10 March, 2023

The Nine Key Lessons Learned Transforming A Failing New International Payments Business Into A €200m+ Per Year Success - Part 4

In the first part of this series I started to describe the background to FX4Cash, Deutsche Bank's international payments business, and the circumstances in which I came to lead the business. I covered how we prevented the business from being closed down and the first step we took on the path to success in the second part. In the third part I detailed the problems with the way in which FX4Cash was being distributed and the changes we implemented to unlock its potential. In this section, I will first describe how the FX4Cash team was reorganised and given new roles and responsibilities. I will then cover the transformation of the product management function and how and why the operations team were empowered to be leadership peers in the new structure.

Complete Reorganisation Of Team Roles And Responsibilities

Whilst initially the FX4Cash business was failing, that was not because the team lacked the talent to succeed. To drive that point home, it's worth pointing out that there were only minor changes to the team over the transformation to a successful business. The problem was how the team was organised, the roles and responsibilities the different team members had, the lack of objectives being set and the team's lack of authority to control the resources they needed to succeed.

It was striking how even the most minor of issues were brought to me by team members for decisions to be made. Many members of the team were more than capable of handling these issues themselves, but they had been denied the authority to make those decisions. It was clear within the first few weeks that a completely different team structure was required in which much more authority was delegated and that enabled the talent within the team reach its potential.

The team that I inherited had little or no structure outside of the near-shore team. The near-shore team was well managed and well structured. As far as the wider FX4Cash team was concerned, I had come across similarly poorly structured teams in the past, where the structure was flat not by design but from an unwillingness to make the difficult decisions required to differentiate the people to lead from the rest of the group. There was also a randomness to the geographical distribution of roles that was not aligned to the needs of the business.

When leaders fail to provide appropriate structures to teams, especially, as in this case, a globally distributed team, unhealthy dynamics flourish that are to the detriment of the business. In this case, those unhealthy dynamics created a sense of urgency to the need to reorganise the team. There are many ways to organise teams. What was I to do? Whatever choices I made would make some team members happy and others potentially resentful. These were delicate matters that deserved to be treated with the upmost care and attention. I focussed all my time and effort on how I could organise the team to maximise the opportunity of the business whilst giving each of the team members the opportunity for personal success.

The structure of the team needed to be aligned with the commercial strategy. Given the change in strategy to target corporate customers, a team structure needed to be designed that could drive the sales governance process, provide Product Sales Specialist resources in those locations with the greatest commercial potential, manage the issues that arise on a day-to-day basis in the various locations and to capture the ongoing requirements for the business across the globe from a product management perspective.

I will address the product management issues in a subsequent section as they warrant a longer description. The rest of the reorganisation I will detail below.

The first element of the reorganisation was to create three regional teams with responsibility for the commercial performance of their region. The regional teams were self-sufficient in terms of the people resources they required. The second element of the reorganisation was to appoint one person in each region to lead the team in that region. In the legacy structure every team member nominally reported to me. In the new structure people in the regional teams would report to the regional head of the team. The third element was to create a management committee that I would chair. The members of the committee were to be peers consisting of the three regional heads, the head of the near-shore office team, the head of FX4Cash product management and the head of FX4Cash operations. The head of operations did not report to me as operations reported up through other organisational verticals. The remainder of the management committee were my only direct reports. The rest of the team reported to the relevant management committee member.

One of my main objectives with this structure was to delegate authority and direct control of resources to the senior members of the team. As I was setting these regional leaders aggressive commercial targets it was hugely important to me that I gave the leaders the control over the resources they needed to be successful. Each of the three regions had very different opportunities and challenges and they needed the autonomy to develop to meet their market's needs.

An issue that I felt strongly about was the perception of the near-shore team from those team members based in the main regional head offices. I had detected a sense that the near-shore team, merely by virtue of their location, were perceived as not being peers of the people in the more high-profile offices. It really bothered me. I had come across a similar issue in a previous business that I had inherited where really talented people were prevented from realising their full potential, simply because of the office they were based in. I was determined for that not to happen on my watch.

The head of the near shore team was now clearly visible as a peer of the other FX4Cash management committee members. I made a point of regularly visiting the near-shore office, meeting with each of the team members and reinforcing the fact that there were no limits on what they could achieve. I also made sure the other senior members of the team and the wider stakeholders visited the near-shore office by holding an annual business planning meeting there.

The commercial progress of the business was now reported on a monthly basis from a global perspective but with a regional breakdown. The regional heads chaired their own region's sales governance meetings which helped establish them as the product peers of the various regional sales managers.

Aligning the organisational structure of the team with the commercial objectives of the business and empowering each region with the autonomy to chart a path that met their regions unique needs, provided the conditions for the FX4Cash business to achieve a rapid turnaround in its fortunes. The structure enabled the business to succeed whilst providing a platform for the members of the team to develop their careers.

Fixing Product Management

The product management function of the FX4Cash business at the time I assumed its leadership was under resourced and did not have the appropriate processes in place. It was a mission critical function that needed to be fixed if we were to succeed. Importantly, it was the resourcing that needed to be fixed. The team was high quality but too small.

The technology development methodology that was in place at the time was the waterfall method. Having previously been a board member and senior executive of a fintech company I had deep experience in the technology development lifecycle and was very familiar with the waterfall development methodology.

For that process to be successful the product management pipeline needs to provide the engineering team with a reasonably long-term view of the development requirements. This should be at least a one-year view of the pipeline. My personal preference is for an eighteen month to two year rolling view of the pipeline that is updated quarterly.

There are almost always a number of trade-offs in development pipelines that are delivering multiple streams of work. Given sufficient forward visibility, engineering teams are able to advise on the optimal path that balances time to delivery, high quality code with meeting commercial imperatives.

To produce a sufficiently detailed and forward-looking development pipeline requires the ratio of engineers to product managers to be appropriate. What I initially inherited with FX4Cash was a woefully under resourced product management team relative to the number of engineers in the development team. This was causing a bottleneck which severely impeded the development process.

This was in no way a reflection of the abilities of the product management team. The product managers were talented and had deep knowledge of both the FX4Cash Engine and the ecosystem of other payment systems that FX4Cash interfaced to. It was simply a numbers problem. The product managers were overwhelmed. We needed to triple the number of product managers and institute processes that were appropriate for the scale and breadth of the development effort.

There was a long list of development requests but no forward-looking pipeline. The process of determining the projects for the next period of development comprised of a last-minute scramble to get enough requirements documents together to give the engineers enough to work on.

Notably, once the requirements documents were written and the development cycle began, the way the product management team interfaced with the development team worked extremely well. The technology delivered through the teamwork of the product management team, the development team and the quality assurance team was high quality. In production, the FX4Cash Engine was highly reliable and issues that impacted the business were rare.

It took a while to build the headcount we required but we got there in the end. The distribution of the team was chosen to match the geographic footprint of our development needs. Not least, Asia was properly represented. After a change of leadership of the product management team we eventually completed the roll out of a radically different planning process that delivered a two-year forward-looking pipeline that was adjusted quarterly.

Despite the fact that investment banks spend large sums on technology, and sometimes claim to be technology businesses at heart, the reality is that they generally have significant gaps in their product management capabilities relative to technology companies. Having worked at senior levels at both investment banks and technology companies I have experienced the gulf in the product management process of investment banks relative to technology companies. I have been able to address this issue through the roles I have held at some banks and it is striking how much the business benefited through improvements in product management processes.

The large-scale changes to the product management process and getting that function properly staffed was a necessary condition for success. As the rate of customer growth accelerated the changes required to the FX4Cash Engine to meet the diverse needs of the customers grew rapidly. Good process combined with talented product managers and engineers delivered what the business needed to succeed.

Empowering Operations To Be Leadership Peers

In the early days of my involvement with FX4Cash, when I was trying to understand the business, I started to map out the team and all the partners of the business. Given that FX4Cash is an international payments business, payments operations was a mission critical function. FX4Cash had its own dedicated operations team in Dublin and they were the FX4Cash business' most important partner. Within a matter of days of my involvement in FX4Cash I arranged to speak to the leader of the FX4Cash operations team so that I could learn as much as possible about the underlying processing of the payments.

The operations team consisted of a small group of extremely talented and enthusiastic professionals with seemingly encyclopaedic knowledge of FX4Cash. I learned so much from the discussions with the operations team.

I went into those conversations with an uncomfortable lack of confidence in my understanding of what FX4Cash really was trying to achieve. I had to hand a schematic diagram of the FX4Cash Engine that the head of product management had provided me. I also had an electronic copy of the FX4Cash system manual that had been produced by a member of the team in New York who I would eventually give the role of leading the U.S. business. Those two documents were the only sources of information that were of any use. As previously highlighted, marketing collateral and the monthly business updates were confusing and unfit for purpose. The system schematic and the system manual were purely factual documents describing processes.

The documents in themselves didn't give the knowledge I needed. However, a combination of the documents and the conversations with the operations team, in which I could ask lots of dumb questions, enabled me to form a picture in my mind of what FX4Cash really was.

It became clear to me very early on that the leader of the operations team needed to be a highly visible member of the management team if FX4Cash was to succeed.

The operations team were noticeably diplomatic and circumspect in the early conversations I had with them and that raised concerns for me as to why they felt the need to so measured in expressing opinions. I was eventually able to earn their trust and they were more open with me about what was good and perhaps more importantly what challenges they were encountering with the product. Around the same time, in conversations with two members of the core team I discovered that they had a wholly unacceptable view of the relative importance of themselves with respect to the operations team and were somewhat dismissive of the operations team's point of view. It explained the initial circumspection I detected in speaking with operations. Fortunately, these two team members were exceptions and the rest of team had a healthy and well-founded respect for the operations team.

Given that the purpose of FX4Cash was to provide fully automated end-to-end straight-through-processing of international payments, the operations team's role was to deal with issues when the process failed for some reason. You learn far more from the cases where it doesn't work than when payments go through incident free, and it was the operations team who had that experience and knowledge. It was through the conversations I had with operations that I discovered the concerns that the team had with elements of the business. Decisions were being made about the direction of the business by salespeople that overruled concerns of operations to the detriment of the business. It had to stop.

I learned very quickly that the operations team needed to be front and centre of the management of the business. It was also very clear that they were not being given the authority they warranted in the current set up of the FX4Cash business. By way of example, the operations team had a long list of development requests that they had provided to the product management team. None of these requests were being prioritised. Meanwhile, vanity features that made little or no commercial sense, that were requested by members of the original sales team, were taking up valuable development resources. It was an utterly indefensible situation that typified the poor management underlying the initial failure of the business.

When I implemented the reorganisation of the business, the head of operations joined the FX4Cash Management Committee as a peer of the regional heads, the leader of the near-shore team and the head of product management. The operations team were given a percentage of the development budget that they had sole control over. This meant that operations had their development requests being worked on in every development cycle and were quickly able to work through their backlog of requests.

I visited the team in Dublin a number of times. I also asked the Dublin team to host the rest of the global leadership team and stakeholders for one of regular onsite meetings we used for business planning. This gave me the opportunity to publicly demonstrate how important the team were and how highly I valued their contribution.

For a business to be successful it needs to get the big decisions right. To get those decisions right it needs the input from a range of perspectives. The people closest to the day-to-day operating processes have a unique and hugely valuable perspective. They need to be given both the visibility and the seniority to influence the direction of the business.

Coming Up...

In the next post in this series I detail the problems that FX4Cash solved for corporate customers.

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