How far should one push the goal of universal standardization vs. line-of-business autonomy?
Many of our clients ask for help in achieving the seemingly altruistic goal of enterprise-wide standardization. This may involve anything from universal business processes, standardized technology platforms, alignment on reports/analytics, or harmonization of governance models. In reality, each of the various business units to be impacted by such an effort (Manufacturing vs. IT vs. Operations vs. R&D…) is unique by nature, with different needs and priorities. Is there a happy medium between these two extremes?
For example, in one case, we were brought in to align the project & portfolio management (PPM) capabilities across six of the primary lines of business at a global insurance company: Life & Protection, Asset Management, Individual Savings & Retirement, etc. We conducted workshops with representation from each group, and started to identify the current PPM state and maturity, options for a desired, harmonized future state, and roadmaps for phased implementations. The Asset Management group quickly broke off, however, due to the privacy and confidentiality of their project data – a valid need for separation, but this lead to the group’s complete isolation. The other lines of business viewed this as the Asset Management group “going rogue” and all the other groups decided to spin away from the standardized/common solution.
In another situation, my team was tasked with designing and implementing a common solution across all commodity and entities (Electric, Gas, Steam, business subsidiaries, etc.) at a major metropolitan utility company. During the due diligence phase of understanding and documenting the “as is” processes, we quickly realized that a fully standardized solution is neither possible nor desirable. The project work and the challenges faced by each group were truly unique and needed to be managed with a higher degree of autonomy. Instead, our goal became to align to a common foundation – same technology platform, same financial management processes, common governance models, universal reporting – but, to allow each group to expand and grow, as necessary. For example, the Gas group added capabilities to track units (linear distance of pipeline completed, or the number of customers impacted). Another portfolio added the capability to optimize at the program level, and track at the project level.
Across the extremes of 100% standardization vs. 100% autonomy, there is an ideal middle ground that should be the target. It will differ for every business organization, and there is no official textbook definition to determine what is universally “best.” Early on, you need to decide how far the needle should be allowed to swing in either direction across the spectrum. Solicit buy-in from each business unit on what should be common, and then enforce those standards. From there, based on the necessary capabilities, maturity, uniqueness, etc., let the groups grow individually. The results will be better for each group individually and collectively.