, ERP, BI, and BPM Suites as the way of driving their change. It’s not that these technologies are irrelevant, it’s just that there is so much more to the story – putting “go faster stripes” on broken processes tend to get you in a bigger mess, faster. If a consulting company had every consultant on their team using different methods and techniques, then the customers will inevitably receive highly variable outcomes. In management speak – things are a mess. Quite rightly, getting to the next level is normally about reducing cost and creating better predictability. The transition to the next level is mostly about exerting stronger management control within the existing functional structure.
- At level 2, the organisation has standardized at the level of the function or geography. It’s OK to have one way of doing things in London, another in New York and a third in Tokyo. But that still holds you back. If you are a global freight business, having separate finance functions with different operating practices in each country is just adding costs and complexity you can do without. Transitioning to the next level is all about finding what’s common and core to your operations and creating consistent customer experiences. Achieving those goals means engaging employees across functions to collaborate more, which is challenging considering the fact that most middle managers still think that their job is to get better at command and control. Typically, metrics are still aligned to the functional silos, so process improvement only works to the extent that it makes those silos look good. In effect middle managers are the problem here. Subconsciously, they work to protect their status and validity of their function. They will nod in the right places, but most will still exhibit a set of passive aggressive behaviors that slow down the pace of change.
- Achieving Level 3 is all about standardizing your processes at the enterprise level. People tend to resist this as it requires functions and business unit managers to effectively relinquish complete control over their resources. Along with those trying to improve things, they often misunderstand the goal. It’s usually seen as having a single way of doing things, which is often interpreted as sterilizing/sanitizing business offerings. They see this as cost reduction exercise. The real trick in getting to the next level is to understand the opportunities for value innovation and focusing on improving the outcomes delivered to customers; segment-by-segment. This is really where Business Architecture can help you give shape and substance to the change initiative; using it to outline the path ahead and create alignment. It’s also where you will use more and more CX improvement techniques, working outside-in to engage colleagues into the change program, but more importantly, to differentiate your business offerings to customers, delivering compelling experiences.
- At Level 4 process outcomes are far more predictable. You are now running the organization by the numbers with refined metrics that help you discover where you need to improve and adapt. However, it’s critical to understand that this is not about taking standardization to “another level”; it’s about “specializing” the standard processes for different segments of customer, in the full knowledge that you are breaking that standardization. The metrics focus is going to help you identify the types of cases and customer segments that require special attention. Specialization for different customer segments – effectively, adapting your processes to the customer needs – feels right and safe because you know that the supporting capabilities and processes are “industrialized” to handle the work. Where relevant, you need to reinvest those changes back in the common enterprise-level approach, improving it for all.
- Level 5 organisations are very rare. Indeed, we can only think of two that we have studied – one a cleaning company in Brazil that saw its role as reducing the needs of its customers for its services; the other a software development business. With richly segmented customer segments, your employees are becoming more important in further specializing your offerings for individual customers. They are so well educated that they know the implications of creating customer-specific variations. For example, they could accurately price the implications of variation A in comparison with variation B for a specific customer, taking into account the impact on all the supporting components. Your customers love it because they are getting custom offerings based on a deep understanding of their needs.
Each one of these transitions sees a transfer of power. Those who currently wield power – especially those in mid-management positions – will feel increasingly uncomfortable moving up toward Level 3. Below level 3, processes are there to make the functions look good, above that, the functions are there to make the outcomes look good. And although they may not even consciously realize it, it is this loss of power which drives their resistance. They may engage in all sorts of behaviors to undermine the initiative, since in the end it will see them lose their position of dominance and control they have built up.
Consulting Firm Maturity Journey
Here we walk through the maturity levels shown in Figure 1 using a not completely fictitious consulting organization as a background example:
- Level 1 – Individual consultants have their own offerings that are neither standardized nor consistent across the organization.Individuals hoard their knowledge and jealously guard their specialist areas. As a result, customers receive highly variable results and often, conflicting advice. Moreover, the overall business just cannot scale. Sales are difficult to make and the only repeat business comes from the odd superstar consultant.
- Level 2 – Practice Leaders create a catalog of existing offerings and establish basic management controls. Each practice area has a different way of doing say, an assessment. Indeed, they may have several different types of assessments. While the outcomes have now become a little more predictable, the overall experience of the customer is still highly variable across consulting disciplines. Processes are seen very much inside-out, and long-term viability of the organisation is still sub-optimal.
- Level 3 – The organization struggles to create standardized service offerings across the practice areas. After a lot of soul searching, the different practice areas start to zero in on common ways of carrying out their work. The customer facing service offerings are beginning to leverage common and predictable components. Once achieved, it becomes infinitely easier to communicate the value of the organization; its sales start to increase in a more predictable fashion. However, there is a still a tension as individual practices want/need to customize the standard approach for their own areas. They want to, and need to, reflect the needs of their particular customer segments.
- Level 4 – Having established standardized offerings in Level 3, we now look to customize them for different areas and domains. We do this in the full knowledge of the variations we are making (from the somewhat standard, common approach). Where possible, the standard approach is adapted to support and enable those specializations. The emphasis is back on meeting the needs of the practice areas, but now these service propositions leverage robust, scalable and efficient components. Selective centralization of common services occurs to help drive efficiency. For example, funding a centralized “Research Service” such that individual client projects have a shared resource that ensures they have access to the most up to date and relevant research for their needs. Rather than doing that on each project, the Research Service maintains a staff to make high priced consultants more efficient (and therefore more profitable). Every customer engagement is scrutinized for areas of weakness; best practices are constantly identified.
- Level 5 – Highly educated and empowered consultants construct seemingly bespoke offerings for customers.Yet in reality, they are based on robust and scalable components. Cultural norms are strong enough such that all variations are captured and shared, with peers adopting novel and useful variations. When initiating projects, teams work hard to reuse existing approaches. Management practices encourage constant innovation.
Most consulting firms and technology vendors can easily see where they are up to. But no matter what industry, the challenges of the transformational journey remain remarkably similar.
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