The “Simple & Efficient”transformation initiative launched with two objectives:
In Guido’s opinion, two aspects contribute to this: the first is a lack of commitment to deliver by the management, and secondly the fact that plans are outlined at a level of detail that is too high and too strategic, and therefore not actionable. He recommends ensuring that governance meetings are fed with “valuable, fresh, frequent & qualitative insights” from the field, and that actuals and forecasts are monitored on a frequent basis. This ensures that there is an automatic measurement of strategic gaps ‘to date’ and ‘at completion’, with as a consequence an ability to follow the evolution of these gaps and converge them.
BNP Paribas launched the Simple & Efficient transformation project: the aim was to generate some 2 billion € of savings in 4 years. Five years later, not only has the programme more than reached its initial objective, but has exceeded the target by creating savings of 3.3 billion €, an increase of 65% over the initial objective. What happened? How did this happen? proPilot, the Strategy Execution Management Software, developed by dFakto, certainly helped, but here are our key learnings from this experience.
Four key success factors.
Four key success factors were identified: an evolving governance, a centralised budget, a simple transversal methodology and a dedicated resources team.
It is important to have governance that can evolve. At BNP Paribas, the governance changed according to the phase and stage of the programme. Initially, the executive committee oversaw the planning of the work, while the heads of different business units worked on the plan. The former gave support to the latter who then had the responsibility of monitoring what actually happened in the field. This ensured that the top management has the right information in the right format as soon as possible, and as directly as possible.
The fact is, however, it’s not always easy in big organisations to have the right information at the right time. This is why there is the need for an incentive. This is where the centralised budget came to play an essential role because by funding specific projects, you trigger the feedback you need for those projects. We speak here of a certain kind of mutual agreement between the steering committee and the heads of business units.
Note though it’s important to remember that top management should not be made to play the role of the police, and that their role is making sure that whatever projects have been promised are also executed. Furthermore, it was important that reporting be as simple as possible: with only the details that are relevant, and including whether or not the business unit was sure to reach the objectives of the overall programme.
A third condition to ensure success in any transformation is using the right methodology. The reality is that in big organisations, you don’t have the time to convince people to be part of something. You therefore have to create a dynamic to make sure that the organisation starts to work within the thinking of the programme from the very beginning. In the case of BNP Paribas, this methodology was based on 3 phases. Initially, of course, the overall goal had to be defined. Once this was agreed to, the 1st phase was a top-down overview plan that included all the potential savings for each business, function and territory. The goal of this phase was to decide what kind of initiatives could be taken to reach the overall objectives, in other words, pinpoint the savings that could be delivered and at what cost. Ideally this phase should last only about 6 to 8 weeks. The recommendation is not to take too much time. Make it easy for those that are doing the job and because transformation is not the normal job of the people, give them the support they need. The 2nd phase consisted of implementing the ideas from phase 1. More people are involved in this phase, indeed it’s where you bring people in who are capable of turning the initiatives into projects.
At BNP Paribas, it required 12 weeks to translate everything into project programmes. The reality is that you have to know what you’re doing, how you’re doing and when you’re doing it, otherwise the initiatives simply won’t move forward. Also you shouldn’t allow initiatives outside the scope of the plan. Finally the last phase is the implementation phase. This phase is longer compared to phase 1 & 2. It’s in phase 3 that you’ll make the changes in the governance.
The last key success factor we identified in the BNP Paribas case is the necessity of having a dedicated team. The beating heart of the programme, they are the people who bring everything together: managing the programme, giving information to the governance, and presenting possible solutions. They were also the people that made sure that decisions were acted upon on the ground.
These 4 factors at BNP Paribas helped the company exceed the initial objectives of 2 billion € of savings, to reach 3.3 billion €. Now projects that exceed their initial objectives represent only a small percentage compared to the ones who only reach their objectives (and even smaller compared to the ones who fail). So how did the programme overreach its objectives?
The first one is the extension capability. It refers to the dynamics created once the phases 1 & 2 of the methodology have started. During these phases, you see lots of question being raised, and many people starting to communicate with each other, indeed all begin to be more and more convinced of the real purpose of the programme. The result is they begin to think in another way. Their mindset changes to be in line with the dynamics of the programme. At that moment it’s important to start a new wave of phase 1 & 2 to generate (more) new ideas and solutions. As a result, people will come up with better and more valuable ideas.
Now if a project fails to deliver for whatever reason, the loss needs to be compensated by a new project or extra effort in another project in order to respect the initial commitment. When we talk about compensation we mean launching another project or improving another project. This compensation capability implies that all parties are fully transparent on the progress of their projects, identifying at the earliest possible moment any potential problems so that it allows them to quickly respond to it and limit the risk of “non-achievement” of the objectives. With transparency and non-judgemental communications it’s possible to admit that a project will deliver less than expected. And experience showed us that people always find compensation elsewhere because they don’t want to show failure before the executive committee!
A transformation doesn’t happen in a vacuum. It occurs in a world that is changing and disruptive. This is why a dedicated team is essential. In this way you can be certain of continuous transformation within the company, as if you don’t adapt, you’ll disappear.
At dFakto, the way we see transformation involving different things. First, we encourage pro-active management. We believe that if you can identify issues before they have an impact, it’s easier to resolve them (hence the real value of supplying valuable, fresh, frequent & qualitative insights). When people realise they won’t succeed on their part of the programme, they will report it, and by doing so avoid negative figures in the results. Furthermore, if you can identify what’s wrong as early as possible there is a strong incentive to finding ways to solve the problems, and deliver.
In short, as Guido says,
“We have a more organic approach to transformation. We see it as a living organism. It’s something reactive: you can do something, or you can do something different. We used to plan, execute, and then give feedback. Today, we don’t have this ‘only’ linear approach to transformation. We see it, thanks to dFakto data, as something much more cyclical, and that includes a higher reporting frequency, and consequently a high-planning frequency.”