How to build an effective Enterprise Transformation Office: If you think an ETO is a PMO, think again!

If you’re transforming your organization at scale, an Enterprise Transformation Office, (ETO) could be what you need to manage, govern, accelerate and leverage your transformation programs. Yet ETOs are often misunderstood, and when poorly implemented, may fail to deliver value. An ETO is far more than a PMO (Program/Project Management Office) and having had the privilege to work with many global organizations going through transformation programs, I want to take a look at why ETOs, done well, can ensure a successful and sustained transformation.

This article offers a summary of an ETO for the uninitiated, and, as well as covering why they work and what they do; I offer suggestions on how to resource and structure an ETO in your organization.?

All organizations expect their Transformation program will succeed, yet Enterprise Transformation is often mismanaged simply because it’s hard to put new governance and management structures in place at the start of a transformation process. Organizations recognize a need to transform but manage the transformation program within the confines of the existing (pre-transformation) structures. Using traditional management methodologies to manage change, really seems counterintuitive once you see it from the perspective of a transformed organization. But there are also other issues that lead to sub-optimal transformation delivery.?

Enterprise Transformation is often seen, at the very least, in-part as a technology issue, and as such, it is mostly managed and led by technology teams. Of course, many Enterprise Transformation programs rely heavily on new technology, but the fact that the management and leadership of transformation programs sit within technology functions is problematic. It puts the onus for whole organizational change on technology teams, and while tech teams are in part responsible, a truly successful Enterprise Transformation relies on whole organizational change as opposed to delivery by one function, alone.

Many organizations, including those that are successful in their transformation programs, experience that transformation can take longer than envisaged. And why? Anyone who’s undertaken such a complex change program will tell you that Enterprise Transformation is complex with many streams of work cutting across all Business Functions, and Business Units. Diverse, and often matrix teams are involved, with multiple suppliers involved across multiple geographies. All these teams may have divergent ways of working, but ultimately, they all need to align and they all need to do something new or work differently to enable organizational change. Enterprise Transformation is, of course, a complex business, but when done well, can change how an organization operates: wholesale.

This is where an Enterprise Transformation Office comes in. Something special is needed to inspire vision, manage the complexity and ensure smooth delivery. Something a lot more dynamic than a PMO. And yet, an ETO shares many characteristics with a PMO. Like a PMO, the ETO interfaces with all business functions, and ultimately, it delivers the Enterprise Transformation program without being hindered by the issues of one particular function.?

An ETO:

• Brings people together from across the organization;
• Ensures all functions work together;
• Enables effective execution of transformation initiatives
• Continually manages resources; internally and externally
• Delivers independent governance and reporting;
• Offers a “Single Transformation View”; and
• Operates as it would in a transformed state.

An ETO is highly effective because it is lean, agile and always optimizing; its objective is simple: to deliver change through continuous optimization.?PMOs, on the other hand, are much better understood, and found in many organizations. PMOs oversee the continual delivery of Business-As-Usual initiatives. They are a well-understood function of a large enterprise. While they bring people together, manage resources, and oversee delivery, they are about continuity and not about radical change.?

PMOs, unfairly, often suffer from their reputation as paper-pushing, box-checking teams that deliver management with a ‘capital M’ and are heavy on reporting. PMOs are often seen as self-serving entities, that slow down a change process as opposed to speeding it up. An ETO is very different and shouldn’t be viewed as a PMO at all. Indeed, an existing PMO shouldn't take on the responsibility of managing an Enterprise Transformation program.?

Fundamentally, a PMO might be how you’d manage any change program before you’ve gone through a transformation program, whereas an ETO is how you’d manage any change program after your organization has transformed. To manage transformation successfully, however, you need to ‘walk the walk’ and start by managing the transformation with an ETO.?

Organizations can benefit enormously from an ETO because they deliver:?

• Accountability
• Visibility
• Speed
• Results
• Continual Optimization

Setting up an Enterprise Transformation Office is actually easier than setting up a PMO. A PMO comes with a well-defined and extensive suite of management and governance processes yet an ETO is intentionally much lighter.

Every organization and every Enterprise Transformation program will differ, but ultimately these are the characteristics I’ve seen successful organizations consider:

• Small Team: Align the smallest possible team that represents the whole organization
• Independent: Carve-out roles / time for employees within Business Units or Functions to work independently in the ETO
• Strategically led: Define the ETO objectives (as opposed to program or initiative objectives) based on strategic objectives
• Empowered: Empower the ETO to make decisions (with the most minimal governance of structures) and to align teams across the organization
• Agile: Run initiatives in an agile way with short-term planning
• Inspiring: Report real results organization-wide
• Successful: Deliver continual optimizations

When it comes to leadership, every ETO needs a true transformation champion - the Chief Transformation Officer is a non-technical, but utterly vital role. This needs to be someone who can connect data to cyber to digital transformation to finance to people; because, of course, transformation touches on all these critical pillars.

A great Chief Transformation Officer needs broad experience to speak the language of the CFO, CIO and COO. These are the people they will work with closely; indeed, these three roles form what I called the “Decision Triangle” for Transformation. Underpinning the decision triangle is the Chief Human Resource Officer who is accountable for building a culture to retain the talent required to enable the transformation roadmap.

• The Chief Finance Officer (CFO) ensures the initiatives are the right investments
• The Chief Operations Officer (COO) oversees the implementation of initiatives to enable operational effectiveness
• The Chief Information Officer (CIO) ensures the initiatives are the right ones to enable data, digital and cyber strategic objectives

Let’s take a look at the structure, and team in a little more detail. The ETO has very few lean, strategic capabilities which may be internal or external.

From an org design perspective, I see for key capabilities in the ETO:

• Change Management?
• Portfolio Management
• Governance
• ?SARO (Savings Addressability and Recovery Office)

It is important to establish the ETO within the finance function. An ETO is an investment arm, strategic and certainly not a technical one, even if it relies heavily on operational execution and technology. So the Chief Transformation Officer (CTO) should report to the Chief Finance Officer (CFO). Reporting to the CTO, the leads cover the core capabilities of the ETO. The capabilities mentioned are self-explanatory but let's take a closer look at the Portfolio Management pillar.

The Portfolio Management Lead oversees Program Management and performs the functions a PMO would otherwise perform, except in a more agile, lighter-touch way. By including Program Management within the ETO, the PMO itself becomes redundant; there's simply no need to perform this function twice. So, if you have an ETO, you have the function of the PMO contained with it.

Additionally, and at a later stage, a Savings Addressability Recovery Office (SARO) is a vital function. This is about ensuring that the expected value is realized. The SARO tracks impact to ensure initiatives are achieving their financial targets. The SARO should be set up after an organization has gone through a major cost-optimization exercise.

Once set up, the structure of the ETO can of course flex, and each organization will differ in terms of how many people they need in each area, but the premise remains the same: the ETO is independent, grounded in realizing financial goals, and agile.

I hope I’ve inspired you to consider, or even reconsider an ETO. It really is very different from a PMO. If your ETO looks like a PMO or if you don’t have one at all, now’s the time to start thinking like an organization that’s already transformed.