360 03 e Research Ward Uhl Success and Failure in Transformation 13 Case Studies

7/29/2019 360 03 e Research Ward Uhl Success and Failure in Transformation 13 Case Studies

1/8

METHODOLOGY | RESEARCH

To remain competitive in increasingly

global markets, many businesses need

to transform either what they do or how

they do it or both. Economic turbulence

and uncertainty can also make the need

to change more urgent but, at the same

time, make it more difcult to accomplish

successfully. Given these challenges, itis not surprising that studies show that

only about 30% of transformation pro-

grams are completely successful, while

30% fail completely. Our study of 13

business transformation cases of differ-

ent types in large European corporations

is consistent with this pattern of success

and failure:

four of the transformations were very

successful achieving all the main ob-

jectives, five were partially successful as some

expected benefits were achieved, but

not all,

four were unsuccessful, achieving

none of the transformation objec-

tives, or they were not completed.

Most incurred substantial costs.

Every business transformation is differ-

ent but not unique and lessons can be

learned from the experiences of others.

Because these cases showed the same

pattern of transformation success andfailure as other studies, they were valu-

able in developing and testing the BTM

methodology.

The cases were developed through inter-

views with those involved in the transfor-

mation and reviews of relevant documen-

tation. They were carried out, analyzed

and written up by teams consisting of ex-

perienced academics, consultants and

senior company managers. Some have

already been published in the BTA 360 the Business Transformation Journal

and others will be in future. Each case

SUCCESS AND FAILURE

IN TRANSFORMATIONLessons from 13 Case Studies

by John Ward and Axel Uhl

This article reports the results of an analysis of 13 business transformation case

studies. Some were successful, some failed and the rest were partly successful. It

shows how the BTM2 disciplines infuence the outcomes and explains why some

are more successful than the others.

Abstract

In developing the BTM methodology, we carried out 13

case studies of different types of business transformation in

large European corporations. Of these 30% were success-

ful, 40% partly so and 30% were unsuccessful. Each case

was assessed against the BTM methodology disciplines tounderstand why they were more or less successful. Many

of the failures were due to lack of alignment with the busi -

ness strategy, lack of clarity of the expected benets and

inadequate risk assessment. In implementation, the IT and

process changes were often performed more successfully

than the organizational changes, resulting in some benets

being delivered, even in some of the less successful cases.

But this rarely was enough to enable the transformation

to achieve its strategic objectives and the majority of the

benets. Overall the organizations whose approach to man-

aging transformations included attention to the majority of

the BTM component disciplines were more successful thanthose that did not.


2/8

3131


was analyzed in terms of how extensively

and how well the BTM component disci-

plines were performed. The results were

compared to identify signicant aspectswhich appeared to affect the level of suc-

cess achieved. Analyzing these transfor-

mations of varying degrees of success

shows that those organizations whose

approach to managing transformations

paid attention to the majority of the BTM

disciplines were more successful than

those that did not.

The case studies were in the following

industries: automotive, pharmaceuticals,

construction (see case study in issue 1

of this journal, page 38), food, oil (issue

2, page 46) and chemicals, nancial ser-

vices (issue 1, page 52), telecommunica-

tions(issue 2, page 54) and IT. The cases

included transformations to develop new

products and services as well as restruc-

turing and reorganizing core business

functions and introducing global process-

es and systems. All involved changes in

organization structures and individuals

roles, responsibilities and behaviors, in-

cluding, in a few cases, large scale staffrelocations and redeployments. All the

cases included new and signicant in-

vestments in IT to enable the business

changes, but, in all except one of the

cases, IT benets were not the main ra-

tionale for the transformations.

The BTM Methodology Disciplines

An overview model of the methodology

components and relationships is shown

in gure 1. Figure 2 shows an example of

what have become known as transfor-mation heat-maps of the BTM discipline

components and how well they were

performed (in this example: for a partially

successful case). These maps were used

to analyze all the cases.

As would be expected, the successful

cases were largely green with some am-

ber and even a few red. In the unsuccess-

ful cases, the boxes were mostly red and

amber, but there were also always a few

that were green!Findings for each of the eight methodol-

ogy disciplines are now discussed, start-

ing with the three direction disciplines,

before considering ndings regarding

the enablement disciplines and the Meta

Management aspects.

1) Strategy Management

A transformation needs to be driven bya clear strategic rationale a rationale

which should be easy for every employee

to understand, otherwise there will be lit-

tle motivation to change. All the success-

ful ones had imperatives to transform the

business, not just one function. It was

also clear that in all the unsuccessful

cases the need for transformation was

relatively low; either there was no press-

ing strategic need or it was not seen as a

business priority at a senior level.

In three of the four successful transfor-mations the need for change was en-

dorsed at executive level and then time

and effort was spent to gain the buy-in of

the rest of the organization and develop

the ability to undertake the changes. In

most of those that were partially success-

ful, the readiness to transform appeared

to be high, as well as the strategic need.

They were not entirely successful mainly

due to over ambition, or even over enthu-

siasm; too many positive assumptionswere made with little assessment of the

potential risks.

Fig. 1: The

direction and

enablement

disciplines

(source: BTA)

Competence

&Training

Mgmt.

Program/

Project

Mgmt.

ITManagement

Process

Management

Organisa8onal

Change

Mgmt.

Value

Mgmt.

Risk

Management

Strategy

Management

BusinessTransformationManagement

Direc8on

Enablement

-Leadership

Meta-Management: -Communica1on -CultureandValues
http://360-bt.com/issue1_pdf/360_01_f_Casestudy_Hilti_vomBrocke_Petry_Schmiedel_Hilti_Case.pdfhttp://360-bt.com/issue1_pdf/360_01_f_Casestudy_Hilti_vomBrocke_Petry_Schmiedel_Hilti_Case.pdfhttp://360-bt.com/issue2_pdf/360_02_f_CaseStudy_Houlder_Wokurka_Guenther_Shell_Comment_Bielli.pdfhttp://360-bt.com/issue2_pdf/360_02_f_CaseStudy_Houlder_Wokurka_Guenther_Shell_Comment_Bielli.pdfhttp://360-bt.com/issue1_pdf/360_01_g_Casestudy_Lukas_Giordano_Lamy_Janasz_Financial_IT_Integration_at_Insurance_Company.pdfhttp://360-bt.com/issue2_pdf/360_02_g_CaseStudy_Kresak_Corvington_Wiegel_Wokurka_Teufel_Williamson_Vodafone_Comment_Schultheis.pdfhttp://360-bt.com/issue2_pdf/360_02_g_CaseStudy_Kresak_Corvington_Wiegel_Wokurka_Teufel_Williamson_Vodafone_Comment_Schultheis.pdfhttp://360-bt.com/issue2_pdf/360_02_g_CaseStudy_Kresak_Corvington_Wiegel_Wokurka_Teufel_Williamson_Vodafone_Comment_Schultheis.pdfhttp://360-bt.com/issue1_pdf/360_01_g_Casestudy_Lukas_Giordano_Lamy_Janasz_Financial_IT_Integration_at_Insurance_Company.pdfhttp://360-bt.com/issue2_pdf/360_02_f_CaseStudy_Houlder_Wokurka_Guenther_Shell_Comment_Bielli.pdfhttp://360-bt.com/issue2_pdf/360_02_f_CaseStudy_Houlder_Wokurka_Guenther_Shell_Comment_Bielli.pdfhttp://360-bt.com/issue1_pdf/360_01_f_Casestudy_Hilti_vomBrocke_Petry_Schmiedel_Hilti_Case.pdfhttp://360-bt.com/issue1_pdf/360_01_f_Casestudy_Hilti_vomBrocke_Petry_Schmiedel_Hilti_Case.pdf


3/8


Having a clear vision of the intended fu-

ture business and organizational mod-

els and then allowing compromises and

trade-offs in the detail of how they are

implemented, is most likely to achieve

stakeholder commitment. However, insome cases, when the drivers demand

urgent action, a top down, mandated ap-

proach to implementation can also work,

but it tends to achieve stakeholder ac-

ceptance rather than positive commit-

ment.

Most transformations involve at least

two distinct phases to create a new

capability and then to deploy it. In most

of the cases the capability was created,

but not (yet) always exploited; hence thebenets achieved were often less than

those originally envisaged. Creating a

new capability can be done separately

from business as usual, but deploying it

usually competes with other operational

priorities.

2) Value ManagementIn the unsuccessful transformations the

objectives and business cases were of-

ten vague, based on a benets vision

rather than evidence based benets and

an understanding of how to realize them.

This made it difcult for some stakehold-

ers to believe the transformation was

worthwhile and commit the required time

and resources.

There was also often confusion between

changes and benets: for example in-troducing common global processes is

a change, not a benet, although it may

Enablement

Program/ProjectManagement

ProgramPlanning andGovernance

Program & Proj.Integration

Mgmt

Program &Project Scope

Mgmt

Program &Project Time &

Cost Mgmt

ProgramQuality Mgmt

ProgramHuman

Resource Mgmt

ProgramProcurement

Mgmt

Risk

Management

360 StrategicRisk

Assessment

Deep dives forstrategic risk

areas

Assesstransformationbusiness case

Define riskstrategy

RiskManagement

Execution

Risk Monitoring

Identifyadditional

improvement

Risk Mgmt. aspart of BoardGovernance

Competence &Training

Management

Competencestrategy

Training needanalysis

As-is analysis

Gap analysis

Curriculumdevelopment

Trainingpreparation

Training

Evaluation &improvement

ProgramReporting

OrganizationalChange

Management

Set-up &governance

Stakeholdermanagement

Changeagentnetwork

Communica1onmanagement

PerformanceManagement-ProjectTeam

PerformanceManagement-

Business

Changereadinessassessment

ChangeMonitoring

Process

Management

Determinescope ofanalysis

From templateto bespokeinventory

Identifyimprovements /add attributes

Map selectedprocesses

Plan processimplementation

Implementprocesses

Evaluateprocesses

Establish CIP

Meta

ManagementPart of Global IT project: HR Excellence function established and many further benefits have been identified.

ITManagement

Business andIT CapabilityAssessment

To-be analysis

Gap analysis

IT roadmapplan

Solutionarchitecture

design

IT Deploymentplan

IT Operations& Service

Optimization

IT LifecycleManagement

Strategy

Management

AS-ISDataCollection

Analysis ofneeds &

maturity level

Designbusiness vision

DesignBusiness Model

Integrated

transformationplan

Business Case

Organizationalmodel

Risk analysis

Direction

ValueManagement

Baselineanalysis

Valueestimation

Detailedbusiness case

Agreeownership for

realization

Plan benefitrealization

Execute benefitrealization

Review andevaluate results

Establishpotentials for

further benefits

Fig. 2: Examplepattern for a

partially success-

ful case (source:

SAP)

(see also journal

issue 1, page 25)

performed and performed wellperformed either only to some extent or not particularly well

either not performed or performed poorly

evidence about the sub-discipline was not available
http://360-bt.com/issue1_pdf/360_01_d_Methodology_Uhl_Pimmer_Transdisciplinary_Knowledge_Network.pdfhttp://360-bt.com/issue1_pdf/360_01_d_Methodology_Uhl_Pimmer_Transdisciplinary_Knowledge_Network.pdfhttp://360-bt.com/issue1_pdf/360_01_d_Methodology_Uhl_Pimmer_Transdisciplinary_Knowledge_Network.pdfhttp://360-bt.com/issue1_pdf/360_01_d_Methodology_Uhl_Pimmer_Transdisciplinary_Knowledge_Network.pdf


4/8

3333


create the potential for benets, such

as reducing costs or higher service lev-

els. Too often business benets were

overestimated, while the risks and theproblems in making the changes were

underestimated perhaps deliberate-

ly, otherwise it would be difcult to get

funds and resources?

3) Risk Management

Risk management was often glossed

over, but given the high failure rate it

makes obvious sense to identify and

anticipate what could go wrong, before

it happens! As a result many risks only

became apparent during implementa-

tion, leading to increased costs, delays,

scope reductions and even abandon-

ment. This reluctance to explore the

risks earlier may have been inuenced

by executive instigation of the transfor-

mation, which can discourage negative

feedback, making it inadvisable, even

career limiting, to point out the potential

risks!

To maximize the probability of delivering

the intended benets, the transformationshould be planned in short deliverable

stages, if possible. This also reduces

vulnerability to changing business con-

ditions and makes it easier to adjust the

transformation to retain strategic align-

ment.

In essence, the outcome of the transfor-

mation could be predicted from the pre-

dominant color in the assessment of

the directional disciplines. How clearly

and comprehensively the transforma-

tion strategy, value and risks have beenunderstood and communicated provides

a strong indication of likely success. Had

the organizations undertaken this analy-

sis early in the transformation, some fail-

ures and the signicant resulting waste

of money and resources could have

been avoided.

Having considered how the direction

disciplines affect the level of success of

a transformation, our attention turns tothe enablementdisciplines and how well

they were performed in the cases.

4) Process Management

The IT and process changes are usually

performed more successfully than or-

ganizational changes, resulting in somebenets being delivered, even in some of

the less successful cases. But this was

not enough to enable the transformation

to achieve its objectives and the majority

of the benets.

In some of the cases IT or process meth-

odologies dominated the overall transfor-

mation approach, making the implemen-

tation of other changes more difcult.

In two of the unsuccessful cases the IT

function tried to satisfy all the expressed

user needs, which increased the scope

and consequently the costs considerably

outweighed the benets.

5) Program and Project Management

Transformations cannot be fully planned

in advance and have to adapt to both

changing business conditions and pro-

gram achievements. This is not neces-

sarily a comfortable position for senior

management and requires an empow-

ered governance group to oversee and,as necessary, adapt the program. Effec-

tive management of the change content

and benets delivery is more important

than the efciency of the process.

In some unsuccessful cases the organi-

zation relied heavily on the knowledge

and capabilities of a third party supplier

throughout, which changed aspects of

the transformation towards what the sup-

plier could do, rather than what was re-

quired.

The transformation manager should haveexpert knowledge in the area that is be-

ing changed and also how to manage

change in the organization. A key skill is

being able to reconcile the differing views

of the change and resource implications

between senior managers and operation-

al line management. The priority early in

the program should be to gain agreement

between senior and line management as

to what changes the transformation in-

volves, before negotiating for the fundsand resources required. In some of the

less successful cases the contract be-


5/8


tween the program team and senior man-

agement was agreed before the views of

line managers had been taken into ac-

count.

6) IT Management

The transformations whose main benets

were seen as IT cost reduction or ratio-

nalization or were led by IT were not suc-

cessful. Some business transformations

become IT replacement projects, as the

rst phase is about replacing old technol-

ogy and systems and IT methodologies

and approaches are used with little busi-

ness involvement. It then usually proves

very difcult to regain business interest

when the IT part is completed.

IT is often in a weak position in the con-

text of a business transformation due to a

lack of real business knowledge, but with

a perception that they know how it works,

but they only know how the IT systems

work. These notions created conict in

some of the transformations. When IT

won the argument the transformation

was unsuccessful, but when it was busi-

ness-led, any potential conict was moreeasily resolved.

7) Organizational Change

Management

These cases suggest that organizations

should manage business transformationsas orchestrated, continuous, incremental

sets of changes co-evolving and co-

existing with business as usual priorities.

The successful transformations usually

addressed the organizational, people

and capability aspects rst, then the pro-

cess and IT components. The less suc-

cessful tried to do the reverse.

Understanding and addressing stake-

holder issues and having a strategy for

accommodating or dealing with them

as early as possible in the transforma-

tion is vital. The longer the time avail-

able to transform, the more the stake-

holder views can and should be included

in how the transformation is conducted.

The methodologies used should enable

all the main stakeholders to directly con-

tribute their knowledge and plan their in-

volvement, instead of relying on experts

to interpret the stakeholders needs.

Stakeholder engagement is a critical suc-

cess factor in almost every transforma-tion, and early alignment or reconcilia-

Fig. 3: The

transformation

experience curve(source: SAP)


6/8

3535


tion of multi-stakeholder interests is very

important in order to avoid, for example,

dominance by a minority of stakeholders

or destructive negotiations between dis-

senting groups.

The transition curve (see gure 3), de-

scribing how people and organizationsexperience major change should be

respected. A comprehensive and sus-

tained approach is needed to minimize

the period that people spend in the val-

ley of tears, which is characterized by

uncertainty and even disillusionment.

Figure 4 shows that different groups

reach this point at different times in the

transformation. Senior management in-

terests may have moved on, just when

many line managers and staff are under

stress, usually due to change and busi-ness as usual pressures colliding.

8) Competence and Training

Management

Assessing existing competences as part

of the Readiness is important in order

to determine the strategy, because what

can be achieved is a function of two fac-

tors: rst, the amount of work required

to make the changes and second, the

knowledge and skills that can be madeavailable at the required times. If some

essential competences skills are limited

or absent, a strategy for developing them

is needed early in the transformation.

In the successful transformations people

were informed and educated about what

the intended future business should look

like. This helped them apply their exist-

ing knowledge to determining how thevision could be achieved, but it also

exposed where knowledge was inad-

equate. Where suppliers are providing

essential competences, those also need

to be appraised and managed in case

they have over-estimated their capabili-

ties. Organizational and individual ex-

perience cannot always be transferred

from transformation programs in other

organizations.

In addition to the eight direction and en-ablement disciplines discussed so far,

Meta Management considers themes

which inuence the performance of any

type of organizational transformation.

From the case studies a number of les-

sons about leadership, communication,

culture and values can be learned.

Leadership

The successful transformations had

CEO sponsorship and a C level execu-tive leading the transformation. Involve-

ment should be real and visible or other

Fig. 4:

Employees

experience the

effects of the

transformation

at different times

(source: SAP)


7/8


Key Learnings

The transformation must have a clear strategic rationale

explained in a language which everyone can understand.

Otherwise there will be little motivation to change.

The outcome of most transformations depends on how

clearly and comprehensively the transformation strategy,

value and risks have been understood and communi-

cated at the start. The successful transformations usually address the or-

ganizational, people and capability aspects rst, then the

process and IT components. The less successful try to do

the reverse. Most transformations involve at least two distinct phases

creating a new capability and then deploying it. The

former can often be done separately from business as

usual, but the latter inevitably competes with other opera-

tional priorities, which can seriously delay or even prevent

its exploitation. The transformation manager should have expert knowl-

edge in the area that is being changed and also how to

manage change in the organization. Overall, It is clear from these cases that the organizations

whose approach to managing transformations included

careful attention to the majority of the BTM component

disciplines were more successful than those that did not.

executives will not see it as important.

The evidence from these cases suggests

that continuous personal involvement in

the governance of the transformation iswhat is needed, but it is not always easy

for a busy executive to sustain this over

the extended period of most transforma-

tions.

But the cases also show that the earlytransfer of ownership to a coalition of

business managers, who will actually

deliver the changes and benets, is the

best way to develop the capability to

change. One key decision that needs to

be taken is the mode of change agen-

cy to be adopted. Either an expert task

force or devolving change responsibili-

ties to operational managers can work,

but a lack of role clarity is likely to cause

fragmentation and even disintegration ofthe initiative.

Communication

A common lesson from many of the

cases even the successful ones is

that no amount of communication is everenough! Informing everyone in the orga-

nization why change is necessary and

about the consequences of not changing

usually needs regular repetition. Equally

important is being open about what the

changes are going to mean, even if they

will be unpopular with some stakehold-

ers. Evasiveness builds distrust or sug-

gests ignorance, both of which reduce

credibility and hence commitment.

The communication must explain what

is going on and what the intentions are,

and it must be conveyed in the language

of the different stakeholder groups. De-

livering it at the appropriate times when

it is relevant to the working context of

the recipients is also critical if it is to be

effective. Also communication is a two-

way process; this is sometimes forgot-

ten and in some of the less successful

cases little attention was paid to ques-

tions, concerns or feedback which the

transformation team (wrongly) felt to bedistracting or unimportant.

Culture and Values

All the transformations included signi-

cant changes in organizational roles,

responsibilities, and behaviors, and in

many cases the changes were counter

to the prevailing culture. The successful

transformations recognized this was ei-

ther desired or inevitable and addressed

the organizational issues rst to create a

new context within which to bring aboutfurther changes.

In some cases the transformation also

demanded a change in the organiza-

tions values: for example, loss of au-

tonomy and reduced discretion for local

investment, consolidation to achieve cor-

porate control of resources or standard-

ization to achieve corporate rather local

business advantages. Inevitably these

changes created tensions and exposed

cultural and value differences across thebusiness units and functions, which had


8/8

3737


to be either reconciled or over-ridden to

succeed with the transformation. In the

less successful transformations these

tensions were not addressed and exist-ing power structures prevented or sub-

verted the changes.

The structure and mode adopted to bring

about the transformation should nor-

mally reect the organizations overall

management style. The task force ap-

proach, which exercises the use of pow-

er, worked well in a situation when the

need to transform was urgent, the objec-

tives were very clear and the means of

achieving them were known. In the op-

posite situations, a more devolved ap-

proach enabled at least one successful

Service

AUTHORS

Professor John Ward is emeritus professor at the Craneld University School of Man-

agement. John was Professor of Strategic Information Systems from 1992 to 2010 at

Craneld and Director of the IS Research Centre from 1993-2005. He has a degree in

Natural Sciences from Cambridge, is a Fellow of the Chartered Institute of Management

Accountants and is a past-President of the UK Academy for Information Systems.

j.m.ward[at]craneld.ac.uk

Professor Dr. Axel Uhl is head of the Business Transformation Academy at SAP. He

is a professor at the University of Applied Sciences Northwestern Switzerland (FHNW)since 2009. Axel Uhl received his doctorate in economics and completed his master

in business information systems. He started his career at Allianz and has worked for

DaimlerChrysler IT Services, KPMG, and Novartis. His main areas of research and in-

terest are sustainability and IT, leadership, and business transformation management.

a.uhl[at]sap.com

ACKNOWLEDGMENTS

The authors would like to thank all those who were involved in developing the case studies. Without their

work this article would not have been possible.

organization to increase the scope and

ambition of the transformation, through

knowledge sharing across the organiza-

tion and individual managers learningfrom experience as the program evolved.

As the transformation proceeds, it may

be necessary to change modes and in

turn the governance of the program. In

particular the creation of a new capability

can be carried out by a task force largely

separated from day to day operations.

However, deploying the new capability

usually competes with other business as

usual pressures, which can cause unex-

pected problems, delays or even unsuc-

cessful deployment.

360 03 e Research Ward Uhl Success and Failure in Transformation 13 Case Studies

Documents

Transcript of 360 03 e Research Ward Uhl Success and Failure in Transformation 13 Case Studies