ANZ Banking Group has revealed the full impact of its large-scale agile transformation, including how it created a new class of leaders and now handles the same workload with up to 30 percent less staff.
General manager of omnichannel Christian Venter - one of the key executives that led the agile transformation - used a slightly unusual forum in the Adobe Summit 2019 in Las Vegas to detail where ANZ’s move to large-scale agile had and hadn’t yet paid off.
ANZ’s transformation is a particularly influential case study in the adoption of ‘enterprise agile’, which is essentially an expansion of agile methodologies used by technology teams to other parts of an organisation.
Last year, Woolworths cited ANZ as a place it is “gleaning a lot of insights” to apply to its own organisation-wide agile transformation.
ANZ’s transformation is best known for two key pieces of work - new ways of leading (NWOL) and new ways of working (NWOW).
To date, the bank has couched NWOL mostly as a piece of work that led to the identification of “five behaviours” it now expects its leaders to exhibit, such as curiosity and empathy for others.
Meanwhile, the bank used its FY18 results at the end of October last year to declare it now has over 9000 people in Australian and Technology divisions working in agile teams - otherwise known as NWOW.
What’s now clear from Venter’s commentary at the Adobe Summit is the mechanics of how ANZ reached this point.
“This is going to be interesting for you. We took 9000 people and we asked them to reapply for their jobs - right from the senior leadership executives all the way down,” Venter said.
“I was one of those people. I ran this transformation program, and even though I ran it, I was out of a job at the end of it and had to reapply for one of the jobs within that process.
“It was an interesting experience - video interviews, psychological testing, showcases - all kinds of things that we did very differently to try and understand ‘are these the right people?’”
Some of the things that made it “interesting” were also patently uncomfortable for those that went through it.
“People said they didn't like the video interview process, it makes [them] scared, so we changed the way we did video interviews,” Venter said.
“There were just little things that we adapted all the way [through the transformation] to show staff that ‘hey, if you give us feedback, we will listen’.”
After re-applying for a role in the newly-agile ANZ, those that made the cut noticed a difference.
“We didn't select the same ‘usual suspects’ into the roles, and that was the thing that told our organisation we were serious about this,” Venter said.
“The ‘rock stars’ who got the big bonuses every year, who rode roughshod over people and left a trail of bodies in their wake, didn't get the jobs.
“Instead, it was a new kind of leader. And when we did that, the organisation knew we were serious. That's where the cultural transformation starts.”
Venter said that ANZ had been transparent with staff from the outset that NWOW would mean job losses.
“A lot of organisational transformations happen in a back room somewhere. There's an org chart and a consultancy in there with a red pen and they start putting crosses through names,” Venter said.
“We didn't do that. We literally created a glass room - we called it the fishbowl - and we ran this transformation [from it].
“We said to our staff, ‘Anyone can walk into that room anytime and look at anything on the wall and understand what we're doing’.
“Twice a week we ran pizza sessions with 70 people at a time. They'd come in, we would talk to them about the transformation and what we were doing.
“And we didn't hide the fact that we knew that this new model would need less people to do the same amount of work. But they understood.”
Just how many less people ANZ can get on without was on show in the FY18 results: it was revealed 5000 employees - or 11 percent of the Australian workforce - had left during that 12-month period.
Venter put some percentages around just how many staff were now needed in the agile bank.
“There are approximately 20 to 30 percent less people doing the same amount of work, and that comes at a saving,” he said.
Killing hand-offs
Venter said ANZ had three main reasons to pursue enterprise-wide agile transformation.
First, it wanted to increase its “speed to value”.
“Anyone can deliver a lot of features to market quickly but if they're not the things your customer values, then you're delivering the wrong thing quickly,” Venter said.
“So you need to be able to measure value.”
Second, the bank was in a war for talent. It saw the need to reinvent itself as “a great place to work” in order to attract the right people to come and work there.
Third, Venter said ANZ was keen to target silos.
“We wanted to break down silos, break down hand-offs and become a lot more efficient,” he said.
“In many organisations today, work is siloed: it comes in, it goes into one specialist team, it moves to the next, moves to the next, and it moves to the next. Those handoffs are killing your organisation right now.”
As NWOW was set up, Venter decided to measure the impact of hand-offs on ANZ processes.
“I took processes [from] across the bank, like onboarding new staff, getting new infrastructure set up, getting a new vendor on board, and measured how long it took and how many handoffs,” Venter said.
“The results were frightening. So we decided we had to change.”
Venter said the bank acted a bit like the medical industry, where it could take multiple doctors, referrals, consultations and tests to arrive at a diagnosis. Each step likely occurred in a different location, and the end result was the process took many weeks or months.
“Imagine having all the specialists in the same room, with the equipment and the machines that are needed to go through all at once,” he said.
“That's what we've done now. What we said is let's take all those separate teams - and for us that’s risk, procurement, audit, legal, marketing, technology - and put them in the same tribe and squad, and allow them to work together.”
(ANZ’s agile transformation uses terminology from the so-called Spotify model. So it arranges workers into “tribes” of 150 people, and breaks down those tribes further into between 20 and 30 squads. Each squad has a mix of people and skills to enable it to function somewhat autonomously and self-contained).
Venter noted there are some types of roles where the bank does not have the luxury of providing one person per squad.
“We don't have enough compliance people to sit in the squad, but we sit them at the tribe level,” he said.
“So we have a dedicated compliance person per tribe, and then the tribes prioritise what they focus on within the particular squad.”
While the agile structure was intended to kill hand-offs and silos, Venter noted that this was still challenging in practice.
“We are finding that by creating autonomy in tribes, the very word ‘tribe’ is tribal, so some of the silos that we were trying to break down, we've seen creep back but at a tribal level,” he said.
“Getting cross-tribe collaboration is something we're really working hard on again now to go 'How do we keep people aligned across tribes so that we don't reinvent the same problem and solve it in one tribe and then solve the same problem in another tribe?”
Part of the solution to that is to have “cross-tribe collaboration groups called chapters and guilds” - essentially comprising people with common interests and experience - such as user experience - that have the remit to roam across tribes.
The bank also has specific domain architects that run across tribes, and swap notes to compare what all the different tribes are up to.
“That's about as good a solution as we've come up with so far, but I think we've got room to improve,” Venter said.
A new funding model
While the bank has new ways of leading and working, it still doesn’t necessarily have a new way of funding the work.
This is an issue often seen in agile transformations: workers are rearranged but funding continues to be allocated once-a-year and on a project basis.
This can cause problems in an agile model because how a team iterates on its work and evolves a project or capability is uncertain, and there is little room in the traditional model to absorb the cost of change.
“I call what's happening at the moment a collision between new ways of working and old ways of financing,” Venter said.
“We have this process which I call the annual Hunger Games. It's kind of like the last person alive in the room gets the money - at least that's how it used to be.
“We're trying to stop that now. We were running an ‘old ways of financing’ for the first year, and because we went live in the middle of a financial year cycle, we still were stuck with all of that kind of 'this was the amount your project was allocated' [model].
“We'll now move to capacity-based funding. So a squad in a tribe is 10-12 people, the tribe can spend x because that's your headcount, and that's it.
“Priorities might shift in terms of wanting to focus more on a market segment. The capacity is diverted there.”
ANZ is far from alone in trying to move to a capacity-based funding model.
Australia Post went through a similar transition in its own agile transformation back in 2016. The UK Government also ran into similar issues.
