Problem
ING's Journey to Agility
"In the summer of 2015, the Dutch banking group ING took another step in its journey to become more agile. Using benchmark principles and practices from firms with agile reputations, such as Google and Zappos, they made significant changes in their structures, systems, and processes. In fact, ING executives admit that the current changes are only the latest in what has been a long transformation journey. Bart Schlatman, the former chief operating officer at ING, noted, "We have been on a transformation journey for around 10 years now, but there can be no let up. Transformation is not just moving an organization from A to B, because once you hit B, you need to move to C, and when you arrive at C, you probably have to start thinking about D."
Although the company was performing well, consumer behaviors and expectations were rapidly changing. Digital technologies were enabling customers to access services at different times and places as well as through different channels. ING had to rethink the customer experience, and finding a way to work in a more nimble fashion became a high priority to deliver on that strategy.
Reflecting the research on agility-and not just parroting the latest fad-ING defined agility as the ability of an organization to rapidly adapt and steer itself in new directions. The organization understood that agility was not just about new ways of developing software, working in multidisciplinary teams, or selecting particular practices, like scrum or stand-up meetings. Agility required letting go of existing organization structures and governance; it had to be viewed as a systemic organization property.
Looking back, this latest change consisted of three broad activities: repositioning the culture, organizing for flexibility, and implementing the new design. First, any attempt to become more agile must eventually address the question of culture and identity, and ING did not view it separately from other changes. Culture and identity needed to be integrated with everything the organization did.
Early in the transformation process, executives began to realize that a central part of ING's identity revolved, ultimately, around the idea that it was a technology company operating in the financial-services business. Over the years, managing technology had become more important than leveraging it for the customer. When a group of ING executives visited Google, they were amazed by how excited young people were in discussing the possibilities of technology. They were proud to be engineers, and ING executives wondered why its engineers had lost that passion.
One answer was found in a common question. When talented young people were asked to name their dream company from an employment perspective, the places they cited all had in common a particular way of working in small teams with a clear and common purpose, interacting closely with customers, and constantly reshaping what they were working on.
Second, to support the intentional emergence of a new, more engineering-oriented culture and identity, ING made a variety of organizational changes to increase its flexibility. At the core of these changes was a new structure with a clear external/customer-oriented focus, clear roles, and clear management processes. ING was convinced that any structure with the usual hierarchical trappings would hinder agility.
The central feature of the structure was a nine-person, multi-functional "squad." Each squad was relatively self-managing, worked in a single location, was accountable for a specific customer-related objective, could change its membership as it evolved, and disbanded when the objective was achieved. Each squad was required to write down its mission and objectives, agree on a way of measuring its impact on clients, and decide how to manage its daily activities. This gave the squad a lot of autonomy to collect feedback from customers and continuously improve its products.
Multiple squads with related missions were assembled into a "tribe" with one member taking responsibility for establishing priorities and reviewing results through a new quarterly business review process, allocating resources, and interfacing with other tribes to ensure a coordinated effort. Managers share information about these activities transparently. Communities of practice that review learnings across squads and OD practitioners who serve as coaches to individuals and teams support this core structure.
Changes in HR practices complimented the structure and management process changes. For example, ING switched to a peer-to-peer hiring model where teams select their own members. It also changed its new employee orientation process to include a full week of customer call center work as well as stints in other key functions of the company. Finally, ING altered in substantive ways how information was communicated in the organization.
The final aspect of ING's transformation was the implementation process. With few exceptions, it implemented the changes in ways that reflected how they wanted the organization to operate. For example, executives spent an enormous amount of energy role modeling the ownership, empowerment, and customer-centric behaviors that reflect an agile culture. Executives spent two months and five off-site retreats developing the new organization and established five or six experimental squads. Learnings from these tests were used to adapt the design elements. After that, the organization was able to concentrate on getting the new organization staffed up.
By their own account, it took about eight or nine months from the completion of the strategy and vision in late 2014 to the point where the new organization and way of working had been implemented in the headquarters organization. That is, ING initially started with a focus on its headquarters organization. This included about 3,500 members from marketing, product management, channel management, and IT development. The thinking was that these functions represented the core work processes of the organization and that organizing these units to support agility would represent an important example for the rest of the organization.
A big part of that was integrating product development and operations activities into what ING called "DevOps." It provided the capability to make continuous change and delivery in IT. The squads work together in the same buildings and constantly test what they might offer customers in an environment where there are no managers watching over them and slowing down progress. Focusing on DevOps has enabled ING to develop innovative new product features and position itself as the number-one mobile bank in the Netherlands.
Other functions, like HR, finance, the branches, the call centers, and operations were encouraged to adopt agility in ways that were appropriate for them. For example, operations and call centers used self-steering teams that took on more responsibility and less oversight from management. The sales force and branch network organizations used other tools and tactics.
One particularly intense and top-down part of the implementation process was the staffing of the new organization. ING recognized that selecting people with the right attitudes, mindsets, and cultural fit was more important to effectiveness than knowledge or experience. As a result, ING effectively suspended the employment of its headquarters staff and asked them to re-apply for open positions. Nearly 40 percent of the people selected were in different positions compared to their positions before the change and importantly, age was not a factor. Many of the "older" people adapted more quickly than the younger ones.
The new approach at ING has already improved time to market, boosted employee engagement, and increased productivity. For example, ING is releasing software on a two- to three-week basis rather than five to six times a year, and its Net Promoter Score, a widely used measure of customer satisfaction, and employee-engagement score are up multiple points.
Among the lessons learned at ING are that agility is not a purpose in itself but the means to a broader purpose. It's important to ask why agility is important, to make sure everyone understands the purpose being served by agility. ING has also learned that the leadership team must be "all in" to make a transformation of this magnitude a success. Third, becoming an agile organization requires sacrifices and a willingness to give up fundamental parts of your current way of working. People need to know what they will be giving up. This is especially true for senior executives who must often let go of traditional hierarchical control, formal meetings, and detailed planning and budgeting." (Cummings & Worley, 2020).
• Why did ING continue on its journey towards becoming more agile?
• What are/are not the next steps for ING in becoming more agile?
• If you were part of the ING team, what would you suggest to improve the process and why?