The founding principles of transformation

11 Jun 2018

Operational Excellence, including business diagnostics, transformation and process optimisation, is a proven way to handle and advocate any change programme

MOD appears to have lost control of multiple transformation projects and is using the deviation from SDSR15 to underpin further Defence Reform. In parallel, a £20.8Bn Affordability Gap exists and planned efficiencies will not be realised unless MOD regains control of its transformation portfolio.

The founding principles of transformation are widely documented, they ultimately reside in an organisations ability to define its future state and provide an endorsed business case that will underpin a compelling need for change. Our understanding of the current situation (through our involvement with DSN(T) & DEFSCOR) is that MOD currently has a significant number of transformation projects and programmes running concurrently, many of which appear un-coordinated and do not adhere to the aforementioned principles of transformation.

At present there is no PCMO controlling the multiple transformation initiatives and there is no portfolio level view of how these may or may not deliver return on investment (ROI) or indeed contribute to the future end state, Defence is therefore “gambling” on the projected efficiencies being realised. This approach, which lacks coordination, coherent governance and leadership appears in all cases to be underpinned by SDSR15 but without any singular controlling body driving an accurate course. From our experience, Change in all cases should not be undertaken lightly, both ROI and the cost of change itself should be fully understood and modelled prior to embarkation.

“Our advice at this critical junction would be to cease all transformation initiatives that cannot evidence ROI and focus on the control aspects that will deliver efficiencies against the plan”

This is likely to affect multiple departments, functions and contractors but effectively this will stop all uncontrolled transformation, provide a method of restraint for spiralling costs and provide a catalyst for mobilising change that can be controlled at portfolio level. We would in addition mandate the following guiding principles such that transformation and realisation of benefits can be approached in a controlled and disciplined manner:

• Understand the Vision - The vision (or end state) once fully defined and sponsored at the highest level within the organisation then requires mobilising such that each individual business objective is achieved through mapping and decomposing into individual(s) objectives. Without this level of disaggregation of the overall business objectives the organisation will run the risk of failure to meet its targets and its vision.
• Analyse the Value Chain - The entire value chain should be mapped, analysed and fully understood prior to any level of change occurring. Without a forensic understanding of the entire value chain the organisation will not understand where the inefficiencies reside and is therefore highly likely to modify elements of Defence that did not require optimisation.
• Apply Control - Change itself must be approached in a disciplined, analytical and controlled manner (see diagram) such that efficient elements of the value chain remain undisturbed throughout. When return on investment and benefits cannot be calculated, controlled or tracked then transformation should be avoided at all costs. In order to drive a realistic chance of transformation “sticking”, the organisation must implement change itself, empower leaders of change and resist change being “done to them” by external parties.

RINA has a profound understanding of Operational Excellence including business diagnostics, transformation and process optimisation, as proven through our recent transformations of Met Police, NHS, Brize Norton (Project Gateway) and BAE Systems. We have first-hand experience of the challenges MoD is facing and would advocate a much more controlled approach to change, we would recommend a strong presence of Lean Six Sigma, Business Analytics and Operational Excellence practitioners throughout all change programmes of this complexity and magnitude.

Article by Gavin Mee and Rosie Tulloch, RINA