A transformation management office isn’t just a new name for a project management office – instead, it drives change more effectively during complex transformations, making it more likely that value will be delivered faster, more predictably, and with less disruption.
Authors: Chris Tomlinson & Paul Coxhead
Executive summary
Delivering transformational outcomes is becoming a more urgent requirement to stay ahead in today’s dynamic business landscape, but executing complex change initiatives is challenging. Up to 70% of change initiatives fail to achieve their objectives due to factors such as inadequate strategic alignment and poor execution. Traditional approaches to managing change programmes, such as project management offices (PMOs), may not address the complex challenges posed by enterprise-wide transformations, leading to a disconnection between goals and execution. The transformation management office (TMO) offers a more effective approach to managing complex change programmes, emphasising strategic alignment on both vision and the route to achieving it, potentially increasing value creation at speed.
This paper presents the need for TMOs and their unique value, including examples and insights from successful TMO implementations. It highlights the key components of a TMO framework, implementation recommendations, and relevant insights, ultimately showcasing the value TMOs bring to organisations navigating complex transformations. The TMO provides a strategic, value-adding function that helps companies navigate the complexities of transformation, delivering targeted results and ensuring the long-term success of their change initiatives.
The need for effective transformation management
In today’s increasingly competitive and rapidly evolving business landscape, organisations must continuously transform to stay ahead. These transformations include: significant shifts in strategy; digital overhauls; post-merger integration; cultural transformation; shifts in operations; and efforts to improve financial performance and environmental, social and governance (ESG) performance. In most cases they require organisational restructuring and pivoting in-house capabilities. However, executing complex change initiatives is often fraught with difficulties, and many organisations struggle to achieve the desired outcomes.
Despite significant investments in time, resources, and effort, many organisational transformations fall short of their intended goals. Research indicates that up to 70% of change initiatives underperform or fail to achieve their objectives. This high failure rate is often attributed to factors such as inadequate strategic alignment, poor execution, insufficient stakeholder engagement, and a lack of agility in responding to unforeseen challenges.
Moreover, traditional approaches to managing change programmes, such as PMOs, are often insufficient for addressing the exceptional challenges posed by multifaceted transformations. PMOs often focus on process adherence, status reporting, and risk management, and overlook the strategic and value-driven aspects of transformation. This can result in a disconnection between the organisation’s goals and the execution of its transformation initiatives.
"CHANGE IS THE CENTRAL ISSUE IN MODERN MANAGEMENT."
John Kotter - Emeritus professor, Harvard Business School
Examples and insights: the impact of TMOs
The case for a TMO is supported by numerous studies and real-world examples. A recent survey by the Project Management Institute revealed that organisations with a TMO report 38% more projects meeting their original goals and business intent, and 33% fewer projects considered as failures. This highlights the significant impact of TMOs on the success rate of transformation initiatives.
A notable example of a successful TMO implementation is Shell’s multiyear SAP S/4HANA transformation programme. Muuto Consulting played a key role in setting up the TMO for this high-profile digital programme, which ultimately led to significant improvements in programme efficiency, data quality, and decision-making (ASUG, 2021).
On the other hand, a high-profile example of a failed transformation where a TMO might have made a difference is Hewlett-Packard’s acquisition of Autonomy. This acquisition resulted in an $8.8 billion write-down due to integration challenges and then accounting issues. A TMO could have potentially helped identify and mitigate these issues with a greater focus on delivering the value of the deal, ensuring a smoother integration process and reducing the risk of financial losses.
Developing in-house capability: the benefits and challenges
Having an internal TMO team has several benefits, including greater control over the transformation process, alignment with the organisation’s strategy, and the ability to customise the TMO approach to meet the organisation’s unique needs. Building TMO capability in-house also allows organisations to develop a deep understanding of their own operations, culture, and systems, which can lead to better decision-making and more effective change management.
However, building an internal TMO team also presents several challenges. One challenge is the volume and variety of changes required to keep team members engaged and developing.
Another challenge is the cost of building and maintaining TMO capability, which can be significant, particularly for smaller organisations. Additionally, attrition can be a concern, as skilled TMO professionals are in high demand and may be recruited by other organisations.
Another potential obstacle is the ability to challenge the status quo, particularly when the TMO consultant is employed by the client or sponsor. In some cases, internal TMO teams may face pressure to conform to existing organisational norms and resist advocating for more radical or disruptive changes. It is essential to ensure that the internal TMO team is given the autonomy and support necessary to challenge the status quo and drive meaningful change.
TMO as a strategic approach
A TMO focuses on driving value throughout the entire transformation process by emphasising strategic alignment, value creation, and effective execution.
During the early stages of transformation mobilisation, a TMO focuses on the framing and architecture that will support the organisation in properly defining the transformation’s objectives and designing the desired future state. Unlike traditional PMOs, which often prioritise process adherence and status reporting, a TMO tailors its approach to meet the unique challenges of complex transformations. A PMO typically measures project performance based on traditional project management metrics, such as schedule variance, budget variance, and quality. A TMO uses a broader range of metrics such as return on investment, customer satisfaction, employee engagement, and market share, and therefore has a focus on outcomes rather than outputs.
Key components of a TMO framework
(Component & Summary)
Strategy & alignment
Ensure alignment of transformation initiatives with the organisation’s overall strategy, vision, and goals through collaboration with executive leadership and key stakeholders. Develop a clear understanding of desired outcomes and strategic context.
Value tracking & optimisation
Continuously track and optimise the value delivered by transformation initiatives, with a focus on developing value-based performance metrics, monitoring progress, and making necessary adjustments to optimise value creation. Prioritise resources and efforts on critical aspects of the transformation.
Governance & decision-making
Establish a robust governance structure to facilitate effective decision-making and prioritisation – including designing and implementing steering groups and decision-making and collaboration forums – to ensure the right decisions are made at the right time, balancing short-term needs with long-term strategic goals.
Risk & issue management
Proactively identify, assess, and mitigate risks and issues that may affect the transformation’s success.
Capability building
Find and develop the skills and capabilities required to successfully execute the transformation and sustain the change. Promote a culture of continuous learning and continuous improvement.
"THE GREATEST DANGER IN TIMES OF TURBULENCE IS NOT THE TURBULENCE. IT IS TO ACT WITH YESTERDAY'S LOGIC."
Peter Drucker - Management expert and author
Driving Agile transformation with a TMO
A TMO plays a critical role in supporting agile transformations, facilitating the adoption of agile principles and practices across the organisation. By leveraging a TMO’s expertise, organisations can overcome the challenges of implementing agile at scale and drive successful transformations.
One key benefit of having a TMO involved in agile transformations is its ability to provide guidance on scaling agile practices beyond individual teams to the entire organisation. Additionally, a TMO can help establish a common language and understanding of agile methodologies across the organisation, making it easier to coordinate and align efforts.
To achieve successful agile transformations, it is essential to start from where you are, leveraging existing processes and incrementally improving and adapting them. This approach can help institutionalise a new project methodology across an organisation, making it easier to drive adoption and sustain the change over time. A TMO can play a crucial role in facilitating this process, providing guidance on agile principles and practices, and helping organisations adapt their existing processes to meet their transformation objectives.
Overall, a TMO can be a valuable partner in driving successful agile transformations and enabling organisations to realise the full potential of their agile initiatives.
Embracing the TMO: key considerations for TMO set-up
The increasingly complex and challenging nature of organisational transformation needs a more effective approach to managing change. The TMO has emerged as a powerful solution, offering strategic guidance, coordination, and support throughout the transformation process.
Design for value
Implementing a TMO effectively needs a thoughtful and strategic approach. A thorough assessment of the current state of the transformation initiatives, capabilities, and readiness for a TMO is essential. This includes identifying gaps and areas for improvement and determining how a TMO can provide value in the organisation’s specific context. It is important to define the TMO’s scope and objectives clearly, ensuring alignment with the organisation’s overall strategy and objectives.
Make high-quality decisions, quickly
Securing leadership buy-in is essential for successful TMO implementation. C-suite executives and critical stakeholders must be engaged and supportive of the TMO to ensure its success. To establish a robust governance structure, it is necessary to design decision-making processes, roles, and responsibilities that facilitate effective oversight and prioritisation. This is critical for enabling high-quality decision making, at speed, over the course of a multi-year transformation.
Appoint superstars – great teams don’t happen by accident
Assembling a skilled TMO team is critical to success. Recruiting experienced professionals with a unique blend of transformation, change management, and industry expertise will create a high-performing TMO. The best TMO professionals typically have a background in project and line management roles across business consulting, programme management, strategy, and operations, combined with strong leadership and communication skills.
Leverage the discipline
A smart implementation approach is crucial, including timelines and key targets to guide the TMO’s establishment and ongoing activities, and to ensure it is positioned suitably to both harness and challenge internal processes and systems. Optimising the TMO’s performance is essential. Regular assessment of the TMO’s effectiveness – using performance metrics and feedback from staff and customers – will drive continuous improvement and ensure value delivery.
Overall, implementing a TMO requires a thoughtful and strategic approach but, when done effectively, it can unlock significant value in complex transformations.
TMO vs. PMO: Which is better for delivering change?
The traditional project management office (PMO) and the emerging transformation management office (TMO) have different focuses, goals, and scopes. The PMO is primarily responsible for ensuring that individual projects are delivered on time, within budget, and meet specific goals. In contrast, the TMO takes a holistic view of transformation programmes, including multiple interdependent projects, to ensure they align with the organisation’s overall strategy, vision, and goals.
Key differences between a TMO and a PMO
Discipline | PMO | TMO |
Focus | Project-centric | Transformation-centric |
Objectives | On-time delivery, budget management, project quality | Alignment with organisation's overall strategy, value creation, benefit realisation |
Scope | Independent or single projects | Programmes consisting of interdependent projects |
Governance | Project governance structures, steering committees | Transformation governance and decision-making forums |
Risk Management | Project-specific risks and issues | Enterprise-level risks and issues, proactive mitigation, and contingency planning |
Change Management | Project-level communication and engagement | Programme-level change management strategy, culture shaping and sustaining |
Performance Management | Project-specific metrics and key performance indicators | Value-based performance metrics, continuous value tracking and optimisation |
A TMO is better suited to address the specific challenges of complex transformations because it takes a broader view of the programme, focuses on alignment with the organisation’s overall strategy, and prioritises value creation and benefit realisation. While a PMO is still valuable for managing individual projects, a TMO offers a more comprehensive approach to managing large-scale, interdependent transformation programmes.
Conclusion: leveraging TMOs to unlock value
The TMO is a distinct and critical function designed to unlock value in complex transformations, not merely a repackaged PMO. Implementing a TMO can significantly improve an organisation’s chances of a successful transformation, ensuring that the substantial investments made in time and resources are not wasted, but instead deliver tangible and lasting benefits.
As the pace of change continues to accelerate, organisations must be prepared to adapt and evolve to maintain their competitive edge. A TMO can help companies navigate the complexities of transformation, delivering targeted results and ensuring the long-term success of their change initiatives. By embracing the TMO concept and leveraging its unique capabilities, organisations can not only survive but thrive in today’s rapidly changing business landscape.
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About the Authors
Chris Tomlinson is Muuto Consulting’s Managing Director. He specialises in the design and execution of complex global transformation programmes, focusing on organisational restructuring and post-merger integration.
Paul Coxhead is a Director at Muuto Consulting. His professional focus is on management of enterprise-level changes, especially digital transformation. He works with senior leaders and teams to architect and mobilise high-performing TMOs.
References
Nohria, N. & Beer M. (2000). Cracking the Code of Change. HBR Magazine.
Americas’ SAP Users’ Group (ASUG). (2021). The Foundation of Shell’s SAP S/4HANA Transformation.
McKinsey. (2020). Overcoming the challenge of change.
Project Management Institute (PMI). (2021). Delivering Value through Transformation Management Offices.
Kotter, J. P. (1996). Leading Change. Harvard Business Review Press.
Drucker, P. (1999). Management Challenges for the 21st Century. Harper Business.
