Is the Hub and Spoke Business Transformation Organization Right for You?
Have you seen the latest Business Transformation Office (BTO) organization Models? The organizational structure of your BTO is extremely important to the success of driving repeatable, sustainable, and successful transformation.
To take the mystery out of BTOs, MSS Business Transformation Advisory (MSSBTA) has interviewed multiple national and global transformation leaders on how to establish a BTO to transform your enterprise.
Business Transformation empowers your organization to transform services by replacing manual processes with digital processes, or legacy technology with new technology. According to Gartner and McKinsey (2020), 70% of all transformations fail. Most transformations fail from lack of vision, focus, clear purpose, control, and flexibility. A successful BTO structure prevents these failures and ensures sustainable transformation. BTO models include resources that are dedicated to protecting your organization. Your Business Transformation Office can be structured in one of three ways, depending on your organization’s business needs, degree of urgency and culture:
The Hub and Spoke
The Parachuter Business Transformation Organization Model
The Parachuter Business Transformation Office is a vertical operating model providing autonomy to leaders and experts looking to transform their organization (shown in the example below). Some of the corporations and leaders we interviewed indicated their BTO followed this structure. They found it had independence and was capable of successfully executing standalone transformation projects. However, because transformation leaders and experts were not embedded in the business units, they were often seen as parachute jumpers. When the BTO was engaged, transformation experts would parachute into a Business Unit (BU) to inspire, storm, norm, and provide leadership to achieve an end-to-end solution. As projects ended, transformation experts were either re-engaged or dismissed based on the project's success.
Figure 1: Example of The Parachuter Model
The main concern with this model is its lack of a holistic method to sustain transformation benefits.
The Sharpshooter BTO Model
The Sharpshooter is another vertical model with great results through a COO or SVP-driven BTO. This vertical model is not embedded, yet transformation initiatives typically have a burning platform, C-Level-support, and established BU goals alignment.
American Express (AMEX) offers a good example of the Sharpshooter model. Dom Ranieri, former SVP of Business Strategy Execution, explained that he did not have a burning platform or a C-Suite mandate to get business units (BUs) to rally around change when he inherited the organization. He worked closely with AMEX business leaders to understand their pressure points. This helped him determine the needs of each BU so he could execute significant operational efficiency and business transformation changes.
As a result, he repositioned the BTO around the BUs' needs and engaged experts who already had credibility, political capital, and preexisting trust by BU leaders, as outlined in the organization chart below. Business leaders and experts promoted the expertise of the BTO and looked for opportunities, much like an external consultant, to help the BUs execute transformational change.
"Sponsorship and a reason to change, without these two you flail and you cannot make traction!"
Dom Ranieri, Former SVP of Business Strategy Execution, American Express
Since the COO or Operational SVPs typically determine performance deficiencies, they are well-positioned to develop your corporate performance targets. They can engage the BTO to assist the BUs achieve expected performance targets. Transformation experts evaluate BU processes to generate millions of dollars in cost savings or avoidances. Your transformation experts are positioned to identify BU process issues. They can quickly align with the COO or SVP during regular alignment meetings to gain funding and technical resources needed to execute transformational change.
Figure 2: The example of The Sharpshooter Model
Over the years, AMEX adapted to the needs of the business units. AMEX had a centralized BTO model but as the business transformation mindset became imbedded in the BUs, the centralized model evolved to the Sharpshooter model, however they needed assistance in executing their key initiatives. As the needs and culture evolved, so did the BTO approach.
The Hub and Spoke Business Transformation Organization Model
MSSBTA recommends the Hub and Spoke model. It leverages the benefits of the Parachuter, and Sharpshooter models and defines the role of “Transformation Leader”. This role is empowered with a holistic view to guide and direct a sustainable transformation. In the example below, your Transformation Leaders (Director or VP) report directly to your COO as the hub. Each Transformation Leader reports through a dotted line to each respective C-Level or senior BU leader. The Transformation Leaders are embedded in each of the BU leadership teams. This grants them ownership and accountability.
Figure 3: Example of Hub and Spoke Model
Depending on the size of your company, each Transformation Leader should have a small, effective team of Transformation Managers and/or Director’s familiar with the key areas of transformation, such as:
Each BU transformation team pulls resources from a central, shared services team of experts managed under the hub, reporting to the COO. Your embedded experts have deep BU business expertise, and their quarterly and annual goals are linked to the BU and COO goals/objectives.
Some groups at Microsoft use this approach, where Transformation Leaders and teams are embedded in the business units. Transformation Leaders become strategy influencers and part of the BU team. This structure allows Transformation Leaders to quickly identify areas to improve standards, automate business processes, and drive rapid process improvement.
"The embedded BTO hub-and-spoke approach works better for influencing strategy, implementing standards, business process improvement, and better use of tools."
Ruchika Bhasin, Head of Business Strategy and Operations, Microsoft
Like the Sharpshooter model, your COO often determines performance deficiencies. They are well-positioned to establish corporate performance targets and engage the BTO to help BUs achieve expected performance targets. Your COO should regularly review current road-map strategies to five key dimensions of performance. Did the organization:
Deliver on time?
Deliver within budget?
Deliver what was promised?
Meet all compliance regulations?
Treat customers better than expected?
Taking the Next Steps to Develop Your Business Transformation Office
When developing or reforming your BTO, an executive leader (such as the COO) needs to provide the vision and urgency around the importance of the BTO and how it will benefit and add value to your business transformation needs. To help, the executive leader should create the “burning platform” for a corporate-wide mandate. Additionally, the C-Suite needs to be aligned with the current BTO initiatives in progress, and the future direction of the organization. Conducting an honest evaluation of your existing BTO or building a BTO from scratch takes a clear vision, commitment from the organization, and (often) expert guidance to establish leadership, governance, and accountability early and often.
Davenport , T., & Redman, T. (2020). Digital Transformation Comes Down to Talent in 4 Key
Areas. Retrieved from https://hbr.org/2020/05/digital-transformation-comes-down-
Tabrizi, B., Lam, E., Girard, K., & Irvin, V. (2019). Digital Transformation Is Not About
Technology. Retrieved from https://hbr.org/2019/03/digital-transformation-is-not-