What To Expect From Agile

In the Netherlands, ING is the number one commercial bank in the country serving clients ranging from medium-sized businesses to global corporations, which include three-quarters of all Dutch businesses. ING WB is a market leader in trade finance, equity capital, and mergers and acquisitions. After merging two different operations in 2007 (Postbank and ING), the company realized they needed to structure the organization and processes in a more flexible way to stay competitive and in the lightning-fast digital marketplace. The top executives began a research process inspired by companies like Spotify, Amazon, and Zappos. For the three of them, agile methods resulted in improved customer orientation and employee engagement. Supported by ING board, the company began the process to shift to agile as top executives also realized empowerment for the base of the organizational pyramid was part of the change. During the previous and following year to 2015 one-third of the senior managers left the company as they were to embrace the new way or leave the company.

As the agile organizational structure is very common for new software or e-business companies while they have software-oriented processes across the entire organization, few traditional companies are using agile methodologies across most of their product and services development teams. Many banks across the world have digital units to develop and release mobile apps or website features quickly. But those groups usually remain disconnected from the rest of the IT organization and the rest of the company. By 2016, 80% of US companies had at least one form of agile running. But the adoption for established companies and more for those running under waterfall models creates a major cultural shift for employees and management.

ING faced a 4 steps plan during their agile implementation:

• Getting Stakeholders support: Top executives introduced agile to a non-agile related board before implementing any major organizational change. After explaining why the company needed to adapt to a more flexible approach as e-business companies where leading on agile methods and its impact for competitiveness they got stakeholders positive support. Another concerned group was regulators, ING executives had to make clear about how compliance and legal functions would continue to be managed in the traditional way.
• Build the structure around customers: Changing from process oriented to customer-oriented was a disruptive redefinition of the company structure. The move for this was to create specific mini-structures to address particular customer segments.
• Balance oversight and autonomy for employees: Agile is about empowerment but banking industry relies also on supervision. While keeping their compliance and legal structure and process, as usual, ING moved to a more open review process to ensure proper follow up for teams.
• Providing employees with more opportunities: For agile structures, there is a risk for employees to become too task-oriented and results focused on burning them out. As part of the learning process, ING created a hybrid way between the regular HR career map and agile weekly meetings for coaching and support.

By 2017, eighteen months later the company improved their Net Promoter Score from -21% to -7% also creating annual savings close to $330 million dollars. Their cost to income ratio dropped from 65% to 51%, all this while the transformation process was not finished.

Personal Conclusion

In my experience, working for a more than a century ago organization trying to move from waterfall-oriented structure to a more flexible one, not agile perse, the shift is a major cultural challenge that is really hard to digest for many organizations. ING example as a bank corporation, one of the tightest industries around the world, being able to disrupt their corporate structure moving from process oriented to customer oriented company and delivering results in 18 months is a world-class example. According to McKinsey, to deploy agile, companies must alter their operating models and organizational structures. This kind of exercise may result in a major time and money investment project. Agile adoption requires for many companies to start managing the project portfolio and not just doing a thing “on the fly”. As agile is a very flexible approach it requires more previous planning and requirements grooming to let things flow in a smoother way.

Agile is not about letting everyone do what they want or just working things without planning and documenting as many people may think. Agile is about solving problems faster and getting into a viable product without the regular bureaucratic and multi-level steps. While moving from a process-oriented standard to a Customer focused organization, the main issue for executives is to set up the proper controls to empower people across the organization. Shifting to agile can be as demanding as any major ERP implementation project because they both address the entire organization. ING case is one of the best execution projects I have ever seen, since the involvement of top management and shareholders until the successful step by step delivery and change management concerns.