This is how the new model works at the largest Hungarian life insurance company
How can we replace the well-established, but by now slow and cumbersome company silos to open up the way for fast, purposeful and successful Agile teams? After discussing the basics of Agile, and the challenges of scaling it up, let's get deeper into the ins-and-outs of operating in an Agile way. Let's see how an Agile organisation is structured.
How is this new structure different from the old one? How are the often cited cross-functional teams organised? What new functions and roles should we plan to establish? Last but not least, how does all this guarantee a more effective fulfillment of customer expectations and corporate strategy? We will answer all those questions in this piece by Boston Consulting Group and NN Insurance through the example of the Hungarian insurer, starting from strategy to the level of the individual employee.
1. We must build the Agile organisation directly on strategy
In textbook examples, the organisational structure is perfectly aligned with corporate strategy: if you look at the organisational chart, it reflects the company's goals and operating model. However, that is rarely the case in practice.
Scaled Agile - when Agile is extended to the entire organisation - provides the opportunity to create this perfect alignment between organisational structure and strategy. Naturally, smaller or larger organisational units continue to exist in Agile, you will see that as we discuss them one by one. Still, we will be able to create a more unified framework to implement corporate strategy. We will be able to establish corporate segments which will be capable of implementing independently the strategy direction assigned to them, and which will be fully responsible for doing that.
2. New corporate structure and culture will replace the old operational functions
How did this work under the old organisational structure? The organisation was divided up along the various functions, thus each unit worked on a particular slice of the task, meaning that when they finished, the job was passed on to the next field of expertise. However, in practice, customer experience is simply lost in this system due to over-segmentation or because the solution developed over several years will be outdated by the completion of the development process.
In Agile, however, we give our organisational units an end-to-end mandate to achieve their assigned goal with the available resources. This end-to-end responsibility guarantees that no chain-like dependencies will develop, avoiding the silo model's mechanism, when one unit had to wait for the other one to finish. In an appropriately designed scaled Agile model, the sum of the organisational units makes up the entirety of the strategy, and possesses all the resources, including the knowledge and other capabilities as well as the mandate to make decisions, to complete the task.
This is the structural framework. A sense of ownership, which we already mentioned in the first part of our series, will supply content to this structure. Namely, that the employees identify with the task, for which we assign them autonomy, empowerment and support. This culture will ensure that we will not create a make-believe Agile under the new corporate structure.
3. We build our new organisational structure on tribes and squads
On the basis of all these, we identified three clear strategic directions for NN Insurance Hungary. We assigned each of the strategic directions to a new organisational pillar, the tribe.
- The mission of the salesforce tribe is to ensure that sales are executed by the company's tide agent network at the highest level of customer experience and at maximum efficiency.
- The purpose of the new channels development tribe is to develop new sales and engagement channels.
- The customer care tribe is responsible for post-sales customer experience, developing digital customer service further, and simplifying and automating processes.
At NN Insurance Hungary, tribe leads are an integral part of the management to ensure the consistency of the tribes' operation. Thus everyone has the information they need, and we can share the resources optimally among the tribes. Furthermore, this measure ensures that all levels of the organisation are Agile.
The basic units of the tribe are the squads, which are teams of about 8 to 10 people. The squads carry out the implementation of the tasks and determine what changes are needed to meet the goals. All the expertise needed to achieve the goal is present in these cross-functional teams since they consist of colleagues from each required field, be it the IT developer, the marketer, the tester, or anyone else. The key to team success is that these diverse colleagues work closely and effectively together to create the highest value-added to the given task.
4. The chapter ensures professional standards and that no silos will be created
We establish a two-dimensional organisation in the scaled Agile operating model. One dimension is provided by the tribes and squads just discussed, and the other by the so-called chapters. The chapter brings together professionals from every given discipline, such as all IT developers, all product developers, or all marketers. That means squad members are also chapter members. The squad sets the daily tasks and the chapter provides the professional support necessary.
The chapter's job is to guarantee the professional standards. In order to achieve that, it must ensure that a sufficient number of qualified colleagues are available in the given chapter for the given task. It also must uphold and continuously improve the professional standards, e.g. through trainings. The chapter aligns the work carried out by the tribes and squads so that the tribe and squad members will not work on conflicting or duplicated tasks. It also performs all related operational human resources tasks.
Thus, the chapter ensures that no new silos develop from the tribes, and that the new way of working is adopted. We at NN thought it best if all our employees become part of a chapter - regardless if they work in a squad. This way we can provide them professional support in a scaled and unified way. Naturally, we can decide to do that differently if that fits the specificities of the organisation better.
5. We can maintain the agile teams' pace with new roles and a brand new feature
Since we started the presentation of the Agile organisational units with the tribes, let's continue with them again, now focusing on Agile roles. Let's see what we should know about the tribe lead function. He or she is responsible first and foremost for reaching the strategic goal. To this end, the tribe lead sets the priorities and helps the tribe's operations with coordinating resources, tasks and responsibilities.
The product owner is responsible for the products he or she is assigned to - be it product development, IT or a work organisation initiative - supporting the work of the squads. With the product owner's help the teams, in light of the business need, will divide the entire task into annual and quarterly sections, and finally into two-week iterations. Thus the team will be able to deliver something specific at the end of each period. In the meantime, the product owner also keeps in touch with the customer - be it the company's client, the management, another tribe or even an external actor - to exchange information and feedback continuously.
As for the other organisational dimension, there is the chapter lead, who is responsible for the effective and efficient management of the four functions of the chapter. The question that may arise is: who should the chapter lead report to? At NN Insurance, some of them report to the tribe leads and others to a member of the management responsible for a particular function. But this may also be done in another way at another organisation.
Here we have arrived at a real curiosity, because the next role does not exist at all at a traditional organisation. This role is no other than to support operations. His duty is to boost the effectiveness of the staff and of the organisation by introducing and fine-tuning various elements of the Agile way of working, be it stand-ups, other events or any other internal mechanisms. At the strategic level, this position is the agile coach, and his or her role is to support the tribes and their full transition to ensure alignment. At the operational level, that person is the scrum master, who is responsible for the squads' day-to-day methodological support.
This is especially important initially because experience has shown that the teams usually hit stumbling blocks after the first few weeks, when the first difficulties emerge and by when they have gained some experience of the new structure. The scrum master accompanies the team on its development path and provides advice to overcome these ups and downs. Thus the scrum masters and agile coaches do not work directly on the tasks the team is working on. This may be incomprehensible for some people in the beginning, but if we integrate this function well, it will soon become obvious that they can further strengthen the effectiveness of the squads and the company.
6. It is up to us where we put the run and change activities
Finally, we need to introduce another twin concept: change and run activities. In an agile organisation, some of the colleagues work directly on the implementation of the strategic goals, while others work to ensure normal business operations, so, let's say, the company can open every day. The former activity is the change and the latter is the run activity, in a nutshell.
But where do we rank these activities? At a first glance, it seems obvious that only the colleagues engaged in change activities will make up the agile tribes and constitute the squads. However, it could be worthwhile to include run activities or some elements of the run activities in the tribes to ensure the unity of the organisation, the creation of actual end-to-end responsibility, and the interrelation of the various functions. Again, the decision should be based on the characteristics of the organisation.
At NN, we reckoned that the latter suits the organisation better. That is why one third of the staff perform change and another one third carry out run activities in the tribes. The remaining one third do other support functions such as compliance, controlling and similar control functions, but outside the tribes. This mixed lineup poses no problems, because some agile methodological elements can support some run activities. As an example, NN's procurement department visualizes and follows current tasks using a kanban table.
This, however, is still only the skeleton of the Agile organisation. We need to add the appropriate competencies, skills and attitudes. Not only the co-workers' roles change fundamentally in an Agile organisation, but those of the leadership as well, meaning that completely new leadership attitudes and competencies will be required. The next chapter of our Agile series will discuss just that.
About the authors
- László Juhász, Senior Partner and Managing Director of Boston Consulting Group. László is a leading expert on agile, he has supported several agile transformation projects.
- Imre Sztanó, Chairman and CEO of NN Insurance Hungary since March 2016. Imre launched and sponsored the company's agile transformation.