Agile Processes Can Transform Companies From Unexpected Places: The VGZ Success Story
In today’s fast-paced world, you’d be hard-pressed to find an IT shop that isn’t at least experimenting with Agile. The pressure for IT to accelerate and innovate faster than ever before is real. But it’s not just IT that is feeling the heat. In most firms, every leader in every function is under pressure to operate at the speed of their increasingly empowered customers. And while those leaders may not embrace all of the specifics of Agile (with a capital ‘A’), there are more than a few leading their firms’ move to speed and innovation in customer experience. VGZ Cooperative is one such firm where this is happening in spades.
With the help of Kees Hamster, board member and CFO/CIO of VGZ Cooperative, we recently set up a meeting to observe, learn, and share insights on how VGZ is advancing toward its goal of becoming a customer-centric digital organization. In a competitive market, VGZ is the second-largest nonprofit health insurance organization in The Netherlands, with a turnover of €10 billion and 2,000 FTEs; 400 of these are inside the technology organization, which is called Data Care.
VGZ started by taking the key step of clearly defining the challenges it planned to address:
- How VGZ could differentiate itself in a regulated industry.
- How the company could reduce employee churn.
- How VGZ could offer more competitive services for its B2B networks, such as doctors and hospitals, and its end customers.
VGZ decided to focus its efforts on improving the customer experience. The starting point was not a traditional customer segmentation — the leadership instead decided to focus on understanding and improving customer journeys, specifically the frequency of customer interactions and the impact on the life of customers.
To become truly customer-focused, VGZ needed to change its processes to recognize customer behavior and quickly act on customer needs. Management decided to accelerate the speed with which it made decisions, speed up the delivery of new features for customers, and close the loop by integrating the lessons learned — in effect, the principles of Agile! The sales and marketing team saw the benefits of this and jumped on board wholeheartedly. Fortunately, VGZ had already implemented design principles and introduced Lean IT in 2014. This proved a solid foundation for the introduction of Agile ways of working in VGZ.
Before adopting Agile, go and visit as many companies as possible with your team to observe, learn, and provide a catalyst for change inside your organization.” (Kees Hamster, board member and CFO/CIO of VGZ)
We observed how Agile can be treated as just another way of working that delivers a lot of benefits and goes beyond its association with the IT organization. Given this perspective, I am fascinated to see how groups outside IT adopt Agile ways of working.
At VGZ, Agile was loosely adopted inside IT, but the sales and marketing departments were the first unit to adopt it wholesale. This created a demand for the IT organization to follow suit and align itself with its internal clients. After four quarters of adopting Agile, here are some of VGZ’s key takeaways. Agile:
- Generates a lot of enthusiasm. Agile created a better understanding of the customer and the business, as well as greater cooperation between the business, IT, and customers (who were listened to more).
- Changes the way you measure your employees. Have clear targets and express them in terms of customer value.
- Demands that you relearn how people can work together. Make teams as autonomous as possible by giving them tools and reducing handovers; teams should be able to solve problems on their own. Have teams of no more than nine people to avoid creating subgroups.
- Involves a wholesale change in the way you govern. VGZ introduced quarterly business reviews, where 200 people get together over two days; they spend 50% of the time on business needs and 50% on improving the way they operate. Preparation is the key to success here. If you want to see how the QBR works, check out this excellent video (well done to the film producer!).
VGZ’s Agile journey is a continuous process of learning, integrating, and improving. We observed that the key to the firm’s success is to create an environment where it is safe to fail quickly and integrate those lessons. The meeting participants included Frey Sigurjonsson, CIO of Swedish Match, and my colleague Christophe Torride, senior advisor to the Application Development & Delivery Council.
We left with so many takeaways. Which departments in your org are the engine and wagon in Agile adoption? Why is that working/not working? I would love to hear examples of manufacturing companies incorporating Agile! Please add your answers, thoughts, and questions below!