Julian Birkinshaw London Business School

Scott Duncan Date:20/09/2016

Building an Agile Organisation at ING Bank Netherlands

From Tango to Rio

Bart Schlatmann, Chief Operating Officer of ING Domestic Bank Netherlands, sat in his
office in Amsterdam near the famous Ajax football stadium in Spring 2016 and reflected on
the next stage in ING Netherlands’ transformation journey. The last twelve months had seen
the introduction of a radical new way of working in many parts of the Head Office, and all
evidence pointed to it being a success.
Schlatmann had been involved in the whole transformation journey since 2006, but he knew
there were plenty of new challenges on the horizon. One was how to keep the model
evolving, so get the right balance between individual freedom and top-down control. Another
was whether and how fast to roll out this new way of working to other parts of the ING group.
Could this agile way of working be adopted quickly across the entire ING Group? Or should
ING wait until it was properly bedded-down in the head office operations before rolling it out
further?

ING Overview
While its history could be traced back to 1881, ING Group was formally established in 1991,
through a merger of three Dutch financial services firms. Through the 1990s, ING Group
expanded by acquisition into Belgium, USA, Latin America, Poland and Mexico. and in 1995
bought Barings Bank after its dramatic failure.
To expand its retail banking business overseas without creating a branch network, the
company launched ING Direct. The first of these was set up in Canada in 1997 and was
soon followed in a number of other countries including the USA, UK, Germany, France and
Australia. ING Direct offered a range of focused, no-frills savings accounts, mortgages,
payment accounts and consumer lending products. By 2010, it was the largest direct bank
in the world with over 23 million customers. By 2015, ING Group was the 4th largest bank
in the Eurozone based on market capitalisation.

Julian Birkinshaw is Professor of Strategy & Entrepreneurship, London Business School.

Scott Duncan is a Research Associate at the London Business School

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Merger of Postbank and ING Bank

In April 2007 the board decided to merge its two autonomous subsidiaries, Postbank and
ING Bank. Postbank had a large customer base (7 million retail customers) but no branches,
while ING Bank had a full range of products and service and a large branch network, but
fewer retail customers. As Nick Jue, Chairman of ING retail Netherlands, explained:
“We are taking the best features of the two banks and bringing them together… Our
Postbank customers can benefit from ING Bank’s strong personal advice capabilities
and ING Bank customers can profit from the strong direct banking formula of Postbank.”
Nevertheless, there were concerns: Postbank customers were fearful of being forced into a
more expensive banking model. Only 30 per cent of the banks’ employees said the merger
would succeed.
ING’s top executives realised the merger would require a new brand that was accepted by
customers and employees. The merger project was called Tango (“Together Achieving New
Growth Opportunities”) and was led by chief operating officer Bart Schlatmann.
Bart Schlatmann had joined ING Group in 1995 as a management trainee. In January 2007
he was appointed as Chief Operating Officer ING Retail Netherlands, with responsibility for
all products and operations, including the overall change portfolio. In operational terms,
Tango was essentially about migrating 8.5 million customers (of 16.3 million Dutch
inhabitants) onto a common IT system (based on the Postbank system), and to offer
everyone an integrated set of products.
Schlatmann put in place an extensive programme of internal communications, and he
installed a “countdown” clock before the merger and rebranding to “ING Bank” on 1st
January 2009. In television and print ads, the campaign featured conversations between
Postbank’s logo blue lion and ING’s logo orange lion. Through often funny exchanges, the
lions addressed questions about the merger. During the campaign, the blue lion gradually
became orange (the corporate colour of the new bank) until even the last blue tip of its tail
changed colour.
The bulk of retail customers were moved to the new platform in May 2009, followed by SMEs,
then private banking clients, mid-sized businesses and finally corporate clients. The team
had to overcome various IT challenges along the way including the lack of comprehensive
documentation of the legacy systems and the difference in account number structure
between the two banks. The migration was finally completed in 2012, cost €1.3 billion and
reduced headcount by 4,000 resulting in ongoing savings of €280 million a year. The process
offered valuable learning for Schlatmann and his team:
“First migrate the existing systems, then upgrade them. Transformation is best
undertaken at the top of an economic cycle when alternative job opportunities are
available for those losing their job, not at the bottom of the cycle.”

The Global Financial Crisis

When the US housing market started to crash in mid-2007, ING Direct USA had $32 billion
(€22.6 billion) in mortgage obligations on its books –largely because it had been compelled
to by US regulations – and like most other banks it was facing huge losses. The problem
became so big that ING first had to receive a rescue package of €10 billion from the Dutch

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state in October 2008 and subsequently negotiated a deal to transfer 80% of the portfolio of
problem mortgages to the Dutch finance ministry.
In 2009, ING Group announced its “Back to Basics” programme to cut operating expenses
by €1 billion in 2009, with 35% of the savings to come from staff cuts. In total, 1200 people
were laid off in ING Retail Bank Netherlands.
The same year, EU competition commissioner Neelie Kroes gave qualified approval to the
aid package, but she put pressure on ING’s executives to split the company into more
manageable units. It was agreed that the Group’s insurance arm would be hived off, a new
consumer bank formed, and ING Direct USA would be sold. A new CEO, Jan Hommen,
was appointed in October 2009.
There were also changes underway in the Information Technology operations of ING. Peter
Jacobs (CIO of ING Netherlands) and Ron van Kemenade (CIO of the group) embarked on
a shift away from the traditional ‘waterfall’ methodology for software development and
towards an ‘agile’ methodology. The effect was dramatic. As one executive recalled, “we
released a new mobile banking app, improved it every 3 weeks based on customer feedback
and within six months it was rated the best mobile banking app on the Apple’s iStore.”
Word spread quickly and as Henk Kolk, Chief Architect of ING Domestic Bank, said later,
“this little spark spread like wildfire to the extent that everyone wanted to use Agile.”
Scrum masters were brought in to assist and by May 2013, IT had been re-organised into
180 small teams who were responsible for developing the software and running it in
production. Teams used continuous delivery to release ‘minimum viable products’ and used
customer feedback to issue further releases which were improvements on the first one. As
a result, the time to market of software fell from around 13 weeks to less than one week and
the typical release cycle increased from four per year to every three weeks. At this stage,
though, the ‘agile’ methodology was only being applied in the IT function.

Less is More
In the aftermath of the financial crisis, weak economic conditions and increasing levels of
banking regulation in Europe were putting pressure on ING’s operating model. In late 2011,
CEO Jan Hommen announced the second phase of ING’s transformation, later called the
“Less is More” initiative. As Schlatmann explained:
“In Less is More, we actually started redesigning processes. We had over 2,000 different
banking operational processes at the start and by the end we had only 200. I can buy
something from Amazon in three clicks. So why do I need to ask my clients 36 questions for
a simple opening of a savings account?” I have all the data already so why should I ask the
applicant again?”
At that point, ING was a multi-channel bank, and each individual channel had its own
process for exactly the same product. For example, opening a savings account on the
internet had a different process than a branch, or an office dealing with mid–sized companies.
For Schlatmann, this made no sense: “We agreed to move to one process for all the
channels because the customer experience should be exactly the same.”
Schlatmann and his team set out to re-engineer the 2,000 processes that were part of ING
Retail Netherlands daily banking operations. They used Lean Six Sigma-trained “Black Belt”

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experts to assist internal staff, with no external consultants. Each key process took three
weeks, and had to pass through the “washing lanes” test before it was passed as “clean”
(See Figures 1 and 2).
Less is More took 18 months. There were some dramatic improvements, for example the
debit card application process went from 24 questions to 6 clicks. Customer satisfaction also
increased as measured by Net Promoter Scores – see Figure 3.
While this was going on, the broader restructuring of the Group was underway. ING Direct
USA and Canada were sold in 2012, and the UK operation was sold in 2013. The Dutch
state was repaid in a series of tranches for the aid given in 2008, with the final repayment
made in November 2014.

New CEO: Think Forward and the Omni-channel Strategy

Ralph Hamers – previously CEO of ING Belgium – became CEO in October 2013. In March
2014 he announced “During the past several years we have vigorously restructured ING
Group to make our company stronger, simpler and more sustainable. Now that we are in the
end stage of the restructuring…we are proud to be in a position to look ahead to the future
of ING Bank – to Think Forward.” This would include:
 “Clear and easy- to - understand products
 Anytime, anywhere service based on mobile-first, omni-channel experience
 Empowering customers via personalized interfaces
 Service that would keep on getting better by continuous improvement and set the
standard for customer service.”
In the summer of 2014, Schlatmann and his team were considering how best to implement
Hamers’ Think Forward strategy. They had a track record of successful transformations as
a result of TANGO and Less is More, and they had shown the value of looking outside
traditional banking to find new ways of working, for example Amazon’s 3 click sales process.
They were also aware of the potential disruptions to banking, from peer-to-peer lenders like
Prosper through to payments providers like Paypal.
So when Schlatmann met with strategy consultants during that summer and listened politely
to their recommendations to close branches in Netherlands – the conventional wisdom at
that time- he said “No, let’s do the opposite, be disruptive and open some branches to reach
out to more of the 8 million Dutch people who currently do not bank with us.” He continued:
“While 10% of customers use only our digital channels Internet or mobile and 10% of
the clients only use physical distribution channels (call centre, branches, sales forces),
the remaining 80% use all of them. So if you just close our branches then you actually
cut out also a lot of the people who are actually feeling uncomfortable and want to
have face-to-face contact with ING.”
He also knew that one of the biggest frustrations for customers was a lack of channel
compatibility. They might start applying for a mortgage online, but when they got to a
mortgage adviser at a branch they would have to start all over again because nothing had
been captured. He was determined to change this:

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“How cool would it be if after using one of our call centres the previous night, you went
to the branch who said “Hey, I saw that you had an eleven o’clock call with our call
centre regarding savings. Were you helped correctly?”. You would be totally surprised.
That whole concept is called omni-channel, the seamless switching between channels.”
These internal discussions coincided with the 2014 football world cup in Brazil. With Rio de
Janeiro in mind, it was decided to call phase three of ING Bank Netherlands’ transformation
journey RIO, which stood for Redesign Into Omnichannel. During the next five weeks,
Schlatmann and a small team of five developed the vision. As he later put it:
“First we developed the Why - a clear customer-focused insight into the need to do
things better, to switch seamlessly between channels, to overcome silos. Then we
developed the What - the business plan to implement the vision and remove silos. If
you want to be successful in omnichannel, you cannot have silos because silos mean
internal handovers which means disruption in service. The How – use of Agile – came
later.”
Schlatmann first gained the support of the entire Board of Directors of the Netherlands Retail
Bank, then he went to the COO of the Group, Roel Louwhoff, and finally to the Board. On
25 November 2014, the green light was given. The company announced a “major change
programme” to introduce a “seamless, real-time customer experience across all banking
channels.” It would involve investments of €200 million in 2015-17, and significant cost
savings in the form of 1,700 redundancies.
But the question, how should the retail bank structure itself? was still entirely open. As
Payam Djavdan, a member of the RIO team, recalled, “At that stage, we had announced
that we wanted to eliminate our silos in our organisation and shed over 2500 staff, but we
didn’t have a clue on exactly how we were going to do it!”
So a small team led by HR gathered internal opinions, and asked what problems needed to
be solved. “And what people said was, first of all, eliminate bureaucracy, take out all the
layers, give us more responsibility and empower us.”
Schlatmann continued “I think the most important step was to acknowledge that even a bank
in the end is a big tech company. We have lots of data. We are more and more dependent
on technology, even in a relationship model. So let’s look at what makes those tech
companies successful. And that’s how we started the journey in December 2014”.

Inspiration from Stockholm

Schlatmann and his colleagues started seeking inspiration from tech players like Google,
Facebook, Amazon, Netflix and Spotify. “We stopped looking at banks. It sounds very
arrogant but it actually makes us lazy. You need to look at companies that need to fight for
their clients every day, like Amazon.”
They observed that it was possible to structure an organisation very differently based on
Agile thinking but noted that to be successful, the deployment of Agile working needed to be
applied end–to-end including customer interface and technical implementation, and not just
as an IT methodology.
They contacted Spotify and in December 2014, Schlatmann and a small team including
ING’s HR Director and Chief Customer Officer spent a day in their Stockholm head office.

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Spotify – a relatively small company with 1200 or so staff - were very helpful and open. The
ING team asked question after question, and quickly realised that “If we want to transform,
if we want to be different, we need to learn. In Spotify, people are fully empowered and are
responsible. If they build some technology stuff, they put it in production - nobody else. They
are responsible. If it goes wrong, they take it out, fix it and put it back.” This was very different
from the lengthy process used traditionally to develop and deploy software at ING.
The ING team were told that a new Spotify engineer brought down the entire IT system on
his first day, and instead of firing him, they celebrated it. Spotify’s chief architect explained,
“He found a weak spot in the system, so instead of saying what have you done, we
said great! You have found something we didn’t find. Normally, in a traditional IT
company, I would be saying, you should do this, you should do that.”
Over a drink that evening, the Lead Architect commented to Schlatmann, “I can see you are
fascinated by our way of working, but it’s not that easy. A key question for you and other
senior executives is: how much are you willing to give up?” He was referring to control and
power at that stage.
An important part of their visit was a conversation with Danielle, one of Spotify’s Agile
coaches. As Schlatmann said, “She explained why Spotify really didn’t have a lot of
management and why the role of agile coach was so crucial.” Like a soccer coach, her job
was to help bring out the best in the teams she supported.

Building an agile template

The ING team were “blown away” by what they saw at Spotify, and they decided to use it as
the template for their new operating model. Schlatmann and a team of four, plus a facilitating
consultant, spent a week off-site in January 2015 and developed the template for the new
agile way of working. They quickly agreed on the following key elements:
Squads. These would be self-managing, autonomous units, of maximum 9 people, working
together in a shared space, with end-to-end responsibility for a specific customer-focused
project. A squad would bring together colleagues from all the disciplines that were needed
to complete the project successfully (e.g. marketing, product management, data analysis,
user experience and IT), including a “Product Owner” with responsibility for the product to
be delivered and one “Customer Journey Expert” who would delve deeply into the
customer’s requirements, motivation and behaviour. At the end of a project, the squad would
be disbanded and the members set to work in other squads.
Tribe. This would be a collection of squads with interconnected missions, for example
mortgage services. Each tribe would be coordinated by a Tribe Lead who would oversee
priorities and budgets, and ensure the necessary knowledge and insights were shared with
other tribes.
Chapter. This would be a cross-cutting entity of maximum 7 people, providing coordination
within an area of expertise, for example data analysis or customer journey expertise. The
Chapter Lead would be responsible for horizontal coordination in a particular area of
expertise and would also be a squad member.
Agile Coach. These would cover several specific squads and help them grow and to work
as a high-performance team.

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Centres of Expertise. While almost all work would be done in squads, it was recognised
that special centres of expertise would be useful for scarce or specialised knowledge such
as Communications.
Rethinking the entire organisational model from the ground up was exciting but daunting
work. One team member commented, “We had to think very carefully about the make-up of
these squads, and not just recreate all our old functions under headings. The guiding light
in all this was the customer: every squad had to serve a real user need. This allowed us to
eliminate and simplify a lot of things.”

Overcoming Hurdles
Implementing the agile way of working was never going to be easy. The first hurdle was the
Works Council, responsible for the interests of all workers within ING (equivalent to an
internal Union). The council members quickly understood the need for change, but
Schlatmann and his team had to work hard to explain how the agile methodology would
actually be beneficial to workers. “At first, the Works Council were shocked but on the other
hand, they felt this was the chance, the one-time chance to really change the organisation.
So actually, yes, they were willing to support us in a very positive way.”
The next potential hurdle was the board of ING Group. Schlatmann and the Netherlands
CEO, Nick Jue, discussed the proposal with key executives, including the CEO Ralph
Hamers, and while some were initially “nervous” the overall view was strongly supportive.
“We had built up a strong track record, so the board sign-off was straightforward.”
The final obstacles were the bank regulators, the Central Bank in the Netherlands and the
European Central Bank. Schlatmann described what happened:
“We informed our regulators and actually, they were a bit concerned. They were afraid
because first of all, this was so unique within the banking industry, they’d never seen this
structure and way of working before. They felt that Agile meant no control. We showed them,
however, that that notion was totally incorrect. Agile, in the way we planned to do it, would
be extremely transparent with daily progress reports and questioning of any lack of progress.
We actually hosted a group from the European Central Bank in our offices, to show them
how it would work.”
Schlatmann and colleagues committed to start the agile methodology rollout in
Headquarters and follow later in the operations. It was also agreed that the functions of
finance, compliance and legal – ING’s “second line of defence” – would continue to be
managed in their traditional way.

Preparing for the new organisation

The vision for omnichannel was announced in November and December. Some of the
communications were at “two pizza sessions” –no bigger than could be fed with two
American-sized pizzas- where attendees could give open feedback on the RIO plan and
influence the eventual way forward.

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To prepare for the transition, they needed to find the right people for the key roles. This
meant that “Everybody lost their job; everyone went to the new hiring process,” explained
Schlatmann. “We also decided that you cannot select your own people: a hiring team will do
it for you.” Another rule, later explained by Jaap Kok, an IT engineer, was that “The way the
reorganisation was set up was that you applied for a function or a role but not for a specific
team.”
The job descriptions of the first roles to be filled - Tribe Leads – were posted on-line on 1
February 2015 along with the application process. Heidi van Eijk, described the process:
“I had to decide within one and a half weeks whether I would go for it or not. I took
psychological tests about my personal values in relationships, power and performance, then
underwent a selection process including two interviews with members of the board and a
third with HR.”
Van Eijk was not in a senior management position at that time, she was one level below. But
she decided to go for it anyway “because it sounded exactly my type of culture and my type
of model.” As she recalled, “It was not so much testing me on the content of the job – which
was also in there – but a huge part of the selection process was mainly about, does this
person fit in this model?”
The new Tribe Leads, including Van Eijk, were appointed in March and attended an intensive
one day on-boarding event at Schiphol airport, to introduce the new agile model. Some
Spotify people also attended, to share their experiences and ensure the concept was
properly understood. This process was then repeated for Chapter Lead roles. Maartje
Geeven, one of the newly appointed Chapter Leads, recalled, “We had agreed our overall
chapter structure, but this was about making the entire puzzle work, rather than me selecting
my chapter team.” They assessed 600 applicants in eight days. Those who were not
successful were assisted in finding other jobs in ING or outside ING.
Next were the Agile coaches. Lieke Jansen described her experience: “There was a 360
degree review on me, then in the interview I was presented with a business scenario; if this
happens to you, what will you do as a coach?” The emphasis here was on finding people
who wanted to help others, rather than run the show. “Some of our old-style managers didn’t
fit this role,” recalled Schlatmann, “it turns out, being a good agile coach is extremely difficult
– these were tough roles to fill.”
Agile Coaches were given an intensive 2-4 week course led by a leading agile consultant in
the Netherlands, in using techniques such as daily stand-ups, sprints, retrospective and
portfolio boards, the roles of product owner and Agile coach. Lieke Jansen also recalled that
“the chairman of the Dutch Olympic Committee helped with teaching us about team-spirit.”
Some people from Spotify were also brought in.
The result of the selection procedure was a dramatic change in the make-up of the
organisation. As Schlatmann put it “30% of the senior management was out. 70% of the
remainder got a new job! ”
Starting in March, five squads were formed to trial the methodology – they called it The Lab.
The volunteers were enthused by the opportunity (“that’s where I want to work,” said one),
but during the trial some became disheartened, as they felt there was a lot of internal
resistance. As Payam Djavdan said “They were boxing against the rest of the organisation:
they were driving on the other side of the road.”

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The last major event before the new organisational structure went live was a large
“onboarding” event in the Amsterdam Arena stadium for all 2,500 employees working in the
new organisation.

RIO Goes Live

The new organisation went live on 15 June 2015: 14 tribes each with a defined purpose,
broken down into 350 new squads plus a number of existing IT squads already using Agile
and working on legacy systems. As Henk Kolk said, “our commercial colleagues have joined
us in IT in using Agile!”
Tribes were subdivided into 3 types: Experience tribes which focused on attracting
customers, Service tribes which took care of customers after they had been attracted, and
two Enabling tribes. One enabling tribe built black-box technical solutions such as customer
identification. The other built the framework for omnichannel solutions, with 40 User
Experience specialists (“UX’rs”). One UXr, Maartje Aangenendt, described her role: “We’re
very focused on the user; we put ourselves in the position of our customer, to see how their
needs can be best served and take a close look at their behaviour… We are peeling the
orange, and get to the essential need to be fulfilled.”
Immediately after go-live, Tribe Leads asked each squad to formulate their individual
purpose, as a way of enhancing their own sense of ownership. Heidi van Eijk, Tribe Lead
Experience Daily Banking explained: “Even though there is a clear tribe purpose, we want
every squad to own its own purpose.” For example, the Consumer Loans squad in Van Eijk’s
tribe wrote its purpose thus:
‘’We offer you a fitting credit solution to achieve your goals …You are aware of lending
money as an option for these goals, and make your choice in a well-informed way,
with a good feeling, now and later.’’
One of the Payments squads wrote:
‘’We understand that payments are required to buy things and to do what is important
to you. You want a convenient digital payment experience that meets your specific
needs. Therefore, we introduce innovative payments and inspire you to make the most
of them, now and in the future, as you grant your primary banking relationship to us.’’
These draft squad purposes were then presented at meetings of the whole tribe and were
modified and refined over the next few weeks. Van Eijk recalled other aspects of the early
days:
“There was so much uncertainty. We were in a new building, people were in new teams,
most people were on a new subject, content wise. In the beginning everyone was
concerned about where is my desk, which kind of place do I have, where’s lunch, what
time do we start …The agile coaches were there to facilitate and they just did their
very best in making people enthusiastic and getting them into this new agile way of
working as soon as possible.”
Experience tribes were focused on attracting customers. For example, Heidi van Eijk was
Tribe Lead Experience Daily Banking, and described her work as follows:
“We try to make a customer impact in three areas. The first is attracting customers to
use ING as their main bank, mainly using our digital interfaces. Second is the
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Financially Fit area where we help customers to make the right decisions with money.
Third, we don’t only want you to have your daily banking account with us, we want you
to shop with us for related services. That’s having all your financials under one roof,
as we call it.
Experience is about bringing the customer on board. As soon as they open an account
or they pick up the phone to the call centre, then it’s the Service tribe that takes over.
However we also have some tools to help people decide between various financial
options; for example, I’ve got €50 000, should I start saving or is it better to repay my
mortgage? People have to make that decision first and we help them with tools for
that. I'm end to end responsible for that kind of tool.”
Heidi van Eijk was responsible for 11 squads and 110 squad members. She also had 3 agile
coaches each working with 3 to 5 squads. Experience tribes were accountable to Vincent
van den Boogert, Chief Customer Officer.
Service tribes provided internal expertise. As explained by Tom Degen, “Service tribes and
squads are fully responsible for the customer processes and channels and also the
maintenance of the product itself (so end-to-end).” Maartje Geeven, Chapter Lead in the
Customer Information Management service tribe explained her work:
“Our tribe is the backbone of customer administration – we capture customer data,
organising it well so that every product has the right information, and we organise and
distribute this data to our multiple channels. We make sure this data is up to date, for
customers and for regulatory authorities.”
By May 2016, there were 350 squads in total including the IT squads now fully integrated
into the combined commercial and IT organisation since March 2016 and 45 Agile coaches.

Day-to-day work in a squad

Squads typically had up to nine members with a mix of customer journey experts, data
analysts, IT engineers and UXrs appropriate to its purpose. Squads were transient but kept
the same squad members for the duration of that squad purpose, often as much as six
months but sometimes as little as three weeks (e.g. for a marketing campaign).
Squads held daily “stand-ups” (short meetings) to discuss what each person planned to do
that day, and how it linked to the 2-3 week “sprints” that were underway at the time. Squads
used whiteboards and post-it notes to record tasks and progress. At the end of the sprint,
the squad held a “retrospective” usually attended by the squad’s agile coach to agree what
went well or not so well, lessons learned and to establish a backlog of issues not completed
and to be carried over to the next sprint.
Saloua Essalhi, product owner in the Cards Authorisation squad (within the Payment
Banking Services tribe) described an example:
“We inherited a problem that French autoroute tolls booths would not accept our ING
debit cards and with the summer exodus approaching, lots of Dutch people with their
caravans about to head South, we had to act fast or we would be responsible for the
biggest traffic jam ever in France. We started a high priority sprint and fixed the
problem in a matter of days.

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As another example, we were told our point of sale services had to be available
99.98% of the time (excluding ATM transactions). So I took this to my squad, I said:
guys, this is coming up, we have to comply or we will lose our licence. How are we
going to deal with this?
This is how a law in Brussels which became a law in the Netherlands became an item
for the compliance team and then was added as a backlog item for my squad and me.”
Squads were not designed to last forever: some were disbanded once they had finished
their piece of work, and the people involved were allocated to other squads. However, in
practice there was quite a lot of stability to the make-up of squads, with some people
switching between squads at the end of a particular phase of work. While this model
assumed some squads would disband, this had not yet happened. Explained Schlatmann:
“There is always more work to be done than we have people.”
Most squads were located in ING Netherlands Domestic Bank’s head office next to the Ajax
football stadium. This four-storey office was remodelled and redecorated during 2015/2016
in line with the agile organisation. There were now modern, interconnecting and open plan
stairs linking the floors of the building, symbolising the connectivity between teams. Each
floor had an area where employees could meet – “living rooms” – and each area was
decorated differently. The first floor housed the “street hub” and included the restaurant and
games room. The rear garden area was being remodelled and had a garden café accessible
from the first floor. There was a yoga room, a workshop area and inspiration rooms to aid
and assist with creativity. Individual teams used inspirational quotations on the walls of their
work areas such as “There are always flowers for those who want to see them” (Matisse), “I
dream my painting and then I paint my dream” (Van Gogh), and “Intelligence without
ambition is a bird without wings” (Dali). Each squad had its own area which included a
whiteboard for its stand-ups and large screens and scrum board for its sprints. ING’s office
in Leeuwarden was also modernised and refurbished.

Oversight and evaluation

In terms of long-term strategy, Schlatmann explained how the board’s role had evolved since
the introduction of the new organisation. The board continued to create the overall strategy
but it was then “translated into the work of individual tribes, so the board used output steering
not input steering to guide tribes.”
The heart of the new oversight process was the Quarterly Business Reviews (QBRs), a
concept they adopted from Google and Netflix. For the review, each tribe would write a
maximum six-page summary, based on data, of what they achieved, what they did not
achieve and why not, what they were going to achieve next quarter, and any dependencies
outside their tribe control. QBRs included a peer-review component, where tribe leads would
provide feedback and challenge to each other.
“Then we have what we call the QBR Market - an event every quarter between tribes
where they request staff swaps or re-allocation of resources to manage the
interdependencies between tribes,” explained Schlatmann. “Then based on the QBR
you will get the OKRs – the Objective and Key Results. And the OKRs need to be
70/80% complete. If you have 100, you’re not ambitious enough!“

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Tribe leads then translated the outcomes of the QBRs into 4-5 themes which were then
translated into “epics” or tasks for individual squads to be undertaken over the next quarter.
Coordination of priorities within a tribe was via the tribe’s “Portfolio Wall” which showed the
epics to be undertaken by individual squads. These were then prioritised in meetings
involving all the squads, product owners and tribe leader. Progress was discussed at regular
meetings the tribe lead had with individual product owners, roughly every two weeks.
Feedback to individuals on their performance was undertaken in various ways. For squad
members, there were formal sessions between individuals and their chapter lead every six
months based on all the squads that individual had been in during that period.
Evaluation of individual performance occurred at ‘POCLAC’ meetings every two weeks,
when the Product Owner, Chapter Lead and Agile Coach met up. As Payam Djavdan
explained, “They evaluate individuals, based on what has happened in the last sprint. And
they do it for every individual.” As Schlatmann said “Performance feedback will never be a
surprise because it is extremely transparent. You get feedback from your agile coach and
from your team members on each squad you have been in.”
Heidi van Eijk described her experience: “I get feedback from my chapter leads - the ones I
directly steer – and I get feedback from product owners and the agile coaches. I speak to
them every two weeks for an hour when we discuss how it works out in the squads. ”
What about Key Performance Indicators? Schlatmann said “KPIs are gone now. We just
have a few team KPIs now, some on individual development for example. In the squads we
now measure engagement, efficiency, and time to market with the help of INSEAD
academics. With their help, we are gathering data to see if there is a difference in velocity
and engagement in squad performance between a squad of defined staff that develops its
purpose itself, versus a squad whose purpose has been defined and then invites staff to join
it.”

Reflections and learnings

As the agile methodology became incorporated into everyday work, people started to
understand it better, and they started to look at things very differently.
For example, the external hiring process changed significantly. Schlatmann described the
new process: “We now have hiring teams. If there’s a vacancy in the squads, there will be a
hiring team with people from the squads. If you work in an agile team, it is crucial for the
team to figure out what the candidate’s strengths are, so that the team can work well
together.”
Planning and strategy were also very different. Saloua Essalhi observed: “There are still a
lot of misconceptions about agile working. For example, people think that as you adopt this
way of working, you can change your direction every two weeks. So they think, we don’t
need to have a vision anymore, we can do this sprint and then on the next sprint we can go
the other way. It took us a time together to understand that is not true – you need to know
where you are heading for this to work.
“Other misconceptions are that agile doesn’t need any documentation, and it doesn’t
need any disciplined thinking. Wrong and wrong again! To make it work properly, you
still need discipline. Agile doesn’t mean no rules – it means different and better rules.”

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Once they had started to ‘bed down’ the new model, the vast majority of people bought in.
They enjoyed the extra responsibilities that came with the squads, the team-based working,
and the increased speed of action. But there were also some concerns.
First, there were coordination issues. “By breaking work down into these bite-sized chunks,
there are challenges in how one squad’s work links to others. We have to be very thoughtful
about defining the interfaces between squads.” A related issue was that some parts of the
bank, for example call centres and branches, had been left ‘ring fenced’ using the old
organising model. “It’s often not clear who we should be talking to,” explained one call centre
person.
Another challenge was getting the right levels of support for people working in squads. Agile
coaches typically provided support and guidance for three squads at a time. “Yes, this is an
unusual role, and people need training to do it properly,” explained Josje Schiltmans, a
member of Schlatmann’s team. “They work on interpersonal dynamics, they keep an eye on
the big picture, using data to steer the squad in the right direction, and they push squad
members to keep working in the agile way, rather than slipping back into old ways of working.”
Some squads didn’t feel they needed much help from an agile coach, while others felt they
needed more help: “The agile coaches are spread too thinly, they are struggling to keep up
with personnel appraisals,” observed one product owner. The new model assumed that
individuals would be more self-reliant, but it was taking time for people to adapt.
Another important point was personal development and career management. There were
other opportunities for promotion in the new way of working, so people were encouraged to
make lateral moves or to develop in their chosen area of specialisation. “A traditional
promotion to management is less common,” acknowledge Schlatmann, “but as the Spotify
Lead architect told me, you have to be prepared to give certain things up to work in this new
way.”

Current Challenges in Spring 2016

Reflecting on the major changes that had occurred, Bart Schlatmann was broadly content
with what had been achieved. He knew that the latest phase – RIO – was working well. 3000
staff had now embraced the culture of agile methodology.
Several internal measures were used to track progress, and they all recorded improvement.
For example a survey called Ready, Willing, Able gave ratings during TANGO of 70%
(ready), 70% (willing) and 21% (able), while the comparable figures for RIO were 80%, 70%
and 83%. Customer satisfaction, using the Net Promoter Score, had jumped from -9% to
+20%.
Output performance measures, in terms of cost/income ratio and profitability, had not yet
seen significant improvements, “but we would expect them to lag the customer and
employee measures” observed Schlatmann. His expectations for an improved cost/income
ratio, from 65% down towards the 50% target, were high (Figure 4).
Saloua Essalhi described the situation: “I like living in this culture, because it pushes people
to always improve. The deal here is either you believe in this or you don’t, and if you don’t,
you’d better not be here. It’s as simple as that!”

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But some questions remained. The first was whether the balance between the autonomy
given to tribes resulted in alignment with the company’s strategic objectives. As he put it:
“Just imagine that you play tennis on the court without any lines. The game will be so
different. Sometimes you need to work on alignment. But the question is how thick are the
lines? In the beginning, they probably will be thicker. Later we’ll think, okay, are they now
mature enough? Okay, then we’ll make them less thick. And that’s where we are now, trying
to figure out how much freedom to give people. ”
The second big question concerned how Schlatmann and his colleagues might roll-out the
agile model to other parts of ING Group. Schlatmann put it this way “Ralph Hamers would
like to roll this out further but we’re a federation of countries within ING. So although in ING
Bank Netherlands we are by far the largest component of the group, we need to have
independent proof that the improved results we have achieved are because of what we have
done with agile.” He knew also that ING had stated that “Agile working may not suit all
business functions, trial-and-error is required to test this. Agile is agile and is not set in stone!”
There were three parts of the Group that were potentially suitable as the “next step” in rolling
out the agile methodology.
One was the call-centre and operations responsible for daily banking in the Netherlands, a
unit of about 1700 employees based about 90 minutes-drive north of Amsterdam. While the
opportunities for improvement here were large, it worked on a very different operating model,
with close supervision of workers and a factory-like mentality on efficiency and speed.
A second area was the business banking part of ING Netherlands, which consisted of 350
people serving the small and medium sized enterprises (SMEs) and 700 people serving
larger corporations. The services provided to these customers were obviously very different
to those offered through the retail bank.
The third possibility was to take the model as it was working in the Netherlands retail bank,
and transfer it over to the retail operations of ING in Belgium, which was one of ING’s biggest
markets.
Schlatmann wondered: which of these opportunities should he focus on first, and how fast
should he proceed?

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Figure 1: Process Design Principles

Figure 2: The Redesign Process

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Figure 3: Customer Performance Measures

A note on the Net Promoter Score (NPS)

Net Promoter Score (NPS) is a way of measuring customer loyalty and satisfaction. NPS is
based on a direct question: ‘How likely is it that you would recommend our
company/product/service to a friend or colleague?’ Promoters are those who respond with
a score of 9 or 10 (out of 10) and are thus considered loyal enthusiasts. Detractors are those
who respond with a score of 0 to 6 (unhappy customers). Scores of 7 and 8 are passives,
and they will only count towards the total number of respondents, but not directly affect the
formula.
NPS is calculated by subtracting the percentage of customers who are detractors from the
percentage of customers who are promoters. NPS is a recognised measure for customer
satisfaction in the financial services industry.

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Figure 4. Timing of Change Activities

Source : Presentation by Dorothy Hillenius, ING’s Director of Corporate Strategy , to Digital

Banking Revolution conference organised by Bank of America Merrill Lynch in London 13
May 2015

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Figure 5: ING P&L Data

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Figure 6. Organisation Chart for ING Netherlands

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