FINLAND’S BIGGEST FINANCIAL GROUP GOES ALL IN ON AGILE By Tapio Schrey, Timo Ritakallio, Roope Talasmaa, Hannakaisa Länsisalmi, and Katri Rytkönen
n 2018, OP Financial Group owned a engagement. When the COVID-19 pandem- Isolid share of Finland’s home mortgage, ic forced most of the company’s 12,000 em- corporate loan, and nonlife insurance ployees to work remotely, they found that markets. But the company, the nation’s agile methods brought structure to their biggest banking and insurance institution, work and led to better cooperation. Agile needed to act faster to keep up with a more also helped people quickly refocus priori- competitive business environment and ties and redistribute resources to deal with new technologies. In addition, a survey of a massive increase in the demand for cus- employees showed that they weren’t as tomer service—a pivot that helped bolster engaged as they could be and felt that OP public perception of the company’s cus- wasn’t as responsive as it needed to be to tomer service. address changing customer needs.
OP embarked on an enterprise-wide re- The Need for Change structuring to be nimbler and more respon- OP is part of the fabric of Finland. Many sive, starting with creating separate busi- small cities and towns that no longer have ness units for each of its three core a grocery store or post office still have an customer segments. As part of the restruc- OP branch, part of a network of 350 loca- turing, the company adopted agile ways of tions that stretches from Helsinki to Utsjo- working across the board to give people ki, well north of the Arctic Circle. (See the more flexibility and autonomy to deliver sidebar “OP Financial Group at a Glance.”) on strategic goals. Established in 1902, OP has been an inno- vator from the start. In recent years, that Although the transformation is ongoing, has meant investing in online and mobile OP already has made great strides toward banking to maintain market share in Fin- achieving its goals, including streamlining land’s progressive retail banking sector, decision making and improving employee where a large percentage of customers pri- OP FINANCIAL GROUP AT A GLANCE
Established in 1902, the company has •• 2 million owner-customers, approxi- grown to become Finland’s largest bank mately 40% of the Finnish population and insurance company. It has: •• 12,000 employees •• A cooperative network of about 140 independent banks with 350 branches •• €92 billion in loans originated, €64 billion in deposits, and €838 million •• A 40% market share of the Finnish in pretax profits in 2019 retail banking sector •• For fiscal year 2019, net promoter •• Separate divisions for corporate scores of 62 for customer service and banking (40% market share) and 26 for brand nonlife insurance (34% market share)
marily use their mobile phones for bank- across the organization was a critical next ing. step. Agile is a team-centered, iterative, cross-functional approach to work that can To stay competitive, OP couldn’t keep do- be applied to many business contexts. Or- ing the same things but a little better. As ganizations adopt agile to streamline deci- the business environment became more sion making and break up siloed functions competitive, the company needed to identi- in order to improve customer value, em- fy and react to potential threats faster. It ployee experience, and operations. Agile needed to figure out how to help employ- boosts collaboration among functions and ees, who, as the survey found, were frus- helps people work to their full potential as trated with their job roles. They worked members of multidisciplinary, autonomous well within their respective functions but teams—a scenario where the gains exceed didn’t collaborate effectively across depart- the sum of their parts. ments. They also were put off by a hierar- chical leadership culture that included OP designed its own agile operating model, multiple management layers and steering which is grounded in several guiding prin- committees. ciples. (See Exhibit 1.)
OP already had taken steps to change. The company had previously centralized opera- How OP Implemented Agile at tions and learning processes and expanded Scale into adjacent businesses. The IT function OP introduced agile in waves, beginning in had begun using agile ways of working. OP’s the summer of 2018, with a commitment retail bank division and IT department had from senior leadership to support the launched a small pilot to create an online change. Leaders took part in an eight-week mortgage product, and the company had immersion program on the subject, which hired leaders with agile experience. included seeking advice from management at other banks that had adopted agile prac- tices. In the first few months, the company Making the Case for Agile also mapped out what agile would look OP’s transformation picked up steam in like, designed the implementation journey, 2018 when the company restructured into assessed the potential risks that could arise separate units for its main businesses: re- from the change, and identified the actions tail banking, corporate banking, and insur- the company could take to minimize those ance. Adopting agile ways of working risks. (See Exhibit 2.)
Boston Consulting Group | Finland’s Biggest Financial Group Goes All In on Agile 2 Exhibit 1 | OP Financial Group’s Operating Model for Agile at Scale
The operating model is unified but Customers are the heart of everything Teams mana e themsel es allows for different types of work Agile teams work to meet end-customers’ needs, Teams succeed and fail together, not as ays of working vary by activity but align with not internal goals individuals common goals Product and service teams include a product They are self-directed, autonomous, Common principles, structures, and processes owner to represent the customer cross-disciplined, and have a purpose-driven ensure that departments and functions work talent mix together
Continuous improvement is key Lea ers set irection an support Teams use sprints, demos, and retrospectives to teams improve the flow of work Leaders set targets and encourage collaboration Training reinforces new ways of working, thinking, They use such phrases as How can I help and leading Leaders help to set and maintain boundaries Agile coaches help teams improve They update priorities so work is in sync with business ob ectives
Sources: OP Financial Group; BCG.
To model the behaviors that they wanted insurance and corporate banking divisions, the rest of the organization to adopt, senior and in the retail bank division’s centralized leaders changed how they collaborated customer service call centers and back- with one another and led their own teams. office functions. OP expects to spend the They also decided to launch the new oper- rest of 2020 and 2021 introducing agile ating model in an agile way. They spent practices to central support functions, in- two months creating a minimum viable cluding HR, finance, strategy, communica- product (MVP) of the operating model, en- tions, legal and risk management, and in- listed design teams to help create the mod- ternal audit. el, refined it in short sprints, set up a situa- tion room that anyone could use to see The company invested time and resources how the transformation was progressing, to familiarize employees with agile con- and invested in communications about the cepts. In addition to being invited to help project. create the company’s agile operating mod- el, employees were encouraged to apply to The full rollout of agile practices began in join a 40-person renewal tribe whose mem- January 2019, when all employees in the bers act as agile stewards and ambassa- company’s retail banking headquarters and dors. The renewal tribe is restaffed with IT functions—about 1,000 people altogeth- each rollout wave, allowing people with er—made the switch. The retail banking di- different backgrounds and roles to help vision created six agile tribes that included lead the change. Former tribe members IT staff. The IT staff that was not part of who return to their respective departments the new retail tribes replaced its previous ensure that the agile model stays true to its agile setup with four new tribes and adopt- roots as it expands to other parts of the ed the new operating model. All OP em- company. ployees involved in the new ways of work- ing were trained in the new operating OP shares information and leads discus- model, and the company hired and trained sions about the transformation through coaches to help teams adopt agile philoso- intranet-based collaboration platforms, phy, practices, and skills. such as Yammer; weekly coffee sessions; and an information booth designed to look OP spent the rest of 2019 supporting the like a traditional Finnish sauna where peo- new tribes and preparing for the January ple can gather and discuss the change. To 2020 launch of agile ways of working in its help spread the word, OP held planning
Boston Consulting Group | Finland’s Biggest Financial Group Goes All In on Agile 3 Exhibit 2 | Timeline for OP’s Agile Transformation
PRE IOUS arch une August anuary une anuary une EFFORTS
Leadership immersion, Leadership immersion IT a opte a ile e e i ision benchmark visits continues starts structure launches upport tage Plan tage Retail bank rollout an IT launche upport tage Plan tage a ile pilot rollout Continuous e pansion of agile
Continuous training and coaching
Agile e periments are conducted throughout the organization
Sta e o li e Sta e o li e Retail banking and IT Nonlife and life insurance, 10 tribes corporate banking, retail 1,000 people banking operations 4,500 people
Sources: OP Financial Group; BCG.
workshops and sessions and encouraged maintain closeness even after they employees to share stories about the trans- switched to working remotely. Despite the formation. pressure of operating during a crisis, OP’s net promoter score—a measure of how a company is regarded by the public— Positive Early Results jumped to a record high of 65 for its cus- The early results of OP’s ongoing transfor- tomer service. mation have been positive. By reorganizing around agile teams, the company eliminat- ed two layers of management and discon- Learning from OP’s Agile tinued tens of steering committees, which Experience sped up decision making. Eliminating re- OP faced multiple challenges while adopt- dundant positions, along with other chang- ing agile at scale and gained insights that es, helped OP reduce operating expenses other organizations can learn from. by approximately €100 million. Establish clear, measurable business Employee engagement also improved. In a rationales and goals. Agile is a tool, not a fall 2019 personnel survey, 92% of respon- goal. Adopting agile requires a fundamen- dents said that they prefer working under tal change to operations, so a company has the new model. They said that they take to be committed for it to work. That more responsibility as a team and get bet- includes being clear about the reasons for ter directions, which helps them prioritize making the change and creating KPIs to work. They also collaborate more, encoun- measure progress toward specific goals. ter less bureaucracy, and have more auton- omy to make decisions. And the new prac- Invest in leadership. When BCG polled 60 tices allow them to devote more time to global leaders about the factors that resolving customer issues and to introduce contribute to successful agile transforma- new products faster. tions, leadership, culture, and behavior ranked as the most important. OP’s man- During the COVID-19 crisis, agile helped agement team immersed itself in the OP adapt quickly to changing market con- subject, eventually designing the new ditions. The experience of working in agile model in more than 100 workshops during teams helped employees stay aligned and the first 18 months of the transformation.
Boston Consulting Group | Finland’s Biggest Financial Group Goes All In on Agile 4 Still, turning initial insights into ongoing operating model it’s created. OP, which leadership behaviors can take additional has about 80 agile coaches, found that the months, or even years, of practice. best coaching mix includes business experts and coaches, IT agile coaches, and Learn from others, but create the agile new hires with experience in change model your organization needs. Adopting management. agile at scale isn’t easy. Although it’s important to study and learn from others’ Apply agile ways of working to your agile experiences, companies must resist the transformation. Just as agile teams build temptation to copy what another organiza- an MVP to test before a wide-scale product tion is doing. Each company’s situation is rollout, companies should build an MVP of different, so each one needs to tailor agile their agile operating model. Starting small to its own needs and operating model. not only ensures that the foundation is When updating the operating model for right, it allows for agile practices to evolve agile, address all components; don’t just over time depending on the organization’s redesign a new organization structure. (See needs and helps employees own the Exhibit 3.) change. At the start of its agile transforma- tion, OP decided that certain parts of its Use agile coaches, but choose them new operating model would be designed carefully. Agile coaches support a compa- before going live, while others would be ny’s goals in several ways. In the begin- filled in over time. ning, they help teams learn and adopt agile practices. Down the road, coaches Balance autonomy and alignment. Agile can help teams improve their perfor- depends on teams being able to work mance. Because coaches have different autonomously, though within common backgrounds and philosophies, a company boundaries. Companies can keep teams in should prioritize recruiting coaches whose sync by offering clear, concrete targets from mindset is a good match for the agile leaders; encouraging active communication
Exhibit 3 | Agile at Scale Requires Rethinking the Operating Model
All aspects of the business should be reengineered and integrated to support the new way of working
Roles an Lea ership Talent structures mana ement an e elopment
oal settin rocesses ulture an an an ays o beha iors measurement orkin
orkin Technolo ical ecision makin en ironment enablers
Sources: OP Financial Group; BCG.
Boston Consulting Group | Finland’s Biggest Financial Group Goes All In on Agile 5 between teams and leaders; and adopting initial transition period, which could last mindsets and shared ways of working that six to nine months. Beyond that, compa- encourage collaboration. nies should anticipate allocating significant additional resources to maintain the Help employees through the transition. momentum to adopt agile, including Moving to agile can have a tremendous spending on training, and to further impact on employees. Leaders need to develop the operating model. show compassion as they guide people through the change and provide resources for everyone, including people who may be dopting agile at scale is no small leaving the organization. Resources could Aundertaking. But as OP’s transition include career fairs, résumé-writing ser- shows, the resulting well-coordinated team- vices, skills sessions, and career guidance work and faster decision making can lead or other types of counseling. Employees to major improvements across the organi- are likely to need substantial upskilling, zation. reskilling, and coaching to get through the
About the Authors Tapio Schrey is a partner and associate director in the Helsinki office of Boston Consulting Group. He leads the firm’s People & Organization practice in the Nordics, and is a global expert in large-scale change, including agile at scale. You may reach him by email at [email protected].
Timo Ritakallio is the president and group CEO of OP Financial Group.
Roope Talasmaa is a managing director and partner in BCG’s Helsinki office. He leads the firm’s Finan- cial Institutions practice in Finland, and focuses on large-scale change, including agile at scale. You may reach him by email at [email protected].
Hannakaisa Länsisalmi is the CHRO for OP Financial Group and the executive sponsor of the compa- ny’s agile at scale transformation.
Katri Rytkönen is a senior vice president of OP Financial Group. She also leads the company’s work in agile at scale transformation and renewal.
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