Technology Enabled Business Transformation (Nordea case)
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Best practice change management approaches rarely yields the results we desire, and for good reasons. Based on his PhD research and 25+ years of experience Mikkel discusses why, and what he is trying to do differently in his job as Head Architect for Nordea's Personal Banking Business to improve the success of transformation efforts.
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Technology Enabled Business Transformation (Nordea case)
- 1. Technology Enabled Business Transformation Mikkel H. Brahm, PhD Head Architect, Nordea slideshare.net/ mikkelbrahm 1
- 2. Enterprise Architecture Some definitions to ensure that we understand each other Architects design Architecture Architecture is Structuring Structures1 We impose Structure to achieve Qualities • e.g. Firmitas, Utilitas, Venustas • ~ Durability, Usefulness, Beauty Everything that is Formed has Architecture • whether or not an architect designed it • whether or not emergent = intentional A Company may engage in one or more Businesses A Business is a Purposeful Exchange of Valuables (tangible or intangible; for profit or non-profit) The Business takes place in an Ecosystem of Players who play some role in the Context of the Business e.g. customer and supplier, but also market regulators, competitors, partners, media, .. Enterprise can mean the Ecosystem, the Business, the Company, or the IT of either of these Enterprise Architecture can mean the design of the (intentional) structure of the Enterprise, or/and the (intentional and emergent) structuring of the Enterprise 1) Pierre Bourdieu, (1972) 2013, Outline of a Theory of Practice, Cambridge University Press 2
- 3. MechanismsPeople Action Structure $ Enterprise Architecture What we seek is particular outcomes = action performed by people and mechanisms in structures Harold Leavitt, 1965, Applied Organizational Change in Industry, in Handbook of Organizations, James March (Ed.), Routledge Based on Leavitt’s diamond
- 4. 3. AS-IS MODEL 2. TO-BE MODEL 0. AS-IS REALITY 1. TO-BE REALITY 4. GAPS • A • B • C 5. ROAD MAP Best Practice (waterfall) Change Management Rarely delivers the desired outcomes – but it is something you can do without having to think too much 4[E.g. TOGAF-ADM] Open Group, The (2013) TOGAF® Version 9.1. Zaltbommel: Van Haren Publishing.
- 5. Best Practice (waterfall) Change Management Partial answer to why this approach rarely seem to deliver the desired outcomes Pattern1: Context (= set of Forces) + Problem + Solution Our models are (over) simplifications of the real world => they do not describe all the relevant forces and aspects of problem and solution 1. Gaps between as-is and to-be models are only a subset of gaps between realities ◦ dependencies exist between gaps, both gaps that show up in models and gaps that do not 2. Changes in our roadmap are only a subset of all the changes that occur e.g. do not cover ◦ changes emerging without intentional actions ◦ changes that result from the intentional moves of other players in the ecosystem 3. Some changes that are included in our roadmap, we are not always able to effect ◦ the people available to us may not have the required know how or technologies ◦ “wielding power” to influence, sell, motivate, etc. is difficult and complex ◦ the objective we are pursuing may not be realistic 1) Christopher Alexander, 1979, The Timeless Way of Building & 1977, A Pattern Language, Oxford University Press 5 Iterative approaches may better support learning and navigating along the way
- 6. 6 [Why are banks so similar?] DiMaggio, P. J. and Powel, W. W. (1983) The iron cage revisited: Institutional isomorphism and collective rationality in organisational fields. American Sociological Review. 48(2), pp.147-160.
- 7. Source: Nordea, Annual Report 2017, nordea.com Investor Relations Nordea simultaneously responds to change and innovate Together, we lead the way, enabling dreams and everyday aspirations for a greater good 7
- 8. 2018 © Nordea Digital Company confidential Customer Statement “I will trust a bank that guides me when I feel lost, comforts me when I feel frustrated, and encourages me when I need motivation.” Take my hand and I will trust you Customer Statement
- 9. Source: Nordea, Annual Report 2018, nordea.com Investor Relations 9 €m
- 10. Nordea’s adoption of Scaled-Agile Framework This is a work in progress – roughly 50 % of development is done in a SAFe (“inspired”) structure • Nordea has split our total investment in change into 7 portfolios • Initiatives in a portfolio are sized according to investment level (essential, large, full) • Cadence is common 4*12 weeks PI’s (+3+1 weeks of vacation) = matches fiscal year & quarters 10Source: https://scaledagileframework.com/
- 11. Nordea Organisation, simplified No split between IT and Business, nor Silos; just Run the Business and Change the Business Group Functions Personal Wholesale RUN THE BANK CHANGETHEBANK Group Functions Portfolio Technology Personal Portfolio Commercial Portfolio Commercial & Business Wealth Wealth Portfolio Wholesale Portfolio Change Execution Initiatives funded by Portfolios Product (not Project) funding i.e. ≈ Stable Burn Rate Architectural Governance is a mix of Investment Gates and Solution Architects assigned into Hubs Group Data Portfolio Group Tech Portfolio Group Architecture CEO & COO 11
- 12. Shared via Architecture Repository EA provide initiatives with Target and Transition architecture We do not just seek autonomy per se, but a mix with just-in-time centralized decisions 12 Enterprise Level Portfolio Level Solution Level Information Guidance Approved by Architecture Board Approved by Maker + Checker Solution Architects must link their architecture to Enterprise and Portfolio level architecture Architecture that guides build teams must be approved by the Architecture Board We are centralizing prioritization and control over the transformation of Nordea and invalidate previous ‘silo-decisions’ Published by Head Architect Approved by Maker + Checker scaledagileframework.com: Centralize infrequent long-lasting decisions that provide significant economies of scale
- 13. Budgets&Guidelines Controlling&Reporting Henry Mintzberg, 1983, Structure in Fives, Designing effective organizations, Prentice-Hall 13
- 14. Sunshine 14James C Scott, 1992, Domination and the Arts of Resistance, Yale University Press
- 15. Architecture Board Torsten Hagen Jørgensen Group-COO & Deputy Group CEO Head Architect Dual competent Solution Architect Dual competent Developer Cross-functional teams trust trust trust 15Steve Jobs: The people that really create the things … are both the thinker and doer in one person.
- 16. Nordea & Personal Banking Priorities 2019 Each Business Area defines sub-goals to the Group level priorities Increase Business Momentum • Mmmmmmm mmm mmmmmmmm mmmmmmmmm • Mmm mmmmmmmmm mmm mmmmmmmmmmm • Mmmm mmmmmmmmmm mmm • Mmmmmm mm mmm m mmmmmmmm • Mm mmmmmmmm mmm mmmmmmmmm Drive Structural Cost Efficiency • Mmmmmmmmm m mmmmmmm mm mmmmmm • Mmmmm mmmmmmmmm mmmmmmm mmmmm • Mm mmmmmmm mmmmmmm mmmmmmm Key Priorities Key Enablers Leverage ONE Nordea Embrace Data, Technology & Digitalisation Embed the Nordea Culture • Mm mmmmmmmmmm mmmmmmmmmmmm mmmmmmmmmmm mmmmm Mm mmmmmmmmmm mmmmmmmmmmmm mmmmmmmmmmm mmmmm • Mm mmmmmmmmmm mmmmmmmmmmmm mmmmmmmmmmm mmmmm 16 What to architect? Completeness of Vision?
- 17. Investment in Change in Personal Banking 2019 Illustrative example (names/numbers are modified) 17 INITIATIVE ARCH. ALIGN BUDGET FY TARGET ARCH. PRIORITY ARCHITECTURE ALIGN & PRIORITY RATIONALE BusinessMomentum StructuralCostEfficiency LeverageONENordea Data,Tech&Digi Lack of clarity of scope boundaries with <other investment> and risk of duplication € 1,2m Increase momentum within some product offering Product and Service 1 Have not yet adopted strategic enabler zzz€ 2,1m Increase momentum within some servicing offeringProduct and Service 2 Building yyy, which could be acquired to speed up innovation € 12,1mWin the XYZ market by ZYXMarket 3 High Biggest and most important enabler in the bankMostly€ 121mNnn mmmmmmmm nnn mmmmmmRe-platform 2 Key enabler for re-platform 2€ 12,1mNnn mmmmmmmm nnn mmmmmmNew capability 1 High Key enabler for re-platform 2Fully€ 21,2mNnn mmmmmmmm nnn mmmmmmRe-platform 1 Mmm m mmm mmmmmmmmm mmm€ 2,1mNnn mmmmmmmm nnn mmmmmmNew capability 2 Mmm m mmm mmmmmmmmm mmmNeutral€ 1,2mNnn mmmmmmmm nnn mmmmmmInnovative capability 3 Mmm m mmm mmmmmmmmm mmm€ 2,1mNnn mmmmmmmm nnn mmmmmmCulture transformation 1 Embedthe NordeaCulture Nordea and PeB 2019 PRIORITY High Mostly None Mostly None Mostly None Mostly None None NoneFully Mostly Business Momentum Leverage ONE Nordea Data Tech Digi Cul- tureCost Next step (I hope): Pivot to focused Goals-driven Inspiration: Chris Potts, FruITion Series, Creating the Ultimate Corporate Strategy for Information Technology Investment culture? Ability to execute?
- 18. Nordea’s transformation is a series of transformational changes Currently the ecosystem probably requires us to change more than we can cope with in one go Simplify Operating Core Digitalize Sales and Servicing Open Supply and Distribution 18
- 19. Enterprise Architect toolbox A multi-disciplinary approach will enable more informed decision making 19 Enterprise Architecture (and Technology) Tools, Methods, and Understanding Business and Change Management Tools, Methods, and Understanding Leadership and Psychology Tools, Methods, and Understanding
- 20. How you become competent hinders development of expertise To evolve you must first follow prescriptive methods and models, and then transcend them 20 Schooling Mentoring Reflexivity Transcend MethodsandModels Follow MethodsandModels Hubert and Stuart Dreyfus, 1986, Mind over Machine, Macmillan Inc.
- 21. Questions & Comments Slides on slideshare.net/mikkelbrahm