By Will Larcombe Director and Co-founder, Stellarmann
The financial services sector has been dogged by unsuccessful digital transformation projects. In 2020, The House of Commons Treasury Committee went so far as to issue a report on IT Failures in the Financial Services Sector, inspired by the disastrous TSB migration of 2019 that resulted in a huge fine for the bank. According to McKinsey, only 30% of banks that have undergone a digital transformation say they achieved their stated objectives. So, what’s the problem? And more importantly, how can we fix it?
Where have we gone wrong?
Reasons for this low rate of success are numerous. They include third party failures, software issues and cyber-attacks, as well as human error. Leading the list, however, is change management itself – the Treasury Committee named this a root cause of failure in 91% of IT incidents.
Managing change is never easy. Success is dependent upon a cohesive team, excellent leadership and crystal-clear communications across an organisation – which in financial services is likely to be large and complex. The challenge can be even greater where major IT projects are concerned because the expertise required can often be found only outside the organisation.
This means that transformation teams are at best a hybrid mixture of in-house and external people, and sometimes consist almost entirely of contractors. No matter how talented each individual may be, they cannot be expected to work together effectively from day one without the right inspiration and management.
There are strategies that can help. While I don’t want to slip into too many sporting clichés, there are some obvious analogies to be made between business transformation and sports teams. I’ve personally learnt a lot from speaking to sports professionals about their management styles and I’d like to share some of them here.
Choose the right players
Selecting the right lineup for delivery team should be your first priority. As you seek people with the right skills, you’ll need to strike a balance between the higher cost of short-term contractors and the risks of long-term hires, and between the benefits of a wide variety of experience against the challenges of creating a team that gels.
Consider your options carefully. Bringing in talent on a long-term basis can be cost-effective and ensure cultural buy-in, particularly if you see further similar projects on the horizon. Permanent employees take a long time to find, however, and are expensive to part company with if things don’t work out or your requirements change.
Consultants are an alternative option. They offer more flexibility and can be sourced quickly from a traditional consulting firm or via a recruitment agency. They do, however, have their own drawbacks. Using a consultancy firm can be costly and there is no guarantee they will have the specific skillset you require. They also generally reserve the right to switch out your consultants at will. Another issue is that consultancies tend to have a strong “this is the way we do things” mentality, which can cause conflicts if you are following a different methodology of your own. Independent contractors can be appealing from a financial point of view but come with the challenges of IR35 compliance and not having the skin in the game of permanent employees.
This makes a professional services partner an attractive third option. They can find associates with the exact skillset from within their own network. They can share the risk of delivering project outcomes and act as the “assistant manager” on the project, helping to take on some of the day-to-day challenges of people management.
Establish the ground rules
Once you have constructed your team, you need to set about establishing a coherent culture. This will require you to set clear expectations and to lay out the preferred methodology. Both are necessary if you want to pre-empt any clashes between the working methods of internal and external team members.
Make sure that all your players are working towards the same shared objectives. This will mean everyone knows the ultimate goal of a project, and why that goal is in place. For example, this may be to replace a legacy system, but the reason we’re doing this is to improve the customer experience.
Setting short term goals along the way can also help enormously in motivating a team, particularly if your current structure is only temporary. Celebrating these small wins together can help create a sense of collective achievement. Reminding people frequently of what the project is all about can be very helpful. We’re not necessarily talking about Ted Lasso “Believe” posters, but sometimes posting reminders on walls really can make a difference.
Be ready to change tactics if need be
No matter how much planning you have conducted, there will always be unforeseen circumstances that affect a long-term project. To avoid demotivating everyone by sudden changes in direction, maintain dialogue both with business leaders and team members assessing each phase – and regularly check in to ensure that all sides are still aligned and heading for that common goal.
You may need to change tactics. If members of the team are performing roles in which they are not 100% comfortable, you may also need to make player substitutions. This is not easy, but you must be brave enough to do so when required.
Regular meetings and reviews will ensure project alterations are explained properly and you avoid the risk of silent resentment and demotivation, which often builds in the absence of clear communication. If you have a high number of external staff, this is where you will want a delivery partner to support you – not just with communications but also with substitutions if necessary.
Don’t be afraid to ask for help
Successful change can happen in financial services, in spite of the challenges. The decision to bring in team members from outside the organisation needn’t create divisions, rivalry, and discord among the in-house team. The addition of new skills and experience can instead be highly motivating for permanent staff and improve outcomes for the business overall. It just needs to be handled in the right way.
At the heart of this success is the management of the hybrid teams as much as the selection of individual members. Leadership itself is a collaborative process – no football manager would operate without a coterie of dependable assistants – so when handling a team that spreads outside the organisation, seek outside help. And with strong leadership, clear objectives and constant communication, you’ll be well on the way to creating a winning, high-performance team that can bring about the transformation you’re looking for.
