Changing Culture to Maximise Enterprise Value webinar Thursday 18 March 2021 presented by: John Thorp and David Golding The link to the write up page and resources of this webinar: https://www.apm.org.uk/news/changing-culture-to-maximise-enterprise-value/

1. Changing Culture to Maximize
Enterprise Value
David Golding
David@goldingengineering.co.uk
John Thorp
John_thorp@thorpnet.com
Val IT and slides copyright © 2006 IT Governance Institute. Used with permission.
18 March 2021

2. Agenda
• The origins of Value and Benefits Management
• What is Value Management
• The Core - P3M
– Portfolio Management
– Programme Management
– Project Management
• P3M+
• Management of change
• Full-cycle governance
• Activist accountability
• Relevant metrics
• Completing the picture
• Challenges
• Culture and mindset
• Q&A
2

3. 3

4. 4

5. 5

6. Origins of Value and Benefits Management
Project Management
• 1972 – APM
• 1969 – PMI
• 1967 – IPMA
• 1962 WBS – US DOD
• 1957 PERT – US Navy
• 1957 CPM - Dupont
• 1956 AACE
• 1917 Gantt Chart –
Henry Gantt
Value Analysis
1943-47 GM
Lawrence Miles
• 1954 US DOD
Benefits Management/Benefits Realization
Management
Cranfield
• 2006
Benefits
Dependency
Networks - Ward
and Daniels
• 1996
Benefits
Modelling
DMR/Fujitsu
John Thorp
• 2003
Information Paradox v2
Enterprise Value Management
• 1998
The Information Paradox
Benefits Realization Approach
Gerald Bradley
• 2006
Benefits
Realization
Management
Value Management
• 1966 VEA UK
Value
Engineering
• 1972 IVM UK
6

7. What is Value Management?
The “linked up thinking”, mindsets, behaviours and
practices that must be embedded in governance
and management to create and sustain business
value from all business activities, including but not
limited to transformation and IT-enabled change.
Effective Value Management requires moving
from a delivery culture - “build it and they will
come”, to a value culture.
Organizational culture is
the collection of values,
expectations, and
practices that guide and
inform the actions of all
team members - it’s “the
way things are done
around here”
Deal & Kennedy, “Corporate
Cultures: The Rites and Rituals of
Corporate Life”,1982, 2000
“Change is hard because
people overestimate the
value of what they have—
and underestimate the
value of what they may
gain by giving that up.”
James Belasco “Flight of the Buffalo:
Soaring to Excellence, Learning to
Let Employees Lead”,1994
7

8. Value Management Principles
Investments will:
➢ be managed as portfolios of investment programs and resulting assets.
➢ cover the full scope of activities that are required to achieve business value.
➢ be managed through their full economic life cycle.
Value delivery practices will:
➢ recognise that there are different categories of investments that will be evaluated and
managed differently.
➢ define and monitor key metrics and will respond quickly to any changes or deviations.
➢ engage all stakeholders and assign appropriate accountability for the delivery of
capabilities and the realisation of business benefits.
Adapted from Val IT and slides copyright © 2008 IT Governance Institute. Used with permission. 8

9. The Full Life Cycle of an Investment decision
We need to look at benefits over the full life cycle
of an investment decision
Ultimately, the
goals of
investment and
asset
management
should be the
same - to
create and
sustain optimal
value
Investment
Ideation
Evaluation
Initial Business Case
Evaluation
Prioritisation
Business Case
Selection
Detailed planning
Solution delivery
Implementation
Adoption
Value Creation Value Sustainment
Retirement
Business as Usual (BAU) - Assets
Ideation
Evaluation
Prioritisation
Business Case Detailed planning Solution Delivery
Implementation
Selection
9

10. P3M
Portfolio Management
Source : Adapted from The Information Paradox by John Thorp. McGraw Hill 2003 and Val IT 2.0 Framework ISACA
2008
Programme
Management
Project
Management
Objective selection of
investments to maximise
business value, based on
both attractiveness &
achievability with proactive
monitoring and adjustment
of the portfolio of investments
based on performance and
business context.
Management of all
the projects, grouped
into a programme,
that are both necessary
and sufficient to realize
the expected benefits.
Management of budget,
schedule and resources
to deliver the required
capabilities that are
Necessary but NOT
Sufficient to realize the
expected benefits.
10

11. Portfolio Management
Executing business strategy by:
➢ managing the evaluation, selection, monitoring and on-going adjustment of
different groupings of investment programmes or assets
➢ categorized by their type/characteristics
➢ with clear evaluation criteria for each category of entity
➢ assigning weightings to those criteria based on their contribution to strategic
objectives
➢ while meeting clear risk/reward standards
➢ enabling decisions to be made on how to best manage entities in the portfolio
➢ in order to to optimize the value of the portfolio for the overall enterprise.
“There is
nothing worse
than doing well
that which
should not be
done at all.”
Peter Drucker
11

12. Categorisation
INNOVATION
GROWTH
MAINTAINING CORE
OPERATIONS
MANDATORY
Transform
DEVELOPING
OPERATIONS
Grow
Run
Keeping our
job
Maintaining
service
levels
Doing things
better
Doing more
things
Doing better
things
Source: Gartner (Meta)
Emphasis is on
maximising value at
an acceptable level of
cost and risk
Emphasis is on
minimising cost and
risk, thereby freeing
up funds for
discretionary spend
Discretionary
investments
Non-Discretionary
investments
Increasing
degrees of
freedom to
allocate
funds
Greater
complexity of
connection with
desired business
outcomes
12

13. Investments selected based on value
Value = f (Alignment, Business Worth, Risk)
Measure of fit with
strategic direction
Measure of financial
and non-financial
contribution
Chance of not
delivering and not
realising benefits
Portfolio Management is
about:
▪Objective and consistent
evaluation of investments
▪Comparing ‘apples with
apples’ (by unitising a
relative score across the 3
dimensions of value)
▪Choosing the highest
value investments –
balancing desirability and
achievability
Source: adapted from ITGI Val IT Framework 2.0 2008; John Thorp’s The Information Paradox 2003, and IBM Australia
Alignment
Business
Worth
(Contribution)
Risk
13

14. 14

15. The Business Case
“Business cases are generally viewed only as
documents for gaining funding. Once approved they
are put away…few track the business benefits the
projects actually achieve”
Gartner, Building Brilliant Business Cases
“Business Cases contain untested assumptions
masquerading as facts”
Bob Morton, Government of Canada
“…38% of respondents openly admitted to overstating
benefits in order to get approval”
Cranfield School of Management, survey of 60 European companies
Largely works of fiction
based on “delusional
optimism” and “strategic
misrepresentation”!
Stephen Jenner quoting Daniel Hahneman &
Brent Flyvbjerg
15

16. The Business Case
• The foundation that sows the seeds for success or
failure – NOT a bureaucratic hurdle
• Business cases should:
➢ Go beyond delivery of IT projects to include realization of
value from IT-enabled investments in business change.
➢ Focus on managing the “journey” as well as achieving
outcomes (both intermediate and final)
➢ Ensure that relevant and appropriate measurements
(both lead and lag), accountability and reporting are
included
➢ Be a living, operational management tool, updated
through the full life cycle of an investment decision,
with timely corrective actions taken as required
16

17. 17

18. Programme Management
Managing a structured grouping of projects that are both necessary
and sufficient to produce clearly identified business results or other
end benefits
Evolving beyond…
➢ Delivering a capability to achieving a desired business outcome
➢ Focusing on technology to identifying all the elements of change that
are required to deliver benefits
➢ Focusing on managing activities to delivering value
18

19. Benefits Mapping – Completing and Connecting the Dots
INITIATIVE
Source: The Results Chain™, Fujitsu
CONTRIBUTION
CONTRIBUTION
CONTRIBUTION ASSUMPTION
ASSUMPTION
ASSUMPTION OUTCOME
OUTCOME
OUTCOME
INITIATIVE
INITIATIVE
INITIATIVE
INITIATIVE
INITIATIVE
INITIATIVE
Clear
accountabilities
Full scope of effort—
All necessary IT and
business initiatives,
including change
management
Clear
understanding
of outcomes
Relevant
metrics
19

20. Source : Val IT Police Case Study – ITGI 2007
Benefits Map (Results ChainTM) – an Example
20

21. The Benefits Realisation Plan
• A Benefits Realisation Plan includes:
– Identification of outcomes that will be treated as “benefits”
• Outcomes should be described using precise language - using the acronym
MEDIC something is Maintained, Eliminated, Decreased, Increased or Created
– Definition of the metric
– Baseline for the metric
– Secure metric source
– Target for the metric over time
– Accountability – ownership and for
recording/reporting
• Progress against plan is managed using a benefits register
21

22. Benefits Register – an Example
22

23. 23

24. Getting ahead of the Curve - Managing the Journey
Requires an Effective Full Life Cycle Governance
Process that…
Prevent / Plan Contain / React Recover / Throw
away or start again
$’s
Develops complete
& comprehensive
Value-driven plans
Senses & responds
to deviations early,
quickly and
decisively
Eliminates the risk
of getting to the
crisis stage
“How does
a project
get to be a
year behind
schedule?
One day at
a time.”
Fred Brooks
© 2021 The Thorp Network Inc..
24

25. Stage Gates
• Plan initial gates during Business Case development
• Add/change as required
• NOT waterfall
• Phases may/will overlap
• Go forward/Tweak/Go back/Hold/Cancel decisions
• Progressive commitment of resources
• Increased rigour as we know more
• Informed, timely programme decisions based on feedback
Programme
Plan of Work
Programme
Business Case
Execute
Programme
Deliver Operational
Benefits
Ideation
© 2021 The Thorp Network Inc.
SGAR 0 1 2 3 4 5 6 7
25

26. Project Management
The application of processes, methods, skills,
knowledge and experience to a group of activities
concerned with delivering a defined capability
according to the project acceptance criteria based
upon an agreed scope, schedule and budget.
➢ Project management includes the planning, initiation, execution,
monitoring, and closing of a project.
➢ Many different types of project management methodologies and
techniques exist, including traditional, waterfall, agile, and lean.
➢ The use of project management has broadened considerably
since its origins in engineering and construction, through its
application to information technology and increasingly to almost
all elements of organizations and society.
26

27. P3M+
Source : Adapted from The Information Paradox by John Thorp. McGraw Hill 2003 and Val IT 2.0 Framework ISACA
2008
Performance Management
Portfolio Management
Investment Management
Programme
Management
Project
Management
Asset
Management
M
a
n
a
g
e
m
e
n
t
o
f
C
h
a
n
g
e
Strategy Management
27

28. Change Management
A holistic and proactive approach to managing the
transition from a current state to a desired state
Evolving beyond…
➢“lip service” to taking it seriously and getting
it done, including:
➢culture change, reward systems,
organizational design, stakeholder
management, human resource policies
and procedures, executive coaching,
change leadership training, team building,
communications planning and execution,…
Effective
Management of
Change requires
that we change
how we manage
– a significant
change that itself
needs to be
managed
28

29. Investment Management
Managing the full life cycle of an investment decision
from the initial idea/concept (ideation) through to the
retirement of the resulting new or improved assets.
Evolving beyond…
➢ Moving beyond a delivery culture (“build it and they will
come”) to a value culture
➢ Providing continuity between the initial investment and
the management of the resulting assets
➢ Maintaining a focus on creating and sustaining value
throughout the life cycle
➢ Using the business case as the key management tool
throughout the life cycle
29

30. Performance Management
Measure what is relevant to guide decision making and
action
3 Areas for Metrics
• Solution Delivery
• Service Operation
• Benefits Realization
– Are new capabilities being used?
– Are they being used in the expected way?
– Are we realizing the expected benefits?
“You can’t measure what
you can’t describe.”
Kaplan & Norton
“You can’t manage what
you can’t measure.”
Peter Drucker
You need both “lead” and “lag” metrics
30

31. Accountability & Responsibility
Michael L. Smith and James Erwin, Role & Responsibility Charting (RACI)
The Accountable person is the individual answerable for
the activity or decision. It includes “yes” or “no” authority and
veto power. Only one accountable person can be assigned
to an action.
The Responsible person is/are the individual(s) who
actually complete(s) that task. The Responsible person is
responsible for action/implementation. Responsibility can be
shared. The degree of responsibility is determined by the
person with the “Accountability”.
31

32. The RACI Chart
Source : Val IT Framework 2.0, ITGI, 2008 32

33. Accountability requires…
Plus…there must be acceptance of
accountability
Source: Adapted from The Information Paradox
1. Clear Mandate and scope
2. Sufficient authority and Latitude to act
3. Requisite competence
4. Commensurate resources
5. Clear lines of accountability
6. Understanding of rights and obligations
7. Relevant performance measures
8. An aligned reward system
33

34. 34

35. 35

36. Completing the Picture
Source: Adapted from The Information Paradox by John Thorp. McGraw Hill 2003 and Val IT 2.0 Framework ISACA 2008
Portfolio Management
Value Governance
Investment Management
Programme
Management
Project
Management
Asset
Management
Performance Management
Strategy Management
M
a
n
a
g
e
m
e
n
t
o
f
C
h
a
n
g
e
Operations Management
Source: Value Leakage IBM Strategy & Change, Survey of Fortune 1000 CIO’s. Aug 2004
A
r
c
h
i
t
e
c
t
u
r
e
M
a
n
a
g
e
m
e
n
t
RISK
VALUE
Total
Benefits
-
Total
Costs
Doing The Right Things
Doing Things Right
36

37. What’s the Problem?
“The failed promises of the
Information Age add up to the
longest-running disappointment in
business history. On the other
hand, information technology has
produced an enormous transition,
something that companies should
be grappling with and studying
every day.”
Jack Welch
World Economic Forum, Davos, 1997
37

38. Value Leakage
Source: Adapted from The Information Paradox by John Thorp. McGraw Hill 2003 and Val IT 2.0 Framework ISACA 2008
Portfolio Management
Value Governance
Investment Management
Programme
Management
Project
Management
Asset
Management
Performance Management
Strategy Management
Operations Management
M
a
n
a
g
e
m
e
n
t
A
r
c
h
i
t
e
c
t
u
r
e
M
a
n
a
g
e
m
e
n
t
M
a
n
a
g
e
m
e
n
t
o
f
C
h
a
n
g
e
15%
Execution
Leakage
32%
Structural
Leakage
53%
Strategic
Leakage
Source: Value Leakage IBM Strategy & Change, Survey of Fortune 1000 CIO’s. Aug 2004 38

39. Why does this happen?
1. Failure to acknowledge complexity
• Linkage, Reach, People and Time
2. Focused on, and driven by technology and technologists
3. Limited/no senior business ownership or accountability
4. Limited/no business stakeholder engagement
5. Woefully inadequate business cases
• Limited/no clarity of desired outcome(s)
• Limited/no understanding of scope (“depth” and
“breadth”) of organizational change
• Failure to balance “attractiveness” with “achievability”
(including organizational change capacity, project and
programme management capabilities)
• Limited/no relevant metrics (“lead” and “lag”)
6. Failure to “manage the journey”
7. Failure to manage the benefits
“One of the more important
reasons that change efforts fail,
is that the idea of
’organizational change’ is an
illusion.
While process-centric people
may think it is possible to simply
design a set of new processes
and the changes will happen -
this is not the case.
Organizations do not change. It
is the individuals in
organizations that change their
behaviours.
Unless the need to change is
perceived as an effort to create
positive outcomes - individuals
can be expected to resist the
initiatives that are part of the
overall change effort.
It can take a number of years of
concerted and fully supported
effort to move a whole
organisation from being delivery
centric to being value centric.
APM, Delivering benefits from investments in
change: Winning hearts and minds, March 2011
39

40. 40

41. • Value and benefits management are much more than just a part
of project and programme management – they are behaviours
that need to be embedded in all management domains - from
strategy through to business operations.
• If value is to be created and sustained, value and benefits need to
be actively managed through the whole investment lifecycle.
• This requires an effective approach to governance – with a strong
focus on ownership and accountability that promotes and supports
a culture of value, such that the organisation has:
➢ A shared understanding what constitutes value for the organisation;
➢ Clearly defined roles, responsibilities and accountabilities;
➢ Processes and practices around value management, with active benefits and
change management; and
➢ Relevant metrics.
Culture Eats Strategy for Breakfast
Peter Drucker
41

42. Digital Transformation – The Next Step in the Journey
A culture that is:
➢ Obsessed with value and reducing complexity
➢ challenging all aspects of the status quo
➢ continually unlearning, reimagining and reinventing
➢ transcending traditional roles, siloes and hierarchies, and dismantling bureaucracy
➢ Inclusive, open, transparent and collaborative
➢ decision making focused on evidence rather that hierarchy and ego, embracing openness
and transparency with empowerment and accountability “at the edge”
➢ getting things done through teamwork and responsible autonomy
➢ leadership as a behavior to be recognized, nurtured, empowered and rewarded throughout
the organization
➢ Open-minded and embracing diversity
➢ in recruiting new talent, as well as integrating external talent and partners
➢ challenging existing organizational paradigms and mindsets
➢ recognizing that great ideas and creativity can come from anywhere in the organization or its
eco-system
➢ Agile - comfortable with risk, uncertainty and continuous change
➢ willing to try new things
➢ capability and flexibility to rapidly adapt and up-scale or fail fast and pivot depending on
progress towards desired outcomes
© 2021 The Thorp Network Inc. 42

43. 43

44. 44

45. 45

46. 46

47. 47

48. 48

49. 49

50. And finally – by special request, the view
from John’s office😀
50

51. Changing Culture to Maximize
Enterprise Value
David Golding
David@goldingengineering.co.uk
John Thorp
John_thorp@thorpnet.com
Val IT and slides copyright © 2006 IT Governance Institute. Used with permission.
18 March 2021