While the financial services industry is no stranger to business transformation, the pandemic forced businesses to expedite the pace of change. Eli Rosner, Chief Product and Technology Officer at Finastra said: “It feels like the fast forward button has been pressed. I think it was burgeoning even before COVID-19 hit us, but the pandemic has just taken it to a whole new level; it’s forced everybody to think differently about their business.”
Deloitte has identified four areas of transformation triggered by COVID, including wider adoption of digital services and online engagement with customer service teams. Many of these changes were long overdue given an increasingly tech-savvy consumer base. However, even when change is necessary, transformation is never a straightforward process. Recent research from Firstsource found that 81% of financial services executives rated transformation programmers as stressful or incredibly stressful.
To help financial services leaders navigate complex change projects, Firstsource research revealed five Leadership Lessons to ensure that change initiatives are more likely to succeed.
Tempering over-optimism by having a success-range
Projected benefits and costs of change programmers are always impacted by some unknown unknowns. The pandemic has exploded many new challenges out of the water, and one thing is sure, more unknowns lie ahead.
It is no longer about having one well-defined success criteria, business cases need an upper-bound and a lower-bound success range. Factoring in various case scenarios e.g. from 40% to 70% efficiency improvement, will allow project leaders to navigate and pivot within that ‘success band’. In truth, the project is likely to fall somewhere in-between but seeing outcomes as a scale will mean there is an agreement from the outset that there needs to be room for manoeuvre to hit that upper band.
Fully assessing the impact
Transformation projects are never self-contained, they affect the whole organisation impacting systems, processes and even company culture. However, many leaders are failing to plan for the knock-on effects of these projects. A COO involved in the study said: “I find that most proposals haven’t considered the implications for adjacent systems and processes. Then you end up with project overruns and you’re into more money than you’d originally planned. I kicked proposals back for that, more than any other reason”.
The research demonstrated a lack of established wisdom when it comes to how to best assess the impact of a change project. However, many leaders wished they had taken the time to consult senior executives across the businesses and noted where they seem apprehensive. Another key regret was not considering the overall ‘quantity’ of change and how this would impact particular groups within the business. These are important learnings for finance leaders looking to drive transformation.
Ensure dissenting opinions are heard
It is human nature to amplify the opinions that support our own and disregard dissenting data. However, this approach is detrimental to leading a successful change project. To optimise the chances of success, leaders need to actively search out dissenting opinions – this is the only way to ensure that the business case has been robustly tested from all angles. In the Firstsource study 43% of initiatives rated successful had considered dissenting opinions, compared with only 13% of less successful ones.
Setting up steering groups that include naysayers is a useful way to surface a wide range of opinions. One CFO said: “Try to have a steering group that involves people who are pro and anti – both sides of the story. It means you bring them into the fold so you’re closer to what their concerns are, but also gives them an opportunity to feel that they’re part of the process. That’s important”.
Choosing suppliers who can put some skin in the game
To run an effective change programme suppliers should be embedded into the process. As one Digital Director noted: “In an ideal world you can’t tell who is a supplier and who is an employee, everyone is working together to get the right outcome”. External stakeholders such as consultants and outsourcers should be included in steering groups and have a unified structure in place for project governance.
The Firstsource study found that senior executives are largely comfortable when it comes to managing suppliers. However they noted two key areas that need to be improved. The first is evaluating suppliers for cultural fit before commencing a transformation project. The second point is the importance of creating an informal avenue for frank conversations at senior level; this is critical for preempting and troubleshooting issues before a project is derailed.
Managing the emotional marathon
In any large change project, there will be emotional highs and lows. You hope for a series of big wins, as new capabilities go live and results come through. But inevitably there will be some legitimate low points. Managing his emotional roller coaster is hard; 70% of financial services providers rated it as ‘difficult’ or ‘very difficult’. As one CFO put it: “You can become over-focused on a programme. You actually live and breathe the whole thing yourself. When it’s going badly, you’re going badly, and when it’s going well, you’re going well. You take on the personality of the stage of the programme you’re in. And that makes it very, very tough.”
The research showed that the most common approaches to managing the emotional marathon all relate to nurturing a positive culture. An easy fix is committing to celebrating individual or team wins; this was an initiative that 64% of respondents put in place to better manage the emotional marathon. Other measures included learning from mistakes while avoiding a blame culture and taking an empathetic approach when things inevitably go wrong.
Leadership lessons for transformation
The financial services sector is defined by fast-paced change and this should be seen as a huge positive. Taking an agile approach, and flexing to fit customer needs, results in a more robust sector that better serves the needs of end consumers. However, delivering transformation projects is a complex, high pressure endeavour. But, as our research demonstrates, there are common mistakes that can be identified and preempted to make the process smoother and more efficient. By factoring our Leadership Lessons into the planning process, transformation leads will be better placed to deliver successful outcomes while managing the human impact on delivery teams.