9 Part Blog: The Reasons Transformational Change Can Fail – Reason 5.
Governance refers to the oversight and decision making processes used to run a company or manage an important activity. This is often overlooked when implementing change, and is poorly understood. Not establishing a governance framework at the outset can lead to serious challenges late in the implementation phase. This can result in companies experiencing major cost overruns, and in some extreme cases, outright failure of their transformational initiative.
There are 2 important aspects of governance which relates to transformational change.
(1) Establishing Oversight
One of the main benefits of a governance framework is oversight. This primarily applies to digital transformations, which involves working with outside parties. These include 3rd party software vendors or system integrators leading major parts of an organization’s implementation. Without a governance framework in place, companies can run into major challenges when outside parties primarily report on their progress, but fail to identify potential issues they are aware of, which are outside of their project scope.
For example, a vendor will report that the project plan is on schedule and soon ready for rollout. However, shortly afterwards, a major problem appears with user acceptance testing because feedback was either ignored, minimized, or not addressed early on. In this situation, having a governance framework in place identifies user acceptance testing as a critical go/no go activity. As well, it also identifies who within the company is responsible to ensure it meets the required conditions, before any rollout is done.
An effective governance framework identifies oversight and the steps that need to be met to mitigate potential risk.
(2) Establishing Rules of Engagement
The second area related to governance refers to what can be called internal rules of engagement. A governance framework establishes upfront how the executive teams and their departments support and contribute to the transformation. It also identifies how specific decisions will be made for different activities related to the initiative, and who will make them.
Companies often do not consider this because it is assumed that the leadership team is in agreement and will support what is asked of them. Hence there is no need to specifically spell this out. However, it is a mistake to assume this if the initiative is new to the organization, or there is an unhealthy political culture. For example, the range of planning and implementation activities to sustain a sales force transformation usually requires a high level of coordination across departments such as marketing, procurement and production.
With a governance framework in place, departments are clear on what they need to do to support the initiative, along with who is responsible for these activities.
Benefits of Establishing a Governance Framework Early On
Some level of disruption inevitably occurs when implementing transformational change. Instituting a governance framework at the outset allows the leadership group to talk about and agree on the internal rules of engagement. Examples of this include:
- Establishment of roles with agreed-to responsibilities and accountability pre, mid and post implementation.
- How decisions will be made on important activities such as vendor selection.
- How specific processes and tools will be used by the organization.
- Who will be responsible for operational results, due to the transformation.
How to Develop a Governance Framework
Many companies do not have the experience or internal expertise to design a governance framework. As a result, one way to do this is to have an outside expert at the outset develop it for the organization. They can then be periodically engaged to assess progress and identify important areas that need to be addressed. Their arms-length involvement and perspective can provide important impartial guidance and ensure that any issues that are present or emerging, are quickly identified and acted on.
In the next blog, I will review the danger of viewing transformational change as a project with an end date.
This article is based on my forth coming book Rethinking Change Management; How To Implement Transformational Change For Long Term Success, which will be publishing later this year. If you find this article helpful, please share and subscribe to our blogs and newsletter (insert link here). Stay tuned for further details.
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