Organisational Complexity and Business Transformations


Especially in large organisations, some business transformations are more successful than others. Why is that the case?

Even with an excellent analysis of required changes (e.g. risks or regulations), proper planning and outstanding execution, the business transformation may still fail due to organisational complexity.

This complexity is caused by varying factors. Some are more obvious such as numerous hierarchy levels, bureaucratic processes, competition for key persons and budget constraints. Other factors may not be that obvious. Examples range from internal politics over unclear accountabilities to interdependencies between different programs. Depending on the size and multi-jurisdictional footprint of the organisation the list of factors becomes even longer.

Many organisations face the same question: How can a business transformation program deliver in such a challenging environment?

Strategies for addressing organisational complexity are manifold and vary from organisation to organisation and from transformation to transformation. Focussing on three of the mentioned factors, a variety of strategies can be employed to increase the chances of success.

Access to Key Persons

Every organisation has key persons who are responsible for critical operational results or possess key knowledge about the underlying processes, systems and organisational structure. Operating at full capacity, they are usually involved in multiple change and operational activities, so that they are unavailable for any additional program making them a scarce resource for the intended business transformation.

These key persons need to be identified and convinced to support the business transformation program – usually easier said than done. One option is to understand the reason they cannot support the program and address that constraint, e.g. by shifting operational business to another person or team. Another option is to convince them to take on an advisory role which limits their responsibilities to sanity checks and document reviews for the program.

Managing Interdependencies

Large business transformations commonly require changes to multiple business lines or units across the organisation. It is quite common that interdependencies (bi-directional dependencies) exist between two change programs impacting on the same business line or unit. For example, a program needs to introduce changes to several process steps before the other program can adjust subsequent steps. An interdependency exists because the targeted new process must realise benefits for both programs while still delivering on expected results for the business line.

Managing interdependencies is part of sound program risk management. Key interdependencies need to be identified, assessed and monitored appropriately. Whatever can go wrong, usually goes wrong. Hence, in addition to management of these interdependencies, appropriate contingency plans should be prepared addressing the question: if a program objective with an interdependency cannot be delivered, which other options exist to deliver that objective without the interdependency? For example, if a system release aiming at automation of a workflow cannot be delivered, a contingency plan could include a tactical solution based on Excel or enhancement of manual process steps.

Creative contingency planning may also uncover approaches for breaking these interdependencies permanently increasing the flexibility for the entire business transformation program. While this may be an obvious step, contingency planning for transformation objectives on the critical path are less common than one would think.

Another aspect of interdependencies is “artificial” scope enlargement. This type of scope enlargement means that other parts of the organisation may try to hitch-a-ride to achieve their objectives. The best strategy for this kind of scope enlargement is careful screening of additional objectives and recalculation of the entire timeline as well as resource allocation. Taking on board new objectives usually results in stretched timelines and increased budgets which need to be approved by respective governance bodies or the executive board. All stakeholders need to become aware of the enlarged scope and approve the new timeline as well as budget. This is an excellent way of validating additional objectives from other parts of the organisation and potentially reject them.

Navigating Politics

Another key aspect of successful business transformations is appropriate governance and C-suite/ senior management support. Generally, these key stakeholders are responsible for strategy, business lines or supporting functions such as operations, risk & compliance, finance and IT. Without the support of these key stakeholders, a business transformation becomes much harder to execute, may be delayed or even stopped for no obvious reason. Therefore, gaining the support of mentioned stakeholders is crucial. Sponsorship can be gained by presentations to appropriate committees or in face-to-face meetings. Gained support needs to be reinforced frequently with appropriate decisions from these stakeholders and disseminated throughout the organisation via updates in committees, emails and reports. Furthermore, each business transformation requires an appropriate governance involving all affected stakeholder groups. This ensures that challenges can be addressed and disputes resolved.

How does C-suite sponsorship and respective governance help with internal politics? Having gained the support of these stakeholders, any challenge created by politics can be addressed via established governance and sponsorship ensuring that the business transformation can progress and deliver on agreed objectives. Carefully built and maintained alliances as well as personal affiliations will pave the way for executing the program successfully.

Access to Key Persons, Interdependencies and Politics are only some organisational complexities which need to be managed when transforming a business successfully. Organisational complexities gain an additional dimension with multi-jurisdictional coverage. Cultural diversity, varying regulatory requirements and different perceptions of risks are only some additional challenges impacting on intended business transformation.

The hard gained experience of a seasoned transformation manager plays a critical role when dealing with organisational complexity. It cannot be learnt from a textbook or via presentations. This indicates that a transformation manager with a suitable track record needs to be engaged. One option is to find an experienced employee with a track record of succeeding in the organisation’s complex environment. Another option is to find an external professional with the advantage that the professional comes without the “internal baggage” and brings a fresh perspective into the organisation.

In summary, business transformations can succeed if organisational complexity is managed correctly. To ensure success, a suitable transformation manager with sufficient experience is critical.

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