THE NEW STRATEGIC IMPERATIVE - ENTERPRISE AGILITY IN FINANCIAL SERVICES - Accenture
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ENTERPRISE AGILITY IN FINANCIAL SERVICES THE NEW STRATEGIC IMPERATIVE
OVERVIEW
TRUE AGILITY
CALLS FOR A
NEW APPROACH
Enterprise agility—the ability to respond rapidly to
opportunities and disruption—is a strategic imperative for
financial services (FS) organizations. Yet it is proving elusive.
Following our 2017 Financial Services Change and opportunities across all facets of the
Survey1 of more than 800 industry executives, we business, while maturing the stabilizing cultural
conducted further largescale research involving and governance spine of the organization.
more than 3,500 employees of FS companies, This requires an approach that is more
using our proprietary Transformation GPS and transformational than traditional—agility
Agility Index analytical tools2. These results cannot be built using the command and control
combined give a unique insight into the state of approaches of the past.
change and agility within the industry.
Nor is it something that can be gained by
In a volatile world, agility is required to respond focusing on a few select areas. In this report
and adapt to a changing and uncertain we address the eight key areas, each of which
environment. Our research shows that true needs to be optimized if true agility is to be
enterprise agility delivers significant financial attained: leadership, culture, agile change,
benefits, giving the organization more than risk and governance, funding and investment,
double the probability of achieving top-quartile organization, channels and operations, and
results compared to the industry average. It also technology and data.
shows that FS firms on average score low on
speed and stability, the two key elements that No organization in FS has completely mastered
comprise enterprise agility. However, a small enterprise agility, but many are on the way.
group of change leaders in FS are getting better There are practical steps that can accelerate the
results. They are moving faster, embracing digital, journey, and we have helped many banks and
developing an agile change capability, and insurers take strides towards enterprise agility.
rewiring their enterprise for speed and stability.
To find out more and get started on your
To achieve true enterprise agility, firms must enterprise agility journey, please contact Andy
move beyond agile methodologies in IT or Young (andrew.s.young@accenture.com), Andrew
on isolated change programs—they must Woolf (andrew.woolf@accenture.com) or James
develop responsiveness to market forces Tabernor (james.o.tabernor@accenture.com).
2
ABOUT THE
RESEARCH
This report draws, for its conclusions and recommendations, on a
number of recent Accenture research studies. They include:
• The 2017 FS Change Survey, in which we interviewed 787 senior FS
executives who are responsible for developing their organizations’
change strategy and/or implementing their change programs. Within
the global sample, 292 respondents were insurers, 302 were bankers
and 193 were wealth and asset managers.
• Transformation GPS, an advanced, analytics-based system utilizing a
database of input from more than a million employees of some 220
organizations undergoing business transformations. By empirically
identifying the variables that have the greatest impact on the success
of such transformations, and measuring how individual organizations
are performing in terms of these variables, Transformation GPS is able
to replace intuition with facts and recommend specific, timely actions
that put the change program firmly on the path to high performance.
• The FS Agility Index Study, carried out by the Transformation GPS
research team, used a similar methodology with a sample of 3,500
employees within 17 FS organizations in 9 countries. Respondents
ranged from senior leadership to team members and spanned all
organizational functions. The aim was to gain a detailed insight into
how FS companies are performing in terms of the two key contributors
to organizational agility—velocity & adaptiveness and a foundational
base—and what they need to do to become more agile.
All of these surveys consisted of standardized questionnaires in which
respondents were asked to rate a variety of factors, some of which are
subjective. The results were used, among other things, to arrange the
respondents’ organizations in different groups, such as Change Leaders
and Truly Agile. While there is a risk that common rater bias amplified
the differences between some of these groups, analysis confirms that
the distinctions are sufficiently large and consistent to support the
conclusions derived from them.
3THE VALUE
IN A VOLATILE WORLD,
AGILITY IS THE NEW
STRATEGIC IMPERATIVE
Enterprise agility is both a strategic and a is caused by shifting regulation, new technology,
financial imperative for FS organizations. market volatility or changing customer demands.
However, a small number of banks and insurers—
First the strategic imperative. Many banks and the change leaders—have worked out how to
insurers are stuck in legacy business models and rewire their business for continuous change to
with propositions, operations, workforces and stay ahead of the market today and build the
technology that are slow to change. Accenture future business model in parallel.
research shows they may have experimented with
innovation, but they’ve failed to scale new ideas Going further than many previous studies,
with commercial value in their core business. Accenture research also shows that enterprise
These organizations remain at risk of slow agility delivers significant financial benefits. Truly
compression by market forces and niche digital agile firms are more than twice as likely as the
players entering the industry with new business average FS organization to achieve top-quartile
models. Incumbents often struggle to adapt to financial performance (55 percent versus 25
disruption and change in the market, whether it percent), while those companies rated ‘at risk’
are unlikely to achieve this (see Figure 2)3. Truly
agile firms show better long-term performance,
Figure 1. Pivoting to ‘the new’. How FS having achieved a 16 percent growth in EBITDA
organizations can gradually shift their focus from between 2007 and 2017, compared to 6 percent
their core business to new growth opportunities. for our database average and 3 percent for ‘at
risk’ organizations.
It seems a paradox, but as in many effective
entities, truly agile organizations run both fast
and slow systems:
NEW
• Fast: a network of connected subsystems and
TRANSFORM
THE CORE
BUSINESS capabilities that mobilize and respond rapidly to
external events and opportunities, driving speed
to value.
GROW
THE CORE MAKE A
WISE PIVOT
• Slow: a foundational base, or stabilizing
backbone, which comprises leadership, culture,
SCALE structures and enabling processes for control,
LEGACY
BUSINESS
THE NEW
coordination and effectiveness.
Time
4Figure 2. The probability of organizations with different enterprise agility ratings achieving
top-quartile financial performance (versus the average of 25%).
Source: Accenture Transformation GPS study.
CHAOTIC & TRULY AGILE
INCONSISTENT 12%
21%
55%
Velocity & Adaptiveness Index
29%
CAPITAL MARKETS
27%
4%
BANKING
FINANCIAL SERVICES
INSURANCE
AT RISK PLODDING ALONG
26% 42%
Stabilizing Backbone
Foundational Index
Base Index
X%: Proportion of all companies surveyed that fit into the respective quadrants
X%: Probability of companies in this quadrant achieving top-quartile financial results
Remember learning to ride a bike? Stability It is not for want of trying. FS firms are second
without speed meant you stood still, while speed only to software companies in their take-up
without stability was fun for a few seconds but of agile4. Many have started rolling out agile
led to a fall! This is particularly true in a regulated projects, but success levels vary and there is an
industry like FS, where falling off can have serious increasing realization that true agility requires
economic and customer consequences. In a more. To become truly agile, banks and insurers
volatile world, maintaining this balance is the key will need to rewire their businesses for speed
to long-term success, as it allows the organization and stability.
to sustain an elevated level of performance.
VELOCITY & ADAPTIVENESS
FS NEEDS TO SPEED UP, Four key elements contribute to the velocity &
AND STRENGTHEN ITS adaptiveness score of FS firms: speed to market,
FOUNDATIONAL BASE responding rapidly, exploiting opportunities,
and staying ahead. FS firms fall below the 50th
percentile on all four elements and the average
Based on our most recent study of approximately score puts them in the 39th percentile for this
3,500 participants, and as illustrated in Figure index. In other words, 61 percent of companies
2, financial services is in the ‘At Risk’ quadrant. in all sectors score higher. Insurance scored
In other words, it is slower and less stable on the lowest (16th percentile), with banking (43rd
average than our cross-industry benchmark, percentile) and capital markets (48th percentile)
which is based on more than 220 organizations faring better.
in 50 industry sectors. Moving a firm from the ‘At
Risk’ to the ‘Truly Agile’ quadrant hugely increases As Figure 3 shows, the speed to market score is
the probability of top quartile financial results. Put just below average (47th percentile), but those for
simply, this is an issue that the CEO and the entire responding rapidly (37th percentile), exploiting
C-suite need to care about. opportunities (30th percentile) and staying ahead
(26th percentile) are much lower. 5Figure 3. The FS industry scores below average for velocity & adaptiveness and its four elements.
Source: Accenture FS Agility Index Study
39
0
PERCENTILE
LOW V&A HIGH V&A 100
PERCENTILE
NORM
BANKING
CAPITAL MARKETS
INSURANCE
QUESTIONS
Quick to Responding Exploiting Staying
market. rapidly. opportunities. ahead.
47 37 30 26
PERCENTILE PERCENTILE PERCENTILE PERCENTILE
Note: differences are statistically significant at p = 0.01 level
These results are a concern because of the speed It’s important here to understand the distinction
of change in the market. A disruptive challenge between risk and uncertainty. With risk it is
to the entire value chain, while unlikely, is not possible to calculate—or at least estimate—the
impossible—when the Korean social messaging likelihood of a predictable event occurring and
platform Kakao launched a bank it signed up 1.5 therefore its expected cost / value. Uncertainty,
million customers in a week. What is more likely on the other hand, is less comprehensible and
is compressive disruption caused by smaller, calculable—we don’t know what we don’t know.
faster players such as TransferWise, Starling, Traditional risk management techniques work
Monzo, Revolut, Ripple and Lemonade, which are well for risk, but are not much help in managing
well positioned to target sections of the value uncertainty. In the absence of probability and
chain and claim small but valuable shares of the cost estimates it is difficult to rationally justify
customer base. any mitigating actions. As the world became
more volatile this was one of the key reasons why
FS organizations are well aware of the need for agile approaches were developed: to navigate
speed. Seventy-nine percent of executives said uncertainty by learning as you go.
shareholders expect the benefits of change to
be delivered within 18 months or less5. Clearly, This ability—to continuously and rapidly read
the days are long gone when protracted multi- the environment, change course, and learn from
year programs were acceptable. However, the results of change—is an essential element of
speed should be considered in the context of velocity & adaptiveness. The Transformation GPS
high volatility. Many organizations are able to survey examines all levels within participating
accelerate their change initiatives under stable organizations. One interesting result is that
conditions, but those that have been trained the velocity & adaptiveness scores for middle
to avoid uncertainty struggle when conditions management (17th percentile) and regional and
become unpredictable. business unit leadership (3rd percentile) are
significantly lower than those for executives,
team leaders and team members. This reflects
6the difference between being at head office and governance. Confronted by a crisis, the reaction
at the edge of an organization, close to in-market of many leaders is to tighten control in the hope
pressures, regulator demands, competitor moves, of preventing a recurrence, to add bureaucracy,
and customer expectations and complaints. and to replace autonomy with instructions. But
In addition, in most FS firms, these middle complex governance, controls and hierarchy do
managers have borne the brunt of organizational little to banish uncertainty, eliminate risk and
cost cutting yet have limited decision-making build a strong foundational base. The solution
authority. Re-engaging them is critical, given the is more about organizational alignment than
delegated leadership required for agile change. rules and policies; more about accountable and
This will be difficult though, especially in global authentic leadership than management oversight;
markets and as regulators take more of a global and certainly about having a strong core of talent
viewpoint on consistency across with a positive mindset.
market operations.
FS scores in the 41st percentile for a foundational
base, with the three sectors—banking (34th
FOUNDATIONAL BASE percentile), insurance (42nd percentile) and
capital markets (44th percentile)—achieving
Some may be more surprised by financial similar ratings.
services’ low score for a foundational base,
or stabilizing backbone, than for velocity & Digging into the results, what stand out are
adaptiveness, especially given the emphasis on the scores for attracting the best talent (35th
stability, resilience and compliance since the percentile) and having the time, training and
global financial crisis. But the stability that comes resources to ensure quality service (26th
from prudent risk management and large capital percentile). These are of particular concern as
reserves contributes little to organizations’ ability the industry struggles to appeal to younger
to navigate confidently in turbulent conditions. generations and digital talent, who often prefer
to work in smaller organizations or in other
A foundational base is the product of effective industries.
leadership and culture, structures, governance
processes, coordination, prioritization and Again, the regional and business unit leadership
resource allocation. Of these, leadership group recorded the lowest scores
and culture are much more important than (29th percentile).
Figure 4. The FS industry also has a below-average foundational base—its stabilizing backbone.
Source: Accenture FS Agility Index Study
41
0
PERCENTILE
LOW FB HIGH FB 100
PERCENTILE
NORM
BANKING
CAPITAL MARKETS
INSURANCE
QUESTIONS
Avoiding Living Competing Paying Attracting Ensuring
politics. the code. on cost. competitively. the best. quality.
54 46 43 38 35 26
PERCENTILE PERCENTILE PERCENTILE PERCENTILE PERCENTILE PERCENTILE
Note: differences are statistically significant at p = 0.01 level
7WHY IS ENTERPRISE AGILITY CASE STUDY
SO ELUSIVE?
If enterprise agility offers so much strategic and MOVING FROM ‘AT RISK’
financial value, why is it so elusive for FS firms? TO ‘TRULY AGILE’
There are a number of reasons, none of which is
insurmountable. The benefits of overcoming the
FS firms are regulated and typically have a low barriers to enterprise agility were
risk appetite, which together may slow down underlined in our employees study.
response times and decision making. While this One of the mid-sized national banks
may be a consideration, many other industries in the sample had moved from the
also operate under regulation and there are ‘At Risk’ quadrant up into the ‘Truly
ways to create risk-appropriate and multi-speed
Agile’ quadrant in the space of
governance. Newer entrants typically feel less
constrained by regulation. two to three years. Starting from
a quasi-nationalized background
Legacy complexity is definitely a factor for most and taking a comprehensive
incumbent banks and insurers. It is very difficult approach to embracing agile,
to move quickly when the enterprise is complex digital and innovation, it rewired
and resistant to change. The legacy includes
complexity in current propositions, product back the whole enterprise for speed and
books, processes, technology and data. stability. The bank strengthened
its leadership, reset its culture and
The same challenges are present in the mind- people strategy, attracted new talent,
sets, skills and behaviors of leadership and the invested deeply in its workforce and
workforce. Historically, banks and insurers have
sparked new ways of working. It is
operated with a traditional mindset that avoids
risk and uncertainty at all costs. They have relied now seeing the benefits in speed to
on hierarchical structures, and have worked in value, market competitiveness and
siloes with a bias towards command and control. financial results.
Enterprise agility demands a different approach,
but this is unfamiliar and uncomfortable for many This is a good example of the merit
FS firms.
of a holistic approach, as opposed
In our FS Change Survey, executives rated the to one that regards agile, digital and
challenges their organizations face when trying innovation as point solutions. By
to change. Figure 5 shows a tightly packed creating a common foundation to
range of findings, with a dozen different barriers support the various elements, and
being experienced by more than two thirds of
including leadership and culture
respondents. Interestingly, the change leaders
more acutely perceived the same barriers as intrinsic to this foundation,
to change. However, they are simply better the bank increased its agility and
at removing, overcoming or isolating these rapidly converted that into business
obstacles. performance.
What is clear from this study is that the change
leaders, who are much more likely to derive
business benefits from their change programs experience the same challenges and barriers to
(100 percent compared to 71 percent for other agility as the rest of the industry, but understand
FS organizations), have better flexibility and that they can be constructively addressed.
agility (see Figure 6). These FS change leaders
8Figure 5. FS organizations face multiple barriers to change.
Source: Accenture 2017 FS Change Survey
Q. What are the biggest barriers to your organization’s ability to drive through change?
Availability of resources and appropriate skill set 14% 33% 32%
14% 35% 30%
13% 32% 31%
Fear of change from a poor track record 13% 28% 33%
11% 31% 31%
11% 31% 31%
Lack of strategic vision from leadership 12% 26% 30%
Lack of management support 13% 22% 31%
Serious barrier Barrier
Figure 6. FS change leaders have a high estimation of the agility of their organization.
Source: Accenture 2017 FS Change Survey
Q. How do your rate the flexibility and agility of your organization?
Highly Flexible
Flexible
47%
15%
47% 45%
Change Leaders Rest of Industry
910
THE ELEMENTS
REWIRING FINANCIAL
SERVICES FOR SPEED
AND STABILITY
With significant strategic and financial value at stake, it
is worth exploring what makes a truly agile organization.
Unfortunately there is no silver bullet—no single method,
technology or change to your organization structure that will
make you simultaneously fast and stable. Yet our research
has provided insights into the key elements that are known to
contribute to enterprise agility. In this section we look at the
following:
3. AGILE 5. FUNDING AND 9. TECHNOLOGY
1. LEADERSHIP CHANGE INVESTMENT 7. WORKFORCE AND DATA
2. CULTURE 4. RISK AND 6. REWIRING THE 8. CHANNELS AND
GOVERNANCE ORGANIZATION OPERATIONS
111. LEADERSHIP & VISION
CASE STUDY
AT ALL LEVELS
It sounds like a cliché, but truly agile COLLABORATION FOR
organizations put their people first. Leadership
THE TOP 200
at all levels has the biggest impact on
business performance during any period of
transformational change6. Leadership is crucial
Customer service is a strategic
to fostering agility, primarily by modifying the imperative for this Accenture
corporate mindset and culture and in that way client, and to enhance it
creating a conducive environment for other kinds the organization needed a
of agile operational changes.
strong foundation of effective
In a truly agile organization leadership roles collaboration between leaders and
change. Senior leaders need to set the vision employees. We worked directly
and direction, create clear priorities, and
with the bank’s top 200 leaders to
then provide the right environment for agility
across the enterprise and for effective agile help develop their collaboration
change. An essential part of this is how senior with each other and with the rest
executives grow strong change leaders at the of the organization. We did this
team-leadership, middle-management and
senior-management levels. Put simply, truly agile
through collaboration coaching, a
organizations have more leaders committed to collaboration behavior framework,
change at all levels of their organization (see kick-start and pop-up challenges
Figure 7). This requires empowerment and on the collaboration platform, and
distributed authority, which are cultural attributes
enabled by leadership. This is challenging to a podcast series focusing on the
achieve in FS organizations which, for many neuroscience and psychology of
years, have removed change and decision making collaboration. Most impactful was
authority from managers. In many organizations
millennial mentoring by talented
we work with, we need to help managers at all
levels become ready to lead. and digital-savvy graduates.
Together we achieved a significant
Being a leader in financial services is not easy. uplift in collaboration and
Great leaders are both more digital and more
human in their mindset. They understand
increased leadership confidence.
that in an environment of constant innovation
and disruption, success depends on valuing,
nurturing, respecting and empowering the
workforce. By shifting their focus from business
They recognize it as an opportunity for learning,
processes or labor management systems to
and support their employees as they reskill and
people they bring purpose, authenticity and
grow their resilience. Finally, they understand
the ‘truly human’ back to their organizations.
customers at a human level, empathize with their
They realize that true agility requires them to
needs and engage confidently in social media.
substitute a fixed mindset, characterized by
traditional management practices, with a growth
Change leaders have a much stronger vision of
mindset that empowers people and creates a
change (see Figure 8). Done well, change vision is
safe environment in which their organization can
derived from strategy (not just bottom-up inputs),
speed up.
is emotionally compelling (not just rationally
clear) and is effectively translated into investment
Leaders are aware of the major shifts occurring
priorities (not just words). The Transformation
in work and the fear this can create, so they
GPS study confirms that vision & direction has
manage disruption positively and with integrity.
three to four times greater impact on change
12Figure 7. Leadership at all levels has the greatest impact on the realization of change benefits.
Source: Accenture 2017 FS Change Survey
Q. T
hinking about the change leadership and culture within your organization, do you agree with
these statements?
A. Agree + Strongly Agree
Change Leaders
Rest of the Industry
94% 63% 87% 63%
Senior leaders provide the sponsorship Team leaders actively support
for transformational change programs and commit to the change process
benefits realization than any other factor7. This Setting a clear vision also means saying no to
is because, in any period of transformational other changes and activities. Often, executives
change, it creates clarity of direction and set too many competing priorities, spreading
motivates action. their time and their key people too thinly over
multiple ‘side of desk’ projects.
In a volatile operating environment, a clear vision
allows the organization to constantly realign back To maintain forward momentum as change
to what really matters. We are not talking about progresses, senior leaders need to clear the path
the hollow mission statement or cascading of of organizational obstacles such as conflicting
targets without any strategic context. The vision agendas or uncertainty about the future business
must be co-created, continually revised to guide model. Achieving this requires collaboration with
the evolving organization, and communicated in peers and subordinates, enabling the correct
a way that is both rationally clear and emotionally priorities to emerge. Leaders have a key role
compelling. in sensing change and looking outside-in. The
market and wider environment move so quickly
As the organization leadership shifts its emphasis that the process of collecting and reviewing
from controlling individual actions to aligning relevant data, making decisions and acting on
autonomous teams and individuals around a them needs to be continuous. Where disruption
shared intent, it becomes essential that the vision looms or opportunities beckon, leaders have a key
is actionable. Each team and individual must be role in shifting focus and resources to act quickly.
able to tie their work, actions and decisions back
to the vision—ideally by themselves. This can be This entrepreneurial mindset and growth bias
challenging, especially in global and complex FS can be difficult to inculcate, especially in the
organizations or for operational teams not at the many organizations where, for the last ten
frontline with customers. years, managers have been driven to achieve
compliance and cost reduction, and where the
13focus has been on the formal organization. In the customer and the business within the agile
agile enterprise the focus is on leaders’ networks delivery teams, and help the teams prioritize and
of diverse stakeholders that give them the data deliver the highest priority change.
and insights needed to develop a
broad perspective. Great product owners are typically make-or-break
for agile initiatives, but they are normally a level
Senior leaders need to delegate decisions or two down from the board. For instance, at one
more effectively through the organization. In large retailer the product owner saw the digital
a regulated context, such as the UK’s senior unit expand from a single team in a basement to
manager regime, this does not mean abandoning more than 300 members representing multiple
executive accountability, but instead delegating disciplines and managing multiple release trains
decisions within clear parameters to leaders at and feature teams. However, it is difficult to free
a lower level who are ready and able to make up key talent to focus on being product owners,
effective and ethical decisions. as their operational demands deny them the time
for this role.
When senior leaders support their team members
in this way, the effectiveness of agile delivery Finding or developing sufficient numbers of
improves markedly. Local leaders within the product owners is therefore a challenge for many
bank or insurer’s operational and customer- banks and insurers. Product owners need to
facing areas become more confident in making understand their business area and what their
decisions relating to the overall business model customers need, they need to think ahead about
and priorities, having good access to insights and how customer service and value can be improved,
real-time analytics about their business area and they need to be able to dedicate time to work
and customers. with the delivery team. In a number of banks and
insurance companies we have helped develop
Some of these leaders will play specific product- cadres of new product owners and have given
manager or product-owner roles within agile them leverage through strong business analyst
change delivery. These leaders represent the support structures.
Figure 8. FS change leaders have clearer long-term vision of change in their organizations.
Source: Accenture 2017 FS Change Survey
Q. Do you agree that your organization has a clear vision of change over the next three years?
Agree
Strongly Agree
47%
46%
53%
22%
Change Leaders Rest of
the Industry
14Senior leaders have a responsibility to free up
these individuals and create the organizational CASE STUDY
support for these difficult roles. In most cases,
senior leaders then need to make a conscious
decision to step back from the detail. This entails AGILE TRANSFORMATION—
allowing local leaders and self-managing teams TOP-DOWN AND BOTTOM-UP
to make their own decisions aligned to the vision
and within clear mandates, intervening only when To improve customers’ experience
performance or changes go off-track or when a
of its insurance and wealth
shift in direction is required. Executives should
avoid overturning product manager and owner management products, a leading
decisions or interfering in the day-to-day running FS group wanted to move toward
of self-managing teams. They need to be ready a more agile way of working. It
to support and coach local leaders and product
owners when they escalate, and encourage
took a simultaneous top-down and
greater self-sufficiency. bottom-up approach, engaging
business leaders and enabling
Clearly, effective delegation does not mean teams. To set the foundation for a
senior leaders being distant or absent. They
know what is going on and have a clear view of more agile way of working and for
accountabilities across the organization as well as continuous improvement, it:
of delegated authorities, mandates and decision
rights. This reduces the risk of the duplication and • Produced a constantly evolving
confusion experienced by organizations in the playbook on ‘how to do agile’.
‘Chaotic & Inconsistent’ quadrant of our agility
index. In short, as in a good football team, each • Ran a comprehensive coaching
player knows their position and doesn’t chase the program for senior stakeholders,
ball around like you see in a kids’ match. enabling teams and providing
them with hands-on experience in
Equally, the work of the leadership team, a board
or executive committee, becomes that of an agile.
agile team. So when a strategic issue arises or
• Built a project-level agile capability
an opportunity presents itself, individual leaders
take accountability and organize the right multi- on business-critical projects
disciplinary response. Actions are collaborative, through intensive coaching of
but not everything requires consensus. product owners, scrum masters
This can be counter-cultural in many banks and
and business analysts.
insurance companies that rely on centralized, • Ran agile change leadership
consensus-based decision making. But it has
been shown, over and again, that people can be
forums to highlight and overcome
trusted to make the right decisions if they have a any adoption challenges at
clear understanding of the common objective and regional level.
the opportunity to choose to commit to it. Where
mistakes do happen, senior leaders must set the • Ran a number of highly interactive
tone by helping product owners and teams treat board-level sessions with business
these as learning experiences. When things do and functional leaders.
go wrong or hit an obstacle, senior leaders must
resist the temptation to direct task level activities, A key part of this journey was
thus disempowering the organization again. identifying and acting on changes
in leadership behavior and
decision-making.
152. CULTURE – AGILE WAYS
CASE STUDY
OF WORKING
An agile enterprise is built on a culture that BREAKTHROUGH INNOVATION
consists of critical values. Included among these
are an unwavering focus on customer value,
AT ONE OF THE WORLD’S MOST
a commitment to innovation, enterprise-wide CREATIVE ORGANIZATIONS
transparency, collaboration within and between
teams, an approach to talent that emphasizes We worked with one of the world’s
leadership rather than management, the most advanced engineering
empowerment of people to make decisions, and companies to help it achieve
continuous learning. These are not attributes
breakthrough innovation for its
found universally in the DNA of banks and
insurers. To develop them as working practices future business. We assembled six
the organization needs leadership role models, directors from the organization,
time and space for individuals and teams to learn four Accenture strategists and
to change their practices—which is rare in a world
that prioritizes efficiency—and the removal of
eight designers from Fjord to
organizational barriers. form one ‘super group’ that
operated like a start-up during
Agile organizations spend time understanding an intense 100-day innovation
their customers, their needs, and how they
experience the services they provide to them. cycle. Using design thinking, the
They put this understanding at the heart of their team collaboratively generated
decisions and actions. They treat complaints hundreds of ideas, refined
and other feedback not solely as performance
them into many concepts, and
metrics but as things that happen to real people,
and as a valuable source of ideas for becoming ultimately arrived at one minimum
more relevant to them. Turning these ideas lovable service that was made real
into appealing, disruptive offerings is not a by developing it into a functioning
supplementary pursuit undertaken when time and
resources permit, but an integral part of their core
prototype. This exercise created
production process that is vital to satisfying their a repeatable framework for
customers. For many banks and insurers, this is innovation and produced an idea
about rediscovering their customer and that is the foundation of a major
growth focus.
new business line.
Innovation, creativity and experimentation are
actively encouraged. While many FS organizations
have labs, fintech partners and digital challenger moments in their relationships and lives. This
brands, leaders in agile organizations send entails focusing the human effort where and when
the message that innovation is something for it matters most.
everyone, not a few. They provide an environment
that is inclusive, allowing for creativity and novel Truly agile organizations understand that close
thinking, and that allows teams to fail fast—and collaboration within and between teams is
safely—so that they may progress rapidly. They the key to success in the knowledge-worker
quickly scale the ideas that work, using them to economy—there is no other way to make sense
generate commercial and customer value. of the rapidly changing environment or narrow
the time gap between idea and value realization.
They also understand how to blend and This collaboration includes participation and co-
coordinate digital and human interactions to give creation with colleagues, customers and external
customers the most appropriate experiences, partners to incorporate different perspectives
support and advice to be relevant at the key and test and learn rapidly. This is best done by
16creating new team constructs in the right physical
and virtual working environments. It can be
reinforced by rewarding collective performance
CASE STUDY
and achievement of team goals, not just
individual efforts. A CONSTANTLY IMPROVING
Agility depends on a culture of learning and a
ORGANIZATION
growth mindset. This is challenging in an FS This online investment company
environment that has focused on formal and
mandatory training—reading the procedure was recognized as a disruptor
manual to capitalize on prior knowledge—rather when it launched. It set up its
than learning, which is the development of organizational structures to
new knowledge. To be truly agile, banks and
ensure constant improvement.
insurers need to ‘relearn how to learn’ and must
develop a growth mindset focused on constant Today, it has more than $10 billion
improvement, using experience to learn and in assets under management.
resilience gained from setbacks. Using agile What did it take?
rituals like retrospectives can support these
reflective learning practices. • It works in groups of small, self-
managing and project-based
Leadership practices go a long way to shaping teams.
corporate culture, and this, like trust, builds over
time. A healthy culture requires clear intent and • Teams and work are organized
tone from the top, but it does not always come to allow for failure and iteration,
easily. Some leaders—but not all—will let go of
some decisions, learn from failure, embrace talent
making them more innovative.
and manage in more open ways. These, in theory, • Managers exist not to track
are good things. Yet most senior managers work progress but to challenge,
were rewarded and promoted for exactly the
opposite in the past, especially since the 2008 support and guide.
financial crisis. So for many leaders, until they • The focus of performance
become ‘the way we work around here’, these
behaviors would make them uncomfortable.
management is not hours
To build a culture in which they are the norm, clocked but productivity levels or
the formal organizational practices—such as the end result.
measurement, performance management,
rewards, capital allocation—would need to be • Teams communicate constantly,
changed. Senior leaders and culture carriers for either by grouping themselves
the organization need to empower their people to together in a common area or
make these changes, monitoring them and, when
using messaging and other
necessary, intervening to ensure that the steady
reinforcement of trust and a healthy culture is not digital tools.
interrupted. • Every employee has access to
a common set of enterprise
performance goals and data,
increasing transparency.
173. EMBRACING AGILE Figure 9. FS change leaders use agile method-
ologies for more of their change programs.
CHANGE – BEING AGILE & Source: Accenture 2017 FS Change Survey
NOT ‘ONE SIZE FITS ALL’ Q. Approximately what percentage of your
change programs employ agile technology?
Change in a truly agile enterprise becomes less
of a ‘one off’ event and more a constant part of Mean for FS Change Leaders: 60% of all change
the business. Agile techniques are grounded in programs
iterative and continuous delivery and have been
used successfully in software development for Mean for the Rest of the Industry: 37% of all
over two decades. Now, in an effort to increase change programs
speed to value and respond more rapidly to
changing business conditions, FS change leaders
are using significantly more agile delivery (for 60 None
percent of programs on average8) across all parts
of the value chain (Figure 9). Change leaders 80%-100%
are also using agile more effectively, and see
significantly higher value in terms of outcomes,
60%-79%
speed, collaboration, transparency and cost
(Figure 10).
40%-59%
One of the defining attributes of FS change
leaders is that their workforces thrive on fast- 20%-39%
paced change (83 percent agree, compared to
51 percent of other organizations9) and we know
Up to 19%
that high performing teams typically have 30 - 50
percent more change going on10.
0% 10% 20% 30% 40%
However, agile is neither a silver bullet nor a
panacea. Truly agile organizations will typically agile change are suitable where benefits can be
use a variety of delivery models and the right incrementally delivered, where speed is important
one for the change outcome. Agile and scaled or where there is volatility. Many organizations in
Figure 10. FS change leaders derive greater benefits from their use of agile.
Source: Accenture 2017 FS Change Survey
Q. A
gile methodologies have delivered the following benefits for my organization:
A. A
gree + Strongly Agree
83% 86% 82% 87%
79%
57% 56% 62% 58%
50%
Better change outcomes Faster delivery on projects Increased collaboration Improved stakeholder Lower costs & more
Faster delivery on projects Improved stakeholder
& benefits & innovation involvement efficient change projects
involvement change projects
Change Leaders
Change Rest of the Industry
Industry
18FS seek to retain linear ‘waterfall’ or
programmatic delivery for in-flight programs CASE STUDY
and higher-risk changes, where failure would
be catastrophic or where benefits are inherently
back-ended. Examples are major deadline-critical TRULY AGILE ‘MODEL BANK’
compliance programs or core-banking and AT GLOBAL FINANCIAL
payments-system changes. However, we are INSTITUTION
seeing FS organizations take on more complex,
scaled and transformational changes using This global financial institution
agile approaches as they mature their capability
(see alongside for a case study of core-banking
offers retail and wholesale
changes implemented with scaled agile). Change banking services to customers in
leaders make these decisions deliberately, rather over 40 countries. It is investing
than leaving the choice to personal preferences heavily in digital transformation
or random factors; they understand that the
different delivery models have different uses to become the best-in-class omni-
and value. channel bank, create a scalable
and digital financial platform
There is more continuous change across the
and improve the customer
enterprise, due to the escalation of volatility and
opportunity in the market and as a consequence experience. Accenture is utilizing
of the mindset of continuous improvement and scaled agile methodologies to
learning discussed above. implement and scale its new
In addition to their ability to manage a
digital banking platform across
greater volume of continuous change, truly more than 90 countries. This
agile organizations are capable of more includes organizational change
transformational change. These step changes management, impact analysis,
are often intended to release untapped value,
create new value streams or develop the future country-level governance and
business. They require deeper change capability data migration, and integration
and exceptional change leadership. deployment tracking. This
program is delivering complex
It is worth noting that the word ‘transformation’
is often misused. Transformation fundamentally new change on a monthly
changes the business: what it is, the way it does frequency, which is possible only
things and the way it serves its customers. It is a because of the scaled agile
leap forward into the new and often the unknown.
It is a deliberate process, but is often better
delivery disciplines in place.
executed iteratively. There are several reasons
for this.
Finally, the behavior of customers and colleagues
is often most effectively changed by nudging and
Firstly, when leaping into the unknown, learning
layering up small changes, rather than imposing
can increase the benefit gained. One of
big, scary shifts.
Accenture’s clients field tested its ‘big bet’ after
a few iterations. The result was its core idea was
For large transformations, many organizations
doomed to failure, but a related concept was a
struggle to scale agile change effectively. The
hidden gem, uncovered by the customer tests.
most commonly cited reasons are a belief that
the company philosophy or culture is at odds with
Secondly, an incremental approach balanced with
core agile values (53 percent of FS executives), a
good architectural insight and release planning
lack of experience with agile methods
can lower the risks associated with exiting one’s
(41 percent) and a lack of management support
legacy or breaking with the past.
(42 percent)11.
194. RISK & GOVERNANCE –
CASE STUDY
SINGULAR, MULTI-SPEED
& RISK-APPROPRIATE SCALING AGILE WITH STRONG
Effective risk management and governance,
RISK GOVERNANCE
done well, empower leaders and create clarity This large global bank wanted to
regarding the operating parameters. These in
turn enable faster responses and decisions. In scale its agile ways of working,
some instances the risks are known. However, updating its change methods,
the threats that FS organizations face—such processes, tools, people
as cyber-attacks and money laundering—are
capability and governance to
constantly changing. There are also unknowns in
every market context, geo-political events being enable agile across its portfolio of
just one example. These risks are not only threats; programs. This work delivered a
they also create opportunity—insurance against new framework for agile delivery,
cyber-crime is increasingly popular among
businesses of all sizes.
embedded into the enterprise-
wide methods and aligned
Great risk management does not try to eliminate with technology delivery. The
all risks and uncertainties, a futile endeavor in updates enabled it to deal with
today’s volatile world. Yet in most banks and
insurance companies, risk and governance are a mixed portfolio of waterfall,
typically single speed (typically too slow), are hybrid, scaled agile, agile and
based on rules rather than principles (which continuous changes. Individual
disempowers leaders), and are not adjusted to
programs were coached through
the prevailing risk levels (one size fits all). Often,
decisions are unnecessarily escalated, to be made agile adoption and supported
by committees and then ignored or overturned. with training, while new ways of
In some organizations compliance has changed working and tools were adopted.
from being a mandate to a mindset, where the
default is always to err on the side of caution.
Risk, compliance, finance and
Truly agile companies will differentiate their audit functions were all brought
mitigation actions depending on the specific into the change early on, which
decision point at hand. secured their support.
A cornerstone of agility is having individually
accountable and empowered leaders who make
well-considered decisions quickly and iteratively. data and insight to increase pace and flexibility,
Let’s break that down. Firstly, decisions have clear especially as it relates to customer outcomes.
individual owners, who consult their stakeholders This information is shared openly within the
but take accountability, not always deferring organization and with less manual manipulation
to a committee. Secondly, decisions are made and effort. Accompanying this, there is a level
quickly based on the best information available of honesty about performance and status that
at the time, within the parameters allowed and means successes are celebrated and problem
by the people empowered to make them. Finally, areas are understood and addressed rapidly.
decisions are not ‘once and done’, as progress, Hoarding information or fudging reports are
feedback and results may inform a different no longer needed or accepted. However, this
course of direction. level of transparency can be challenging in FS
organizations that are starting to grapple with
Another cornerstone is transparency, which data privacy and data sharing.
must be balanced with the need to protect
certain information. Agile organizations use
20Figure 11. FS change leaders maintain a more disciplined approach to agile.
Source: Accenture 2017 FS Change Survey
Q. How regularly do you undertake the following as part of your agile process?
Change Leaders Rest of the Industry
‘Always’ ‘Always’
Release planning considers the business and
33% 39% 19% 31% 11%
customer impact
Subject matter experts are embedded in 29% 8%
33% 39% 16%
'sprints' or 'product reviews'
The end customer or change audience is 30% 6%
34% 37% 15%
involved as part of our agile process
We use techniques such as iterative 30% 7%
35% 35% 15%
prototyping and model office testing
We bring together small multi-disciplinary 25% 5%
34% 34% 14%
teams for 'sprints' (e.g. Scrum)
Agile teams work in a distributed model (i.e. 25% 7%
34% 40% 13%
not co-located)
Product owners and business executives are 30% 6%
35% 36% 12%
embedded in 'sprints'
Sometimes Often Always
One of the concerns we hear most often and benefits; status reporting based on burn
regarding agile is that it is an excuse to down/burn up; more frequent implementation;
eliminate planning, documentation and delivery benefits realization that happens earlier and
disciplines—and that the organization will lose more iteratively; and different business case
control over delivery. rules depending on the type of investment and
the policies for allocating capital. In particular,
Done properly, agile and scaled agile delivery key performance indicators focus more on
disciplines should lower execution risk and performance towards outcomes, speed to value
increase control over end outcomes. This is and predictability of delivery. Helping steering
because agile breaks delivery down into smaller committees and risk/audit functions adjust to
controllable increments, allows for learning along these changes is essential.
the way and creates transparency for everyone.
Planning is iterative, meaning plans remain The wider organizational support processes and
dynamic and relevant. governance need to be adapted too. Procurement
processes need to be accelerated to allow
Our 2017 FS Change Survey indicates these rapid and simple engagement of smaller fintech
disciplines need to be strengthened across the partners and to rapidly develop and test proofs of
industry. Change leaders, while not perfect, are concept. IT and risk processes need to be ready
more disciplined in their application of agile and to deal with new risks relating to cloud, data
see the results (Figure 11). privacy and cybersecurity. Risk and compliance
teams need to play a more active role in defining
Moving to more agile change within the portfolio a ‘safe future’, helping the product owners and
creates new governance demands, including the wider organization manage risk by being
non-sequential planning; frequent constructive involved in guiding and advising, rather than
changes in requirements; change control sitting at a distance behind policy and procedure.
reserved for fundamental shifts in scope, cost With agility being the most effective means of
21managing risk and navigating uncertainty, a to revenue actually declined slightly (Figure
continuous effort to improve agility is the best 12). Despite the need to respond to mounting
way to achieve these ends. disruption, and the accumulation record levels of
cash on their balance sheets, few are accelerating
Effective governance does not need to be slow. their investments in change, whether in current or
It can be done confidently, with decisions made new business activities. In fact, only one in three
ahead of them being needed (e.g. setting a risk have invested aggressively in new ventures. This
appetite around cloud or putting in place data is despite the fact that 54 percent of surveyed
sharing agreements) or through clear paths that executives from large organizations expect the
are appropriate to the risks and types of risk majority of their revenue in three years’ time to
faced, where immediate decisions are required. come from new businesses13.
Change leaders are exceptional at prioritizing
funding and investment—and understand the
5. FUNDING & INVESTMENT important messages these decisions send to
the organization. As Figure 13 shows, they have
– PRIORITIZED & DYNAMIC a clear view of the change portfolio. When
leadership ensures that the vision and purpose
One of the most difficult challenges for leaders of are clear and shared, agreement on priorities is
disrupted businesses is to allocate investments relatively easy to achieve; without it, building
successfully. On the one hand they need to agreement is often difficult and lacks rationality.
preserve and optimize their core business which—
despite the disruption threatening its long-term By prioritizing initiatives, FS change leaders can
relevance—is still the generator of most of their deliver greater value from their total change
revenue, profit and cash. On the other, their new investment. Their change portfolios are more
ventures need to be given adequate support to closely linked to the organization’s strategy and
prove themselves and mature. The questions of vision, and to some extent are decoupled from
how much to invest, where and how rapidly, tax a ‘same or a bit more/less every year’ annual
the brains of most executives today. planning cycle. Initiatives or business areas can
then be prioritized for return on investment and
An Accenture survey of 1,500 large organizations12 strategic alignment. Low-value or irrelevant
found that while total investment between initiatives can be stopped quickly. At Accenture,
2006 and 2016 increased, investment relative as we moved more than 60 percent of business
Figure 12. Investment by large organizations – most remain cautious.
Source: Accenture Research, Wise Pivot Diagnostic, 2017
22into ‘the new’—shifting our focus from traditional plans and business cases to justify the release
to emerging revenue sources in the space of a of full program funding, tranche funding can be
few years—we had to make deliberate decisions synchronized with defined change increments
to decouple funding from the ‘run’ plan and make and value delivered. Funding is not fully
big, bold bets in new acquisitions and areas such committed at the start of the year, allowing space
as security, digital and cloud. for new initiatives that need in-year funding.
Finance teams need to introduce new budget
and funding approaches, while maintaining
overall control (see Figure 14). Seed funding
creates space to exploit new opportunities
and quickly undertake proofs of concept,
experiments and prototypes. Instead of detailed
Figure 13. FS change leaders have a clearer view of their change portfolio.
Q. Do you agree your organization has a clear view of its change portfolio for the next 12 months?
Agree
Strongly Agree
60%
51%
47%
40% 25%
53%
Change Leaders Rest of
the Industry
Figure 14. The difference between conventional and tranche funding for change programs.
Classic Budget Budget for Agile Projects
Long cycles for Business / IT alignment Short cycles for Business / IT alignment
236. ORGANIZATION – A FOCUS Narrow specializations distant from other
specializations become a thing of the past too.
ON LIVING BUSINESS, NOT For instance, a number of banks and insurers have
reconfigured their organizations, for both run
NEW STRUCTURES and change activities, around customer journeys
or value chains (e.g. home buying), bringing
Organization structure can inhibit or facilitate together channel, operations, IT and business
enterprise agility. However, adopting a new change teams.
structure will not on its own create enterprise
agility. While each organization is unique, truly Decision making is affected. Decisions are best
agile organizations typically focus more on made closest to the work that is being done. Agile
purpose, outcomes and an ‘organic’ approach, organizations step back from detailed top-down
rather than mechanistically using fixed processes, planning, because in a volatile environment
structures and jobs to drive results. They these plans rarely endure and cannot be reset
recognize that human relationships and informal fast enough. Delegating decision making has
networks make businesses work, not the boxes been a challenging step for many of the banks
and lines on an organization chart. and insurers we have worked with, especially
in corporate and national cultures where there
In truly agile organizations, work is organized is high authority distance and deference to
differently. Teams become more important than hierarchical and consensus-based decision
organizational structures and individual superstar making. For delegation to be successful, teams
heroics. Teams become smaller, self-managing need to be empowered to make decisions,
and multi-disciplinary. They leverage the mandates and parameters need to be broad and
strengths of their diverse membership. They own clear (defining the space in which to perform) and
their outcomes and ideally have accountability people need time and support to adjust to making
for end-to-end services or products (internal more decisions.
or external). Teams allocate and prioritize their
own work, allowing them to weed out low value What is also changing is the work that is
and redundant tasks and address quality issues performed and who performs it. At an individual
rapidly. Redundant meetings and bureaucracy are level, roles are more fluid and broadly defined,
not tolerated for long, a result of applying lean allowing colleagues to work where and when
waste reduction and value stream optimization to they want, in order to contribute best to an
knowledge work. Crucially, these teams are made outcome. Roles and contribution become more
up of skilled, full-time and wholly focused team important than jobs. The workforce behind these
members; ‘side of desk’ is banned. tasks is more flexible, and includes the extended
workforce, artificial intelligence and ecosystem
Team leaders become the ‘first amongst partners.
equals’ whose contribution includes coaching,
challenging, guiding and supporting. Many find The workspace changes too. Work environments
this challenging, especially dealing with multi- are incredibly important as they can stimulate
directional feedback. creativity and wellbeing, or get in the way. They
need to be intentionally designed to enable
The wider organization becomes simpler, more collaboration, while also allowing different
flexible and modular. Leadership becomes spaces for deep thought and concentration.
experienced in rapidly bringing together new However, not all teams can be co-located.
teams around new issues and opportunities—but Indeed, Accenture runs hundreds of successful
also knows when teams have served their useful distributed agile teams, often across different
purpose, and then rapidly dissolves them. In both time zones and cultures. This requires a deliberate
cases, leaders help individuals handle the social effort to establish the right virtual workspace,
process of joining and leaving teams. including the best collaboration tools for
communication, connecting and shared working.
While hierarchy will continue to be required for Agile rituals become even more important—for
some parts of the organization in most regulatory instance, a daily stand-up at a time that suits the
jurisdictions, structure becomes less relevant.
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