Beyond the PMO: how leading organizations set up to deliver change

Ask the leaders of a large organization who owns change, and you will often hear four different answers: the strategy team, the PMO, the change specialists in HR, or a newly created Transformation Office. Each of these offices exists for a good reason, and each was designed for a different job. Problems start when an organization expects one of them to do the work of all four.

This article looks at what each office is built to do, where each one stops short, and how organizations combine them as they mature.

The strategy office: from plan to execution

Robert Kaplan and David Norton made the case for an Office of Strategy Management in Harvard Business Review in 2005. Their starting point was the gap between strategy and execution. In a typical organization, they found, 95 percent of employees do not understand the strategy, 60 percent of organizations do not link their budgets to strategic priorities, and 70 percent of middle managers and more than 90 percent of front-line employees have compensation that is not linked to it.

Their answer was a small corporate unit, often six to eight people in a large company, that oversees strategy from formulation through execution. It manages and cascades objectives and KPIs, makes sure the strategy shapes budgets, operating plans and HR, and helps business units turn it into action. Importantly, it facilitates rather than dictates. It does not set strategy for the business units, and it does not take over finance, IT or HR.

Where it stops short: a strategy office keeps direction and priorities aligned, but it is not built to drive hundreds of initiatives week by week, or to prove that they reached the bottom line.

The project office: delivery and governance

The project management office is the most familiar of the four. PMI describes a range of models: supportive PMOs that provide templates, training and good practices; controlling PMOs that enforce frameworks, tools and audits; and enterprise PMOs that set standards, allocate resources across the portfolio and keep it aligned with strategy.

That alignment pays off. In PMI’s 2017 Pulse of the Profession, organizations with an enterprise PMO aligned to strategy reported 38 percent more projects meeting their original goals, and 33 percent fewer projects deemed failures.

Where it stops short: a PMO is designed to keep projects on time, on budget and in scope. It tracks initiatives through meetings, checklists and status reports, but on its own it rarely changes how fast the organization moves. And on time and on budget is not the same as value in the P&L.

The change office: moving people, not just plans

Projects deliver new processes and systems, but people still have to adopt them. A change management office, sometimes called a change center of excellence, builds that capability across the organization. It gives change practitioners consistent methods and one central point of contact, and signals that leadership is serious about the people side of change.

The case for it is strong. In Prosci’s Best Practices in Change Management research, 88 percent of projects with excellent change management met or exceeded their objectives, against 13 percent of those with poor change management, a roughly sevenfold difference. Yet only 38 percent of organizations in Prosci’s 2019 benchmarking had a change management office, and nearly half of those offices had just two to five people, most often housed in the PMO or HR.

Where it stops short: a change office enables adoption, but it does not own the targets or the financial results of the program.

The Transformation Office: driving results

A Transformation Office is built for organization-wide change with hard financial targets. It is typically an independent unit, led by a chief transformation officer with a clear mandate from the CEO. It sets targets rigorously, keeps score in financial terms, maintains a single source of truth for every initiative and runs short, action-oriented weekly meetings that remove roadblocks and hold owners to account.

Two features set it apart. It measures performance independently of the teams delivering it. And it does not own the targets itself: line leaders and initiative owners do. Its job is to increase and accelerate the impact of the transformation, and to raise the pace of the whole organization along the way.

A PMO asks whether the work is on track. A Transformation Office asks whether the results are in the P&L.

Where each office stops short

None of the four is wrong. Each covers part of what a transformation needs. Gaps appear when some of these responsibilities have no clear owner, or when an office is stretched to cover a job it was not designed for.

A maturity path, not a choice

Most organizations build these capabilities over time. A basic setup has a strategy office, or a strategy function, that sets direction. A standard setup adds a project office to govern delivery. An advanced setup adds a change office to bring people along. The most mature organizations combine a strategy office with a Transformation Office that covers project delivery and change in one team, and steers on bottom-line impact.

Combining them does not mean the PMO disappears. In complex organizations it remains essential for day-to-day tracking. The point is that the capabilities work best when they sit together. Prosci’s research points the same way: practitioners most often named strategy, transformation and the PMO as the most effective homes for change management.

Signs you have outgrown your current setup

A quick test for the leadership team.

1. 1Projects report green, but the results do not show up in the P&L.
2. 2Strategy and budgets are built in separate processes, by separate teams.
3. 3Change management is handled project by project, with a different approach each time.
4. 4Nobody can say, this week, which initiatives are behind and by how much.
5. 5Decisions stall because no one has the mandate to escalate them.

If two or more sound familiar, the next step on the maturity path is probably overdue.