BankerVision

2010 Predictions

Last week, I wrote down some of my thoughts for 2009. There have been both lows and highs, but mostly highs. 2009 was a good year. I’m expecting that there’ll be some pretty big highs in 2010 as well. As is everyone’s want to do at this time, I thought I’d make some guesses what the year holds ahead.

No doubt, we’ll all look back at this next year and laugh. That’s the fun of it of course.

Anyway, onto my top predictions for the coming year.

1. Banks, governments and everyone will get really, really, serious about innovation

The last couple of years have seen a lot of talking about innovation, but not really all that much doing it. There are enough high profile innovation successes starting to emerge though (even though they may have happened by accident) that people can now begin to see the power of this stuff when applied properly.

I think this is going to result in a number of very big programmes starting this year. It will all be copycat, of course (“What? They’ve spent that on innovation? We have to double that…!”), and I’d expect a few very high profile programme cancellations in the next 18 months. But overall, the momentum is going to be huge in 2010.

And that is going to lead to some game changing plays from organisations we’d always thought were anything but innovative. I would not be surprised to see a bank doing something so unusual that people’s mouths drop. Like, for example, someone running a similar model to Caja Navarra’s here in the UK.

Or a government department reaching out to citizens and bringing them right inside service delivery.

Or a major corporate releasing a hit product that’s been 100% designed by customers, and which climbs the adoption curve so quickly that their large competitors go out of business.

All that will drive us to an “Innovation Frenzy” by the end of 2010, and if you are a corporate innovator, you can expect 2010 to be a very big year.

2. Citizens will start to deploy tools that do the things that big companies and governments used to do.

Governments and corporates are beginning to make their data available online so that citizens can do what they want with it. But I predict that if government doesn’t make its data available quickly enough, citizens will find ways to get it anyway. Screen scraping works, you know. Then they’ll build what they want, and waiting for government to provide stuff… well why?

3. Crowd-think emerges

This is the year someone senior in a large corporation is going to discover that if you put 10 Gen-Yers in a room and give them a project, the outcome is likely to better than if you put a single, experienced person with 10 years on it. The next generation of workers is quite different to what we’ve been used to, and their hyper-connection means their work operates in a parallel, and highly synergistic fashion.

Then I’d say we’ll begin to see strategic decisions being made by committees of these people. They’ll be small at first but the power of these groups of generation – Y thinkers will get more obvious. Success will breed more success.

It will be 2010 when the signs this is happening really become obvious.

In the next decade, by the way, these are the same people who will be in real management positions in their own right, and crowd-think will happen no matter what the current managers think, whether they like it or not.

And what will happen to the experienced people of today? They’ll still have a role of course, but they’ll be advisors to the decision makers rather than decision makers themselves.

Don’t believe me?

Check out your graduate programme, if you have one, and watch how those people are interacting now. Watch them work together on a project, and don’t fail to notice that no single leader emerges in overall control. Leadership moves around dynamically based on skills and competence.

Then project that forward a few years when we  starting giving them management jobs of real importance.

4. Those who don’t get “social” will never get a decent performance review again.

I’ve written about the difference between those who are connected (online) and those who aren’t, and suggested that there’s a visible performance gap between the two groups.

Well, I’m of the view that this is the year that the difference is going to make itself felt at performance review time. Oh, not everyone will likely recognise the fact that they’re being marked down because they aren’t connected enough, but it will begin to happen anyway.

Here’s why.

Those with the right connections have much superior, and much much more timely data at their fingertips. They consequently make robust decisions fast, and their pace of output goes up. Their work is not only produced more quickly, its quality rises.

One person in my team, for example, can turn around a report in a day or two, whereas everyone else quotes weeks – even a month sometimes – to do the same thing.

Now, when you’re the manager in that position, who do you give the top marks to?

This will all be bad news, of course to those who “don’t have time to read blogs”, or whatever social media tool is currently in fashion. It will also be bad news to those who think that you get to turn off the moment you leave the office.

Those days are gone.  There is a new level of performance emerging, and the bar is getting raised in 2010. People are going to have step up this year, or expect there will be personal consequences.

And not, as I said earlier, because anyone will do anything deliberate, like impose a performance improvement plan or something. It will be because all the top marks will go to those who are connected from now on.

Experience is important, but performance is the new yardstick in 2010

Welcome to 2010, everyone, and I hope you have a fantastic year.

2009: A personal review

Well, I’m back from Austria, and I can tell you, the skiing there was awesome. And I know those of you with families will probably be horrified to know this, but I have to say that taking oneself off during Christmas and not having to do more than calling a few people back home was just an amazing relief. You know how stressful all that Christmas stuff can be. We even skipped Christmas lunch, opting instead for a nice Goulash in a ski-in cafe on the slopes.

Anyway, now that I’m back, I’ve been thinking about 2009, and some of the highs and lows. Mostly, its been a great year.

At the start of the year, I was pretty sure interesting things would be happening. At Lloyds Banking Group, we were just gearing up for the big integration exercise, and no-one was certain what would be happening from one month to next.

The innovation team and I were still trying to work out how to adapt the innovation strategy given the number one priority for everyone was going to be incrementalism for the foreseeable future. Luckily, that was the strategy we’d already been pursuing, even during the boom times. For some institutions, and Lloyds is one of them, you simply can’t have a play-to-win innovation strategy and get away with it. So, as it turned out, there weren’t that many changes there for us. We just kept going on with Innovation Market and all the other things we’d started. I think we managed to achieve some valuable things for the bank.

Nonetheless, I knew that I’d be leaving the bank in 2009, but didn’t know where I’d be going yet. Sometimes, you just know that the time is right. Anyway, I’m firmly of the belief that when you’re an innovation guy, you really want to make sure that you turn your people over every couple of years or so. You want that fresh perspective, that new way of looking at things. Why should it be any different for the person in charge of the innovation programme?

By the end of January I was in a bit of a panic, because I was months late with the manuscript of Futureproofing and just didn’t see how I was going to get it done. So I started getting up at 3AM every morning to write, and now that’s a habit I just can’t shake. Lucky, actually, because my next book is now also months overdue, so the 3AM writing is back on again.

One of the highlights of the first part of the year for me was a trip to Australia, to attend Annalie’s AMPlify festival. I’ve written about it here before, and its a case study in my book. Now, the content of the event was interesting, of course, but it taught me a major lesson: you can’t overlook design in anything you do. Fit and finish is everything, and once you have that right, everything else flows naturally.

My current team are pretty sick of hearing me rant on about this, actually, and they also keep reminding me that just because Annalie had butterflies hatching out of chrysalides at the exact moment people were coming into her event on the last day, does not translate into appropriate expenditure in a non-corporate environment. Actually, I already knew that, but adjusting to the sometimes arcane rules of the public sector has been eye-opening.

When I joined the Department for Work and Pensions in August, it was a bit of a relief, actually. The bank had become increasingly difficult. Although most of us were confirmed in roles by that stage, there were constant announcements of reorganisations, teams being shut down, people being transferred, and of course, the “death by a thousand cuts” as we kept announcing round after round of layoffs due to integration. Everyone was on edge. 

Leaving was neither a simple decision, nor was it done in haste. After all, what would I know about working in the public sector?

Many of my colleagues in banking were somewhat surprised that I joined the civil service (“What on earth would you do that for?”), but it has worked out to be a rather pleasant surprise.

The fact of the matter is that there are few bigger IT environments anywhere. Neither is the innovation upside larger than here. To that, add the challenge of designing innovation systems and processes where profit is not the driving motive, and I think you can get an idea of why this move was so attractive to me.

I’ve been in post now for about 4 months, and I’m really looking forward to talking about some of the things we’ve been up to in that time. There’s really a lot that’s very exciting going on.

The other big thing for me in 2009 was the release of my first book, Innovation and the Future Proof Bank. I have really been overwhelmed by the response to this. I recall at the time I was sending it out for the last time to the publisher, I did it with complete trepidation, knowing that there would be nothing i could do it bombed.

Apparently, that is the normal fear of writers before they send things out.

Anyway, sales of the title are good, and my publisher is pleased. And word is spreading, so month on month sales seem to be growing at a reasonable rate in every country that the book’s avaialble in. Since the book is so ultra-niche, it is much more than I expected.

Anyway, that leads me to the end of the year, and my current projects. One of them, The Little Innovation Book, is an online set of essays based on my writings here in the last four years. Publishers – particularly mine – don’t like to sell things that are already in the public domain, so they aren’t very interested in books based on blogs.

But Future Proof Bank is pretty text-booky, to be honest, and I wanted to have something much more approachable. The Little Innovation Book will hopefully fill that need. I’m hoping to have it done and online in a month or so.

The other, much bigger, project I have on, though, is my second real book. Its tentatively called One Big Thing, and its about single innovations. In particular, based on a set of observations from history and more recently, I’m making the argument that radical innovation isn’t where the money is.

Neither is it in incrementalism, by the way, to those of you who know I am fan of small, sharp innovations done at scale.

Anyway, I won’t say much more about that right now, but will certainly keep you apprised of progress throughout the year.

So, for me, 2009 has been an exciting, and very impactful year. I am very confident that 2010 will be equally exciting. There is just so much going on, and I love it when its busy.

I’ll be back tomorrow with my top 10 predictions for 2010. I am quite often wrong, mind you, but I can’t resist joining in with everyone who always makes their forecasts at this time.

Actually, my boss at the Department has this down to an art. At every Christmas-do he has, he asks everyone their predictions, notes them down, and reads them out the next year.

I forgot to make predictions on the blog last year, but the year before I was pretty much wrong, wrong, wrong. Its much more fun to read back and realise how wrong you were than be right anyway.

The best of the season to you.

Computerisation leads to higher costs

At least in healthcare. Look at this study, which found that although there can be marginal improvements in service quality in some cases, increasing computerisation often results in higher costs.

That is an interesting result, and one that I’ve wondered about for big system processes myself. Almost two years ago I wrote on this subject, suggesting that for some big systems, paper could be a good alternative to large systems development.

This study is evidence that computerisation isn’t always the best answer.

This, of course, leads to questions about the characteristics of systems that should not be computerised. It is an important question, because technologists, left to their own devices, will always build systems, whether it makes sense or not to do so.

Here are the times I think it doesn’t make sense to build a big system:

1. When the prospective process is very low scale, in terms of throughput. The economics of big system development don’t work very well when you don’t have volume. Upfront costs are massive, and you rarely get payback in short time periods. Sometimes, the process has changed or ended before the system even arrives. End user computing has a chance of changing that, but don’t let big IT anywhere near something little if you want an economic result.

2. When the prospective process is at scale, but is extremely complicated. The economics of big IT don’t work for very complicated. You have to have too many people trying understand the system, then too many coders trying to make it work, then too many users trying to change things because the analysts didn’t understand the system correctly in the first place. The costs mount up, and sooner or later your business case that authorised the development in the first place collapses.

This latter case is the one that I think is exemplified by the healthcare study. The more complicated a system, the more expensive it is to build, maintain and operate. That’s if you can get it to work at all, of course. For healthcare, most systems are more expensive than the paper they replace.

So big IT can do simple processes if they are at volume, but not extremely complex systems regardless of scale.

There is an answer of course, and that is that you have to simplify complex processes before you start doing the computer bit. Its obvious, really. But I do wonder how many project failures could have been avoided if some Lean practices were applied to things before the technologists were let in.

We’re lucky that here at the Department that we have a big Lean initiative that does just this. We had a  Lean initiative at Lloyds Banking Group as well, though it was on a much smaller scale.

The trick is making sure that the Lean Machine gets to something before the IT Machine has a go at it. That’s a feat that’s way more complicated that spooling up a Lean or IT project on its own.

You can imagine the response if a technologist were to suggest it. “What? You want to change my business before you’ll computerise it for me? You think you know enough about it to change it? Not hardly”.

Unfortunately, in most organisation, IT hasn’t gained the right to tell business people that they might actually know something about their businesses. The irony is that after you’ve built a few systems that computerise a particular process, you almost certainly do know more about it than the business owners.

I see this changing rapidly, by the way, but will leave my thoughts on the evaporation of the business/IT divide for another post.

Innovation backlash

One of the interesting things about the group I run at the DWP is that we’re accountable for both innovation and strategy.

This, you might imagine, ought to be a nirvana that anyone who cares about innovation would dream about. Practically speaking, however, it introduces a few issues that you don’t expect.

Consider this scenario. You use the tools of innovation to create a pile of new thinking that results in new prototypes or experiments getting built. Everyone is excited, and loves the new approach. New things start happening, so everyone declares the exercise a success.

In the meantime, however, the approved and mandated strategy that was previously being followed gets changed in subtle, but unexpected ways. For those whose responsibility it was to implement the strategy, this is annoying at best. At worst, it represents a threat to them that must be taken out as soon as possible.

Now, I know immediately that everyone will start screaming that strategies must be flexible to new thinking and new goals, and of course I agree with that.

But the situation is illustrative of something that you always see when you send an innovation team into the wild: the new ideas getting created threaten someone’s interests, no matter how well the innovation team influences those around it.

You get a backlash that is as inevitable as it is hard to manage.

In fact, I’m not certain it is possible to manage it. If you’re about changing the status quo and you don’t ruffle some feathers, it is surely inescapable that you’re not really changing anything at all.

My conclusion is that you have to invest your innovators with sufficient political clout that they can – in their own right – protect themselves from the backlash when it happens. If the clout is invested via proximity to a powerful senior figure, then so much the better

Talking with innovators across sectors, I’ve found there are some common signs that innovators haven’t got the clout they need to do stuff.

You know they have no clout when people around them say “the innovation team don’t do anything”. Clearly, what’s happened is that the innovators know they can’t withstand the backlash, so they do busy-busy little projects that don’t ruffle any feathers.

You know the innovators have no clout when things that are ordinarily business-as-usual start being called" “innovation”. I’ve talked to an innovation group that managed to get RSA tokens deployed for security purposes. Ramping up security using off-the-shelf-products is not innovation. But the innovators, fearing the backlash, go where things are safe, and the need for change is self-evident. Tokens are a good example of going where things are safe.

The innovators have no clout when their diaries don’t have meetings with senior people. They know they can’t “deliver” (they are scared the backlash will take out their projects) so they only commit to things which are small enough not to get noticed. Of course, being small, they are also not worthy of the attention of senior folk, so no meetings get set up.

But here is the number one thing that tells you your innovators have no clout: talk with them about innovation, and they’ll tell you how their organisations aren’t innovative. No matter that they are in place to make their organisations innovative. No matter that all their training and professional experience suggests the raw materials they need are all around them. They give you an excuse instead. They’ve been hit one too many times by a backlash for which they had no defence.

There is a downside to giving innovators clout, of course. The downside is they then have the ability to disrupt strategy and “get distracting”. My own view, though, is that a strategy that doesn’t know how to deal with the new stuff without falling apart isn’t very much use anyway. It’ll only be current in the short term.

Try this: give your innovators their head and protect them from harm. You’ll be surprised as the results you get.

Hiring a walk-on-water chief architect

So, things are moving along here at the DWP. So many people have asked me why I moved across from the private sector to here, and I have a simple answer: there are few IT organisations around that match the scale of things we do here. Practically every citizen in the UK is in our databases. We’re 25% of the UK government’s IT bill. There are thousands of technology professionals working for us directly, and thousands more permanently assigned to us from the supplier community. And we’re running a portfolio of IT assets that go beyond the department, servicing a range of cross-government initiatives.

To join the board of that IT organisation is not something you pass up. Especially considering the rapid, major changes we’re going to have to deliver over the next few years.

So that’s why I joined. Now I have a question: what would make you join us?

You see, I’m currently hiring a Chief Architect. I’m looking for someone that can take the outputs of our strategy and innovation teams, and turn them into an actionable plan for the future. But I don’t just want any architect, I want one that can walk on water.

What does walking on water involve?

Someone who is inspirational, because architects need to be inspired to produce a design that’s both grounded enough in reality that its possible to build it, and sufficiently forward looking that it doesn’t close off future opportunities.

Someone who has the gravitas to convince people that they know what they’re talking about. Walking on water means you’re known for thought leadership, and maybe you’ve contributed to the current state of the art in some way. Certainly, your reputation will precede you.

And most importantly, you’ll walk on water if you know how to sell your design so others buy into it. We’re an organisation of more than a hundred thousand people. It takes great sales and influencing capability to get people to notice what you’re doing, and even more to get them to agree. An architecture that noone uses is a waste of time.

Are you a walk-on-water architect? If you are, Alex Richardson at Hudson is handling the search for us.

Here’s a the link to the online ad. Here is the link to apply. And here is the candidate information in proper detail.

Are you a young genius?

If you are, I have five open intern roles. We’re wanting 3 to help in the innovation team, and two that are interested in IT strategy.

They’ll be based in the North of England, and the people who sign up will be with us till March next year. It’s a great opportunity for experience, and of course, there’s a modest salary involved as well.

I can promise you an amazing journey. Our plans are very, very big.

Use the following links for more information and to apply:

Intern Innovators

Intern IT Strategists

Please pass this on to anyone you think could be appropriate… you need to have the right to live and work in the UK.

My first days at the DWP

So, it is start of my second week at the Department of Work and Pensions. I know many of you must be wondering what the transition from bank to public sector has been like. Was it as awful as some people predicted last week when I said I was moving over?

The fact of the matter is that so far, I’ve found many of the stereotypes thrown at me since I made this decision have been wrong, wrong, wrong. OK, well perhaps I still have rose colour glasses on (it has only been 5 days!) but let me give you some examples.

For a starters, there’s a lot that just works. Such as all the little things that make all the difference when you’re starting a new job. For example, I had a new laptop, building access, logon accounts, and working information technology on day 1. I haven’t had that since I left VendorLand. At my previous bank, you’d be lucky if you got that in the first two weeks, and it would only happen if your manager was especially good at working the system.

And get this: I can submit expenses and they will be paid the next day. Imagine that! In every single previous employer I’ve ever had the minimum time to settlement was at least a week. And don’t forget, this was at banks which controlled every single aspect of the expenses value chain, including the settlement bank accounts.

There are lots of other details too. Recruitment people who believe their job is to help on-board you, not just get a contract signed so they can move onto the next post. Support staff that actually check you have what you need, and do it with a smile. Speaking of smiles, even the cafeteria people do it here. Those of you reading from Lloyds will laugh at that: you’ll all recall me dancing up to Starbucks in the cafeteria every morning trying to get the dour-faced barista-lady to do more than grunt.

As a rule, actually, the people aren’t anything like the commonly held stereotypes of the Civil Service. So many of them have switched over from private sector, and in my team, in fact, there is an ex-architect from Lloyds Banking Group. It seems financial services has been, in the last 5 years or so, a fertile ground for department recruitment (there are lots of ex-bankers), but I also have ex-consultants, FMCG, and a range of other sectors as well.

And no-one is here just for the money. Everyone believes they can make a difference. Imagine the power of that.

And one last thing: despite what people think there are people in the government who not only want to make a difference, they are willing to go out on a limb to do it. Yesterday, for example, I found out that Direct.Gov, which is actually hosted here at the DWP, is running an innovation experiment where they allow citizens to put their own applications on top of government data. Yes, that’s right: an API for the government.

Show me a bank with API. You can’t, because there isn’t one. I have to go to a third party like Wesabe, who basically have to suck data out of banks without their permission, to get one. I think it is early days for what Direct.Gov is doing, but you can see the potential. More particularly, the fact of this experiments existence tell you lots about the sorts of things it is possible to do in the public sector.

So yes, I am pleased with the decision so far. And yes, perhaps I am still in honey-moon period. But I can tell you this: culturally, this place is about as far away from the eat-your-children culture of banking as you can imagine. This is a place where it is possible to make a difference on a very big scale.

I can’t wait to test the boundaries of what is possible.

Goodbye and Hello

Today is my last day with Lloyds Banking Group. Its been an interesting couple of years, and in that time, we've built what I'd call a "pretty good" innovation group. Its done some really leading things, like Innovation Market which now has a couple of copies in other institutions around the world. And of course, it has provided a fertile ground for material for Future-proofing, which is out next week.

Whilst most things come to an end eventually, innovation at the bank is not one of them. There is a highly competent team in place, one more than able to carry on the work we've started. Of course, in the context of the major merger presently under way, the kinds of innovation one can do is necessarily different than if you had a clear playing field. The team, however, will add their contribution of uniqueness to that process as they have always done.

This is also my last day as a card carrying banker, as I've accepted a role with the UK's largest government department, the DWP. I'm not entirely leaving financial services, though, as the department is one of the biggest makers of payments in the country, as well as being accountable for pensions. In the department, I'll have innovation, strategy and architecture responsibilities.

I'll be continuing this blog, and retaining the Bankervision title. I'll continue to comment on banking related matters as well, but you can expect to hear much more on innovation and technology. It should be an interesting transition.

Anyway, so I start with the department on Monday. I'd anticipate at least a week of no blogging from me while I get the lay of the land sorted out and work out what I can and can't say here. When you start a new job, that's always something that can be tricky. Every organisation has different boundaries, but rest assured I'll be back shortly.

In the meantime, thank you everyone whose been reading for the last three years, and I hope you'll continue to read me for a few more years to come. I can promise some interesting discussions, and, now that I am no longer employed directly by a bank, much broader commentary on things I felt constrained to avoid before.

See you in a week, or perhaps a bit less.

Does the business case for IT Security stack up?

I've not yet come across an organisation that doesn't have some kind of group that focuses on IT Security. And, frankly, its hard to imagine any organisation that could get by without one, either.

But am I the only person who wonders whether the cost to remediate IT security issues is actually worth it?

Apparently, there are very few IT security people who ask that question. I was at this event the other day, and I was talking to a security person, someone quite senior. During the course of the conversation, I was informed that the strategy was to remediate every potential vulnerability, no matter how small and how theoretical. When I asked him how he paid for all this, he told me that finding the money wasn't his problem. Going on further, he said that when he issued a security directive, he expected it to be followed, and if it wasn't able to be, the workstream or project got closed down.

I shut my mouth at this point, knowing I was speaking with that most invidious of creatures, the professional security specialist. You know the type: they spend all their days dreaming up the reasons you can't do something, rather than helping you find out how you can. Theirs is the right to kill any change for any reason, so long as it is related to a "potential security issue".

The lack of business-centred thinking amongst security specialist is endemic in financial services.

Let us, for example, force employees to have multiple logins that change all the time. It is so very easy to write a policy and implement technology that enforces various levels of password rules, but it isn't so simple to find the money to pay for the helpdesk calls that result from escalating numbers of password resets.

In one bank I know, the response to this was to implement a complex automated system for self-service password unblock. Wouldn't business centred thinking have suggested that a better way would be to relax the password change rules? Since when is a password the only control on business systems anyway?

Anyway, the cost of all those passwords was shown to be way, way higher than the potential costs of any reasonable incident. Didn't matter to the security people involved though, because they were security professionals. Remediating threats was their business. Finding the money to do so wasn't.

Now, obviously, it is impossible to remediate every single potential threat to any large organisation running IT systems. And quite clearly, some threats are larger than others. The problem, of course, is working out which matter and which don't. Spending millions extra on a helpdesk to reset passwords for systems that have multiple lines of defence is clearly somewhat less urgent that dealing with the latest internet banking threat vector.

Security people, for the most part, don't care because they don't have to justify the financial consequences of what they do.

But what would the effect on an organisation be if the security folk had money? And if they were accountable for paying for remediations they decided they had to have?

I bet the first thing that would go would be the self-service password reset system, and the millions extra on helpdesk calls. Objective assessment of those costs in the light of financial constraints would make both an expensive luxury.

I suspect there are already forward thinking organisations that have worked out that the business case for IT security often doesn't stack up. And I rather hope that I'll be meeting fewer professional security people in the future. Instead, I'll be meeting business people who know security, and will be trying to add up the numbers for what they do.

I am certain, when that day comes, we will not only have more agility in IT, we'll also have a much smaller security bill.

And no increase in incidents either, since all that will be remediated are those issues that matter.