Tesco proven target operating model
Tesco operating model was transformed without disrupting the flow of goods to and off the shelves. The modelling carried out identified potential shortfalls and pitfalls that were addressed before implementation, reducing cost, reputational damage and senior management time.
Tesco decided to move from opening 16 hours 6 days a week to 24/7. One of the fundamental changes to their operating model was that they now had to continuously replenish their shelves while open to the public.
Without the opportunity to close during the transition 16/6 to 24/7 the suite of changes had to be accomplished with as little disruption to customers as possible.
CITI, working with Tesco's senior management teams, designed the target operating model (TOM) - or blueprint - of the new way of working and 'proved' that it could sustain the customer value proposition and business value proposition (benefits) for the vision of a 24/7 operation with its associated continuous replenishment demand.
Six months into the programme there was little discernible progress and growing dissent amongst stakeholders. Projects were competing rather than collaborating, change initiatives were being undermined by conflicting objectives between projects, with the performance impact on stores often negative. It was widely regarded by the different stakeholder groups that the project activity was failing to deliver business benefit.
Senior management were becoming frustrated by rising costs, delays and the lack of investment payback.
Approach to solution
Working initially with the various governance groups, CITI translated the stated strategy and vision of the overall programme into "as is" and "to be" statements which in turn were mapped into the expected benefits, the explicit and implicit changes in processes, people and performance that were to give rise to the benefits, and the outputs that the projects were to deliver to give rise or to support the changes.
Through facilitating workshops and using desk-based analyses we developed and validated among all stakeholders a coherent strategic vision and initiatives for the overall transformational change initiative.
We used our proprietary BIP mapping (benefits > impacts > products) toolkit to develop the value model which directly links the benefits to the changes that are to be introduced in the organisation - and proving that these are able to give rise to those benefits and to what extent. The developed value model included specific metrics and KPIs for the changes that were to be introduced in Tesco.
CITI through the use of proprietary methodologies and toolkit provided evidence (visual and numerical) about the consequences of restructuring the projects, the relative effectiveness of different sequencing of many of the change initiatives, and the impact on benefits by de-scoping and re-scoping work streams.
It also became possible for Tesco to set up and manage the transformational change into a set of three 'tranches' - each with its own set of outcomes, and each taking the organisation to a new, stable state on its journey to the Board's vision of the future state.
As a result of the success of CITI's methodology and practice Tesco's appetite for change increased, and before the first programme was concluded it had been overtaken by another major transformation programme which, from the start, used CITI's methodology and toolkit.
Together with the associated skills transfer from CITI to the client, they are able to successfully embark on other change initiatives with confidence. The importance of establishing clear 'line of sight' between the change vision, the work that needs to be undertaken and the benefits to be realised is clearly understood.
Models / tools used
Benefit - impact - product modelling
Programme management toolkit
"The classic training model, taking individuals out of the business to sit in a classroom for a week at a time, was not going to work for us. But at the same time, we knew we needed to raise our game in managing change. I have to say, your people are brilliant!"
Head of business change, Legal & General