Global business Agility report: SEB 15 December 2021
Stefan Davill, Operative Sponsor Agile Transformation at SEB, discusses how SEB eschews a survival mentality for a more positive outlook that is focused on thriving.
As financial institutions recognize the need to respond faster to changing customer habits, they have turned to Agile. An Agile way of working equips employees and teams with the methods and processes to fail fast, learn, and bring solutions to the market quicker. For this report and series of interviews, we collaborated with ADAPTOVATE, a leading global transformation consultancy. We spoke with transformation leaders from institutions all over the world. We asked them to describe their successes and challenges in adopting Agile.
What does the term "Agility" mean at your institution? Does it correspond to a specific function and responsibility or is it a cross-cutting philosophy that structures the transformation of your organization? If the latter, who is ultimately responsible?
All Agile transformations are different. Just putting Agile in the headline will make everybody respond in a different way. At SEB, it is an intangible corporate asset. We do have a definition: the ability to prepare and react to change in a competitive market and pivot not to survive, but to actually thrive. It is a muscle that we want to build. The COVID crisis is a very good example of why you should be prepared to throw your existing business plan out the window and sit together and say “Okay, we have to adapt to this major change.”
Sometimes financial institutions maintain a survival mentality. I think we should have more of a positive mindset, focused on thriving. Agility for us is really on the group level. It is our ability on a group level to prepare and act quickly. And who is overall responsible for it? I would say that our group executive Committee is on paper, but in reality, it's me.
In your quest for greater Agility, which areas are most likely to be transformed? Which areas, on the other hand, do not require immediate transformation, either because they are already "Agile" or because they do not need to be transformed?
We have done a lot of knowledge exchanges with other large Swedish companies like Volvo, Scania and others. As a bank, we took a bold decision to use Agile for all areas. This means anything that requires development. When you're part of the financial environment, you need to do a lot of reporting to FSAs. Then you have colleagues who are all of a sudden having meetings over video. Then we have clients who are taking out mortgages or corporate financing. And then we have potential customers. So that means a lot of other people and organizations. Some people have said “We don't really involve financials. We don't really involve business planning. We don't really involve compliance.” But we believe they are all in fact a major part of the story.
Anything that needs development is part of the solution. The interesting thing is that there is no other industry that is doing everything from a data set like the financial industry. We are producers, we are wholesale, and we are retail.
Third, it's not run by technicians, it's run by economists and lawyers. That's why this is a big challenge. For example, last week our Group Executive Committee – the people at the highest level – presented their business plans to our Agile organization. We have sliced the bank into 14 different value streams and we call them domains. We had all these top executives, including our CEO, who presented our objectives. Essentially all elements are areas where you need development and continuous maintenance.
Among your Agile transformation projects, which ones have been (or still are) the most difficult to lead, but for which you feel that a major step has finally been taken? What was the difficulty and what has finally enabled success on these projects?
We don’t refer to them as projects. We are trying to see how we can fund and maintain value stream initiatives. For example, with mortgages, how can we increase and fund and invest? And then create a design flow and manage value. The most difficult ones are the ones that cut across multiple domains, because it is quite easy if you have only one value stream, like financing, but anything that goes across multiple areas is a big challenge.
So what is our approach? I wouldn’t say that we are in the Champions League on this one, but I think where we've made some good progress and have these really collaborative platforms. If you're responsible for a value stream and there are seven different priority lists in the bank, that's not going to work. Let's make one priority list. Then we can disagree, but at least we have one priority list. Second, we break it down as much as possible. We don't want people to come to work, we want work to come to people. One key KPI is time to start. If somebody says this is super important we must do this, it might still take two months to create the project. But when we say that this is really important and are able to break it down into different features and give it to existing teams, we are able to do that within 5 days.
What has been key to shortening that time frame?
Unfortunately, we are not able to do it all the time, but it's easy for people to understand what we're talking about because they understand when it takes two months to start something. It's about having clear and existing teams in our value streams.
We also have a common pace in the bank, our program increment plannings (PIs). We have 175 teams at the bank. We are all planning at the same pace for one week. Two years ago, all our teams were planning in a completely unaligned manner. Now, all parts of the bank – 4,000 people – meet every quarter to do the PI planning. We actually started at 12 weeks to begin, then brought it down to four weeks, now our planning is down to within one week.
If you talk about the network effect, such as what you have with Bitcoin or the fax machine, every new member of the community adds value. We have achieved an internal network effect with the chief product owner, with the chief Scrum master, a business owner, etc. Now people know there is a person that can help me with my cross needs or a backlog activity. Previously, they had no clue who to ask.
How would you describe the benefits of increased Agility? Have you been able to measure them? Can you share some figures on how you are able to capture benefits?
We have our guiding principles. But then have what is called ‘committed versus delivered.’ So we make our commitments and then come back to how we have delivered on our top priorities. I think in the beginning we had a commitment of 30%. Now we are at 70%. If you're prioritizing correctly, the results will come. As I talked about previously, going from 8 priority lists to one priority list helps provide a full understanding for the different backlogs. If you have one combined value stream – with tech, business, and operations - they have three different targets: business wants to sell more, operations wants to have low costs, tech wants to have high stability in the ID systems. But you can describe the future state in two minutes. Once we have done that, everybody can go home and optimize further for themselves, and that creates the future state.
Can you provide examples of obstacles that could not be overcome in your Agile projects – such as regulation, technology, behavioral, or organizational?
It is very much about behavior. From this top session that we had last week, everybody is optimizing for themselves, everybody considers their work the most important thing. Everyone is wearing their team shirt, but who is wearing their country shirt? You might play for PSG, but who's playing for France? They might be playing for accounts and payments, but who's playing for SEB? That's one of the main constraints.
Another challenge is that people have a very high understanding for their own complexity and not for others. It is difficult to really visualize and understand what other people do. When people use the word capacity, they are often referring to people and money. But a lot of capacity in a bank is people development. A lot of the time people are trained in just one area. If you want to have the Agility or flexibility to say, “We are happy with markets right now so let’s shift our focus to mortgage,” that’s not just a switch we can flip. That requires retraining and relearning for 200-500 people. It's people who have to stop working in one area and shift to another, if that’s the new funding priority. That's the biggest challenge is that the people don't really understand how the organization is working, and that's why it's so important to bring in this system thinking. The CEO is the chief scrum master of the bank. How can you design for flow and manage value?
In terms of Agility, could you provide one or two examples of successful collaborations between departments in your institution, or between your institution and external service providers?
We have 63 different tribes and teams and they all said that we are now working much better together. We have a much better understanding of different areas. We are delivering in a more focused and faster manner. We have a card business which is the biggest in the Nordics. One of our largest clients is an airline and they wanted to improve their card. A card is one of the few physical things you can actually put your hands on in banking. They said it was so great to come and be close to the people actually working on the product development. It was so good for the product development team to talk about desired outcomes and not just features. It was faster and better and more collaborative. Imagine if you are the airline and you're thinking about which relationship you want to build over a 10-year basis, this way of working is attractive.
We are delivering faster. We are delivering more, but the number one thing that I'm very happy about is that everybody says our collaboration is so much better. The word collaboration is Greek and it means working together. It’s not presenting to each other, it's not sending PowerPoints back and forth. People say we now truly work together and it's great.
What organization and incentives have you put in place internally to ensure the success of Agility-related projects? Which of these were the most successful?
It's actually coming back to where I started because we didn’t avoid the tough challenges like financial steering and business planning. It is so easy to have the business planning as something separate and once the business people are done they can send the order to development. Our domains plan together and that is crucial.
I would say that the number one success factor is breaking down different functions as close as possible to value delivered in order for them to be able to take the right decisions on an individual or team level. We might be employed for driving change but so many others are not employed for driving change. Their job is maintaining stability, especially in banking, risk, compliance, etc. They are not against change, they just have a different assignment. It’s okay that they still have reports to produce but when they put their change hats on, they can become part of the solution.
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