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Agility lessons from the trading room floor

Working in an Agile Way when you are not Spotify……..

tradingroom

For a while now, Spotify has been hailed as one of the most successful applications of business agility, or Agile Ways of Working. But many companies struggle to see how this can work for them, particularly in Financial Services where the appetite for risk is low, and the need for control is high.

The truth is, business agility is not a new concept. It’s been around for a long time and it has not just been adopted by the Financial Service Industry. Arguably, investment banks have been living the culture on the trading floor since Wall Street began.

Imagine if traders adopted a waterfall mentality. A trader starts by outlining all the trades they will execute for the coming year, including the date and cost for each trade. They forecast how much they will make and their performance is measured not on how much they make, but on how close they stick to their original forecast, set out 12 months earlier. As it’s impossible to predict the market conditions for the coming year, last year’s performance will be used to set targets.

Over the course of the year, a trade may no longer be profitable. No problem. Simply submit a change request and have it signed off by your manager, their manager, and the CEO if the trade is over $100k. If a trader wants to make a new trade that is not on the plan, this should be submitted for approval to be included in next year’s planning cycle.

If a client changes their investment over the course of the year, legal, marketing, client services and any other department that might have a vested interest should be consulted and sign off before executing any further trades on the trading plan.

If in doubt, the more people who sign something off, the better.

Think of all the time they would save monitoring the stock market and researching trends? Instead, they simply track and monitor progress against plan, year after year, aiming to stay on time and on budget.

Sure they might be predictable, it might feel controlled, but would these traders be effective? Would you invest in that fund? Of course not. The nature of the stock market is that it is constantly changing. Decision making needs to be in the hands of the traders so they can respond quickly and any decision made a year in advance is not worth making.

In an age of digital disruption, to stay relevant, organisations need to operate their product teams like a trading room floor. Instead of submitting a breakdown of all the features that will be delivered over a year and sticking to it, teams need to be empowered to pivot and adapt with the market trends, take advantage of new opportunities and speed new ideas to market.

This starts with a shift in mindset. Instead of viewing product teams as a cost centre, view them as traders. Set them up with a budget and a goal to return a profit, then support them to innovate and make decisions that will maximise return on investment.

You get what you measure, so teams whose performance is tracked against plan will stick to plan, whether it’s profitable or not. Harmful bureaucracy will limit innovation and subsequent value creation. Teams empowered to make fast decisions and make more frequent releases / trades are able to spread the risk and delivery more value, more often!

Whether you are Spotify, a Small Start up or a Large Investment bank, run your product teams like a trading room floor!

By Cat Munro, Agility Principal at ClearPoint

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