ING put headquarters staff on mobility and rebuilt around squads

A company can rename its meetings and leave the work where it was. The handovers stay. The person who used to approve the step still approves it. Only the vocabulary has moved.

McKinsey's interview with two ING Netherlands executives, published on 10 January 2017, records a bank that tried to move the work itself. Peter Jacobs was chief information officer. Bart Schlatmann, who left the group in January 2017 after 22 years, had been chief operating officer of ING Netherlands. Deepak Mahadevan, a partner in the Brussels office, conducted the interview in October 2016.

Schlatmann dates the new way of working to June 2015. There was, he says, no particular financial imperative. The company was performing well, and interest rates were still decent. Customers were using new digital channels, and their expectations were being set outside banking as well as inside it. His example is specific. Someone might take investment advice in a branch, then call or go online to make the investment. The service had to hold across those steps. Agile, in his telling, was the means, not the aim.

He defines it as flexibility, and as the ability to adapt and steer. It means fewer handovers and less bureaucracy, and people who are empowered. The aim, as he puts it, is "to build stronger, more rounded professionals out of all our people." This was not an IT change watched by the rest of the bank. The key was the end-to-end principle: squads mixing marketing, product and commercial specialists, user-experience designers, data analysts and IT engineers, with one definition of success and a focus on the client. Technology companies suggested the shape. ING adapted it.

Jacobs, looking back, names four pillars. IT and commercial colleagues sit in the same buildings, in squads, testing offers without a manager controlling each handover. The structure has to match. While departments, steering committees, project managers and project directors remain, the silos remain. The third pillar was DevOps and continuous delivery. The aspiration was a release every two weeks, not the five or six big launches a year they had run. He says integrating product development and IT operations enabled new features and let ING position itself as the number-one mobile bank in the Netherlands. That is his claim. The interview does not show the comparison. The fourth pillar is the people model. A manager's status and salary had depended on project size and on headcount. In the new model there are no projects as such. What matters is how people deal with knowledge, and whether the layers of expertise are mixed.

The first cut was the 3,500 people at group headquarters: marketing, product management, channel management and IT development. Schlatmann says the core had to set the example. HR, finance and risk, the branches, the call centres, operations and IT infrastructure were left out of the tribes and squads. They were not excused. Operations and the call centres took up self-steering teams, drawn from what ING had seen at Zappos, with more responsibility and less oversight. Branches and the sales force were pushed towards daily stand-ups. Legal, finance and operational risk stay outside the squad so they can remain independent, and a squad can call them for advice.

From a strategy written in late 2014, he says, it took eight or nine months to have the new organisation and way of working across headquarters. Two months and five board off-sites produced the target, which he calls a new nervous system. Five or six pilot squads ran in parallel, and their lessons changed the setup, the rooms and the design. Then came selection and the offices.

An agile IT team was not, for Jacobs, a prerequisite, though it helped. ING had already worked in a more agile way inside IT. That did not count as the wider change, because the business was not in the room. A firm can start in IT and bring the business over once the concept has been tested, or start with one stream, mortgages is his example, and change business and IT together. What fails, and what he says he sees elsewhere, is taking the new way of working and keeping the old structure. "That defeats the whole purpose and only creates more frustration."

Schlatmann calls culture perhaps the most important element, and refuses to make it its own programme. Leaders spent time role-modelling ownership, empowerment and a focus on the customer. New joiners got three weeks of onboarding, again with Zappos in mind, including a full week on the phones at the Customer Loyalty Team call centre. Hiring moved the same way. Board colleagues chose the 14 people who reported to him. He kept a veto only if he truly could not work with the choice. After thousands of team-made hires at every level, he says he never heard of a veto being used. Teams, he adds, became more mixed by gender, character and skill. Walls came down. Formal meetings became few. He describes the result as closer to a technology campus than to a bank of closed doors.

In IT, Jacobs wanted the craft back. Success had become managing other people who wrote the code. At a Google IO conference in California, Jacobs and his colleagues watched engineers talk about the work with pride. He quotes the question they asked: "Why don't we have this kind of engineering culture at ING? Why is it that large enterprises in Holland and Western Europe typically just coordinate IT rather than being truly inspired by it?" People were asked to write code again, and he did it himself. Craft, he says, is what a career there now depends on.

He is also clear about where they went to look. ING decided it was a technology company in financial services, so another bank was the wrong teacher. Young people, he says, name firms such as Facebook, Google, Netflix, Spotify and Uber, which do not share an industry. What he thinks those firms share is small teams, a common purpose and close customer contact. Spotify was the visit that mattered for silos. ING went to Sweden several times, and he says the exchange became two-way, with Spotify coming back on growth, recruitment and pay. They adapted what they saw. A visit is not a model.

Without the old lines, Schlatmann says, a squad starts by writing its purpose, then agrees how it will measure the effect on clients, then decides how to run the day. Tribes add scrums, wall planning and stand-ups so product owners line up. The quarterly business review, borrowed from Google and Netflix, has each tribe write the quarter's achievement, its biggest learning, the successes and the failures, the next quarter's aim and the other tribe or squad it needs. The papers are open, and comment is shared across the bank. They had done four reviews. He says the reviews are improving and still have to work better. Regulators, he remembers, sometimes heard "agile" as chaos. His reply is that the work is managed daily and visible on the walls.

The selection is harsher than a story about new names for old teams. In January 2015, Schlatmann says, every headquarters employee was put on "mobility", which effectively meant they were without a job, and everyone was asked to reapply. Culture and mindset outweighed knowledge and experience. They chose each of the 2,500 people in the organisation as it then stood, and nearly 40 percent were in a different job from the one they had held. He says they lost a lot of people who had the knowledge and not the mindset. Knowledge, he says, can be regained if the capability is there. Jacobs adds that age did not sort people as expected. Many of the so-called old guard adapted faster than younger colleagues.

On results, keep the speakers and the editor apart. The magazine's opening says the model, about 350 nine-person squads in 13 tribes, had already improved time to market, engagement and productivity. Schlatmann, asked about the previous 15 months, lists a quicker path to market, higher engagement, fewer impediments and handovers, and a better client experience. They are progressing well, he says. Releases ran every two or three weeks, against five or six a year. Customer-satisfaction and employee-engagement scores were "up multiple points." They were working with INSEAD to measure some of this from outside. Multiple points is not a figure. An outside measurement this interview does not publish is not a result. Productivity is in the editor's sentence and not in his answer.

Jacobs names two risks that the chart of squads hides. The work had been heavily aimed at getting software into production and at seeing how people responded. Unless they are careful, innovation stays incremental, and a sharper break will not reliably come from one team. Product owners, meanwhile, can follow user feedback in different directions. He wants squads aligned about every quarter or six months, and mindful of the bank's priorities. Autonomy is the design. Drift is the risk he puts next to it.

Schlatmann's advice is two questions, then a list of what leaders gave up. Agility is not a purpose. It is a means. "Why agile? What's the broader purpose?" Everyone has to recognise the reason, because the leadership team has to go all in. Then: "What are you willing to give up?" ING gave up traditional hierarchy, formal meetings, overengineering, detailed planning and excessive input steering, and took empowered teams, informal networks and output steering in their place. Another firm can answer those two questions without treating a trip to Sweden as the transformation.

1. Write the purpose and the client measure before a squad inherits a backlog. Schlatmann's order is purpose, impact on clients, then the day. A stand-up laid over the old handover is the frustration Jacobs describes.

2. Do not keep the steering committee beside the squad. Departments, project managers and project directors are the silos Jacobs names. The new meetings, with the old governance kept, are the cherry-pick.

3. Leave the editor's summary off the executives' numbers. Productivity sits in the opening, not in the answer. The speakers report a two- or three-week release rhythm, scores up multiple points, and INSEAD still outside. Multiple points is not a percentage.

4. Decide what leaders will stop doing before anyone is told to reapply. In January 2015 headquarters staff were put on mobility, and mindset outweighed knowledge. Nearly 40 percent of the 2,500 chosen were in a different job. That is not a new label on the team that already existed.

An agile session can be where the people who would share a squad, and the leader who still holds the old steering, write the purpose and the client measure for one service the organisation already runs.