Monika Alder, MBA CCMP™

Director, Transformational Change

Great West LifeCo.

May 23, 2017

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

Lean in …

Today’s Conversation

• The World As We Know It

• “Lost In Translation”

• Building a Bridge

• The Path Forward

THE WORLD AS WE KNOW IT

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

Value Creation in its Simplest Forms

𝑉𝑎𝑙𝑢𝑒 = 𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

𝑅𝑂𝐼 =𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠

𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

1

1. Investment is intended to refer to both operational as well as capital expenditures required to achieve benefits.

Common Measures for OCM Practitioners

Activities

Results Outputs Outcomes

Capabilities

Organizational Benefits

Project specific KPIs:• Readiness/ Preparedness• Adoption• Proficiency • Usage

INTANGIBLETANGIBLE

“I am not taken seriously”

“We still need to prove ourselves”

“They do notrecognize the

value we deliver”

“They still do not get what I

do”

Yet …..

“LOST IN TRANSLATION”

We are NOT an Island

OCM

Executives

Change Targets

Project Managers

Human Disciplines

Operational Managers

• Overall Experience / Engagement

• Learning & Growth / Capabilities

• Buy-in & Commitment

• Empowerment

Human Discipline Mindset

Operational Mindset

Functions of a Manager

Planning

Organizing

Directing

Controlling

The project is a temporary endeavor to create a specific product, service or result 1

Project Manager Mindset

SCOPESCHEDULEBUDGETQUALITY

RISKS

1. A Guide to the Project Management Body of Knowledge (PMBOK Guide), Fifth Edition

Financial Results

Executive Mindset

Bra

nd

&

Re

pu

tati

on

Op

era

tio

ns

&

Tech

no

logy

Pe

op

le

Cu

sto

me

r Ex

pe

rien

ce

Sustainable Value Creation

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

What they hear is…

… but their mindset and language is about

BUILDING A BRIDGE

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

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”?

Perspective Matters

• Do the measurers of value have the right perspective to see sustainable value creation?

• How do they account for risk?

How do you transform a line into a circle?

Risk from Executive’s Perspective

Systemic Risk

Financial Risk

Regulatory Risk

Credit Risk

Operational Risk

Execution & People

Risks

PATH FORWARD

The Perspective Paradox

1. Connect to the BIG Picture

2. Shift the Time Horizon

3. Reframe from ROI

Connect to the BIG Picture

Our Perspective Executive’s Perspective

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?

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?

Shift Time Horizon to Capture Value

Installation Phase Realization Phase

GO

LIVE

Focus of Project Management Delegated to Ops. Management

Primary OUTFLOW of $$$Risk Factor: Go Live Not Met

Project Management RisksSolution RisksPeople Risks

Primary INFLOW of $$$Risk Factor: Realized<Expected

BenefitsSolution RisksPeople Risks

• Risk and return are symbiotic

vs.

Which one do you want to rely on?

Reframe from ROI: Measure What Matters

The Pitfall of ROI

How does ROI account foruncertainty (i.e. risk) and time?

𝑅𝑂𝐼 =𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠

𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

Reframe from ROI to Value

Risk

BenefitsInvestment

Benefits Investment

𝑅𝑂𝐼 =𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠

𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

𝑉𝑎𝑙𝑢𝑒 =

𝑡=0

𝑇(𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡)

(1 + 𝑟𝑖𝑠𝑘)𝑡

The Importance of Risk and Time

• 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

𝑉𝑎𝑙𝑢𝑒 =

𝑡=0

𝑇(𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡)

(1 + 𝑟𝑖𝑠𝑘)𝑡

Per

form

ance

Time

Reduce Risk

Shorten Time

OCM

People Mindset

Targeted Behavioral Strategies

Increased Change Readiness

Ownership, Adoption & Proficiency

Org System Alignment

OCM’s Value Proposition

OCM’s Value Proposition

We increase value by decreasing risk and shortening the time to benefit realization

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