~ By David Walton, CEO, Bestoutcome
Every major change management programme puts shareholder value at risk. If the project succeeds and meets its objectives, then shareholders benefit. If it fails or even partially fails, then the value of the company may fall and keep falling. And CEOs don't usually survive such an outcome.
Ask any programme sponsor what the biggest threats are to a major project and you are likely to get similar answers: a lack of leadership and drive and not enough focus on business risk. Take the recent example of G4S's catastrophic failure to deliver against the terms of its security contract for the London 2012 Olympics. An unmitigated business risk issue if ever there was one. In just a few weeks, the company lost 14 per cent of its value.
In fact these two issues - managing shareholder risk throughout the duration of a project and top-down, active engagement by the CEO - are inextricably linked and are crucial components of change in an era when intense and significant transition has become a permanent characteristic of so many large corporations. Change never ends and therefore the risk to shareholder value is constant. It follows, therefore, that the CEO must lead change by focusing on shareholder risk.
One of the biggest problems in major change management projects is what could be called a 'Bermuda Triangle' communications failure that occurs between Programme Director, Sponsor and CEO. The Programme Director and Sponsor are often reluctant to raise issues or red flags to the CEO; they see themselves as being responsible for dealing with problems as they occur. And that suits most CEOs just fine: they like green traffic lights.
But if the communication between Programme Director, Sponsor and CEO was focused on business risk so that problems and issues within the programme were examined in terms of shareholder value at risk, they immediately become more vital to the CEO. In this way, the CEO becomes actively engaged and the top-level communications problem is resolved. So how do you make this happen? What do you need to deliver this focus on shareholder value at risk?
Too often there is a yawning gap between the CEO's vision and the nuts and bolts of a programme to deliver it. A focus on business risk presented in terms that the CEO recognises and can engage with allows that gap to be bridged. At the heart of this should be a change map, with clear goals, key milestones and a focus on some of the softer issues such as the ability of individual departments to do what's being asked of them. This ensures a culture of openness and honesty from top to bottom.
It's essential to have accurate data and a system that ensures transparent, visible and objective reporting. That means one toolset that everyone understands, trusts and uses. Too many project management solutions prove so complex and opaque that only technical specialists can drive them. This simply encourages a culture of 'green light' reporting: trying to fix problems behind the scenes and not highlighting milestone risks, often until it's too late to do anything about them.
Like it or not, big change normally demands external help. You need systems integrators, a change methodology and supporting project management software. Tempting as it may be to follow the best of breed approach to selecting these partners, it tends to work directly against openness, transparency and effective risk management.
There are very significant advantages to engaging a niche change management team that has proven experience of your sector or industry. A specialist team should also be able to provide the methodology and the toolset to deliver the change map and desired outcomes. Opting for a specialist team that can provide an integrated approach will enable better data transparency, objectivity and appropriate risk management at each level - from top-level shareholder at risk and down.
Big system project management tools typically prove counterproductive in practise. They are costly to run, are often under-used and tend to distract from the real issues of risk management, risk mitigation, transparency and openness. Indeed, they often end up being used for little more than timesheet management.
What's needed instead is an elegant, easily understood toolset that guarantees objectivity, engenders honesty from top to bottom and gives senior people risk data in an accessible and concise format (i.e. management dashboard).
The CEO needs to know when shareholder value may be at risk. They need to know what actions are being taken to mitigate this risk and whether a programme is actually on track or not. The best toolsets are those built by the specialists themselves, as they are based on many years of practical experience in delivering major change programmes and will reflect the need for risk management and mitigation at every level.
Like change itself, the process of managing change requires continuous progression and innovation. Whether the programme is part of a corporate relocation, merger/demerger, re-engineering of the operating model or a technology migration, change is an essential and inescapable part of business.
For this reason, CEOs and all senior management need to be able to see how shareholder value is being protected. That requirement demands a team of people, a methodology and a toolset that are all founded on data transparency, accuracy, openness and objectivity. Proper risk management is impossible without them.
Bestoutcome specialises in complex change management for large organisations in retail, finance, manufacturing and distribution. Its approach is based on delivering specific business outcomes within a uniquely transparent, risk managed and open framework. This is achieved by using highly experienced consultants combined with PM3 - an elegant, flexible, accessible toolset - and ODPM, an outcome-driven methodology. Bestoutcome's starting point is always the same: the client's ultimate business goal. And it never loses sight of this.