Why you need a Transformation Office
If you are serious about embarking on a transformation journey with your company, you should consider establishing a Transformation Office (TO for short). Transformation initiatives are large, complex, and lengthy, and you need people fully dedicated to overseeing them. Without effective governance, your transformation will stall and become a continuous source of aggravation for everyone involved.
What exactly is a TO?
Put simply, the TO is the team responsible for the governance of your transformation efforts. It is your first line of defense to ensure things are on track - and to raise the alarm and adjust when they are not. It is responsible for the integrated plan, integrated customer journey, tracking against the key metrics and financial objectives, status reports, funding requests, escalation of issues, pre and post-mortems, overall project cadence, logistics of the big meetings, etc. It dictates the rhythm of your entire change effort.
Is the TO the same as an internal consulting team?
No, they are different. That said, the lines can get a bit blurry given that: (i) both teams usually report into the same executive; (ii) the executive in charge will move some of the internal consulting team’s superstars to the TO (there is significant capability overlap between both teams); and (iii) you may have people from your consulting team joining some of the transformation workstreams.
Where should the TO sit in the organization?
The TO should report directly to a member of the executive team. Ideally, it should be run by your Transformation Officer - someone with plenty of experience with this kind of effort and who is respected within the organization. I’ve also seen a number of other C-level folks running the TO, but success in this case depends much more on the individual’s prior experience with transformation and their availability (which is often an issue). If you are unsure whether someone in your executive team has what it takes to be your transformation leader, then they very likely don’t. You are much better off starting a search for a new person to join your team.
What is the scope of the TO? (What projects should be in the purview of the TO, and which ones should not be?)
Although it is difficult to come up with a clear rule on this one, here is my take: if the project is critical for the new vision, contributes significantly to the bottom line, changes the overall customer experience, and/or cuts across departments, they are likely strong candidates to be overseen by the TO. On the other hand, initiatives that are smaller and/or primarily within the purview of a single department do not need to be under the TO. However, the TO must still be informed of those initiatives.
Usually, the scope is very broad. For example, I once worked with a large food company to set up their TO, and we ended up selecting 20 projects to run simultaneously under it. Those projects would be responsible for generating 95% of the incremental EBITDA expected for the following 4 years.
What is the composition of the TO?
The TO may not be necessarily running any one of the initiatives it oversees, but its scope is hefty nonetheless. While the actual size of the team will vary depending on your company’s size, transformation scope, and talent within the workstreams, you should keep the TO small: in smaller companies, 1-2 people will suffice; in larger companies, you may need 4-8 people. In addition to project management expertise, you also need representation from all key functions in your business (the actual capacity needed will vary depending on project phase).
For example, you will need someone from Finance heavily involved early on to tie the chosen metrics to the P&L and to set the systems to easily keep track of the progress of each workstream. Later on, depending on the level of automation achieved, their role may shrink, focusing on reporting. HR, on the other hand, tends to start smaller (focusing on adjusting the comp for the transformation teams and helping fill talent gaps) and grow significantly when you start rewriting job descriptions and reskilling an entire part of the organization.
Also, given the responsibility they will have, you want the people in your TO to be awesome, much stronger than the average employee. If you select well among your existing top talent and external candidates, employees in the TO will be invaluable for your company: not only can they parachute into struggling workstreams and bring them back on track, but they will also become superstars for you to deploy once they learn enough about different parts of the business.
Should the TO be a permanent body in your organization?
More often than not, the TO exists only for the duration of the transformation. I disagree with this approach and think the TO should be a permanent body in the organization. But, and this is a big “but,” only if the CEO and leadership team are truly committed to creating a great company. The pace of change is increasing significantly, and once you finish a multi-year transformation, you should probably start thinking about the next ones to come. I would strongly encourage you to think about transformation the same way you think about continuous improvement: it should always be happening. They may not be of the same magnitude, but they will be of similar relevance.
For instance, your first transformation wave may be focused on migrating from a fixed-fee business model to a subscription-based one. This is a huge endeavor requiring a heavy workload. The second wave could then be more internally focused, completely redesigning your support functions. And on and on… you get the picture.
How should the TO work with the organization's project managers, change managers, risk managers, strategic planners, and other project-based positions?
If you set your transformation on the right track, a lot of your best project-based employees will be involved in it (although not necessarily in the same capacity or at the same time). They will be heavily involved in running transformation workstreams while driving other critical initiatives within their own departments. While the TO wants insight into the work these employees are doing, it is of paramount importance that the TO keeps them abreast of the key developments within the transformation. There is a huge benefit to creating a new communication channel to ensure coordination and avoid unnecessary rework.
You need to empower the TO to drive change.
How do you set up the TO for success?
Put simply, you need to empower the TO to drive change. It needs unwavering support (and time commitment) from the CEO and the leadership team and the ability to speak on their behalf. The TO also needs the ability to tell leaders when their contributions are lacking and provide feedback on necessary adjustments to meet the transformation’s goals. It needs backing from the CEO when leaders invested in the status quo start to push back. And it needs support when the initiative derails and a pivot is required.
Give the TO a real chance to succeed - you won’t regret it. Your company’s operational performance will be catapulted into a much higher level. You will witness steady progress and the change happening in your company right before your eyes.