Traditional corporate hierarchy going the way of the dodo

Gone are the days of traditional corporate hierarchies where executives have the first and final say of all major decisions involving the company. With the ever-changing consumer expectations and demands, Justo Antonio Ortiz, chair of UnionBank of the Philippines, sees companies that have a traditional vertically organized structure with defined command and control structures to adapt a horizontal organization structure as an alternative.

In his talk titled “The Future of Innovation: Digital Economy” that he gave recently at the CEO Virtual Summit hosted by ­ASEAN HR.org, Ortiz delved into how UnionBank became one of the country’s most technologically advanced banks and how he envisions the digital future.

In this future, the traditio­nal vertical structure is deemed ineffective as it is brought about by the inability to respond to an evolving customer behavior and competitive environmental disruptions.

“To succeed in this highly digital world, we believe that there is a need to redefine command and control procedures and protocols, and adapt as an alternative for horizontal trust protocols across our custo­mers, team members, partners and other stakeholders in our ecosystems,” Ortiz said.

Unionbank envisions a future shaped by three so-called megatrends: the deconstruction of the firm, hyper-personalization at scale, and the collaborative commons.

The deconstruction of the firm shifts away from corporate toward an ecosystem of partners and platforms that provide different utilities for business to function efficiently, while the second megatrend of hyper-personalization puts customers at the forefront by allowing them to personalize products and services they consume.

The final trend is the collaborative commons characterized by the devolution of market hours toward individuals and enterprises who turn themselves into both consumers and producers of goods and services in a single shared platform.

Given this, UnionBank then prepares for this future by focusing on two pillars that the company has, which are culture and people; these two pillars are considered the most important and are the foundation of any transformation journey.

Transformation, as described by Ortiz, is not about technology but rather about building a customer-centric culture that is values-based and purpose-led—a critical component of a sustainable and future-ready enterprise.

“It is important for this purpose of UnionBank to harmonize with the purpose of each and every UnionBanker because this will serve as that foundation of trust within the organization. Knowing who we are and why we know what we do is our ethos and this guides our daily work and this is what our customers engage with­—not just our products and services,” he said.

At the start of 2000, UnionBank already had aspirations of becoming a digital financial portal, but the change was not brought about until much la­ter as the culture and the people of the company at the time were not yet ready for it.

To transform, UnionBank began working on a series of middle-out programs and instilling a mind-set that change and initiative do not come from the top but can come directly from the employees with Ortiz explaining: “We also encourage employees to tell their stories of integrity, ‘magis’ and ‘ubuntu’ (community) in the workplace. These are our values. Through this, we’ve heard stories of how employees even at the very bottom of the hierarchy overcome limitations, set clear rules and regulations, not for the sake of noncompliance, but for the sake of serving our customers and delivering a better experience as aligned with our higher purpose and values.”

This values-based and purpose-led mind-set crea­ted UnionBank’s first digital branch in the country back in 2017 called The ARK in Makati City. The board of the bank only approved the project in the beginning, but it was the agile teams who took control and made The ARK an award-winning branch structure and framework that has become the model for other UnionBank branches.

It is more important for the company to ensure that agile teams focus on delivering a superior product for consumers as opposed to preparing reports for the higher-up’s approval. UnionBank’s fast event innovations were also made possible as the company ambitiously moved toward a more progressive structure and culture that has since then been embedded into their internal organization.

These company traits were developed to have quick laun­ches to respond to customer behavior in contrast to comprehensive documentation or approval.

Ortiz said that “In agile sprints, changes in product features can happen every two weeks. We in the board know this. That’s why we’ve accepted that it’s impossible to monitor every step of each project. What is important is that the end goal of delivering superior customer experience, aligned with our values and purpose, is fulfilled.”

Governance is still present in UnionBank’s culture and the team members’ way of working through self-governance and self-regulation that the company has taken the time and effort to develop over time.

To continuously go about their transformation journey, everyone in the company must participate, from the top to bottom. From the management teams, the middle managers, UnionBank team members and the board of directors—all must be future-ready. —CONTRIBUTED

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