By Curt Hopkins
Where there is money, there are regulations.
And a regulated environment is not known for making companies faster or more innovative.
As a result, big financial companies are not where you typically find a corporate appetite for change. But the ability to change and adapt is a necessary ingredient for succeeding in disruptive times.
The Vanguard Group, an investment company, is certainly big. It manages more than $3 trillion in assets. It’s also widely regarded as a creative company. CIO and Managing Director John Marcante, for example, was one of four recipients of the 2016 CIO Innovation Award from Forbes.
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How does this big, highly regulated organization create a culture that embraces adaptability? Marcante recently discussed some of the company’s key strategies with Connected Futures:
Connected Futures: How do you create an organization that embraces change?
At Vanguard, we have a leadership team that encourages innovation and change.
We understand the importance of staying connected to the rapidly changing IT landscape, and we are constantly seeking inspiration from startup communities, the industry, and within. This emphasis on innovation disseminates into all levels of the organization and fosters forward thinking.
Our rotational model for leadership also creates an advantage. Vanguard has a longstanding practice of rotating leaders, and we view it as one of our great competitive strengths. Our rotational culture ensures our professionals are constantly developing, resulting in a deeper understanding of the markets, our funds, and our operations.
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Connected Futures: How does rotating across disciplines feed creativity?
I experienced this first hand. I’ve worked in various client-facing business and technology roles—through which I developed a deep appreciation for how we serve our clients each and every day. Moreover, I had the opportunity to work with a variety of leaders and Vanguard employees.
The rotational model sets precedence for diverse thought and fresh perspective. Change is not only encouraged, but expected throughout the organization.
Once you have a vision, you have to truly lead people through change. You begin with a compelling reason for change—the “why.” Next comes the “what”—you have to enable the vision and mission. Lastly, you focus on the “how”—you need to really think through how this change will affect individuals.
The common thread in the process is communication. You always have to communicate and reiterate—many more times than you would think is necessary.
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Connected Futures: How do you move faster without increasing error?
We foster innovation through test-driven development and continuous integration. As Vanguard grows, particularly as a global organization, our ability to deliver business value at start-up speeds becomes increasingly challenging, yet all the more necessary. We rely on our agile approach to gain the speed we need to be successful.
Our approach hinges on conducting small experiments, and then pivoting as we learn. We begin with what we call a “sandbox” and see if what we’re doing drives the outcomes that define success. It is a measured, deliberate way to iterate a path to a different solution and it enables our teams to take small risks that could potentially make a big impact.
By enfranchising our people to adopt a “just-do-it” mentality we are ensuring we are never in a state of complacency. Instead, by experimenting, even if we fail fast, we learn. And we can move quickly and efficiently.
Connected Futures: How do you decide which new technologies to try?
We experiment with small pilots. We then focus on the trends that we think will help us to drive business value. Any new technology must create value for our clients or our employees. We will not spend time researching a technology that can’t enable one or both of these constituents.
The influx of cross-channel data has given Vanguard a holistic view of how our technology solutions impact clients, enabling us to better measure our success. We can now leverage big data technology to marry web data with other sources of information such as call recordings, account data, demographic data, and social media data.
Connected Futures: Can you give an example of how that creates real value?
The combination of big data and analytics has allowed us to test large subsets of clients in real time and watch their behaviors. We do that today via A/B testing, where we run multiple treatments of scenarios to see how clients respond.
For example, we can analyze web and phone activity to identify points of pain for clients when making transactions. Our Retail Digital Services group is positioning different services on our homepage based on what we know about the client, and we’ve seen as much as a 700 percent increase in adoption of those services over control groups. That is a real client outcome, all based on big data.
Cross-functional trends are enhancing our ability to create the right technologies at the right time with alignment to Vanguard’s mission of creating wealth for our clients.
Curt Hopkins has written for Newsweek, Reuters, the Los Angeles Times, Salon, the San Francisco Chronicle, and many other outlets.