Bernd Jung, who has held executive roles at multinational insurance company AXA and technology and services provider ITERGO, has been part of several large-scale transformations. In this interview with McKinsey partner Henning Soller, Jung reflects on these experiences, including implementing agile practices on the digital side while maintaining a more traditional waterfall approach with agile elements on the foundational side. He also discusses what it takes to successfully implement a two-speed IT architecture and the importance of business and IT partnership in driving the transformation. A condensed and edited version of their conversation follows.
Henning Soller: Bernd, can you give a quick overview of the key aspects of the transformations that you went through?
Bernd Jung: We found that, based on the business strategy we wanted to implement, there was a substantial need for a transformation not only on the business side but also on the IT side. The IT organization is often foundational and conservative. In one of the transformations I was involved in, we were working on waterfall project designs. We were implementing agile approaches, which were new to us in that environment. It was important to have a clear understanding of the strategy for the different core systems and how we could enable IT to best support the strategy.
We started by setting up a separate digital company and taking a two-speed approach: on the one hand, we had a more agile-oriented digitalized setup, and on the other hand, we had the opportunity to work on the foundational areas. I think the most sensitive aspect was to find a way to bring all these strengths together into one overarching approach. For me, as part of the management team, it was interesting to see how we could build bridges across the two models. We faced a lot of challenges on the digital side because it was the first time that we had built up a digital company.
Henning Soller: You mentioned the two-speed model—with an agile side and a foundational side. Can you elaborate a bit on the technology angle and how you were able to set up those two streams?
Bernd Jung: The biggest challenge was to understand the purpose of digital. At that point, we had no clue that we had an opportunity to make something in a different way based on a digital approach. I think the first step was to understand how we could bring all the tech stacks into the digital environment. How do they fit into the organization based on the foundational, traditional IT development of the past?
We realized that we did not have the capabilities to do the digitalization within the parent company. When we decided to take a two-speed approach, it was clear that we had to set up a separate company with its own location to ensure that we could start learning and start building the digital company. We built offices for the new company in cities outside of our home region because we had a big opportunity to identify and find talent in the market. Similarly, we looked into partners in other regions to expand our talent base.
Henning Soller: How much does a transformation like this require the right kind of architecture, target picture, and buy-in from the business side?
Bernd Jung: We implemented a completely new setup of the architecture picture, including the digital one. With the digital approach, there was a heavy learning curve to substantially involve the business in a totally different way, as compared with the waterfall approach we had taken in the past. The first pilots we executed were certainly not best practice, because we had limited experience on the IT side. But for me, what was more substantial is that we had no experience on the business side on how to change the nature of collaboration between business and IT.
Henning Soller: What would you say were some of the key learnings for you? What would you do differently if you could go back and do the transformation again?
Bernd Jung: I learned how important it is to involve the business as early as possible before starting this substantial change. It’s not just an IT transformation. It’s a company transformation. This means we need to change our behaviors and the ways that the business and IT work together. Take a product manager, for example. You can no longer take the past approach of defining some requirements, coming back to that, and saying, “IT hasn’t delivered what I was expecting.” In the new model, the business is an integrated part of the delivery and development. And that’s a big opportunity to start steering the project in a much more efficient way than before.
Bernd Jung is a former executive committee member of AXA and ITERGO. Henning Soller is a partner in McKinsey’s Frankfurt office.
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.