What is Digital readiness: It is defined by the level of readiness of an organization’s workforce to transition into digitized workflows that are enabled by software and technology. Undergoing a technology transformation does not just denote an organization’s investment in IT assets – it consists of three components: culture, process, and technology (https://oden.io/blog/what-is-digital-readiness/)
Who is BYN Mellon?
The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Financial Corporation in 2007(Wikipedia) This reflection draws principles from managing IT in complex times to narrate this journey from a siloed to a DIGITALLY READY financial institution. I believe this reflection will help small businesses that are struggling to be digitally ready.
I shall draw upon these theoretical principles in this reflection.
- Principles from levels 1-4 of IT maturity: Silo, standardization, optimization, and strategic agility
- Principles of managing complexities and building a customer-centric industry.
- From organizational culture: Culture, strategy, and talents (talent management through customization),
- Organizational redesign (To lead a change you need to adjust the reward system)
- Digital partnership in an ecosystem to move to stage 5.
- Breaking down business silos emphasizes horizontal relationships and success principles for building a matrix organization.
- Principles drawn from management models and accelerating digital innovation.
Introduction
The Journey of BNY Mellon Financial Services is a journey of redesigning IT for digital transformation to become a future-ready company. In the beginning, BNY Mellon products are siloed, to remain an industry leader in financial services, to respond to customers changing needs and react speedily and remain relevant in the changing and competitive marketplace. To this end, they embarked on a digital transformation by digitizing their services, redesigning customer interaction, and providing seamless access to BNY products and services. This organizational redesign will demand change in customer experience and operational efficiency. This Digitization goal was achieved successfully through the NEXEN platform.
- Principles from levels 1- 4 of IT maturity: standardization, optimization, and strategic agility
An effective digital strategy is more strongly associated with digital maturity than technology use. Standardizing IT infrastructure to achieve IT efficiency and reduce IT costs was the first major challenge encountered at BNY Mellon. Changing outdated technologies, and legacy systems in favor of a more adaptive IT infrastructure. A single platform architecture will offer centralized control and access to real-time data that will drive business goals and make BNY more agile and responsive to customer needs. A single platform will also enable BNY to deploy new technology more quickly and less extensively. This is the major advantage of one platform over the “best-of-breed” approach. NEXEN was the single platform architecture and platform adopted. SoNEXEN is a financial services platform developed by BNY Mellon. It features a web application, APIs, and data analytics tools to allow financial services clients to access BNY Mellon’s services, such as asset custody, broker-dealer services, and alternative investment services of the localized business services were made available as APIs and repository of common business services reduced redundancy and accelerated development. The APIs will provide a future gateway for partnership in a digital ecosystem. The business applications were decomposed thus creating some modularity in the IT infrastructure that will enable these IT components to be reusable.
Choice of vendors is very necessary at this point, choosing a single vendor will provide hardware and software that will interact seamlessly without the need for additional interfacing systems and thus reduce cost. The Hybrid cloud BXP introduced was a milestone in this standardization process. It is an evolutionary infrastructure and not a static one. This allowed BNY Mellon to scale up or do its services and continuously evolve its products and services. The NEXEN Gateway provides multiple interfaces or portals for removing unique business applications it. Consolidation of IT infrastructure was done at this early stage of building the new digitized IT organization. The technology was completely overhauled. A More powerful and adaptive technology infrastructure- one that separated application development from infrastructure choices was introduced.
The Shared services made available through enterprise applications, and trade capture engines, made data sharing efficient and effective. Shared services such as Digital Pulse offer employees information to be more responsive to market changes through access to real-time data. This is a very important step towards maintaining strategic agility at BNY Mellon. It also provided information and insights to customers. These enterprise-shared applications made BNY Mellon more responsive to changing market needs and created room for small incremental adjustments, mix and merge strategies. The IT architecture was designed to be modular, plug and play and modularity involves absorption and flexibility to changing market space. With the consolidation of IT infrastructure through the NEXEN framework, BNY Mellon moved from a level 2 maturity level to Level 3 where it has a globally optimized business. BYN Mellon built a service-orientated architecture. Although it involved a lot of cost overheads, it will pay in the long run.
- Principles for managing complexities and building customer-centric products and services.
There was a proposal to digitize BNY Mellon so that the accumulation of a growing inventory of value-added and digitally enabled business services would be seamlessly consumed by customers. It is very clear from this that BYN Mellon needs to aim at the complexity sweet spot because increasing product offerings or value-added services without internal process simplification would be very unrewarding as products and services increase. Transforming a company to reach its complexity sweet spot requires a vision of where the company wants to be in terms of product offerings and customer and employee experience. What kind of improvement is sort of? In the case of BNY is customer satisfaction through product offerings. The journey towards the complexity sweet spot depends on where the company is today. There are three approaches a company can take. BNY Mellon is in the lower-left quadrant C and therefore followed the zigzagging to reach the complexity sweet spot. Zigzagging has the advantage of avoiding “big bang” changes in products. Instead, a company makes a series of incremental improvements, first on the dimension of product complexity and then on the other dimension of process simplification, creating continuous organizational learning. Leon shklar acknowledged this incremental move when he said… “If we’d tried to refactor everything at once, it would have taken a couple of centuries, and things would have changed in that amount of time”.
BNY Mellon has reached level 4 of strategic agility and has optimized its IT infrastructure and designed the IT infrastructure to be modular and reusable, to decouple valuable product complexity. Codes reuse can save development time, and reusing business components can save implementation costs, associated with developing new components or codes from scratch, and speeds up business agility. Digitization, therefore, comes into play as an important strategy in managing complexity, simplifying internal processes, and decoupling products and processes. It provides customers with a platform for insights, such as product ratings that help customers make quicker choices/decisions on complex products and service offerings. Since BNY Mellon’s goal is becoming more customer-centric, amplifying customers’ voices would help to determine which complexity adds value. NEXEN was the platform for achieving this digitization goal. BNY migrated its existing applications from its product-aligned portals to NEXEN Gateway.
- Principles for Culture and Organizational Redesign
Recognizing that the migration to NEXEN would involve rewriting much of BNY Mellon’s code, management needed to prioritize and stagger the work. Kumar restructured the IT unit to rebuild the company around the NEXEN strategy. Redesigning a company to be future-ready via digital transformation will bring about changes in organizational culture which are a disruption to the existing culture. To achieve this goal the leadership would champion this goal along with all the employees at BYN Mellon. To achieve this new digital strategy, NEXEN must be in alignment with business strategy. The change in the organizational culture of BYN Mellon must be clearly articulated. Organizational interaction must be used as a medium for communicating this change. Training and support have been identified as a way of facilitating organizational redesign this we saw in the Coursera curriculum that BNY Mellon leadership designed to help developers of the NEXEN digital infrastructure to acquire the necessary skills needed to support the new digital technology that will drive the needed organizational change. To promote an evidence-based decision-making culture, the Digital workplace service –”My Dashboard” was rolled out to IT. This redesign requires having people who are flexible to think differently, and people whose leadership vision aligns with the new culture. The traditional command and control management model must give way to a new model of management where various teams were empowered and autonomous. The service management culture emerged at BNY Mellon.
BNY Mellon must transcend to a Matrix organizational model by breaking down leadership silos, and traditional hierarchical model, and enforcing horizontal relationships through cross-functional teams to achieve this goal of digital transformation, to be a future-ready company operating on Level 5. The benefits of cross-functional teams include enhanced access to resources, broader skill sets, and new ideas. For organizations like BNY Mellon to be adaptive they must ditch the one-size-fits-all mindset.
4. Principles for a Successful Building of a Matrix Organization
To implement a matrix organization, the 1800 IT employees might need to be assigned into small teams of 2-3. A small team was created in BNY that created a protocol, to ingest data. This is an example of such team-based work that should spread to other parts of the organization. The role of the service leader as the IT unit’s key organizing principle and the assignment of direct reports to three service groups (application and development, shared services, and strategy and governance) was the way the IT unit was redesigned around the NEXEN platform. Roles and responsibilities in the decision process must be clearly defined among various teams and managers of the new IT units to avoid conflicts and confusion within the teams and without the teams. In BNY Mellon, every team has a service lead who puts together the app stack the team works on. This approach to IT unit design made service leaders accountable for the outcome of their efforts. Due to the interdependencies and conflicts between various units, managers meet regularly to establish priorities. Performance measures for the teams must not be based only on metrics but also on judgment calls. Service leaders were evaluated based on maturity models on a ranking of 1-5.
A strong and positive corporate culture must be in place to achieve the goal of the IT unit redesign. Very importantly, the right people must be assigned to the right places, this was an initial challenge to BNY Mellon because the many developers who will support NEXEN do not have the required skills in the new technologies and techniques, so the onus rested on the leadership to recruit and develop appropriate skills, manage talents and to assign them to the appropriate teams. And there is a need for extraordinary communication across various teams and with managers. Communication should be both formal and informal. Communication software like messaging apps can be deployed to facilitate communication within the organization. A centralized information infrastructure can also be deployed for easy access to timely information, this capability was provided by the Digital pulse. The individual cross-functional teams must be evaluated individually and as a group. Each member of a team should have the flexibility to work in multiple departments and assume different roles. Care must be taken to practice moderation in such a multi-team environment to avoid temporal misalignment caused by the overlap in schedules and context switching caused by too many shifts of focus. These undermine organizational productivity and learning required for the growth of team members and the organization at large. We saw the implementation of small teams in the redesigned IT unit. The workspace redesign facilitated collaboration between innovation center members and clients and business partners this reiterates the need for extraordinary communication that makes a matrix organization work. This redesign could also incorporate biophilic exposures, that is exposure to nature. Working in natural spaces or exposure to the natural world unleashes the positive potential and vitality of employees in a work environment while lack of exposure leads to job dissatisfaction and burnout which are indicators of poor performance and counterproductive behavior. This connection with the natural world or lipophilic work is gradually becoming part of organizational work design, directly through outdoor meetings or phone calls and indirectly through large windows with sweeping views for instance.
- Principles from Management Model, Digital innovation, Digital Partnership, and Ecosystem
The IT redesign at BNY Mellon transformed the management model from hierarchical command and control to the Quest management model. In terms of managing objectives, the approach is more direct than oblique because a clear set of targets was well-defined. Adjusting reward systems could be a vital aspect of redesigning a company and assigning new roles to employees. How employees were motivated intrinsically was not clear in BNY. Because the company is concerned about digital innovation, the emergence approach to coordinating activities should be the best approach. By abandoning the hierarchical command and control planning management model, the newly designed IT unit by empowering the small teams adopted a new model of management which I identified earlier as the quest model because the “means” of management are loosened while tight control over the “ends” was maintained. This way the small teams led by service leaders have the autonomy to decide how to do what they were asked to do. This is the best model for a company that seeks to be digitally innovative. It is good to note that Autonomy and experimentation among cross-functional teams can lead to making mistakes –not just practical ones. For this reason, a strong culture of integrity is a critical companion for cross-functional teams. Ethical considerations should also be part of the product design. BNY Mellon must use its organizational policies to make ethical considerations a top priority.
NEXEN became an ecosystem for external customer relationships. Ecosystems contribute to innovation through collective access to diverse customers. Digital partnering reduces friction in customer experience -shifting the mindset from industries to customer domains. It could be said at this point that BNY Mellon has reached stage 5 in its maturity level as a company. The IT services offered by NEXEN continued to evolve. Partnership with external partners could be challenging for digitally maturing companies like BNY Mellon but the advice is to “hold on to the core of your culture while letting go of the things you need to grow up“. This should be BNY Mellon’s guiding principle, as it focuses on the goal which was to create a digital ecosystem of services linking BNY Mellon with its customers and external partners.
Conclusion
Digitally maturing companies identify opportunities to foster and participate in innovative ecosystems, which are less formal and more flexible than traditional partnerships, this is exactly what BNY Mellon achieved with the NEXEN platform. Internal collaborations and ecosystems enable companies to be not only more innovative but more agile as well. In the future, BNY Mellon will continue to innovate to fully realize its goal which was to create a digital ecosystem of services linking her with customers and external partners.
Recommended Readings
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- “Revisiting Complexity in the Digital Age”, MIT Sloan Management Review, Summer 2014
- Ross, J. et al., (2008), “Reuse and SOA: Recalibrating Expectations”, Center of Information Systems Research, Vol VIII, Number 3A, Dec 2008. A10.
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- Groysberg, B. at al (2018), “The Leader’s Guide to Corporate Culture”, Harvard Business Review, January–February 2018
- Casciaro, T. et al (2019), “Cross-Silo Leadership”, Harvard Business Review, May-June 2019. A13.
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- Deloitte Insights (2019), “Accelerating Digital Innovation Inside and Out”, DELOITTE INSIGHTS at MIT Sloan Management Review, 2019.
