Faced with the threat of a massive competitor entering the marketplace, DNB, the largest Norwegian bank, rose to the challenge of innovating faster with less friction and better results.
Only a few years later, in 2020, they were named the most innovative company in Norway.
During a recent Innov8rs Connect event, Executive Vice President for DNB NewTechLab Yngvar Ugland in conversation with Dan Toma gave us a glimpse of what’s behind their transformation. You'll find three success factors below.
Let Go Management
When in 2015 the Danish equivalent of DNB announced their plan to launch into Norway in 6 months, DNB’s CEO responded by cutting through the typical bureaucracy of a traditional governance-focused company.
The CEO united cross-functional teams into one area, focused on just one project. He told the group to “figure it out” and to only report to him, yet “only if you have to”. This “let go” management style created autonomous teams, freed from several decision-making layers.
The group successfully created a product within a short turnaround time. One result of that success has been that more executives across the company were being trained to adopt this management style. Also, a dedicated technology lab was created- not to go down the innovation theatre road, but to clearly mark that things are done differently there.
Within this lab, they continue to ask themselves "what are the outer boundaries of what can be done with technology?”, deliberately seeking for high risk initiatives- high risk, but also high reward.
Iterative Strategy Development and Deployment
As an outsider, for Dan Toma it’s easy to notice that DNB's innovation success comes from applying an iterative approach to strategy development and deployment. DNB looks at strategy development ahead of the technological curve, and it’s supported by a dynamic budgeting process.
DNB created an innovation thesis that includes structural problem spaces, business models and technologies, and they put an expiration date on that innovation thesis. The review their strategy every 6-8 months, and then decide where they continue to invest or not.
As example for what’s in such an innovation thesis and anti-thesis, in 2018 DNB said they wanted to move away from having physical distribution of banking products. So, they were not going to support any business idea or model that require people to go to a branch to sign a piece of paper.
Because the innovation thesis is clearly articulated and includes actual decisions, teams can go faster. In fact, the innovation thesis itself is not the critical piece; it’s how they use the thesis that makes it work.
Autonomy: Freedom and Responsibility
The NewTech Lab doesn't work with big budgets. They are secured of funding, but only for a limited amount. Yngvar explains he doesn't want to compete for the same money as the core business. If the mobile app has a critical bug, and there's a million monthly active users suffering from that, they need the resources to fix that bug. Not being dependent on large sponsors also creates the autonomy needed to explore across the horizon. They can pick their own bets and take big steps, rather than iterative steps. Yet that freedom that also comes with responsibility.
The team is always actively seeking high risk, high reward opportunities, which means a lot of things they do will fail. By failing fast, they can succeed faster.
Of course, the transformation is not over. In fact, it might never be over.
But by embracing the letting go management style, adopting an iterative approach to strategy and setting up a fully autonomous exploration team, rather than creating five-year plans in excel sheets and powerpoint slides, DNB has set itself up for success today and tomorrow.
