THE AGILE COMPANYL E S S O N S F RO M BA N K I N G

Lennart Francke

Göran Nilsson

PRAGUE IN AUGUST 1990

PRAGUE IN AUGUST 1990

P R AG U E I N AU G U S T 1 9 9 0T H E S TAT E OW N E D R E S TAU R A N T S

The small private restaurants were always full. What remained was the

huge state owned ones where we met:

v Waiter – Middle-aged man

v Waitress 1 – Middle-aged woman

v Waitress 2 – Young woman

STOCK HOLM 2016N ORD EA BAN K

v Increased digitalisation• Fewer visits to branches• Fewer branches to visit• More digital branches

v From a personal bank man (PBM) to a “team”• A team of different competencies• You now may talk to anyone in the team or even someone from

another department, depending on your question

STOCK HOLM 2016THE N ORD EA CUSTOM ER

v A customer (C) wants to increase his mortgage loan to buy a car:• C tries to call the PBM but is directed to customer service (CS)• CS cannot help C but says the PBM will call C• PBM calls to say that C cannot increase his mortgage more and

instead recommends a private loan• PBM does no longer handle private loans and asks C to call CS• C calls CS in order to make an application for a private loan

M ANIFESTO FOR THE AG ILE COM PAN Y

We claim that there are better ways to manage organizations acting in a dynamic and uncertain environment, especially if they have highly

qualified and competent employees. We value:

v Focus on customers over owners

v Intrinsic motivation over extrinsic rewards

v Trust over detailed monitoring

v Adaptability over formal planningWhile there is value in the items on the right, over-use of them often

hamper agility. We thus value the items on the left higher.

FOCUS ON CUSTOM ERS

Being a truly customer driven bank means:

v Building long-term relationships with customers

v Occasionally sacrificing short term profitability to satisfy important customer needs

v Restricting product managers’ sales activities

v Avoiding product sales targets

IN TRIN SIC M OTIVATION

Cash bonuses work well with simplistic and repetitive tasks, of which there are several in large banks, i.e. trading and securities sales.

But they don’t go well with:

v Fostering long-term relationshipsv Strategic decision-making

v Risk taking

Intrinsic motivation comes from working with autonomy, pursuing mastery, and sympathising with the firm’s purpose.

TRU ST… AN D M ON ITORIN G

High quality standards are particularly important in sensitive industries, such as finance, social welfare and healthcare. Increased

regulation has to be combined with decentralization.

Three lines of defence:

v First line: management controls and internal control measuresv Second line: Risk Management & Compliance

v Third line: Internal & External Audit

Focus on First line.

ADAPTABILITY

Budgeting and/or rolling forecasts are costly, time-consuming, include gaming, decrease focus on actual facts and competition, and hamper

flexibility.Business people can commit to satisfying customers or to follow a

plan. But not both at the same time.

v Relative targets

v Activity planning

v Trustworthy financial reporting

v Internal market for transfer prices – making the dog wag the tail

THE AG ILE BAN K

lennart.francke@gmail.com goran.nilsson@fek.uu.se