Why you need a CapEx NED
Major capital expenditure programmes rarely go to plan, some become so far out of tolerance that they attract unwelcome attention. Implementing major change is difficult. Your company Exec has NEDs to provide expertise, oversight and challenge, and this benefit should be extended to your programmes.
Would you enjoy explaining to your board, shareholders and the City how you wasted over £100m, and years of time and effort for nothing?
That'll never happen, and if it does, then it won’t be you, right?
That’s what they also thought at:
- Co-Op Insurance: Failed £175m transformation programme to migrate their general insurance business to a new insurance platform – now in litigation with IBM
- LeasePlan: Failed €100m SAP implementation
- NHS: Failed £10bn National Program for IT
- Lidl: £500m: Failed €500m SAP implementation
- London Garden Bridge: Failed £53m spent before cancellation.
These are just some recent examples of major initiatives which failed. However, failures don’t often make the news; more often than not they are quietly brushed under the carpet and, understandably, not talked about openly. If you’re reading this, then you’ll almost certainly be aware of several projects that were air-brushed out of corporate memory.
Digital transformation programmes involve fundamental change, and impact all parts of an organisation's operating and business models; the workforce, the customers, the operational and the technology domains; and the interaction between these domains.
Add in the management of stakeholders, third parties and vendors, and balance all these elements with the changes needed to the corporate mindset and culture... and many people realising that it's a complex undertaking, with a host moving parts that are all connected in various ways.
So, why do these large initiatives fail? The reasons are many, and specific examples are well documented (there’s lots of information available online). There are common themes. Most of the reasons why matters don't turn out as expected are known well before they start to bite. All change requires clear and strong leadership, but every accountable individual needs independent support to help them reach the required outcome, at an acceptable cost and in an acceptable timescale.
Companies have Non-Executive Directors to challenge and guide the Exec. There is much to recommend your organisation hiring a 'Programme NED', who can be a critical friend to the Programme Director, and help avoid a very visible capital expenditure embarrassment.
Programme NEDs will help the Programme Director
Get the basics right
- Ensure that there is alignment between strategy, operating models, your transformation roadmap and change capability.
- Understand and be clear about the problems you are trying to solve, and the outcomes you need.
- Ensure that the business case stacks up, and that there’s clarity of programme objectives and scope.
- Establish a fit-for-purpose programme and governance structure, with clearly defined roles and responsibilities.
- Identify and engage the correct stakeholders.
Be realistic
- Caution against jumping on a bandwagon… just because something is popular does not mean that it’s appropriate.
- Understand what you’re getting into, and be aware that there will be hard decisions and compromises to be made along the way.
- Avoid underestimating the size and impact of change, the ability of the organisation to absorb change, and the imposition of arbitrary delivery dates.
- Provide a counterpoint when vendors tell you what you should do, or they promise to act in your best interest (many are focused on their revenue generation).
Programme execution
- Leadership and direction needs to be strong, fair, clear and focused.
- Silos must be breached where necessary (operational and mindset), with confidence to do things differently.
- An holistic view of the programme is needed, never lose sight of the big picture.
- The needs of different stakeholder groups must be recognised, with messaging kept consistent, simple and appropriate for each group.
- The Exec and the workforce must be taken on the journey.
If you’re embarking on major capital expenditure, you need an independent voice by the side of your programme director. Your company board has NEDs to provide expertise, oversight and challenge, and this benefit should be extended to your programme boards.
But... why not think about funding Product Teams rather than Projects?
David Seacombe
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Knowing why matters don't work out as they should is as important as knowing what does work. Learning from what causes programme failure, will significantly improve the chances of success.
David Seacombe