How can you define an appropriate unit of transformation value (UTV) for an operating model transformation? The UTV aims to quantify the overall impact and progress of an operating model transformation by considering multiple dimensions of the transformation, such as efficiency, effectiveness, agility, and innovation.
To calculate the UTV, you can follow these steps:
Identify Key Performance Indicators (KPIs) relevant to the transformation: Select KPIs that represent different aspects of the operating model transformation, such as cost savings, revenue growth, process improvements, employee satisfaction, and customer satisfaction.
Establish a baseline: Determine the starting point for each KPI before the transformation begins. This will serve as a reference point to measure progress.
Set targets: Establish specific, measurable, achievable, relevant, and time-bound (SMART) targets for each KPI. These targets should be aligned with the overall goals of the transformation.
Measure progress: Periodically collect data on each KPI to track progress toward the targets. This could be done monthly, quarterly, or as appropriate based on the nature of the transformation.
Normalise the data: Scale the progress of each KPI relative to its target, ensuring that all KPIs have equal weight in the final index.
Calculate the UTV: Compute the average of the normalised KPI values to obtain the UTV. This will provide a single, comprehensive metric that represents the transformation’s overall value.
The UTV can be used to track the progress of the operating model transformation over time and help stakeholders make informed decisions about resource allocation, prioritisation, and strategic direction. It’s important to note that the UTV should be adapted to the specific context of each transformation and periodically reviewed to ensure its relevance and accuracy.