by Lio Grealou, senior advisor to QR_ and founder of Xlifecycle Ltd  

Business change occurs somewhere at the intersection of hard and soft leadership, across a continuum between strategic and tactical management which can easily be perceived as a complicated maze of hard and soft factors.

Operational capabilities regroup a combination of systems, processes, data, knowledge, talents, skills, resources, tangible, and intangible assets, etc. Organizations are characterized by how they build distinctive ways to deploy, allocate and coordinate resources to create value and sustain their competitive advantage. Capabilities are what businesses can do as a result of teams working together. Data is the input / output, processes and tools are the enablers when joining the dots across data and teams.

Implementing new capabilities involves continuous levels of business alignment and change management to ensure effective adoption. A key challenge in appraising capabilities is maintaining objectivity—considering relevance against the business plan, and/or the product development plan (NPD), as well as the ability of the organization to change. 

Not everything is to be the best in class or state-of-the-art, hence the need for prioritization. Business maturity and agility are also key consideration factors. Creating new capabilities is not simply about team building or adding more resources. As Segal-Horn (2004) put it: “capabilities involve complex patterns of coordination between people, and between people and other resources.” Capabilities are, in essence, routines or multiple interdependent routines with different maturity levels; a.k.a. operating governance, core processes, combined with supporting tools and IT platforms.

In this article, I discuss what it takes to build credible holistic business change roadmaps and associated considerations essential to successfully implementing new operational capabilities. 

Business capability assessment

Business improvement often starts with a capability map and maturity assessment, with questions such as:

• What does the business do, and how well does it do it?
• How does it create value, today, and how does it want to create value tomorrow?
• How does the organization operate, internally and with its suppliers and customers?
• What does currently work and what doesn't, and why?
• What are the core and supporting capabilities which characterize the business modus operandi?
• What is the business market position and what constitutes its core competencies?
• How does it derive its competitive advantage and respond to external change forces?
• How do teams collaborate and exchange data / information?
• What are the key deliverables and decisions required across the product development lifecycle, and how do these link to data quality?
• How does the organization learn? 
• What is the current organizational design and the operating model?
• How does the business deal with internal change?
• What is the relative business maturity and ambition for the future?

Furthermore, both strategic and tactical considerations are to be discussed when assessing capability durability, transparency, transferability, appropriability and replicability. This is a matter of understanding future capability needs versus immediate problem-solving requirements—putting this in the context of short-term effectiveness and efficiency versus long-term competitive advantage. To that end, process and behavioural models such as CMMI can “help organizations streamline process improvement and encourage productive, efficient behaviours that decrease risks in software, product, and service development.” (White, 2021)

Implementing new operational capabilities

According to Porter's generic strategies’ model, there are three basic strategic options available to organizations for gaining competitive advantage: cost leadership, differentiation, and focus (Porter, 1985). These should not be seen as ends to themselves; operational excellence, product leadership, and customer intimacy are for example key indicators for leadership teams to determine if their underlying strategies and change initiatives are working as intended.

Capability and business change assessment is often combined with the improvement and new requirement capture, guiding stakeholders toward pragmatic, feasible solution elements, considering:

• What are the expected outcomes and benefit case for the targeted business scenario, user stories, and detailed use cases?
• How complex might it be, and which stakeholder groups and personas will be mostly affected?
• What will be the solutioning process, who will be involved, how and when?
• Is it possible to demonstrate what we mean through a proof-of-concept to guide key users in their understanding of the solution?
• What would be the deployment and data migration strategy, in the context of the initial MVP scope?
• What are the key internal and external interdependencies, and how do they integrate into the overall implementation roadmap?
• What will be addressed through process versus digital solution elements, bearing in mind that the system might not fix everything?
• What will need to be specifically tailored to the business, and what will be the efforts that make it happen and keep it going forward?
• How will quick-wins be positioned, will they be quick fixes, and will they serve their purpose without hindering the business when transitioning to their next maturity steps?
• What will be the learning curve and is the business ready for it?
• What will be the required education and change management to ensure value realization maximization?
• How does that fit across other business imperatives and wider change initiatives?
• In the interim, how will the change initiative(s) affect the sustainability of ongoing business operations?

Furthermore, requirements might be captured through interviews, discovery workshops, awareness sessions, proof-of-concepts, etc. They will always need to link to tangible business scenarios and use cases. Specific user stories will relate to specific persona perspectives and needs, feeding into a business change roadmap.

Navigating the business change roadmap

Assessing and implementing business change is an integral part of the new capability assessment and implementation plan, independently of the type, maturity, or industry in which the organization operates. However, to be effective, it needs to fit across the organizational footprint and cultural context. 

This is characterized by the fact that “the ability to change links to the organizational culture: how people are onboarded, how they learn or are allowed to learn, how change is implemented (from simple continuous improvement to more transformational change), how people are rewarded, how success and failure are managed, how decisions are made, how the organization communicates across functions, how are business priorities informed, etc.” (Grealou, 2019)

On the one hand, mature organizations with established NPD governance and processes often need focused product data management (PDM) execution support to drive process acceleration, operational efficiency improvements and cost reduction. This is also a matter of skills and talent development, adopting new ‘agile engineering’ approaches and leveraging good data.

On the other hand, start-ups typically begin with PDM capabilities that are essential to a successful launch without doing it all at once. With such challenges, it is a matter of knowing the right questions to ask when, while preempting the possible answers to build a robust foundation for development and improvement.

The business change roadmap needs to allow for levels of experimentation and learning along the way while mitigating and addressing ongoing or new problems. Challenged programs typically look to remediate disruptive data quality problems and provide relevant stakeholders with the accurate, up-to-date information they need, when and how they need it, to fulfil their role effectively and efficiently. This also brings the benefit of relieving the workplace frustration and stress that results from inaccurate data and dysfunctional processes—and, in turn, gaining trust from the stakeholders to continue the business change journey.

What are your thoughts?

References:

• White SK (2021); What Is CMMI? A Model for Optimizing Development Processes; CIO.com 
• Grealou L (2019); First Change The People, Then The System; virtual+digital. 
• Segal-Horn S (2004); The Strategy Reader, 2nd Edition; Wiley-Blackwell.
• Porter ME (1985); Competitive Advantage: Creating and Sustaining Superior Performance; New York, The Free Press.