Other parts of this series:
- Agility is the strategic imperative for financial services firms
- Financial services needs to speed up efforts in the agility race
- To win in agility, financial services firms need to strengthen stability
- How to rewire financial services for true agility
- How to rewire leadership, governance and funding for true agility
- How to rewire culture, workforce and organisation for true agility
- How to rewire channels, operations and technology for true agility
- Agile in financial services: No silver bullet, no panacea
- Navigating the agility journey in financial services
- Reflections on an agile future in financial services
In my last post, I shared the key elements financial services (FS) firms need to consider when rewiring their enterprises for true agility.
Let’s take a look at the first group of elements that will help rewire your organisation: leadership, governance and funding. These three elements are critical to how FS organisations tick and increasing their speed and stability.
Leadership needs to work differently in an agile organization. Senior leaders play more of a role setting the direction, priorities and clearing obstacles, allowing more delegation to empowered leaders and product owners across the business. This is a challenge for FS firms, many of which have relied on a top-down and centralised decision-making. When senior leaders delegate decisions to local leaders, the effectiveness of agile delivery skyrockets. Local leaders within the bank or insurer’s operational and customer facing areas become more confident in making decisions relating to the overall business model and priorities, having good access to insights and real time analytics about their business are and customers. In a regulated environment it is essential delegation is clear both in who is empowered, their responsibilities and sufficiently broad parameters to their decision-making mandate.
Agile organisations tend to create alignment more through vision and purpose, relying less on traditional levers of hierarchical authority. This allows faster response and iterative changes, while remaining aligned to an overall direction. Our Transformation GPS Study shows that vision and direction has three to four times greater impact on benefits realization than any other factor. For FS leadership teams this increases the emphasis on clearly communicating the vision and purpose, but also being clear what initiatives should be stopped.
Our research shows that one of the defining attributes of change leaders in FS is that their workforces thrive on fast-paced change (83 per cent, compared to 51 per cent of their peers). The vision and purpose are clear (40 per cent vs. 25 per cent of their peers), enabling the workforce to rapidly innovate and deliver the results needed.
Historically governance, risk management and regulation have been seen as reasons (sometimes excuses) to go slower. Yet, governance and effective risk management, when executed properly, can empower leaders and create clarity regarding operating parameters. These in turn enable faster responses and decisions that are better informed using data and iteratively revisited. Also, when used well the iterative approach at the heart of being agile, increases control through learning and handling unpredictability. Truly agile FS firms will differentiate and accelerate their risk mitigation actions, governance processes and support processes (e.g. procurement, HR, finance) to be appropriate to the risks being faced. Transparency is also crucial to enterprise agility, where data and insights help determine the pace and flexibility of projects and teams, being honest about both successes and learning from failures.
There are plenty of myths about agile being ‘fragile’ or lacking discipline. The reality is when applied well and at scale, more discipline is present in an agile approach than in a traditional environment. Agile approaches, because they facilitate iteratively learning and decision making, actually improve control in an uncertain environment.
Prioritizing funding is another key determining factor in the success of agile enterprises. Unprioritized investment leads to weak and unfocused execution at slower pace, often cited as ‘side of desk’. According to our 2017 FS Change Survey, change leaders have a clearer view of their change investments. When leadership shares a clear vision and purpose, agreement on priorities is relatively easy to achieve; without it, building consensus is difficult and lacks rationality. By prioritizing initiatives FS change leaders can deliver greater value from their total change investment. Alongside this, seed funding for innovation and critical short term initiatives and tranche funding for agile changes need to be established, not solely relying on annual funding cycles and elongated full programme funding commitments.
Leadership, governance and funding are three vital elements in increasing agility. Done well these can support faster response, but also improve stability and control.
Just as in cycling, you need that stability and control to take opportunities and to avoid obstacles and crashes in a race. Leaders in true enterprise agility, much like cyclists, show the decisiveness to make decisions within an overall race strategy, act on decisions (e.g. breaking from the peloton) and review decisions as conditions change. In that sense, enterprise agility is really like good race management.
In my next post, I will delve further into the next group of key elements for enterprise agility: culture, workforce and organization.
To find out more about enterprise agility in FS or to join our FS Change Director Forum, please contact me here, or on Twitter @AndyYoungACN.
To learn more, register to download: Enterprise Agility in Financial Services: The New Strategic Imperative and listen and subscribe to our podcast, Talking Agility.