Global business Agility report: de Volksbank 23 December 2021

Ton Hagens, Director Portfolio Management & Expertise Lead at de Volksbank, discusses the constantly changing meaning of Agile, and what it ultimately signifies when done well. 

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? 

The word Agility has no real meaning anymore. Nowadays, it’s used for everything. It is used in a good way and in negative ways. But it is used so much that it ends up having no actual meaning. 

What are some of the negative ways you are referring to? 

If somebody shows up late to a meeting, then the answer is not “I’m sorry” it’s “We are Agile.” This suggests that being late is OK because we are flexible and agile. The ‘Agile’ word translates into this flexibility and less strictness, which is not productive. Adding ‘Agile’ as a word to everything results in having Agile leaders, Agile organizations, and Agile teams. And for each combination it has a different meaning. 

We Dutch tend to use English words instead of our native language. When ‘Agile’ was added to our Dutch language it was used to fit whatever purpose people wanted. Whereas in English, adding the word agile to something, results in a more or less correct meaning.

So if you’re in IT, ‘Agile’ is translated to Scrum. If you are in management, it is pretty much everything that is flexible and dynamic. You are adapting to circumstances is what it means in boardrooms. That is why I hardly ever use the word, and only in very generic terms. 

What do you use instead?

My favorite way of coping with this, because I've done many Agile transformations, is selecting new words. I invent a new word or I use a word that has no particular meaning yet. At Volksbank, we call it the ‘Volksbank Collaboration Model’, which is the operating model and use the word ‘Customerize’ to indicate our goals. We try not to use the word ‘Agile’ to explain our operating model. I did the same for another bank. We named it ‘Fast Forward’. We choose new words which we can define the meaning ourselves. The reality is nevertheless that people keep on using the word ‘Agile’ but I try not to use it as a defined way of working nor behavior.

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? 

Let me give you an answer I would typically give instead of answering your question directly. Most banks that I know of, need a transformation that goes beyond IT, which would typically be called a BizDev transformation, in all business areas. I'm a big fan of also incorporating the functions in the same transformation, this means including Risk and Finance. I've done research in at least five banks now, where there was a lot of objection against including Finance in the same ‘Agile’ operating model. I did not find good reasons not to do it only many advantages. Often there is objection to migrating Finance and Risk to a different operating model. But the need for it – and this is why I have difficulty with the question – is evidently higher in the risk and finance areas because they are exploding in size. They are typically not every lean, too costly, with a limited efficiency. There are many reasons to go for an enhanced operating model. That is why I say let’s do all of the bank. I have not found areas where it is not wise to use Agile. The ones that are typically against it are the ones that need it the most. IT departments are usually in favor and they need it relatively the least. The transformations I have done in the last 5-6 years included all the areas of the bank. 

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?

The most difficult I encountered was HR. HR departments are very interested to look at and introduce Agile ways of working. But they are the toughest to change. In departments such as HR there is a profound belief that knowledge and expertise are the primary skill for leadership too, resulting in an organization where the best professional becomes manager. These departments have a natural tendency to not believe that multidisciplinary teams can be successful. This is clearly an impediment for creating multidisciplinary teams. As having multidisciplinary team means expertise is shared and the team are working together towards a client-oriented actual result.  

Another reason might be the fact that they don’t have actual customers. HR has internal clients or external parties that are not real clients from a commercial perspective. If you have real clients, it is easier to think and organize around clients. 

Altogether this explains why HR is even more difficult to transform than Risk and Finance. 

Could you provide one or two examples of successful collaborations between departments in your institution, or between your institution and external service providers?

One big element of transformation is building trust. How do you build trust between leaders and teams? But also how do you build trust across teams? What helps in building trust is having a common goal. Define the goals well, preferably in client terms, because clients are the glue in an organization. After defining goals around happy clients, create social networks to ensure that people get to know and value each other. Give employees a slight push into working in a multidisciplinary team and working in a different way. Most employees will typically like working in different ways and the sharing then becomes much easier. 

Another element I have applied many times over the years, and it’s my favorite element of transformation, is to introduce a new way of learning. Most people like to learn, so you can tap into that by using the right tools, using coaching to support the process, and ensure that these tools are applicable inside the job. What I always do is promote learning in an active way. I actually do internal marketing campaigns to get people to learn. We do knowledge festivals, we organize summer and winter school festivals. We market it in a modern way and classes are given by colleagues. 

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?

It is very important that you define metrics upfront. This way, you can prove to yourself, but also others, that you are making progress. You need to decide which metrics you are going to use. The metrics I like best, one revolves around speed: how fast are you delivering change? One I use for this is epic completion ratio, which is the trend on duration between the moment a change is first described and when it is delivered. 

The second metric is the predictability, which is the difference between the promised delivery date and the actual delivery date. It shows how good are we at predicting the readiness of something. 

Velocity is debated a lot. I tend not to use it and prefer the epic completion ratio. 

Of course, we have Agile maturity schemes too, but they have less metric value. They are more qualitative and give you a sense on how well the teams are performing. They provide good suggestions for improvements. But as proof of success in organizational terms, I tend to use epic completion ratio and predictability.

What about things like value to the business or cost savings?

They apply as well, but they are not good metrics for transformational success because cost savings, while it is of course a benefit often realized in an Agile transformation, it's seldom the reason why you transform. Most of the reasons that I know about are speed, becoming faster in change. Anyway, the transformation is often a one-time cost saving subsequently merged with many other changes, so this is not a good metric to follow. It’s not a way I measure success from a transformation perspective. 

I recommend not to use business value as a metric but solely focus on client value. Increasing client value is the cornerstone of any agile organization and the number one metric to measure and steer on.

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?

We don’t give out financial bonuses so we don’t have incentives like this that would speed up teams. We do it in different ways, because we believe that employees are not just motivated by the money at the end of the month. We know that employee happiness is very much linked to client happiness. We know that client orientation and being able to interact directly with clients instead of going through three other departments is one of the major things that make colleagues happy to work with us. 

Also, when we transform, we empower leaders of teams to make their own decisions, which addresses another area employees dislike. They resent having the long and endless decision processes so they are motivated now being able to decide themselves. 

Another element is fixed budgets, meaning there is no budget process anymore. All of the capacity is assigned to the teams, so you can make your own decisions. 

Then there is the social cohesion in teams. We know that people like working for our company because they like their team. So, we invest a lot in social cohesion. We invest in coaching. We invest in all kinds of interventions, meetups, etc. 

One interesting thing to note is that working in teams can sometimes be negative. Peer pressure on performance can be higher than the typical boss in the past. I have sometimes witnessed more burnouts, because of the social pressure in the team. 

Eventually it all comes down to doing by learning improved ways of working, leading to a results-oriented collaboration. So, invest in development and coaching of all teams and especially leaders to come to a successful transformation.

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