People Accelerating Customer Experience (PACE)

I hope you have been having an amazing day one so far.

The next speaker is Brodie Macdonald, General Manager of the PACE operating model at ASB, the second-largest bank in New Zealand. She leads their operating model transformation and reports to their executive team.

She will be co-presenting with Jane Fitzgerald, a partner at Deloitte, about their four-year journey together from the very inception of this effort to the current time and the amazing places it has taken them.

I love this presentation because they speak so eloquently about their desire to create the conditions and mindsets that favor pace over perfection, being customer-obsessed, trust and transparency, and empowerment over control.

Like the presentation earlier this morning from the team at Virgin Media O2, I so much love the testimonials that Brodie and Jane share that provide external evidence that important people value and appreciate the work they are doing.

Here are Brodie and Jane.

Brodie Macdonald: Thanks so much for that, Gene. Kia ora. I'm Brodie Macdonald.

Jane Fitzgerald: Kia ora. I'm Jane Fitzgerald, and we're really excited to share our journey today around the PACE program that we've been working on for the last four years.

Brodie Macdonald: As Gene said, we're coming to you today from New Zealand, or Aotearoa. We're a small island in the South Pacific with a population of approximately five million. Our borders have been closed for the last two years, so it's been really hard to access our beautiful shores. We're really excited to share the journey beyond our shores so that we can start to share our story.

A little bit about who ASB is: we are a full-service bank here in New Zealand. We cover everything from retail services, private banking, wealth, insurance, business, and corporate banking. We've got about 5,000 people who work here as part of our ASB team, supporting our customers to accelerate their financial progress.

We've been around for 175 years, and in fact this year, in June, we're celebrating our 175th year of serving our communities. Something we're really proud about is our culture of innovation and challenge. Some of the things that we've recently launched include Clever Kash, a digital mobile money box for our children to be able to save. One of the things that set us apart at the very beginning is that we were the first bank to launch online mobile banking in the world.

After 175 years of serving our customers, we're really looking at what is next. How can we continue to keep our customers one step ahead?

The world that we are working in, the world that our customers are trying to accelerate, is changing. We've got new entrants to the New Zealand market. We're seeing big tech and fintech. We're seeing Google come down. We've got Apple Pay. We've got customers that are starting to look at services and fragment their banking services. We've got some amazing innovation happening globally, and we know that in New Zealand, that will come to us soon as well.

Really, what we're trying to do is think about the environment that we're operating in, and the way that we can continue to deliver our strategy that will help our customers stay one step ahead of any change in environment that comes their way.

Jane Fitzgerald: What was our answer to that? Our answer, together with Deloitte and ASB, was all around PACE. How do we help People Accelerate Customer Experience? It was how we move people to focus on customer outcomes, come together in cross-functional teams, and deliver great experiences that we needed to do to be able to face up to the challenge that Brodie talked to.

It was a key message that I, as a transformation lead, but many others had to reiterate a lot at the start of the work together: PACE was never intended to be a program. It didn't have a defined start, and it didn't have an end. This was an evolution of the operating model and the way of working for ASB.

There is something we used a lot, a slogan we talk about: we were changing our BAU, not our DNA. The DNA of the bank was really ingrained. The culture had been super successful over the 175 years, and we wanted to put that at the heart of this new way of working.

But the practices that we had were not being useful to us in the way that we worked. There were multiple handoffs between departments. There was a lack of customer intimacy with some of the products and services that were getting brought to market. There was friction with some of our risk and regulatory teams, as well as added demand on those areas that the bank just couldn't keep pace with.

PACE was all about creating a sustainable rhythm and cadence for the organization to be able to shift into the next gear. The messaging is really key, but also it was never meant to be one methodology. We were really focused on how we have a pragmatic and practical application of agile, lean, DevOps, and human-centered design into ASB to make sure that they could make this their own. We focused on other things like mindsets, which gave us the commonality and the way of working that everyone could understand rather than tool sets.

Brodie Macdonald: One of the things Jane has touched on is that, as part of keeping the things that make our DNA unique here at ASB, we were building on previous implementations and experiments that we'd had across the bank. We're really fortunate that our digital tribes have been doing amazing work over the last five, even 10 years, looking at ways they can deliver value for customers sooner and safer.

We've had a crack in our technology teams about doing the same. How do we bring squads and cross-functional teams together to be able to deliver for our customers? We had a new executive team that came on board with our CEO, Vittoria Shortt, and they were really interested, engaged, and curious about how we could continue to do things better.

One of the things that we did was look at some of the best in the world. We've seen presentations at global DevOps conferences before about the ways of working that different organizations have set about and the way that they've implemented them in their companies. We took all of the things that we had seen that worked here at home, as well as what's working internationally, and as Jane said, created a way of working that was unique for ASB.

We kicked off our PACE journey with a transformation tribe, so we worked in the same way that we were expecting the teams to go on and continue to work going forward. I think that's one of the proudest moments: we drank our own champagne throughout the entire journey.

Jane Fitzgerald: The transformation tribe was a partnership between Deloitte and ASB, and Brodie started with the purpose of ASB being accelerating the financial progress of all New Zealanders. We were really deliberate about building capacity and capability in the New Zealand market for talent. The transformation tribe was envisaged as a way for us to help teach, upskill, and build the capability so that the bank could then take that talent, as well as Deloitte as we took that talent and grew our enterprise agility practice across the New Zealand market.

Brodie Macdonald: Some of those tools, in terms of the ways of working: we've experienced human-centered design and we've worked with that for a while here at ASB. But the opportunity for us to learn some of the skill sets of agile ways of working, and bring those together to create a way of working that's unique for us, is part of what has stood out across our journey.

My team, for instance, here at ASB, has ways-of-working coaches. They bring together HCD, lean, agile, project management, change management, and those skills to help our teams deliver our strategy better, sooner, safer.

Jane Fitzgerald: Everyone always goes to, "What's the model?" So we can talk about the type of changes that we've introduced into ASB and what's working really well, and some of those success stories.

Brodie Macdonald: Essentially, there are five tribes, and they are customer outcome-related tribes. Then there are eight platforms that support those tribes, as well as a number of practices. The practices are really the home of craft in the bank. Think marketing, risk, product. Those are the homes of practices.

Jane Fitzgerald: The change, though, was much more holistic than that. This wasn't only about an organization design lens. It was organization design to help reduce the handoffs, but it was also the people side of change, and that was critical from the very beginning.

The start of the journey kicked off with leadership alignment. We essentially got the new executive team together, and we started talking about what could be. One of the things we really wanted to do was center this change around how we can execute our strategy and be better, sooner, and safer for our customers and our people.

Brodie Macdonald: When we talk about better for our customers, we're looking at things like our NPS scores. What is the net promoter score? How do customers feel about the products and services that we have? We're measuring in our tribes, our customer-facing teams, to understand when we launch products, is that having a positive impact, and what could we do to continue that journey?

We think about our people in the same way. We use an eNPS score, our employee net promoter score. At ASB, we're in the top 10% of all financial services institutions globally for that score. Our people recommend our products and services and recommend ASB as a place to work.

Alongside better for customers and better for our people, we also talk about delivering value sooner. That's not necessarily about speed to market. It's not about getting more through the pipe quicker, but about making sure that we are regularly delivering value for our customers: taking the opportunity to do quarterly releases, taking the opportunity to see how we continue to evolve and make sure that there is working, tangible product and service in the hands of our customers sooner than before.

Another thing for us in financial services, and one of the things I think we grappled with at the start of our agile journey, is that we owe a service to our government, our regulator, and our customers to keep them safe. We're looking after billions of dollars of customer money. Making sure that everything we do is safer in terms of the approach we take internally, but at the end of the day protecting our customers, is a really important part of our balanced scorecard. Throughout the journey, we've been thinking about better, sooner, safer as our mantra for how we measure our success here at ASB.

Jane Fitzgerald: It would be really nice if we could share some of the key wins around better, sooner, safer, and how it's resulted in significant change and delivery of outcomes for the bank.

Brodie Macdonald: One of the things I'm most proud about, connected to our purpose, is that we have an area inside our bank called financial wellbeing. We know that helping customers every day, rainy day, and one day, and supporting them with their financial goals is a really important part of how we can use the guidance and advice we have to help customers progress.

One of the first pioneer tribes that we stood up was called My Financial Wellbeing, and the aim was through that tribe to see if we could test and get something to market. We've worked through a number of different products and services and support offerings for our customers.

Through COVID, one of the biggest things we worked really closely with our teams on was launching what we call Support Finder. It's part of our app and part of our banking service for all of our customers to be able to see what government benefits they might have available to them. It's been up and running now for 12 months through COVID, and really, really pleasing to see that our customers have been able to access over $10 million of additional benefits.

This is money that was available to them, but they didn't know that they could get. Through a really simple questionnaire and a direct link through to our government service websites, we were able to support our customers to get the financial benefits that they needed when it mattered most.

That, for me, is a way to say: how do we put our customers at the heart of what we're doing? How do we connect our people to the purpose? How do we deliver value in a way that helps our customers when they need it, sooner, and in a way that is safe for everybody there? That's one of the examples of what I'm really pleased we've been able to do.

Jane Fitzgerald: For me, better for our people was another really core part of what we were doing. The sign for me was when actually the PACE operating model wasn't the whole bank; it was 1,500 people of the 5,000. The rest of the bank then said, "Hey, we want to get in on this. We want to be part of it." The journey became a bit of a snowball effect, and now the mindsets are a key part of the culture for all people at ASB.

Brodie Macdonald: We've always had really strong values here at ASB, and when we think about our values, we think about those as the heart. When we think about our mindsets, those are the head. It's a combination of both of those things that is helping our teams make really great decisions.

We knew that stepping into this new way of working, we were going to have to adjust our mindset. Some of the things you see up on the screen will be familiar to many who are regular readers of the Agile Manifesto.

We talk about customer obsessed, so making sure, as Jane said, everything we do comes back to customer. The reason we are here is to support those customers with guidance and advice.

We talk about pace over perfection. That's not about whizzing through and delivering without the perfection, but striking the balance between speed and perfection, about pace, and seeing what's the right pace for this job. It's about checking in to see: is a quick and dirty email good enough, or do you need a slide deck that goes with that? It's helping our teams start to balance those two things in their way of delivery.

Learn it all over know it all was massive for us stepping into a new way of working. The biggest thing for us in that is that we will not know all the answers. Particularly when we set about delivering the PACE way of working, there are things that are going to work and things that aren't going to work. Finding a way to learn through that journey, admit when you don't know everything, and seek to understand more was a really important part for us.

Empowerment over control is probably the fourth one that I'll touch on. For our leaders in particular, this was a different way of thinking about how they have progressed. Historically, we have had a hierarchy. We've had people that have been able to direct teams of individuals working below them in a way that helps deliver to our strategy.

Part of our PACE ways of working was about empowering the person closest to the customer, closest to the decision, to make the call. Our leaders became very much those that are clearing the way, the great unblockers, and the sprinkler of glitter is what we talk about. They're there to remove impediments for their own team and to give them the context and the celebration they need that they're on the right track.

Last but certainly not least: trust and transparency. As we went about setting up these mindsets, one of the other things we were looking at is our tool sets. How, in a virtual environment, do you create transparency in the work that we're doing? We've chosen to pick a system that enables all of our teams to connect and see the work. They're able to link to each other and have transparency of dates, delivery, and dependencies as they come through.

Those five mindsets have really become key for us. As Jane said, while they started in PACE, they're actually now part of our ASB vernacular, and we use them on a regular basis to reward, recognize, and celebrate great behavior.

Jane Fitzgerald: We've introduced better for our customers and better for our people. Now I wanted to bring to life a little bit around sooner, and Brodie talked about it when she mentioned empowerment over control and the importance of that mindset.

A key part of this was how do we get the leaders on board? It was a new executive team, a relatively new CEO, and we needed to make sure that they were behind us every step of the way. We set up a group called PACE 6. That was the six key leaders of the executive team who had the most at stake, so they had the most members of the team that would be impacted by this change, or they were the most interested, keen, and passionate.

We brought them together three times a week. A lot. For any transformation or change leader, you know that being able to keep pace with that type of cadence is pretty difficult. But they were there not just to come in and make decisions. They were there to support, sometimes with a bit of emotional support, and they were there to help us test ideas.

It wasn't "bring us fully formed decision-making guidelines." It was "bring us some concepts and ideas, and we'll thrash them out and help you build your thinking." PACE 6 was critical to us getting the wins on the board early in the life cycle of the transformation.

What happened, and it's really interesting when I reflect, is that others opted in. We started to see another person and then another person, and we ended up with nine people in our PACE 9 group. That was really them seeing that the decisions were getting made, and if they wanted to be part of it, they had transparency of what the decisions were. But if they wanted to be part of it, they needed to opt in. They started coming along, partaking in the discussion, getting their thoughts in there, and helping us get a more holistic answer to the things that we were discussing.

It was a really good way of getting momentum quickly and going with the people that were supportive, but also being really open and willing to bring others on the journey with us as we progressed.

The biggest learning, or one of the most difficult moments for me in the 18-month journey that I had, was when we were in a group retrospective with the transformation tribe, about 50 people in a room sharing their reflections on the previous quarter. The PACE 6 team came in and shared that we'd been number two in the prioritization list of all the projects at ASB, and they'd been in an ELT session, and we'd shifted from number two to number 26.

The whole mood of the room dropped, as you can imagine. We were the second most important priority, and now we're 26th. What do you mean? It was a low point, for sure. It took us one week, and we got back up to number two.

How did we do that? It's a lot of hard work and a lot of conversations, but the key message that resonated with the executive team was: we can't afford to not do this work. This is the work that helps us deliver the next 10 priorities in the program. Yes, I can understand number one; that was a regulatory-driven milestone that the bank needed to deliver to keep safe. But everything else, we weren't going to be able to achieve if we didn't focus on our way of working. PACE was the enabler.

Brodie Macdonald: That has really shone through still now in the way that we think about the PACE program. The evolution of it today to how we run it is really that PACE is our way that we execute our strategy at ASB. It underpins our way of working in all of our projects, be that customer experience, regulatory, anything we do here. We can do with our PACE ways of working. It's something we're quite proud of: the journey that it's now just part of what we do and part of our DNA.

Jane Fitzgerald: Should we talk about safer? I'll probably give a little bit of safer in terms of how we execute it and how we helped the bank actually shift into the new ways of working, and maybe Brodie can talk a little bit about safer and how it comes out today in the new way of working.

For us, we were moving to this new way of working pre-COVID, so that wasn't a thing yet. What we were saying is we needed to make first significant moves. We wanted to experiment, but we didn't want to say that we were trialing this. We didn't want to be rolling back our changes because we believed that what we were doing was the right thing for the bank.

How we did it, the tweaks we might need to make to the mindsets, to the tool sets, to the skill sets, those were all up for negotiation and change. But the fact that we were moving was not up for negotiation.

We launched two pioneer tribes. There was about a three- or four-month break in between those, and we learned. We focused on what were the retrospectives, what could we learn, how could we change the employee experience of moving into one of these tribes, how could we help our leaders better as we transitioned them into new roles, and how could we support the rest of the organization to understand the change so they could support these tribes as they started to establish themselves?

That led us to keep changing and evolving the way that we stood up the tribes as they continued to scale through the rest of the bank. That was a key success criterion for me when I look back and think about how we ended up standing up five tribes and eight platforms, but the experience continued to improve throughout.

Brodie Macdonald: One of the things we learned through those first pioneer tribes is that some of the processes we had inside ASB wouldn't necessarily fit with our agile way of working. Finding ways that we could get our controls and governance to fit both models, ensuring that we were safe but also ensuring that we were able to do those things in a way that worked and kept speed, was important.

One of the big deliverables that came out of our program is our new delivery framework here at ASB. Through that, we have six key control points that our teams work to. They've got standard delivery documents that come through each part of that process. It helps make sure as we go along, we have got a record and are able to account for the work they're doing, and make sure that it is done in adherence to our protocols and policies here at ASB.

This helps us build in compliance by design. The process that people follow step by step takes them through, and there's nothing they're going to get hung up on or miss out on by not knowing what the process is. It's a really exciting part of what we've been able to do and change in the way that we work here at ASB.

Jane Fitzgerald: The final point around safer is the aligned cadence across the bank. We moved to increments where everybody is on the same increment, and that has created the ability for us to have prioritization discussions across the tribes and platforms and the rest of the bank in a really aligned and synchronized way. It sounds simple, but something like that has probably delivered the most value.

Brodie Macdonald: Aligning to those increments has given us the chance to have those transparent conversations between the teams. One of the gotchas, and one of the learnings and things we're still working on today, is how do we align our funding model to this new quarterly approach? At the moment, we're looking at persistent funding and understanding how we can get team-based funding into our processes for next financial year. We're continuing to evolve as we learn more about how we can support our own teams in this space.

Jane Fitzgerald: I wonder if we talk about the biggest learning in terms of winding down our first pioneer tribe, Brodie. We were on different sides of the fence through this experience. I was in the transformation side of the coin, and Brodie was in the first pioneer tribe.

Essentially, when I talked about experiments, we actually ended up deciding that the first pioneer tribe that we set up was not a long-lived purpose. The purpose was long-lived, but the delivery vehicle needed to be federated across the whole bank. It was everyone's responsibility for financial wellbeing.

We had to say, about six months into their journey, "Actually, guys, we are going to wind down the tribe. We're going to invest in financial wellbeing for everybody, and we're going to have five instead of six tribes as we move forward." It was a pretty hard message. It's a balance to be able to keep the communication, to story-tell that financial wellbeing was critical, and also to say that PACE and the way of working was still critical and we still believed in it. But we were bold enough to say, "Actually, a tribe isn't the right delivery vehicle for this stream of work."

Brodie Macdonald: What we saw when we stood up that first pioneer tribe of My Financial Wellbeing is that the squads we had inside that tribe, the people that had put their hands up and were willing to go with us on the journey, were able to move into the other tribes. They were able to bring their ways of working, their experience from having been in this way for six months. I think that's been really successful because it brought those people from that first part of the journey and brought a whole lot of experience into teams that otherwise were taking their first step in that space.

As Jane said, financial wellbeing is the responsibility of all of our tribes here at ASB. By taking the step to move from one centralized team to a decentralized way of delivering that, I think it goes alongside our learn it all over know it all, and continuing to experiment and grow.

One of the things when we set about designing PACE was we had the chance to learn from one of our sister organizations, Bankwest, over in Perth, Australia. They had taken this journey about two years before, also with Deloitte, looking at their ways of working. We were able to see what worked there and what we were able to bring into our New Zealand context.

One of the most exciting things, and one of the things I'm really proud about now, is actually our parent organization, Commonwealth Bank of Australia, based out of Sydney, is looking at the same PACE journey. They're seeing a lot of the same things in their environment and are taking some of the work that we've done here in New Zealand on our mindset, skill set, and tool set. We're collaborating with Perth, with Bankwest, with Sydney, with CBA, and really starting to develop our own way of working that we can share. We're looking at things that are unique for our context and keeping those, but where we can, scaling the things that have really worked across our businesses.

One of the other things that I think is a really big proof point of the success of PACE here at ASB is that every month I get the chance to go to our board. They've been an amazing group of stakeholders through the whole journey, and we've taken them on the journey from how we develop PACE, how we're rolling it out, how it's going, and now we're talking to them after that, how we're deploying.

We have a customer value showcase, which takes them through a showcase of real, live, working products and services that our teams have built. Our CXOs, our tribe leads, our practice members are the ones that are fronting our board, which gives them a chance to celebrate and recognize the work that they've been doing in delivering for our customers. It's a really nice way to see the tangible outcomes that PACE has created.

Where are we now? I look after the PACE operating model here at ASB, our way of executing our strategy better, sooner, and safer. I've got three parts of my team. I've got a team that looks after the operating model itself, finding impediments to delivery and to flow, and working to remove those. As we touched on earlier, persistent funding is one that we're looking at right now: finding a way to ensure that our funding mechanisms match our delivery mechanism.

I've also got capability and culture for some of our anchor roles. Our product owners, as part of our model, are called customer experience owners. These CXOs are key for us in delivering value to our customers, so we want to make sure that we are caring for and supporting these people. We have built a program around them to help teach them the skills they need for their role today, as well as the skills they're going to need for the future in this model.

We also have our ways-of-working team. My coaches support HCD, lean, and agile ways of working across our platforms and across our tribes. These parts of our model continue to evolve and will continue to learn and help everybody continue to figure out the best way to work with PACE.

Jane Fitzgerald: It's worth touching on why we're here. We started by saying we're a small island in the South Pacific, and part of why we're here is that we wanted to share the story beyond our shores. Some of the work that our teams have delivered is world-class. We want them to realize that and understand that.

There are some areas that Brodie's hinted at that we're still really keen on learning and sharing. Persistent funding is definitely one. But really, we just wanted to give our teams the chance to see themselves in an international setting and reflect on the work that they've done over the past four years, which we think is pretty amazing.

Brodie Macdonald: It's just a chance to celebrate where we are, to share, and really to be able to learn and continue to learn with everybody else in this community. Thank you so much for having us today. We hope it's been interesting, and we hope it sparked your curiosity a little bit more into the journey at ASB with PACE. Thanks.