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Design Thinking with SAP: "Transformation-Lag": Mastering the time between thoughtsand impact

Posted by Nicolas Schobinger Oct 29, 2014

"Lag" - the scientific time between stimulus and response, is also a factor in business strategy execution. I

call it Transformation-Lag and I define it as the time it takes for strategic thoughts to make impact. For our

business at SAP Services - Professional Services in Tech - I estimate the transformation-lag to be around six

quarters.

Why does it matter?

If you want to get change executed, you've got to know your Transformation-Lag and how to influence it. If you

don't, strategy execution is at risk. Knowing your transformation-lag also helps in communication across your

company. Other businesses might have different lag, and executives might not understand (or accept) why

yours may be different.

At SAP Services, our business is an accumulation of IT implementation projects. They often have a duration of

several quarters and once they're started, it's difficult to introduce strategic change into the contracts. Therefore

change is mostly introduced in upcoming projects, not in currently running ones.

Design Thinking with SAP: "Transformation-Lag": Mastering the time between thoughts and impact

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Transformation Lag exemplified for an IT Services Business

The above illustration is a schematic representation of our transformation-lag. The flow of projects is the purple

diagonal line, switching to blue for projects aligned to the new strategy. At a certain point 50% of the business

is aligned (the red vertical bar). What are the hydraulics here?

Let's look above at the Strategy Phase:

• Yellow - In May, we start looking at key changes needed. This typically takes three months andincludes a lot of decision making

• Green - Our determined changes are then translated into budgeting guidance for the organisation• Grey - Finally, our local teams prepare for the execution phase in launch-sessions titled "Field Kick-

Offs"

Next, let's examine the Execution Phase:Once the sales people are briefed at Field Kick-Offs, they will start

to reflect the strategy in their sales cycles. If you take a short cycle of about three months, we will see the first

projects aligned to the new strategy emerge after Q1. But, as you can see from the schematic,it won't be until

October that we'll see more than 50% of our projects aligned to the new strategy.

That is why our Transformation Lag is labeled at 18 months.

Design Thinking with SAP: "Transformation-Lag": Mastering the time between thoughts and impact

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Understanding and mastering your lag is key to your strategy execution success. For our business, I've learned

to respect four critical success factors:

1. Timing: Meeting corporate deadlines (like guidelines, budgets or comp plans) is key if you don't want tomiss a whole year/cycle

2. Customers: Pushing sales to inject the change as soon as possible for every new project will helpshorten the lag. With a parallelisation approach, you can shorten this even more.

3. Capacity: Hiring ahead of the curve is an investment too often postponed or omitted which thenlengthens the lag.

4. Enablement: Cascading the classic way takes time and the change gets diluted over time. Alternateapproaches can densify this

Depending on your transformation lag, you might end up with an offset between strategy chatter and business

reality. This can lead to tense conversations, and in certain cases frustration. In those cases, you will need to

deploy smart mobilisation approaches to bridge this offset.

No matter what business you are in, transformation-lag is too often neglected - but understanding and

mastering it is the key for getting results.

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