Oliver Wyman’s case for a ‘value-driven’ approach to transformation

28 July 2024 Consultancy.com.au

In order to keep up with market disruption and technological change, financial sector institutions in Australia have to initiate a raft of transformation programmes every year. To ensure success, these transformations should be ‘value-driven’, says Oliver Wyman partner Simon Pelletier.

With the tide of change shifting quicker than ever thanks to rapidly emerging technologies, executives in the financial industry are pushing forward large and small transformations on a regular basis, according to a recent survey from Oliver Wyman.

However, many of those transformations end up failing for a variety of reasons. “More often than not, transformation programs fail to deliver the full anticipated benefits and 40% of unsuccessful transformations end up with financial, operational, and reputational repercussions,” says Pelletier.

Simon Pelletier, Oliver Wyman

“There’s a clear need for organisations to adopt a value-driven approach to maximise their chances of success,” he adds.

Successful transformations generally need to be business-led and guided by the organisation’s strategic ambitions, detailed business plans, and targets. “Transformation execution cannot be led by technology in isolation. It must be focused on incremental value realisation for the business, with features and requirements bundled, prioritised, and deployed in progressive capability drops.”

Once transformations kick off, involvement from the business is key, and teams between the business and IT should form a strong tandem. “There needs to be a continuous feedback loop between the business, technology, and programme teams, allowing for real-time reprioritisation, issue resolution, and course correction.”

Businesses that carry out successful transformations need to take full ownership of the decisions and success of the transformation. This ensures ongoing alignment with changes to business priorities and rapid progress.

“In value-driven transformations, the business takes charge, setting the transformation objective and prioritising the deployment of capabilities that achieve specific growth targets and customer outcomes,” Pelletier says.

Another key success factor for transformation delivery is ensuring that there is sufficient agility built in. “It is very important to be able to know when to hit the brakes and reroute when things go wrong. And to be able to carry out in-flight course corrections when necessary.”

“Unexpected changes and events are inevitable in multi-year transformations, adding complexity to the process,” noted Pelletier.

“Value-driven programmes provide built-in flexibility, allowing for proactive risk management and in-flight delivery adjustments to be made. An improved visibility of capability requirements, interdependencies, and linkages to business value also allows the programme to make informed real-time decisions on prioritisation and sequencing to overcome delivery challenges.”

The survey showed that when organisations followed a value-based transformation strategy, they were more likely to meet success. That success is mostly measured in financial returns: A total of 80% of organisations see their profitability boosted after a successful digital transformation. In comparison, with other approaches, that number was significantly lower.

“Deploying a value-driven transformation provides the best mechanisms for organisations to deliver on their strategic ambitions and business goals.”

“Drawing on real-world case studies, those that have embraced this approach demonstrated a greater likelihood of impact from the capabilities delivered and success in maximising value from their transformation programmes,” concluded Pelletier.

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