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Human Resources
Agility takes the lead at Rabobank
To embrace an agile working environment, Rabobank required a new brand of leadership.
With a trading history stretching back more than 125 years, Rabobank regarded itself as a client-centered cooperative bank with roots in the food and agriculture sector. By the 2010s, however, the competitive and consumer landscape in financial services had shifted. The combination of a low-interest-rate environment and the widespread digital transition had heightened consumer and employee expectations. At the same time, economic uncertainty made it difficult for brick-and-mortar banks to operate successfully in the medium and long term. To remain relevant, they urgently needed to develop greater flexibility, customer-centricity, and efficiency.
For Rabobank, an agile working model was the solution that would unlock and mobilize these organizational attributes. This initiative kicked off with the appointment of CITO Bart Leurs and new CHRO Janine Vos to Rabobank’s board in 2017. Coming from a non-banking, IT-oriented background, Vos in particular brought a dynamic, tech-friendly outlook to the boardroom.
The bank set up its Digital Hub in January 2018 to showcase the new, agile processes and demonstrate the added value to the customer, as well as to the organization itself. In Q4 2018, these measures culminated in the board officially committing to Simplify@Scale, a new organizational design for greater agility.
With the implementation of an agile organization across Rabobank’s global operations, the issues that came into the spotlight included the development of a new organizational culture and a commensurately agile leadership style.
A scalable squad network
The strength of Rabobank’s agile organization rested on the use of squads – small, cross-functional, multidisciplinary teams of 7–10 full-time staff. These self-organizing squads could allocate resources more flexibly, bringing together different backgrounds, such as tech delivery, architecture, design, data science, marketing, and HR, to work in synergy towards a shared business goal. This was a stark departure from the days when product or service experts operated in isolation from developers.
Squads were grouped into “areas” and “tribes.” Each area typically contained 8‒10 squads working together towards a bigger goal. The organizers grouped 5‒7 areas into a tribe. Product owners set priorities and were responsible for developing overall product vision and strategy. “Chapters” – another building block in the agile setup – focused on a specific field of expertise, for instance, tech delivery, architecture, or design. Chapters sought to improve the process (the “how to”), and tribes decided what to work on.
In an agile approach, all phases of the project or initiative took place over several shorter cycles or “sprints”, which lasted just two weeks each. After a single sprint cycle, a minimum viable product (MVP) was made available for use (e.g., the basic functionality of a new IT application). Once each sprint was complete, teams had to share their progress during sprint reviews and decide on conflicting priorities during the quarterly business review.
“For Rabobank, an agile working model was the solution that would unlock and mobilize these organizational attributes.”
Vos explains: “We created a limited set of clear roles with responsibilities. Within the organization, we use the quarterly business review to set priorities. This process provides guidance for teams on how they can contribute to the most relevant issues within Rabobank.”
A new style of leadership to Simplify@Scale
Rather than implement a complete leadership reset, Rabobank looked for leaders with the ability to change the context of work and sow the seeds of a new company culture.
Tribe leaders were required to embody a specific mix of experience – affinity for IT systems, content knowledge, stakeholder-management skills, execution, and the ability to set the direction for the hundreds of members of their tribes. Kiki van den Berg, co-leader of the agile transformation responsible for HR strategy, provides a background perspective: “We looked at candidates’ potential, not for a perfect fit. It was about adapting to the new structures; organizing the process for the team, instead of running the show through an Excel spreadsheet. If we could jointly set the right context, the people in charge would likewise improve.”
Leaders would also have to assuage workforce anxiety around abandoning the traditional hierarchy. The emotional and operational legacy of decades of top-down, bureaucratic-control leadership would take time to overcome. Leaders were to infuse the organization with their passion for and faith in agile processes. They would achieve this through tirelessly explaining the context of Rabobank’s competitive landscape and long-term business objectives, and the use of enhanced agility to meet those objectives.
The core of this new style of leadership is nurturing people through guidance and support, rather than simply setting rules and relaying instructions.
Balancing autonomy and expectations
In 2019‒20, with the range of digital offerings growing fast, Rabobank transferred 10 tribes and 300 squads (representing around 3,000 staff), to an agile work model. Agile was now expected to deliver results and business value, day to day – and, by extension, so were the business’s leaders. To make that happen, the company would have to fulfil its promise to grant teams the autonomy to self-organize and create.
The new structure, in which teams could work undisturbed, with as little red tape and as few top-down processes as possible, won over the workers. However, leaders had to manage expectations that “autonomy” meant unbound freedom to pursue creative projects to the exclusion of other, more mundane, tasks. Managers had to reinforce the message that autonomy meant alignment. The mantra that soon emerged was “freedom within a frame.”
In this environment, a powerful way for leaders to empower their people and instill confidence in the system was to retell Rabobank’s strategy story. They found they could break it down into simple but memorable statements: “We manage the system, not the people.” “Let the teams decide.” “Only step in when you see that the system isn’t working.”
Another agile game-changer for leaders was the removal of impediments, bottlenecks or any other obstacles that could hamper the delivery of value to customers. Dismantling these siloes without reverting to an autocratic leadership style was the real test of an agile leader and required active, empathetic listening to build a circular culture of giving and receiving feedback.
Alongside more formal individual and team learning, a drive to stimulate peer learning was the core of the new agile leadership style. Slowly but perceptibly, it drove the bank’s transition from a knowledge-based to a learning-based organization. Throughout, leaders lay emphasis not on managing people (at least not directly) but, rather, the journeys, content and processes that engaged and shaped individuals.
Keeping the engine running
When agile was employed at scale, temporarily at least, complexity seemed to increase. Alongside the wealth of content, leaders had to consider the sheer number of participants. There were a host of regulatory tasks to handle, and monumental among them was decommissioning IT systems. For Rabobank’s staff, this created a huge additional workload, which contributed little to generating value for the customer, which was always the central promise of agile.
The way forward was to prioritize. This approach was not without its issues, however. Given the long-term, pervasive commitment on the part of all members of the workforce to craftsmanship and adding value, it proved difficult for many to accept that someone else’s work might be accorded a higher priority than theirs.
Patrick Weerman, Product Owner, Insurance, comments: “In the past, it was more about KPIs – although, in reality, you could just cherry-pick one or two big items you knew were going to impact your KPIs. But, when you bring it back to agile, you need more granular information to give the right priorities to the team.”
Developing learning capabilities through the pandemic
Rabobank established “empowering employees” as one of its strategic pillars. Achieving its objectives required a focus on development, training and craftsmanship. A global learning and development team was tasked with shaping employees’ growth experiences. Everyone working for the bank, leadership decided, should have the opportunity to learn continuously; receive assistance in adapting to change; and maintain a meaningful work-life balance, both at Rabobank and beyond. Moreover, individuals should be allowed to decide on their own development path and how they access learning possibilities.
The pandemic presented new challenges to developing learning capabilities within the bank. Appointing a program director in charge of new ways of working, Rabobank began to test a range of strategies for working from home effectively. To managerial relief, the new way of working and learning that the Simplify@Scale program had implemented created spaces for different styles of leadership. COVID-19 had blurred the lines between work and home, public and private, team and family. As such, leaders had to start asking different questions, such as: What is your home and working environment like? Are you coping with stress and burnout?
Going forward, Rabobank’s agile leadership will need to embrace the ambiguity and volatility of the outside environment. They should be hyper-aware of trends and customer expectations – not only in banking but also in non-banking segments – and, indeed, broader changes under way in society.
“Rabobank established “empowering employees” as one of its strategic pillars. Achieving its objectives required a focus on development, training and craftsmanship.”
Takeaways for leadership agility
1. Set up cross-functional team structures to facilitate collaboration. The squads structure brought together team members with different backgrounds and skillsets to work towards shared business goals. This structure facilitated an agile way of working.
2. Look for potential, not perfection. When recruiting tribe leaders, the board looked for adaptable champions of the agile way of working. A “perfect fit” wasn’t sought; rather, management trusted that the agile context would guide the new leadership style.
3. Lead with passion. The task of leaders was to infuse the organization with their passion for and faith in agile processes. This would assuage any anxiety about the new ways of working.
4. Step up your story-telling skills. Leaders had to dispel misperceptions around autonomy. Retelling Rabobank’s strategy story in simple but memorable statements was a powerful way of reinforcing the messaging around alignment and empowerment.
5. Practice active, empathetic listening. This builds a culture of giving and receiving feedback and stimulates peer learning.
6. Ensure that teams prioritize effectively. With so many pressing projects in play, teams need to receive detailed, relevant information in order to decide what to prioritize and when. At the end of the day, everyone is still focused on delivering a strategy while adapting to unexpected circumstances.
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