0 - Transform - Developing the Proposition_v1.1 FINAL

7/29/2019 0 - Transform - Developing the Proposition_v1.1 FINAL

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Version 1.1 January 2009

A Delivery Framework for Large, Complex Programmes

powered by Making Change Stick


powered by Making Change Stick


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PricewaterhouseCoopers LLP2

Making change stickPerformance Improvement Consulting


transform*powered by Making Change Stick







Section Page

1 Stage 0: Developing the Proposition ......................................... 4

1.1 Introduction......................................................................... 4

1.2 Definition of Business Transformation................................ 5

1.3 Transformational Change an academic view .................. 6

1.4 Critical Steps for Lasting Transformational Change ......... 10

1.5 How Does PwC Support Transformation.......................... 11

1.6 Defining the Transformation Scope .................................. 13

1.7 PwC Capabilities .............................................................. 17

1.8 Potential PwC Roles......................................................... 19

1.9 Working with Alliance Partners......................................... 20

i Sales Framework Sales Approach.................................... 22

i1 Opportunity Classification and Qualification ..................... 22

i2 Using Lessons learned..................................................... 25

i3 Creating a Sales Team..................................................... 25

i4 Initial Sales Meeting ......................................................... 25

i5 Ensuring Success from First Contact ............................... 26

ii Sales Framework Differentiating PwC .............................. 28

ii1 Continuing Engagement ............................................... 28

ii2 Competitor Analysis...................................................... 29

ii3 Clear Blue Water .......................................................... 30iii Sales Framework Commercial Approaches...................... 32

iii1 Fee Structures .............................................................. 32

iii2 Demonstrating Value-for-Money................................... 33

iii3 Accounting for the Costs of Transformation.................. 33

iv Sales Framework - Beacon Qualification Process ............... 34


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2009 by PricewaterhouseCoopers LLP

All rights reserved.

No part of this publication may be reproduced or distributed in anyform or by any means or stored in a database or retrieval system,

without prior written permission of the publisher.

COPYRIGHT 2009 PricewaterhouseCoopers LLP.

PricewaterhouseCoopers LLP has taken all reasonable steps to

ensure that information contained herein has been obtained from

reliable sources and that this publication is accurate and

authoritative in all respects. However, it is not intended to give legal,

tax, accounting or other professional advice. If such advice or other

expert assistance is required, the services of a competent

professional should be sought.


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1.1 Introduction

Is a business transformation just a big change or does it have other dimensions?

The purpose of this section is to provide an overview of business transformation and guidance and support

to sales teams who are qualifying or pursuing business transformation opportunities.

The section is structured as follows:

Definition of Business Transformation;

Transformational Change an academic view;

Critical Steps for Lasting Transformational Change;

How does PwC support Transformation?

Defining the Transformation Scope;

PwC Capabilities;

Potential PwC Roles;

Working with Alliance Partners; and

Sales Framework:

Sales Approach,

Differentiating PwC, and

Commercial Approaches;


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1.2 Definition of Business Transformation

The Global People & Change Working Group has defined Transformation

as:

An organisation seeking a step change in performance;

Complex, requiring multiple competencies and capabilities and a shift

in values and behaviours;

Causes disruption, discomfort and uncertainty to large parts of the organisation;

Management focus on overhauling structures, process, people and systems;

The change has lots of interdependencies, multiple stakeholders and no one person has the ability to

make this happen;

The outcome is not necessarily known with clarity and will evolve over time;

Cause and effect are muddled and there is significant tension over what needs to be done; and

Risky.

Transformation can be triggered by many factors such as:

Deal activity e.g., merger, acquisition or take-over threat;

New management team or CEO;

Ongoing decline or gap in performance relative to peers;

A significant business crisis e.g., regulatory failings;

Significant customer trends e.g., socio-demographic changes;

Political: changes in Government, privatisation, or public opinion and regulatory changes;

Dynamic changes in the competitive environment, e.g., competitors making a step change in

performance; or

Industry being reshaped by new models or technologies e.g., convergence or outsourcing.

Transformation is determined by the complexity, not the size of the problem and by definition extends fromAssess through Implementation.

Change has to be driven from strategy, supported by an aligned structure and delivering the people,

processes and technology for success. Unless all five of these critical change enablers are addressed, in an

integrated fashion, the change will never be sustainable. Great change leaders understand this and lay the

groundwork for change by clearly understanding the problem theyre solving and the benefits they must

achieve and then mapping out how it gets solved, involving key stakeholders to ensure buy-in.

Transform

(verb) to change completely the

appearance or character of something or

someone, especially so that they areimproved.


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1.3 Transformational Change an academic view

There are various definitions of

transformational change. A well-known model

of organisation change, that uses Burns

transformational and transactional definitions

as a reference, was devised by George Litwinand W Warner Burke in the 1990s.

Burke-Litwin's Model of Organisational

Change (Figure a) shows twelve interlinkedfactors that influence change and differentiates

between factors that influence

transformational and transactional change.The model assumes factors at the top of the

model have a greater impact than those lower

down.

Figure a: Burke-Litwins Model of Organisational Change

The terms within the Burke-Litwin model are:

External Environment: Forces outside the organisation that currently influence it, or will influence it inthe short-term;

Transformational Factors:

Mission and strategy - the purpose of the organisation and how it achieves that purpose,

Leadership - how the organisation is led, at all levels; differentiated from management practices (seebelow), and

Background JM Burns

The terms transformational and transactional were

originally used to describe leadership styles (JM Burns,

1978.)

Transactional leaders are concerned with management-

type activities e.g., work allocation, monitoring

performance, making routine decisions; transactional

leadership may involve change but it will be gradual.

Transformational leaders bring about change, they

recognise the need for change and have the personal

skills and attributes to identify courses of action to make

change happen; transformational leadership involves big,

sweeping changes.


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Culture - can be interpreted in various ways, but at its simplest the way we do things around here;

Transactional Factors:

Structure how the organisation is structured and designed,

Management practices the actions and behaviours of managers in their everyday work;differentiated from leadership,

Systems the policies and procedures that enable people to carry out their work,

Work Unit Climate the perceptions of individuals within a work unit about, for example: how theyare managed, how their performance is recognised, how much support they get from colleagues and

how effectively they work with other parts of the organisation,

Task requirements and individual skills how well the skills of the individual are matched to therequirements of the job they are asked to undertake; affects motivation,

Motivation harnessing the drive of individuals (that causes them to achieve goals that satisfy theirinner needs) to the organisations goals; the ability of leaders to provide the environment to encourage

such alignment, and

Individual needs and values the extent to which an individuals needs are met by the job; affectsmotivation; and

Individual and Organisational Performance: The outcomes of all of the activities in the model, theperformance of which are measurable. These outcomes may be directly influenced by external factors,

hence the dotted line feedback loop to the external environment.

Other academic views of change include:

Developmental Change

Improvement of the current state to do better than or do more of what already exists.

This could involve a shift in skills, but is unlikely to involve a shift in attitudes or mindsets.

An example could be the elimination of a non-value adding step in a current process.

Transitional Change

Implementation of a known new state, the

evolution of which takes place slowly. It involves

the management of the interim transition state

over a controlled period of time and usually

involves a shift in skills and attitudes. Examples

include re-organisations, mergers, introduction of

new services, etc.

Transformational Change

Emergence of a new state, unknown until it takes

shape, out of the remains of the chaotic death of

the old state. The time period is not easily

controlled and it is often initiated when other

options have failed. For example, a radical shift in

the organisations mission, culture, critical

success factors, form, leadership, etc. The type

of change affects the change management

approach as show in Figure b.


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Figure b: Change Management Approaches

Understanding the academic views on transformational change helps us to be clear on our definition. Based

on the above models/ideas, transformational change is based on the three transformational dynamics of an

organisation that respond directly to the external environment:

Mission and strategy;

Leadership; and

Culture.

In addition, transformational change:

Involves the translation of strategic intent into results;

Is discontinuous;

Is revolutionary;

Affects the deep structure of the organisation;

Requires visionary leadership; and

May not have a clearly defined end-state at the outset of the change.

An academic view alone does not provide the full perspective but it does help us widen our thinking and

proposition to include:

Mission/ strategy;

Leadership;

Culture;

Structure;


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Management practices;

Work unit climate;

Skills;

Motivation; and

Individual needs.

Not purely systems, policies and procedures as shown in Figure c where the transform* capability areasare mapped against the Burke-Litwin Model.

Figure c: transform* capability areas mapped against the Burke-Litwin Model

This leads to an important question: How do the academic views impact upon what our clients might be

saying? e.g.,

Is the distinction between transformational and transactional change relevant to me?

Yes, it impacts the emphasis/focus on transformation changes required to achieve success.

Can a transformation apply to a function/business unit?

Yes, the same emphasis applies to a function or a business unit.


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Does transformation require me to do things differently to achieve success?

Yes, different approaches are needed for:

Leadership,

Effort and resource focus - where do I focus my finite budget?

Change approach,

Skills and capabilities required,

Implementation options; and

Making change stick - much greater focus on, and resource allocated to, mission/strategy,leadership, stakeholder involvement and organisation culture.

1.4 Critical Steps for Lasting Transformational ChangeA successful transformation process goes through several distinct stages. These stages build on each

other, meaning that short-changing any particular stage can have harmful ramifications which may surface

later in the transformation process. In the dissertation, Leading Change: Why Transformation Efforts Fail,John P. Kotter outlines eight critical steps which have become highly respected in the business world for

establishing lasting change. Building upon these findings with PwC insights, the PwC view of the essential

requirements in the transformation process are:

1. Establishing a sense of urgency

A resounding, collaborative effort is necessary for fuelling change. In rallying support, it is necessary to

promote commitment in which people actively desire change over compliance in which people agree to

change because they are instructed to do the task. Because change implies an overhaul of existing

practices and the adoption of a new system, strong leadership is also necessary. Only when 75% of

management is convinced of the need for and motivated to seek change can the transformation process be

successful.

2. Formulating a strong leadership coalition

While it is important that the objectives of the transformation initiative be embodied by the whole, it is also

necessary for there to be a strong, guiding body. This body must span the existing organisational structure -

comprising senior executives / top councillors and senior officers. Sharing a strong dedication to

development and transformation, this body must be able to operate both formally and informally within the

organisational structure in order to enable change.

3. Creating a vision

In order to ensure the collaboration and dedication of the organisations leadership, staff and otherstakeholders, it is necessary that there is a coherent vision. All the intricacies of the transformation initiative

must be distilled into a communicable message which can be understood and supported by all stakeholders.

Without such a vision, the transformation effort can disband into innumerable projects which are

incompatible. Such a vision should be both unambiguous and compelling, going beyond finance or statistical

projections to make it real to all involved.

4. Communication: Spreading the vision

In order to uphold and expand the sense of urgency and dedication to the change initiative, it is necessary to

utilise all means of communication. Employees will not make personal sacrifices unless they harbour a

strong belief in what is being done and why. Communication of the vision must be integrated into every

possible channel. Importantly, behaviour, especially leadership, must be consistent with values. Success is

impossible without gathering resounding support at all levels.


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5. Removing obstacles to empower action

Communication is not the sole ingredient to success. As the number of individuals rallying around the

change initiative escalates, it is necessary to move forward in a proactive manner. Increased support will

empower individuals to develop new ideas and inspire them to act on them. Should obstacles arise, which

they inevitably will, it is important that the organisation seeks to eliminate them and move forward in action.

Hindrances may come in many forms, for example organisational structure, friction caused by compensation

or performance appraisal systems, or staff incompatibility. Eliminating obstacles such as these arenecessary for achieving the vision in the long term and will ensure the initiatives success.

6. Planning for and creating quick wins

No matter how strong the initial support around the change process may be, ultimately the passage of time

has the potential to deflate momentum and rekindle opposition. The creation of unambiguous, short-term

quick wins can boost the credibility of the transformation process. Quick wins may come in the form of

productivity improvements, efficiency improvements or an increase in quality on certain organisation

performance measures. By establishing goals, the organisation must look for ways in which to obtain

conspicuous performance improvement while simultaneously rewarding the individuals involved. Such wins

must be planned for, not hoped for, so as to maintain morale around the vision and sustain momentum.

7. Building on improvements to produce further changeAs the transformation process comes into fruition and the organisation begins to show signs of improvement

and success, it is important that victory is not declared too soon. Changes take time to become engrained

and it is important to recognise that new changes are fragile and are subject to deterioration should they not

be sustained. Full realisation of the vision may be thwarted should fatigue lead to hasty acceptance of initial

gains. The credibility afforded by quick wins must be utilised to tackle even greater problems; successes

must be seen as opportunities to build confidence and apply resources to tackle more significant

transformational changes.

8. Institutionalising changes

In order for transformation to be sustained and, therefore, benefits to be fully achieved, it is necessary that

the changes realised become engrained. New behaviours and values must become cemented as

organisational norms so that once the movement for change is reduced the behaviours do not begin to

disintegrate. It is important that such changes are maintained by consciously attempting to demonstrate how

new approaches, behaviours and ideas have contributed to improved performance. This can be achieved by

making sure that a desire to continue to seek out improvement and uphold best practice remains in place as

an ongoing leadership and management aspiration and objective.

1.5 How Does PwC Support Transformation

transform* is PwCs integrated approach to business transformation and is comprised of four elements:

PwCs way of understanding the issue: Using The Guide helps to generate deeper insight andunderstanding of the clients issues and helps to create compelling, shared propositions;

PwCs way of responding: Our approach to sales provides a rigorous client focused framework forensuring that clients see the value we bring and will engage further;.

PwCs way of executing: Tried and tested engagement delivery and management processes ensureconsistency and quality every time; and

PwCs way of ensuring sustainable value: By applying a Making Change Stick mindset and approachto accelerate the delivery of benefits in ways that are sustained long after we have disengaged and the

change programme is done.

Figure d provides a detailed explanation of these four elements of transform*:


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Figure d: PwCs Integrated Approach to Large, Complex Programmes

PwCs way of understanding the issue

Desired Outcomes:

Clear articulation of client issue Detailed understanding of who is involved A view of cause from a number of stakeholders

An understanding of the pain this issue is causing A specific statement of the application of the issue to the

transformation framework

Principles:

Ensure information is gathered from many sources Listen to opinion and rumour but base decisions on fact Do not offer solutions

Enabling tools:

The Guide Transformation templates Consulting skills Problem solving toolkits

PwCs way of ensuring sustainable value

Desired Outcomes:

Ensure that the project benefits are clear and link to theorganisations key strategic aims

Accelerating the delivery of benefits and ensuring they aresustained long after a change programme is done

Principles:

Its not just the what but the how Creating a best fit change approach that: Focuses on achieving those benefits and sets up measures to

track them. Encourages the involvement of the people who will deliver the

change in practice; ensuring purposeful communication andbalancing those activities that should be driven from the top,and those built on the ideas and successes of the teams onthe front line. Builds sustainability by developing effectivechange leaders, aligning systems, processes and cultureacross the organisation and embedding new ways of workinginto performance management and training processes

Enabling tools:

Making Change Stick Starter Kit

PwCs way of executing

Desired Outcomes:

Integrated delivery approach (functional, technical, changemanagement, sub-contractors/partners) that is seamless to theclient

Transformation is visible based on how PwC consults Execution of projects or phases within a transformation

programme

Momentum built from early wins with minimal pauses Benefits achieved, measurable and aligned to business case Staff capabilities honed on the project Methods, tools and credentials sharpened and shared

Principles:

Project plan and approach developed leveraging standardisedmethodology and tools

Joint PwC-client execution and teaming Transfer of knowledge and skills into the client organisation Project leadership focused on clients transformation goals,

influencing the path forward and advancing team progress Integrated capabilitiesEnabling tools: PITBM Making Change Stick toolkit *

Sustaining

PwCs way ofresponding

PwCs way ofunderstanding

the issue

Supported by:PITBM, EMP

Supported by:Making ChangeStick

PwCs way of

executing

Supported by:The Guide

Supported by:Beacon/Pursuit

PwCs way ofensuring

sustainable

value

Our IntegratedApproach for

Large, ComplexProgrammes

powered by Making Change Stickpowered by Making Change Stick

Sustaining

PwCs way ofresponding

PwCs way ofunderstanding

the issue

Supported by:PITBM, EMP

Supported by:Making ChangeStick

PwCs way of

executing


Supported by:Beacon/Pursuit

PwCs way ofensuring

sustainable

value




PwCs way of responding

Desired Outcomes:

Clear articulation of value proposition Detailed understanding of the pain and who is involved An understanding of organisational and individual motives

An understanding of what could stop transformation fromhappening

Principles:

Ensure information continues to be gathered from manysources

Define a consistent message and employ it consistently Do not offer solutions, talk about benefits

Enabling tools:

Pursuit Making Change Stick Sales framework

Sustaining

Our way ofresponding

Our way ofunderstandingthe issue

Supported by:

PITBM, EMP

Supported by:Making Change

Stick

Our way of

executing


Supported by:Pursuit

Our way ofensuringsustainablevalue




Sustaining

Our way ofresponding

Our way ofunderstandingthe issue

Supported by:

PITBM, EMP

Supported by:Making Change

Stick

Our way of

executing


Supported by:Pursuit

Our way ofensuringsustainablevalue





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Delivering Sustainable Benefits in Transformation by making change stick

Many transformation initiatives fail because they do not maintain a focus on benefits delivery that

appropriately involves people in ways which ensure sustainable benefits are achieved over time.

The acceleration of the delivery of benefits in ways that are sustained long after a transformation initiative

has been completed, involves having a best-fit change approach that:

Focuses on achieving those benefits and sets up measures to track them;

Encourages the involvement of the people who will deliver the change in practice; ensuring purposefulcommunication and balancing those activities that should be driven from the top and those built on the

ideas and successes of the teams on the front line; and

Builds sustainability by developing effective change leaders, aligning systems, processes and cultureacross the organisation and embedding new ways of working into performance management and training

processes.

Making change stick on a transformation initiative is about approaching project delivery with a mindset thatconsiders how the areas highlighted in Figure eshould be addressed.

Figure e: Areas to address in making change stick

Defining the Transformation Scope

Typically the Transformation Scope is defined during the Assess Stage (

Figure f) of the framework. However, during the pursuit of a business transformation opportunity with aclient, PwC may be expected to provide a view on what the scope of the transformation programme should

encompass.


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Defining the High-

level Blueprint for

the new organisation

and the Case for

Change, and the

portfolio of initiatives

that will transform the

organisation, while

achieving short- and

medium-term fiscal

and business goals

Creating the

detailed Target

Operating Model

and plan for the

organisation (e.g.

new org structures,

processes,

locations, skills, IT

etc), whilst also

implementing quick

win initiatives

Build new

processes and

supporting IT,

locations, org

structures, skills

etc., to support new

ways of working.

Understand in detail

the requirements to

implement these

across the

organisation

Implementing the

portfolio of group-

wide and

organisation-wide

initiatives, pro-

actively ensuring

benefits are tracked

and realised,

addressing any

shortfalls (i.e.

portfolio leakage)

Structure

Facilities

Process / Service

People & Organisation

Enabling Technology

Change Management

Programme Delivery

Strategic Direction Assess Design Construct Implement Operate &Review

Rollout new

ways ofworking and

ensure

benefits arerealised

Build the

new waysof working,

and design

rollout

Detailed

Design,TOM and

Quick Wins

CreateCase for

Changeand scope

initiatives

withreference to

identifiedbenefits

Operate new

organisationand implement

continuous

improvement

Operate the

transformed

organisation, deliver

the benefits, and

instigate a culture of

continuous

improvement

Defining the High-

level Blueprint for

the new organisation

and the Case for

Change, and the

portfolio of initiatives

that will transform the

organisation, while

achieving short- and

medium-term fiscal

and business goals

Creating the

detailed Target

Operating Model

and plan for the

organisation (e.g.

new org structures,

processes,

locations, skills, IT

etc), whilst also

implementing quick

win initiatives

Build new

processes and

supporting IT,

locations, org

structures, skills

etc., to support new

ways of working.

Understand in detail

the requirements to

implement these

across the

organisation

Implementing the

portfolio of group-

wide and

organisation-wide

initiatives, pro-

actively ensuring

benefits are tracked

and realised,

addressing any

shortfalls (i.e.

portfolio leakage)

Structure

Facilities

Process / Service


Enabling Technology

Change Management

Programme Delivery


Rollout new

ways ofworking and

ensure


Build the

new waysof working,

and design

rollout

Detailed

Design,TOM and

Quick Wins

CreateCase for

Changeand scope

initiatives

withreference to

identifiedbenefits

Operate new


continuous

improvement

Structure

Facilities

Process / Service


Enabling Technology

Change Management

Programme Delivery


Rollout new

ways ofworking and

ensure


Build the

new waysof working,

and design

rollout

Detailed

Design,TOM and

Quick Wins

CreateCase for

Changeand scope

initiatives

withreference to

identifiedbenefits

Operate new


continuous

improvement

Operate the

transformed

organisation, deliver

the benefits, and

instigate a culture of

continuous

improvement

Figure f: Framework Overview

This is a potential differentiator for PwC. The majority of transformation programmes focus on internal,

operational transformations associated with reducing cost, improving processes, organisation redesign and

service improvement using Lean or equivalent approaches. In most cases, the programme involves

significant change management.

In contrast with some of our competitors, PwCs approach to transformation has a potentially broader focus,

encompassing:

Linking internal improvements with external regeneration, brand management and marketing the

organisation;

Significant focus on leadership capability and cultural change; and

A broader emphasis on performance improvement opportunities including income generation, greater

emphasis on property strategy rationalisation, financial re-engineering and budget management.

This is shown in Figure g, which relates to a typical local authority example. This diagram can be adapted toreflect the particular considerations applying to private sector organisations.


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Figure g: Example Scope of Transformation Programme

An alternative method of presenting programme scope, which has proven highly successful, is a

transformation map (or T-map). An example T-map, which was developed in the context of a competitive

proposal for a public sector opportunity, is shown at Figure h.

This method of presentation shows clearly how external aspects of transformation such as economic

development, partnership working or localism can be integrated with culture change, operational

improvement and cost reduction.

A T-Map is a way of describing scope in a proposal that would be used alongside the framework approach

that describes how to confirm scope. Similar diagrams can be used later in the programme when creating a

transformation route map and used as a means of communication.


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1.7 PwC Capabilities

As outlined in 1.6 - Defining the Transformation Scope, the scope of transformation programmes can vary

depending on specific requirements. Broadly speaking, PwC can do all of the Assess Stage, virtually all of

Design, most of Construct and parts of Implement and Operate. The typical scope of services that PwC can

provide during a transformation programme and the mix between PwC led, third Party led and Client led

activities is summarised in Figure i.

Figure i: Typical Scope of PwC services in a transformation programme

PwC can take a number of roles on a transformation programme, including:

Lead and implement activities;

Manage activities on behalf of the client;

Manage third parties for the client;

Provide critical friend support; and

Quality assurance roles.

The areas which PwC does not typically offer include:

Implement IT infrastructure;

Construct physical infrastructure;

Software development and configuration e.g., ERP although we can implement some CRM packages;


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Facilities outsourcing provision;

Application outsourcing provision;

IT Infrastructure outsourcing; and

Business process outsourcing.

Clearly where these are requirements as part of a transformation programme then PwC needs either to act

as a client advisor in procuring a partner to implement the above in relation to outsourcing, or to act as a

prime contractor/integrator in managing the above IT and infrastructure components.

The capabilities that PwC has can be mapped against the Burke-Litwin Model for transformational change to

give an indication of the breadth of support that can be provided to clients ( Figure j).

Figure j: PwC expertise mapped to the Burke-Litwin Model

MIKE KEY NEEDS TO BE CHANGED TO REFLECT: PIC FINANCE; PIC TECHNOLOGY

Transformation programmes are complex and require rigorous risk management; therefore it is essential to

consult with expert partners and practitioners both during the sales process and also during the delivery of

the engagement. Transformation engagements should always be staffed with an appropriate blend of

specialist and generalist resources.

PIC Financial Effectiveness

TR

A

NS

FO

R

M

AT

TR

A

NS

A

CT

Individual and

Organisational

External Environment

LeadershipOrganisation

Motivation

PwC Expertise mapped to the Model

HRS

PIC Technology PIC Operations PIC Policy, Research &

PIC Governance, Risk &

Valuation & Strategy

PIC People & Change

Management

Structure

Task

Requirements

Individual Needs

Systems (Policies

Mission &

Work Unit


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1.8 Potential PwC Roles

There are a number of dimensions to consider in terms of the roles which PwC can play in business

transformation programmes. Some of the potential options include:

Pure client side adviser;

Prime client - where PwC acts as a client side adviser, providing both strategic and implementation

support, but also assisting the client to procure supply side support as required for areas such as ICT or

property;

Business integrator where PwC acts as a prime contractor with alliance partners or sub-contractors

reporting into PwC; and

Sub-contractor to an alliance partner (i.e., supply side opportunities).

Advice should be sought on which of these options is likely to be most appropriate.

In addition to the above aspects, it is also worth considering how PwC can add value through a series ofsteps as represented in the example layered model shown at Figure k. Where a transformationframework is being used this model has proven a useful way of differentiating the Firm from competitors.

Key points to note include:

The model aims to demonstrate skills transfer and value-for-money through application of a structured

approach to how PwC provides support;

The base layer is free;

PwC emphasises skills transfer, Leadership development and capacity building;

PwC offers a tier of capacity-in-sourcing, where discounted access is provided to PwC consultants

operating full-time, PwCs interim management team, alliance partners and/or off-shore resources. This

can be important if PwC wants to offer clients a method of backfilling; and

Subject Matter Expertise and strategic support is made available in tiers 4 and 5.


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Figure k: Example Model for adding value

1.9 Working with Alliance Partners

Typically there are two types of transformation programme that PwC is engaged to support (however mixed

models also exist):

In-house where PwC supports the client directly to transform (as described in previous sections, andthe most common type of transformation engagement for PwC); and

Outsourced where a significant part of the transformation requires the outsourcing of parts of theclients business, and PwC is contractor-side alongside an alliance partner.

PwC is increasingly required to operate alongside other organisations as part of outsourced type

transformation programmes, both within formal commercial relationships and in situations where clients

operate with a number of partners. Potential options include:

PwC as prime contractor;

PwC as sub-contractor; and

PwC working alongside others without a direct commercial relationship.

While there are a number of models available, irrespective of the commercial position there are typically

areas where PwC is best placed to lead and areas where others (such as a Business Process Outsourcing

(BPO) provider or Service Integrator (SI)) are best placed to lead. The diagram at Figure lsuggests anexample split of the work.


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Figure l: Example split of work when working in Alliances

PwC has a structured alliance programme with over 1000 alliance partners. To date the Firm has

experience of working with a range of partner types including:

Service Integrators (SI);

Enterprise Software Companies;

Telephony Companies; and

Business Process Outsourcers (BPO).

When looking to work in alliance with other companies it is important to conduct the relevant checks to

ensure that conflicts of interest such as audit relationships, etc. are checked.


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i Sales Framework Sales ApproachPurpose

The purpose of the Sales Framework is to provide a structured approach to support the pursuit of a

transformation opportunity.

OverviewWithin the Sales Framework are three key elements (Figure m):

Sales Approach where the opportunity is clarified, lessons learned from previous opportunities aretaken into account, the sales team is agreed, the initial meetings are commenced and planning for the

transition from sales to delivery takes place;

Differentiating PwC where an analysis of the competitors to the opportunity is undertaken and theunique differentiators for PwC are agreed; and

Commercial Approaches where fee structures are explored, approaches to demonstrating value formoney are agreed and the methods for accounting for the costs of transformation are outlined.

Figure m: Sales Framework Overview

i1 Opportunity Classification and Qualification

Transformation sales opportunities should be assessed against two matrices which relate to:

The nature of PwCs client relationship and prior involvement in shaping the opportunity; and

The scope of the potential sale and competitive context.

i1.1 Proactive or Reactive OpportunitiesSales opportunities can be classified as proactive or reactive, and relate to managed or non-managed

accounts ( Figure n). Experience tells us that we do not win transformation engagements unless weheavily invest in the relationship with the client and proactively manage the opportunity.


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Figure n: Sales Classification

Our experience to date suggests that we need to qualify transformation opportunities primarily on the

basis of this analysis:

We win transformation deals primarily where we have proactively pursued opportunities within

managed accounts. Proactive in this context means that we have helped to shape the scope of

opportunity, influenced the procurement process and undertaken significant stakeholder management

activities within the client prior to any tender being issued. In the Beacon methodology, proactive

opportunities are outbound. Critical factors in determining our likelihood to win are outlined in a

later section on lessons learned;

We are very unlikely to win reactive transformation opportunities within non-managed accounts

where we have not influenced the shape of the tender or procurement process. These should, as a

rule, be no-bid unless there is a compelling factor to justify bidding. Reactive opportunities in

Beacon terminology are incoming;

Where transformation opportunities emerge in managed accounts which we did not shape

(managed/reactive), the go/no go process should be challenging. There will be few cases where no

external third party has been involved in shaping such opportunities, which means that we are

probably in a relatively weak position. Our decision to bid should be evaluated after an assessment

of our ability to access key decision-makers, influence the procurement process, or differentiate our

offering on the basis of meeting the client vision or targeted benefits; and

Where transformation opportunities are proactively generated within non-managed accounts, rigorousgo/no go assessments will be required. Evidence to date suggests that if we lack broad-ranging

stakeholder contact at senior level (with access to key decision-makers for the procurement being

key) then shaping the tender has only limited value unless we have also shaped the procurement

process and have access to power.

i1.2 Competitive or Single Tender OpportunitiesSales can be classified as single tender or competitive, with scope that relates to Assess, Assess to

Implement, or Design to Implement, as shown in Figure o.


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Figure o: Sales Stages

The above matrix is important for a number of reasons:

We continue to under-exploit opportunities to generate single tender procurements. These can be an

option where:

- PwC has unique knowledge, perhaps in a managed account, through an audit rotation or where

we have undertaken a number of projects,

- Where there is a significant opportunity cost to the client in running a lengthy procurement

exercise due to loss of benefits, and

- Where we are able to reassure the client that Value-for-Money can be ensured through

appropriate commissioning models, risk/sharing, joint estimating, appropriate mixed economy

sourcing, etc.;

Some of our competitors are not equally strong in all stages of the transformation process. Where we

are proactively influencing the scope of tendered opportunity this competitor intelligence can be

helpful to us in what to include or exclude; and

Some of our competitors offer a lite version of the Assess Stage. In this case we need to think

through strategies for competing. In some cases it is important for us to offer a gated approvals

model within Phases of the Assess Stage.

It is helpful to recognise the need for potentially different sales approaches for each of the following:

Competitive sales opportunities which relate purely to the Assess Stage;

Competitive sales opportunities which relate to the Assess to Implement Stages i.e., not just the

up-front scoping study, but also implementation;

Competitive sales opportunities which relate to Design to Implement Stages - i.e., where PwC did

not undertake the Assess Stage;

Single tender sales opportunities to carry out an Assess study or an end-to-end transformation

programme; and

Single tender sales opportunities to sell on after completing an initial Assess (scoping study). In this

case it is important that sales activity proceeds in parallel with completion of the scoping study (see

section below on Transition from sales to delivery the first 100 days). It is usual to sell the Design

Stage, Construct Stage, and then the Implement Stage in pieces rather than as a single entity, withdiffering commercial arrangements for each Stage.


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i2 Using Lessons learned

There are a number of critical points to note in selling business transformation engagements. The following

list outlines some of the lessons from previous wins and losses. It is strongly recommended that any sales

team has an experienced transformation Partner or Director as a bid adviser. Points to consider include:

Transformation sales require a combined team of specialists and transformation consultants. It is

important that the sales team can describe a compelling vision for how the client will look post-

transformation in terms of areas such as customer service, cost base, culture, brand, etc. Unless the

sector is one in which PwC has real industry knowledge then we are unlikely to be successful;

We are most likely to win deals where we have:

invested significantly in the account well ahead of any tender process,

helped the client to develop a tailored vision,

established how we can bring unique value/benefits which are not achievable through an in-housesolution or our competitors,

fully understood the stakeholders critical to any decision (both directly and indirectly involved),

gained access to key decision-makers for the planned procurement, and

influenced the tender procurement process in terms of scope, evaluation process and decision panel;

We are usually more successful where we can articulate the benefits of our proposition in terms of

improved outcomes to key stakeholders e.g., to members/officers in local Government or

shareholders/directors in the private sector. We sometimes make the mistake of describing our approach

in too much detail;

Transformation sales teams need to be culturally and contextually sensitive what may appear to PwC

as technically the best solution may be unpalatable too large, monolithic or one size fits all, lacking

sufficient tailoring, etc. It is critical that the transform* framework is applied flexibly; and

Commercial structuring is important, particularly in relation to:

the level of risk-sharing,

blended daily rates when compared to services competitors or niche players; and

willingness to contract for outcomes or recognition events.

Some of these aspects are described further in the section on Commercial Approaches.

i3 Creating a Sales Team

As noted elsewhere in this document, it is strongly recommended that teams do not attempt to sell business

transformation programmes without significant involvement from experienced business transformation

Partners and Directors. Equally, it is vitally important that transformation sales are led by teams with

responsibility for shaping the messaging, presenting the vision/blueprint and ensuring that any sales

proposal is appropriately shaped for the specific client.

i4 Initial Sales MeetingThere are a number of important things to be considered at the initial sales meeting, depending on whether


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the meeting occurs pre-tender in a proactive (outbound) sales pursuit or as part of a formal tender process

(which could be as part of competitive dialogue).

Key points to be established (over one or more meetings) include:

What are the principle business issues to be addressed (cost, service, capacity-building, revenue growth

and brand)?

What outcomes would constitute success? Note that this may vary for different stakeholder groups and it

is important to be able to articulate how our proposed solution meets different stakeholder needs.

What are the personal consequences for key players of success, and what risks do they perceive?

What type of change approach would fit (e.g., top-down/directive or bottom-up and participative)?

To what extent is there alignment at senior level about the need for / how to change?

What is the attitude to how the programme should be procured? This may range from willingness to

consider single tender, through existing framework contracts, mini-competition or full market tender.

Who will make decisions about any procurement? Can we gain access to power if we are not initially

meeting a key decision-maker?

Are there any threshold expenditure limits below which it might be possible based on internal rules to

carry out an initial piece of business?

Have other organisations been involved in helping to shape any change programme to date (or the

tender, procurement, etc)?

Who are perceived as key competitors and how are they regarded?

What internal resource can be mobilised to support a programme?

What role does the client see PwC playing (client adviser, prime client, or prime contractor)?

What options exist to meet other members of the senior team or other influencers?

What opportunities exist to help to shape the scope of work to be tendered, procurement process (where

we know the client well) or to carry out some initial work?

i5 Ensuring Success from First Contact

Ensuring success for both PwC and the client is essential in large, complex programmes. The mindset that

is required to sell a long term engagement with the client typically requires a continual dialogue on what is

next?, how can we deliver this together?, how will PwC help to deliver the benefits of the programme and

how can we help to make the change stick?. It is PwCs responsibility to help the client to understand the

entire journey of the transformation and how we can help with the success of the journey at each Stage.

During each Stage of a complex programme the client will be looking for advice and guidance on what

happens after the current piece of work has been completed. This is PwCs opportunity to ensure that we

are shaping the role that we can play in supporting the client in the next stage of work and to ensure that

continuity of delivery for the client is achieved. It is essential that throughout our engagement with a client

we understand and articulate the selling messages required for the next stage of the programme. It is

important that this ethos is undertaken from the very first contact with the client (even prior to a tendering

process) as it is our opportunity to shape what the client requires from external advisors to provide a

competitive advantage.


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In particular, where PwC is carrying out a scoping study or Assess Stage, it is critical to view the whole of

the Stage as a combination of delivery and business development. There are a number of explicit and

implicit activities which need to be carried out to ensure that a transformation programme moves smoothly

from the Assess Stage to Design and subsequent Stages. With reference to business development, these

include the following:

Ensuring that there is a high degree of alignment and ownership among senior stakeholders on the needfor transformation. This requires significant stakeholder management activity which needs to be

consciously planned and executed across a broad range of key players. This is our opportunity to

position PwC in the mind of the key stakeholders to help them progress on the journey and how we can

help them achieve success;

Gaining consensus around a compelling vision or blueprint, and articulating this in a manner which

captures the enthusiasm of key players and staff. This requires careful thought about how to describe

outcomes in appropriate language, use of rich pictures, etc;

Gaining buy-in progressively to improvement initiatives which ultimately form part of the programme-level

business case;

Discussing and agreeing options for financing and accounting for the next Stage of the change

programme during the Assess Stage; and

Agreeing potential forms of commercial arrangements for the next Stage.

The key point to understand about working on complex programmes is that we are likely to be put in a

position of competing for work to win the first piece of the programme a typical failure is that we dont

position PwC sufficiently in the clients mind to continue on the journey with them, and therefore subsequent

parts of the programme are also competitively tendered. Success for PwC is to ensure that we are seen to

help deliver the benefits of the programme and therefore only need to compete once (not twice or more

times) to support the client on their journey.


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ii Sales Framework Differentiating PwCIt is important to differentiate PwC through a number of interventions including:

Continuing engagement from the first point of contact through targeted activities with the client; and

Understanding the competitor landscape to be able to clearly identify what differentiates PwC for eachparticular opportunity;

ii1 Continuing Engagement

There are a number of sales techniques that can be useful in creating and building transformation

opportunities with clients as part of a targeted plan of continuing engagement. Example techniques include:

Insight Sessions;

Discovery Sessions; and

Scenario Planning.

Examples of theses techniques are available on Gateway brief explanations of them are below:

Insight Sessions

Insight Sessions are intensive sessions with senior clients to bring key insights from across the global PwC

knowledge and experience base. The insights should be tailored to the clients industry and strategic

objectives. For example, in Government an insight session would typically follow the methods for

implementing the published policy outcomes. For private sector clients this might include exploring a PwC

point of view such as Pharma2020 or Healthcast to examine trends and implications for clients that might

result in complex change.

Discovery Sessions

A discovery session is an opportunity to learn from a number of people in a group about a relevant topic,

generate ideas that expand a new technique or practice, or brainstorm ideas for the next new "thing". The

format may take many forms such as a workshop, a peer-to-peer session, a goldfish bowl, a think tank, a

simulation or a panel to get people thinking and discussing. In a discovery session, participants learn from

each other, as well as from the session leader. Resulting knowledge is transferred to the larger community.

A discovery session involves working collaboratively with the client to collect relevant information about the

organisation through a number of routes to help in understanding their business.

The discovery session thinking often challenges the status quo it serves as a springboard for new and

better ways of achieving organisational objectives. It can serve as a counterpoint to the way things have

been done in the past.

Through expert facilitation, discovery sessions can become a key enabler for accelerating sales as clients

pursue possible solutions and strategies to their business issues. The principles applied to a discovery

session provide the right kind of learning environment for sharing and creating knowledge and for

demonstrating what enabling technology and accelerated techniques can deliver.

A discovery session can be used to show a client where they are on the transformation journey, the methods

to get there and what other organisations have done. For example the focus of a session could be on what

happens in Assess, Design, Construct, Implement, and Operate to explain to a client how to address each

Stage.

The session also allows PwC to strengthen the relationship with the client at every stage of the sales

process and to leverage our depth of knowledge, experience, thought leadership and leading approaches.

The process will be completely confidential and secure providing the ideal space for clients to focus on theirobjectives.


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At the end of the discovery session, the output will provide the client with an appropriate proposition to

address their business problems.

To ensure maximum benefit from the session, the client should involve senior responsible officers, sponsors

and executive leaders who have overall responsibility for the projects within the transformation programme.

Scenario PlanningScenarios are tools for helping us take the long view in environments that contain uncertainty (the norm in a

transformation programme). They are stories about the ways the environment might turn out tomorrow that

can help us recognise and adapt to changing aspects of our current environment. Typically the process of

scenario planning involves identification of important uncertainties to help create a number of possible future

scenarios, then fleshing out the most compelling scenarios designed to stretch assumptions and generate

creative options.

ii2 Competitor Analysis

PwCs approach to business transformation has been developed through an iterative understanding of:

Competitor methodologies; and

What works in practice.

It is not possible to differentiate our approach from all competitors within this document, but it is strongly

recommended that sales teams seek advice on relative approaches when the competitive landscape is

known.

As an example of how PwC can be differentiated from others consultancies, the following analysis compares

PwCs offering with that of KPMG for public sector transformation work. Each opportunity should be

individually assessed for competitors in a similar manner.

Key attributes of transformation

and cost reduction offer

PwC KPMG

Breadth Broad also includes significant focus on

income, property, budget management,

financial engineering

Narrower principally focuses on reducing

headcount and procurement costs

Culture change Strong emphasis Not really covered

Team Joint from day 1 with strong emphasis on

skills transfer

Primarily KPMG team initially

Mix of consulting team Public sector, some private Private sector, some public

Relationship Aim for 3 years plus Aim for 1 year

Focus Cradle to grave assess, design, construct,

implement, operate and review

Mainly assess and design

Blueprint / vision Focuses on internal operational

transformation and also external brand,

regeneration, service improvement, culture

Principally focused on operational

transformation with an internal focus

Principal focus Transformation Cost reduction

Approach Led by transformation team but with objective

that team support managers across business

Led by transformation team

recommendations passed to client to


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Key attributes of transformation

and cost reduction offer

PwC KPMG

to drive change implement with less buy-in from the business

Activity analysis 32 and 40 box model 15-20 box model

HR transition Core component Not really supported

Methodology Initial scoping quite detailed 5 stage model initial feasibility phase much

less detailed.

ii3 Clear Blue Water

There are a number of elements that need to be understood when differentiating PwCs transformation

offering for our clients:

What are our clients buying? and

Why would they buy from PwC?

Figure poutlines a high-level analysis of the sorts of projects and the scale of opportunities that our clientsbuy.

Figure p: What are our clients buying?

There are a number of differentiators for PwC, including:

Our transformation framework is flexible in its approach and focuses on delivery of benefits into the

organisation;

The scope of support that we can offer to our clients during a transformation programme is typically wider

than our competitors and focuses not only on internal change but also external factors that can influence

the organisation;

We typically bring a broad mix of consultants to an engagement ensuring the right mix of transformation

specialists, and subject matter expertise on the industry or cross-cutting issues that need to be

addressed as part of a transformation programme; and

We keep a continual focus on understanding the client issues in a transformation supported by theprinciples outlined in The Guide to ensure a holistic view of the problem.

Deliver results and

benefits not just

expertise is

increasingly about

doing deals to

deliver results not

just expertise


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It is important that for each opportunity that we clearly understand the drivers for the transformation and the

key issues and benefits for the client (see Section 1.2 Definition of Business Transformation for a view on

drivers for transformation). This will help us to tailor the framework for the specific needs of the client and

to develop what would differentiate our offering from our competitors.


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iii Sales Framework Commercial ApproachesIt is important to understand the different commercial approaches that can be taken to support a client

through a transformation programme as typically an innovative commercial approach can usually tip the

balance in PwCs favour, even if we have more expensive day rates than our competitors.

iii1 Fee Structures

There are a number of issues to be considered in relation to commercials:

Commercial structuring of transformation deals can be complex and it is strongly recommended that the

sales team access specialist advice on PwC approaches and potential competitor commercial strategies;

PwC can contract on the basis of T&M (Time and Materials), Outputs (fixed price for deliverables) or

Outcomes (benefits delivered);

PwC may also offer significant volume discounts associated with deployment of individuals or teams for

periods of continuous utilisation. Advice should be sought both on the Firms position and on intelligenceregarding competitor pricing;

When we contract on a risk / reward basis, this is typically associated with contracting for outcome,

although there are options to contract based on delivered benefits;

It is rarely possible to contract for outcomes at the start of a programme, given the need for baselining of

performance measures which are to be incentivised;

PwC usually prefers not to be incentivised for the Assess Stage, and will typically price this on a fixed

price basis. The rationale is that there can be adverse publicity associated with incentivising consultants

to identify savings, and in our experience these approaches only really work if all parties are sure about

what success will look like and senior management are bought into the programme. However, some

competitors offer fee structures linked to the level of benefits identified during the Assess Stage and

KPMG has offered up to 50% of its fee on the basis of benefits identified; and

The Firm has historically been willing to consider a range of commercial options but advice should be

sought on the latest position. Figure q shows an example risk/reward structure.

Figure q: Example Risk/Reward Structure

Baselined design under

change control

Checkpoint(s)

4 months 1 year 1 year

Typical timeframes

Target businessmodel

Transformedservice

Balancedscorecard

Balancedscorecard

Acceptance test

design

Acceptance

test

Interim performancemeasures

Performanceassessment

Design Implement Operate

Checkpoint(s)Go live &

handover

Settlement of

final payment

PwC roleLead on functional /

service redesign


service transformation

PwC roleIntervention (at our option) where we see a

performance shortfall that may impact on ourreward or where a business case for additional

work can be proven

Key: = gateway review and PwC

milestone payment points

Baselined design under

change control

Checkpoint(s)

4 months 1 year 1 year

Typical timeframes

Target businessmodel

Transformedservice

Balancedscorecard

Balancedscorecard

Acceptance test

design

Acceptance

test

Interim performancemeasures

Performanceassessment

Design Implement Operate

Checkpoint(s)Go live &

handover

Settlement of

final payment


service redesign


service transformation

PwC roleIntervention (at our option) where we see a

performance shortfall that may impact on ourreward or where a business case for additional

work can be proven

Key: = gateway review and PwC

milestone payment points


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Additional approaches which have worked in the past include:

Use of seed capital to fund an initial investment pot, after which future consultancy has been afforded out

of benefits;

Creation of a self-financing portfolio, with early high ROI projects used to generate the benefits to fund

other lower ROI initiatives; and

Timing of PwC fees on a deferred basis, so that payment to PwC is linked to benefits being locked into

budgets.

In our experience of working with clients, typically a mixed economy approach is used where a mixture of

commercial structures are used for different Stages and Phases in the programme.

There is significant additional risk to PwC when entering into commercial arrangements where elements of

risk and reward are agreed, therefore, it is important to consult with senior Partners with experience of risk

and reward contracting on transformation programmes as part of setting up these types of arrangements.

iii2 Demonstrating Value-for-Money

There are a number of ways in which PwC can demonstrate value-for-money on business transformation

opportunities. These include:

Use of existing framework rates (for example public sector framework contracts), potentially discounted

on the basis of duration or for deployment of highly utilised teams;

Presentation of the diagrams similar to Figure k in section 1.8 to show how we focus on skills transfer,capacity in-sourcing and a mixed economy resourcing model, not just provision of consultants. In this

context, mixed economy includes:

Use of PwC staff at discounted rates where they are fully utilised for long periods,

Use of interim managers, and/or

Access to resources from alliance partners or offshore resources;

Joint estimating of required resources, with options for a capped fee structure;

Commissioning models which are non-exclusive;

Assisting the client to find grant funding; and

Shared risk and reward.

iii3 Accounting for the Costs of Transformation

In most transformation programmes, it is necessary for clients to make a significant investment in funding the

programme in early years before benefits outweigh costs. There are a number of opportunities to influence

the shape of the J-curve, through:

Structuring the change portfolio so that early projects have a high ROI, and later ones focus on service

improvement, capacity building, etc;

Financial structuring of outsourced activities, with balloon payments and early subsidisation; and


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Other fee deferral structures.

The impact of these actions on the J-curve can be seen in Figure r.

Figure r: Influences on the J-curve

This is particularly important in public sector organisations due to the need to account on a commitment

basis in many cases, as it is often insufficient to avoid accrual for consultancy or other costs through fee

deferral. It is necessary to find more creative solutions to enable capitalisation

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