Lost in Translation: Articulating & Measuring OCM s Contribution to Value Creation

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2 Lost in Translation: Articulating & Measuring OCM s Contribution to Value Creation Monika Alder, MBA CCMP Director, Transformational Change Great West LifeCo. May 23, 2017

3 Lean in

4 Today s Conversation The World As We Know It Lost In Translation Building a Bridge The Path Forward

5 THE WORLD AS WE KNOW IT

6 Let s Start with Value Creation Value creation is the company s raison d ètre; it is the ultimate measure by which the company is judged

7 Value Creation in its Simplest Forms Value = Benefits Investment 1 ROI = Benefits Investment 1. Investment is intended to refer to both operational as well as capital expenditures required to achieve benefits.

8 Common Measures for OCM Practitioners Project specific KPIs: Readiness/ Preparedness Adoption Proficiency Usage Capabilities Organizational Benefits Activities Results Outputs Outcomes TANGIBLE INTANGIBLE

9 I am not taken seriously Yet.. They still do not get what I do We still need to prove ourselves They do not recognize the value we deliver

10 LOST IN TRANSLATION

11 We are NOT an Island Executives Operational Managers OCM Change Targets Human Disciplines Project Managers

12 Human Discipline Mindset Overall Experience / Engagement Learning & Growth / Capabilities Buy-in & Commitment Empowerment

13 Operational Mindset Planning Controlling Functions of a Manager Organizing Directing

14 1. A Guide to the Project Management Body of Knowledge (PMBOK Guide), Fifth Edition Project Manager Mindset The project is a temporary endeavor to create a specific product, service or result 1 SCOPE SCHEDULE BUDGET QUALITY RISKS

15 Brand & Reputation Operations & Technology People Customer Experience Executive Mindset Sustainable Value Creation Financial Results

16 Plus There Are Incentives Organizations and people do what they are rewarded for Short-term measurement drives short-term thinking Short-term thinking tends to under-emphasize intangibles and other hard to measure long-term items

17 What they hear is but their mindset and language is about

18 BUILDING A BRIDGE

19 Not all Value Creation is Equal Certain outcomes are more attractive than uncertain ones If you can t accurately measure the return the attractiveness of the activity is diminished

20 Can We Measure What Matters Most? Sometimes it is the things that are the hardest to measure that matter the most What is the difference between good and great, success and failure?

21 Perspective Matters Do the measurers of value have the right perspective to see sustainable value creation? How do they account for risk?

22 How do you transform a line into a circle?

23 Risk from Executive s Perspective Systemic Risk Financial Risk Regulatory Risk Credit Risk Operational Risk Execution & People Risks

24 PATH FORWARD

25 The Perspective Paradox 1. Connect to the BIG Picture 2. Shift the Time Horizon 3. Reframe from ROI

26 Connect to the BIG Picture Our Perspective Executive s Perspective

27 Connect to the BIG Picture How much of success: Relates to people thinking, behaving or doing their tasks differently? Is dependent on driving new or different capabilities?

28 Shift Time Horizon Project management mindset frames the time horizon Go-Live and typically short stabilization period define the end of change and shift of priorities When is value really created and when is risk mitigated?

29 Shift Time Horizon to Capture Value Installation Phase Realization Phase Focus of Project Management Primary OUTFLOW of $$$ Risk Factor: Go Live Not Met Project Management Risks Solution Risks People Risks GO LIVE Delegated to Ops. Management Primary INFLOW of $$$ Risk Factor: Realized<Expected Benefits Solution Risks People Risks

30 Reframe from ROI: Measure What Matters Risk and return are symbiotic vs. Which one do you want to rely on?

31 The Pitfall of ROI ROI = Benefits Investment How does ROI account for uncertainty (i.e. risk) and time?

32 Reframe from ROI to Value ROI = Benefits Investment Benefits Investment Benefits Risk Investment T Value = t=0 (Benefits Investment) (1 + risk) t

33 The Importance of Risk and Time T (Benefits Investment) Value = (1 + risk) t t=0 The value framework explicitly acknowledges risk Decreasing risk increases value Time is also a risk to realizing full benefits of change If you can speed up benefit realization, it is worth more

34 Performance OCM s Value Proposition People Mindset Shorten Time Org System Alignment OCM Targeted Behavioral Strategies Reduce Risk Ownership, Adoption & Proficiency Increased Change Readiness Time

35 OCM s Value Proposition We increase value by decreasing risk and shortening the time to benefit realization

36 What is Lost in Translation? 1. Our language and current measurement methods do not adequately capture our contribution to value creation 2. The recognition of OCM as a core risk management function