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OP Financial Group: Enterprise Wide Agile

OP Financial Group, the leading financial service group in Finland, works in every field of financial services from private and corporate banking to insurance.

Pekka Puustinen, the executive vice president of the OP Financial Group, explains why the OP Financial Group is one of the largest ongoing reorganisation programmes and how the OP Financial Group will soon become a self-managed organisation with Enterprise Wide Agile.

The financial sector has changed, and is still changing. We are responding to changes in our operating environment, customer behaviour and regulation with one of the largest transformation programmes in our history. The OP Financial Group’s journey to Enterprise Wide Agile began in January 2019 when the first 1000 people jumped in.

Reorganizing the whole company is an incredible process. Jumping into Enterprise Wide Agile, is not something that can be achieved in one single step. Parallel models need to have been in place for few years.

Enterprise Wide Agile is a totally different method of management. The philosophy is different. In Enterprise Wide Agile, the central concept is that you are not focusing on money, you are focusing on capacity. The capacity stays the same, but what changes is where you put your effort in. You are not focusing on budget, but on what you are doing with these people.

The basic units of Enterprise Wide Agile are self-managed teams and tribes. A team can have up to 10 people and the teams independently decide how they deliver customer value. The teams are multiskilled and multitalented. For example, the retail banking mobile team consists of individuals from both the business and the technology side. Maybe also a layer and a service designer. The team is responsible for taking forward that single mobile product. This is, of course, a simplified example, as reality is never that simple.

The teams form a tribe and one tribe can consist of 100-150 people. When forming a new tribe, there must first be a business opportunity. A tribe leader works as the business leader and is responsible for the tribe’s performance and results. Tribe leaders are not supervisors of the people, but they are responsible for what they deliver.

We now have seven tribes, where all business and development projects are put together in the same place. The tribe leaders can then decide, for example, that in retail banking the focus is now on being mobile, but the teams decide what to do in that context. Each team is responsible for deciding just what ‘focus on mobile’ means in their context.

People in the tribe still have their own supervisors through a chapter they are in. The chapters are built around competences and managed by a chapter lead. For example, a design chapter lead is responsible for that area and ensuring that we have the best designers, and they work with the best design principles.

The tribe leaders don’t often have the skills or the time to do all the work. That’s why we have also created other new roles. An agile coach coaches the teams to work in agile methods. A tech lead is responsible for the technology that the tribe uses, making sure that it is the best possible, that it is aligned with other technologies that the OP Financial Group uses and supports our architecture.

Basic units of Enterprise Wide Agile at the OP
Picture 1. Basic units of Enterprise Wide Agile at the OP Financial Group

Leadership in a self-managed organisation

In the previous organisational structure, we had six layers of management. At the top of the structure was the top management, business areas, departments and business units. The teams were at the bottom.

A self-managed organisation is a totally different way of doing things. In the current organisational structure, we have only four layers. The role of the top management is to decide on the big guidelines and where to focus. The operational level top management’s task is to get rid of obstacles, which may impede the teams. The top management is the bottom of everything.

What is meant by removing obstacles, is that we have a war room. In the war room, there is my name, the HR directors name, the chief technology officers name and our president’s name on the wall. What happens in the war room is that if a tribe or team has an obstacle where they need a decision to be made, there is a red post-it note on the wall. The note says that, now Pekka, if you don’t come and remove our obstacle, we can’t go any further.

On the top of the new organisation structure are individual autonomous teams, and, most especially, the customer. The team meets every day for 15 minutes, where they go through what they are doing together. Daily meetings are not used just for development, but also for business as well. Business does not order development about, however, business is responsible.

In addition, teams have a meeting, where they discuss what they are going to do within the next two weeks, and another meeting in which they discuss what they did in past two weeks. Then, teams also have a marketplace, where they prioritise their different needs and talk about which task gets done first.

The teams must have the power to make all those decisions. The OP Financial Group has 12,000 people working in it. Decisions don’t come to executive level: teams need to make those decisions by themselves.

Agile way of working at OP
Picture 2. Agile operating model in the OP Financial Group

Agile ways of working

The OP Financial Group has a history of scaled agile development. Enterprise Wide Agile and agile in development are two different issues. You really need to have pilots related to Enterprise Wide Agile, although you have used, for example, SAFe, Scaled Agile Framework, before.

You can’t do it all by yourself, and that’s because everything changes. There are so many streams you need to consider. For example, HR, finance and management. Help is needed from somewhere else. Enterprise Wide Agile is still, globally, a new phenomenon and that’s why it’s still in its new, innovative stages.

The OP Financial Group is constantly forming its vision for Enterprise Wide Agile. Already, almost all the positions and titles inside the company have changed. We now have many new positions and ways of working.

In the traditional way of working, if you don’t have a project, you don’t have a job. For example, if your team works on a mobile application for two years, everyone sticks to the project for two years. Otherwise they would have no purpose. Now, what the teams are doing – their projects – may change, but you will still have your job.

We still have quarterly business reviews, whose role is not only to report, but also a way to manage things. Creating a common understanding is the reason why we need to have the quarterly business review process. During one week in every quarter, we look at the same world view and align the whole organisation. If we do this, every three months, for three years, everybody has the opportunity to fully align their understanding of what is happening.

Another new way of working is that our executive team uses every Monday afternoon to fully focus on Enterprise Wide Agile. Every Monday we have lunch together. After that, we participate in workshops and discussions. This requires a great deal of commitment.

In the agile way of working, leaders must associate themselves with the people and you resolve to do many things differently. We have, of course, a lot of things going on here, but what we now do differently, is to use a lot of videos. The videos are available via the intranet, and in them, I explain that I am personally ready to change my behaviour. I also answer any questions in Yammer. All the people in the executive team now do this on a daily basis.

Rolling strategy and Enterprise Wide Agile

Changes in the OP Financial have been wide reaching following our endeavours in using Enterprise Wide Agile and a rolling strategy. A rolling strategy is closely related to Enterprise Wide Agile.

In a traditional organisation you have a one-year projects, two-year projects and three-year projects. Basically, this means that you can’t easily make changes. It doesn’t matter, if you reflect upon your organisational view every three months, because it doesn’t lead anywhere.

Rolling strategy and Enterprise Wide Agile go together. It’s both a tight and loose model, where the tight is the strategy and the loose are the teams, who decide how to implement that strategy. Both the strategy and the teams should be aligned together.

You can think of rolling strategy as being like a rubber band, which you can put on your legs and use to do some exercise. The strategy is the part you keep in your hands. The rubber in your feet is the part within the strategy that you exercise, and you can constantly decide how to utilise that and how to create improvements.

Companies need a rolling strategy, because many things move forward faster than expected, while some phenomena move more slowly than anticipated. For example, some phenomena that we at the OP Financial Group have considered disruptive to our purposes, have been postponed.

On the other hand, some phenomena are compelling. These changes can be either positive and transformative or have a negative impact. For example, 3-4 years ago it was considered that mobility-as-a-service would negatively impact insurance and banking. Also, healthcare was considered to be a transformative change.

What happened in Finland was that mobility-as-a-service did not have a negative impact, but that healthcare was transformative. A lot of consolidation happened in Finland’s healthcare and currently there are 3-4 major players now in the area. These days it’s hard for a healthcare company to grow organically, because they can’t attract the best employees. It’s highly important to understand that the change may be slower or faster than expected.

Normally if you create strategies, the strategy is usually put in place for the next 3 to 5 years. In this kind of strategic planning you have a wide-reaching process for defining your world view: this should be your key competitive advantage related to that future world, in which you should focus on the means by which you should measure it.

What the rolling strategy process in the OP Financial Group means is that we still embrace a world view. Instead of locking it away for many years, our world view and our direction, is constantly assessed.

In the rolling strategy we look at the following five different topics:
• Economy
• Customer behaviour
• Competitors
• Technology
• Regulation

This means that we have five lenses through which we view the world. In each of these, we have three different world views, which are constantly evaluated and quickly updated should the need arise. Each world view is measured and assessed as t: how well the whole group is doing compared to the world view.

In our rolling strategy process, the whole company – not just the executive element – checks all points every three months, including the world view. We check what has been done in the past three months in relation to these topic areas and decide what will be done in the next three months. The measurements reveal just how we did and they help to decide where we should be aiming during the next three months.

With the rolling strategy, we could easily go to a rolling budget, but it is related to other topics rather than just the budgeting. In the old world, there was a need to source funds from someone. For example, if you needed money for technology, the question eventually ended up with the executive team. You often received the answer that there was no time or money available.

Money is still a major issue, but now it is more about resources than money. If there is, for example, a budget of 10 or 100 million for developing a new business, you can now decide more easily how best the money will be directed and utilised.

It’s very important, to understand that you don’t need enterprise Wide Agile if you don’t have a rolling strategy. You can’t deliver a rolling strategy if you are not Enterprise Wide Agile.

The infinite game

The financial sector in general is jumping more into transactional values through data and analytics. We are constantly working in this direction. If we don’t take this direction, we will quickly become a low value transaction operator and someone else will take over all the valuable aspects that are aimed at the customer interface.

In the financial sector Artificial Intelligence (AI) will be, and is already used, at the customer interface. When thinking about the technology part of AI, it is related to many topics such as Cloud Computing, APIs, Data analytics, Quantum computations and Blockchain solutions.

AI helps make better decisions within the company. For example, 60% of our insurance claim handlings are already done by chatbots. It’s not purely AI, but it is very close to AI, because the chatbot is learning constantly.

However, we are aiming much higher through data and analytics. We use this information to run the business. We analyse the data and send it back to our customers as a service. In the future, we anticipate that we will make great leaps forward in this area.

The way we manage things is that every three months the world view is shared, not only for the executive directors, but at the team level. This allows us to understand that it is not just a three-year long game, but an infinite game.

There is no point in making decisions for 3 years when you can make them for 3 months. With some aspects it may take four years to change them. For example, it might take a great deal of time to move everything to the cloud with the legacy systems. You can still follow these projects every three months.

In Ilmarinen, where I used to work, we didn’t have enterprise Wide Agile, but we did have a more advanced version of scaled agile. This change was begun at the same time that we conducted a substantial merger with another company.

At that point it became very easy to make the decision in September, that for the next 3 months we would focus on the merger; and after that we would continue business as usual. Normally, if you don’t have that agility, you would have been forced to bring everything down and focus purely on the merger for the foreseeable future. This would have been an easy decision to make. So, 100% of things we did focused on the merger, but only over a period of 3-6 months, and after that we continued our business as usual.

When we make decisions in the OP Financial Group, it is not necessarily a programme. It’s more like a sprint, where we decide what to focus on. It’s like owning an apartment or a car. You need to take care of them when you own them. With a car, you may need to change the tyres before you can drive the car.

Business is an infinite game that never ends. This is a philosophical change. It doesn’t matter what you call it, but it functions in a continuous stream that never ends.

Key Findings of OP Financial Group’s journey for business leaders:

Getting started with Enterprise Wide Agile

You don’t need a playbook when jumping into the Enterprise Wide Agile and rolling strategy processes. There are good examples, and you can benchmark them, but the organisational change itself takes a lot of work.

You, personally, and all top executives must be ready to put your own time and effort into that. Your commitment is the most important thing for a successful transformation.

Work with the people are and put your heart and soul into the game

The real heroes of the transformation are the professionals working in the teams. Executives shouldn’t have their own separate offices and corner rooms, but should work among their people. This cannot be understated.

In this kind of setup, you can’t micromanage. You must have the right leaders, who can deliver the change and who are committed to the Enterprise Wide Agile methodology. You must personally believe in the new ways of working, and you must put your own heart and soul into the game. Are you brave enough to do that?

Your first 90 days as an agile leader

Enterprise Wide Agile is a totally different kind of way to manage and grow your business. In Enterprise Wide Agile, you focus on the people and the vision, and where the teams put their effort in. Your new role is to remove all obstacles and support your teams to achieve the business vision.

For top executives, moving from the top of the organisational pyramid to the bottom is not easy. In order to diminish resistance to this change, you need to create a common understanding amongst your own management team. In the first 3-months sprint-focus on what this new way of managing things means to every top executive on a personal level.

Read from the next article how OP saw the digital transformation few years back.

Text by: Timo Savolainen and Kati Lehmuskoski

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