KBC s Digital Transformation: A Cultural and People Change (B) *

Transcription

1 12-01-C CASE C KBC s Digital Transformation: A Cultural and People Change (B) * Kurt Verweire, Stijn Viaene & Peter De Prins Cologne (Germany), Friday 25 September Moments ago, Erik Luts delivered a presentation on Managing a Culture Transformation to a select group of senior executives at the SAS 1 Executive Vision Forum. He had been invited to the Forum to share KBC Belgium s approach to change and, more specifically, the lessons learned from the Klant 2020 digital transformation programme, now about two years down the road. In his presentation, Erik had not only presented the programme s ambitious goals, but he had also been open about the change challenges the programme was facing. In the course of his presentation, he outlined a multi-faceted approach to addressing these challenges. While digitisation would require existing organisations, such as KBC, to overhaul their structures, policies and business processes, Erik Luts firmly believed the greatest challenge with regard to change was the one beneath the surface : cultural change. In his presentation at the Leadership Vision Forum, Erik illustrated a number of tactics KBC deployed to create a sustainable culture change. These revolved around ensuring sponsorship and mobilising change leaders, structuring the transformation and communication, and engaging and energising the organisation. Ensuring sponsorship and mobilising change leaders Establishing clear executive sponsorship Transforming a financial services company into a digital organisation is a huge change effort, requiring complete top management alignment. The company had committed 250 million to execute this change strategy in Belgium over the period Budgets for other digital * This case is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The case was compiled from field research. Copyright 2015 Vlerick Business School, Belgium. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. 1

2 projects were cut. The commitment of the top management team in Belgium was crystal clear to Erik. He commented: Not only did we agree that digitisation is the future, we also considered it to be our No. 1 priority for the next few years. Every member of the Management Committee supported this. We had created a Band of Brothers, who were all willing to share the responsibility to succeed. Reaching such an agreement had required long and hard discussions, during which tough strategic questions had to be addressed. These were crucial questions but tackling them was a prerequisite for proceeding in a successful way. At KBC, both Johan Thijs, CEO KBC Group, and Daniel Falque, CEO KBC Belgium, had put enormous efforts into changing mindsets. Our Pearl programme had been started 2 years before, promoting a different mindset and management culture, stressing the necessity to become more lean, agile and proactive. By initiating numerous discussions, seminars and traineeships, Daniel Falque had put the focus on scenario-thinking and creating a common vision for KBC s future. In particular, topics like leadership and transformation in conjunction with digital had caused intensive serious discussions. But the confrontation of ideas and opinions moved us towards a common understanding and determination. The foundation had been built and yet everyone realised the road would be long and windy. Winning the hearts and minds of KBC s staff for this new vision would not be easy. The company and its employees had just gone through one of the worst financial crises ever. This new challenge was not only about introducing new digital technologies it involved an enterprise-wide transformation of a bank-insurer into an integrated brick/click service provider, where customers could experience an entirely new concept of easy-to-access services, designed to be fast and focused on customer experience. Channels would be integrated, allowing customers to choose and switch seamlessly. Internally, Klant 2020 aimed at transforming KBC from a rather administrative and formal financial institution into a dynamic, agile company. Together with Rudi Peeters, KBC s CIO, a biologist and eager student of ecosystem behaviour, a new network organisation concept was developed. In addition to changing the current ways of working at one location, this concept was aimed at stimulating company-wide sharing and promoting of successful new ways of working as they emerged from practice. Mobilising the senior team and group of change leaders to model the desired changes KBC s management team soon realised that the logic of strategic experimentation used in the Klant 2020 programme also required a new management approach. A new way of working was developed that was intended to be the future model for the entire organisation. In addition to focus, flexibility and agility had become keywords for describing KBC s management approach. This encompassed: 2

3 Working as a network: Klant 2020 operated in a network mode with short project life cycles. 2 Innovation and change efforts were defined pragmatically, and focused on delivering customer benefits. Moreover, project procedures were adapted to enable empowered, cross-functional teams and to allow for a flexible allocation of resources. Empowered teams: Klant 2020 teams were no longer told which specific actions to take; instead, they were told which results were expected. Erik emphasised: We steered according to outcomes, rather than inputs or activities. The senior management team wanted the project teams to focus on customer journeys and the delivery of real customer benefits, instead of spending time on elaborate planning spreadsheets. No plan was cast in stone. When unexpected things happened, the project teams were to rely on their own judgment, instead of simply following the project planning. New management styles: Managers were forced to challenge everything they had learned about managing a business. With the roll-out of Klant 2020, the new mantra became Stop relying on assumptions observe what is actually happening. The programme introduced new concepts such as bootcamps, failing fast, and minimal viable product development. Structuring the transformation and communication Organising the transformation into a clear structure In order to successfully complete the transformation, KBC had to find a way to deal with the contradiction between the stability required to run the organisation and the flexibility and adaptability required to cope with the digital revolution that was shaking up the entire financial sector. A solution was found in introducing a building block programme approach, whereby each project in the Klant 2020 project portfolio was not only expected to deliver an immediate and tangible commercial contribution but also to contribute to the development of an architecture of reusable and re-deployable foundational capabilities. Creating and communicating a compelling change story KBC composed a transparent narrative about the intended change, which was to be spread throughout the organisation. The threat of digital disruption of the financial services industry was relatively easy to illustrate. Everybody knew how companies such as Uber and Airbnb had been disrupting other well-established industries. Most were also aware of the fact that PayPal, which had been introduced by ebay, was now a separate company, that Google had been licensed as a bank in several countries, and that FinTech start-ups were all over the news. During roadshows, senior executives relying on the digital fact books they had compiled during their strategising exercise showed employees how new trends were affecting the financial services industry. 3

4 Relinquishing old habits KBC s senior management team realised they had to change habits and confront powerhouses. For example, early on in the transformation process, it became very clear that many of the digital innovations that were part of Klant 2020 would not pass the existing risk, legal and IT governance checks. Practices in these areas required fundamental change. Thus, Klant 2020 proclaimed a new motto: Kill cultures and structures whenever necessary. The argument that something was not possible would no longer be accepted. For example, when functional managers argued that they had other priorities than Klant 2020, the organisation s top management intervened to make clear to everyone that the digital transformation programme was the absolute priority. The greatest challenge was making employees think like customers (instead of like bankers or insurers). Through tangible storytelling and by showing real-life evidence, it was stressed how digital trends were significantly impacting customer experiences and value perceptions. The threat of digital disruption was brought to life by relating real customer stories and what it meant to live in a digital world (instead of stories about the industry or the competition ). In this way, KBC s old value offerings based on we have the most advanced product for you and we have the best experts to explain the products in full detail were transformed into new value offerings, based on you can buy your product quickly and easily and we provide you with the best tailored solution in the fastest way. Engaging and energising the organisation Communicating and inspiring employees Company-wide conferences so-called Inspiration Days were organised several times a year. These conferences were central to the Klant 2020 communication strategy (See Exhibit 2). During the events, members of the Klant 2020 teams, as well as external speakers, informed KBC s employees about the progress of the Klant 2020 programme, its successes and the need for KBC to become more digital. The Inspiration Days had two primary aims: on the one hand, they focused on sharing insights into the Klant 2020 goals and strategy with the entire organisation; on the other hand, they were about creating energy and an open, inviting atmosphere. Continuous feedback posifve or negafve was sought from stakeholders and the broader employee base. The team installed giant message walls in the hallways for people to share comments and suggestions; and screens were put up to display Twitter feeds, thus bringing in the voice of the customer. Inviting and empowering talent KBC reached out to its employees and asked them to share new ideas that would transform KBC into a more digital and customer-centric organisation. By working on projects in an agile way, 4

5 participating in bootcamps, and continuously doing cross-project consistency checks, these employees were driving Klant Each project started with clear performance targets. The staff proposed them, defended them, and were accountable for both successes and failures. KBC staff working on the Klant 2020 projects were continuously confronted with the need for new skill requirements, including e-commerce, digital marketing and IT skills. A major part of their learning experience consisted of on-the-job training, relying on the help of team members, and supported by training sessions. Because the projects also had to deliver results fast, team members were required to adopt an attitude of doing things quickly instead of elaborately. Partnering with entrepreneurs KBC had set up various collaborations with entrepreneurs and innovative companies. For example, KBC had teamed up with 6 other organisations to launch Start an incubator offering free office space, coaching, training and networking facilities to early-stage start-ups. 3 The idea was to bring expertise to start-ups, while connecting employees with entrepreneurs. Another example was the partnership with mobile operator and innovative ecosystem builder, Mobile Vikings, to launch its spin-off CityLife, which offered a digital customer loyalty platform for local merchants. 4 Creating an internal labour market To successfully transform the company, Klant 2020 required a transparent internal labour market. Employees were invited to engage in an unprecedented opportunity to re-create the company. The programme was presented by the management team as the way to develop individual ambitions together with other motivated KBC employees. Personal development was offered in the form of coaching and mentoring. Collaboration was incentivised by putting team performance before individual performance. Successes were celebrated whenever major project milestones were achieved. A Wall of Fame was created, showcasing employees who successfully completed a major project or milestone (See Exhibit 2). When Erik Luts left the stage of the SAS Executive Vision Forum, he felt confident that although KBC had just started its digital journey and still had a long way to go the company was well on its way to embracing the digital age. 5

6 Exhibits Exhibit 1 Klant 2020 preparing for the digital age Exhibit 2 Enhancing engagement - illustrating Inspiration Days and the Wall of Fame 6

7 Exhibit 1 Klant 2020 preparing KBC for the digital age Source: Erik Luts, SAS Executive Vision Forum (2015) 7

8 Exhibit 2 Enhancing engagement - illustrating Inspiration Days and the Wall of Fame Source: Erik Luts, SAS Executive Vision Forum (2015) 8

9 Footnotes 1 SAS Institute, or SAS, is a global leader in business analytics solutions. 2 Verweire, K. Viaene S. & De Prins P. (2015). KBC s Digital Transformation (Part A), p Start was founded in 2013 by KBC, together with Cronos, iminds, Flanders DC, the University of Antwerp, Mobile Vikings and Accenture. See 4 On 30 January 2015, Mobile Vikings, KBC and investment company LRM announced the creation of CityLife Belgium, the company behind the brand CityLife. CityLife offers a marketing platform for local merchants, built around a digital loyalty card. Users earn digital stamps, which they can spend for advantages in the shop where they have collected them. In addition, CityLife hands out citycoins, which can be used with different CityLife partners. See 9