2020 Vision – The Distributed Operating Model
The coronavirus pandemic and a look at the world in 2020 paints a picture that differs greatly to the vision of L.S. Lowry in 1959, which was one of a factory scene, depicting the world when it was seen ‘Going To Work’.
In fact, what has happened to many financial services organisations in the first quarter of the new decade, is that employees have now been forced to go home, or work from a variety of distributed locations.
Whether this was a welcome or a forced evolution is up for debate, however in many cases, the distributed operating model is now a practical reality for many organisations.
And what’s more, the last few weeks has proven to many firms that as a model, it works.
Whilst adapting to this new way of working, organisations are now challenged with seeing what opportunities it can harness from the current scenario.
- Location: Will we go back to working as we were before, now that we know we can operate effectively and productively, away from our previous office location? As a firm, are we locked into real estate positions, or can we re-assess and re-negotiate these?
- Technology: If our employees can work in a distributed fashion, is our business continuity plan and disaster recovery site still required as it was before, now that our operational resilience has been tested? And what new technology is needed in order to maximise productivity gains from distributed ways of working?
- People: Which of our newly adopted ways of working will we now employ and embed for the longer term, as part of business as usual? What are the potential benefits of these?
Defining distributed ways of working
In terms of defining what is meant by a ‘distributed operating model’, we are referring to colleagues and customers who do not need to share the same physical location when interacting. The implications of this have included some of the following: mandated working from home; conference calls, video conferencing and webinar discussions replacing face to face interactions; the potential demise of shared workspaces or disaster recovery sites; customer journey processes and transactions moving entirely to email and telephone as opposed to face to face interaction.
Whilst it is fair to say that many organisations were already moving down this path anyway, the move to distributed ways of working may involve more significant shift for others. The options to consider below, however, may be relevant to financial services firms of all shapes and sizes, regardless of where they find themselves on the journey.
Necessity is the mother of invention
The first question regarding a firm’s physical location may now lead some organisations to re-assess their office size and set-up with a keener eye than ever before. For instance, are there potential tiers of teams that are considered ‘critical’ and needed on-site? Perhaps the move to more flexible working, although forced by recent government advice and instruction, has proven a success for many, from the recent scenario we are all experiencing. Now, more than ever, the necessity of a central London location as a permanent fixture, even for the smallest organisations, may be considered as a ‘nice to have’, rather than a business imperative. For example, many firms are now looking to digitally re-invent their employee and inter-company interactions, by using platforms for seminars, conferences and events, and are already seeing strong levels of attendance and participation across these formats.
Furthermore, virtual offices and shared workspaces can be hired for company meetings and events at a far lower cost than a permanent presence in a single city centre location, once lockdown restrictions are lifted. We may even witness a fundamental shift in real estate, in terms of what the high street and former business districts consist of. Although there are also draw-backs to some of these options, adopting a distributed operating model may allow a firm to potentially reach a broader, diverse workforce, boost productivity whilst simultaneously reducing the time, cost and strain of commuter journeys for its employees. This could also be converted into a diversified target market strategy with clients, reaching new customer segments that were previously constrained by the physical location of a firm’s premises.
Resilience and recovery as the new normal
The second question relates to the operational resilience of a firm’s office and technology as well as the ongoing need for its disaster recovery site, all of which have been subject to a real-life case study and test over the past few weeks. With adversity comes clarity, and firms will now be able to consider more confidently whether a secondary site for business continuity purposes is still required. What is already clear, is that with a global pandemic and lockdown situation, an additional back-up site (which may also be a shared workspace with other firms) no longer solves the problem, if employees are advised to work from home as part of government guidance. This has not only resilience implications, but also potential for cost savings to be realised that were previously not considered, due to potentially reducing office space and the decommissioning of obsolete disaster recovery locations.
Beyond resilience, firms now also have the chance to re-assess their application landscape, ensuring they are equipping their employees with appropriate channels for meetings and calls, in order to maximise engagement and efficiency. These do however need to be managed effectively, whilst mitigating the clear operational risk implications that new technology brings with it (e.g. fraud, information security). Perhaps a move to multiple cloud providers and back up third party providers may also become the new normal from a resilience perspective, in order to mitigate this risk.
Life after lockdown
The third question invites leaders of financial services organisations to consider which current practises, although presently enforced, may become the new normal from a people, organisation and culture perspective, once we move beyond the current lockdown scenario. Industry research already shows a move to a more distributed workforce. Although many employees will be missing the benefit of face-to-face interaction with colleagues and clients, there are some notable advantages to adopting a more distributed operating model that are worth discussing.
Previous cynicism around the concept of ‘working from home’ may now have been tempered in recent weeks, as many firms now know they can still operate effectively in this way. In fact, some industry bodies are already citing increasing engagement via internal and external channels, such as webinars and video conferencing, as events that previously involved time to travel and meet, have now moved online. Furthermore, people who previously commuted anywhere between 3 and 6 hours per day now able to focus more on output and delivering customer outcomes, as opposed to the stress and strain of commuter journeys and the ‘presenteeism’ implications of office politics.
All these considerations present opportunities for more flexible working arrangements for financial services organisations. On a personal level, although we may not move entirely to a full week working from home, exercise during the day, family commitments, as well as more focused ‘deep work’ periods are now more possible than they were in an open plan, city centre office environment. A five-day commute may also become a thing of the past, with designated days ‘in office’, and flexible shifts for those working at home, now more possible than ever.
In conclusion, the first few months of 2020 may have an impact that lasts far longer than the current scenario. Looking ahead, it may be that the responses to this cataclysmic event become the catalysts that drive the move to a distributed operating model for many financial services organisations. Office size, location and set-up is under scrutiny like never before. Operational resilience, disaster recovery and business continuity all have a different feel, as the past few weeks have shown what is, and what isn’t possible. Although a global pandemic is not a one-size-fits all disaster recovery scenario, it has certainly given senior leaders an idea in terms of what may be needed to withstand future shocks.
There are, however, some clear challenges when considering distributed ways of working. For example, the effective mitigation and management of operational and conduct risk will need more focus, if employee and client interactions are now moving to different channels. If firms become more digitally focused, digital conduct will therefore increase in importance. Furthermore, sales quality may be more difficult to manage if employees are now interacting with clients on unmanaged phone lines, or other new, uncontrolled digital mechanisms.
In addition to these immediate learnings and challenges, however, many firms may decide that their overall strategy now needs to be ‘digital first’, moving away from a previous ‘bricks and mortar’ presence, to a digital ‘bricks and clicks’ model. This may now be a business imperative for survival, rather than just a potential strategic option to consider.
From a people, organisation and culture perspective, all of these considerations are also coupled by the potential benefits of productivity and removing some of the problems associated with previous way of working, which may undoubtedly improve work life balance for many. Going a step further, and although some gregarious colleagues may disagree, this new way of working may even be welcomed with open arms by the introverts among us. Sickness levels may also decrease and moves to more flexible ways of working may enhance employee well-being.
So, as L.S. Lowry’s depiction of ‘Going To Work’ has been turned on its head, we now look ahead into a new decade at what challenges and opportunities the current situation now presents us.
Only time will tell if these considerations become the catalysts that drive the next phase of evolution of the financial services firm, towards a vision of a more distributed operating model.