Perspectives
December 15, 2020

The Agile Way to Innovation

Frank Nazzaro
By
Frank Nazzaro, EVP and Chief Information Officer

Innovation and disruption are affecting every industry and the democratization of technology is generating exciting new possibilities, as we’ve seen with 3D printers and no-code platforms. The results are astounding. Advanced technologies and tools are more accessible and affordable — and they’re being used by anyone who has an idea or a need, regardless of their expertise. Simply put, more people are on the playing field, so we can give them the ball and see what they can do.

At the same time, though, innovation is proliferating channels of competition. As highlighted above, fewer barriers to entry are challenging traditional business models — it’s a game of adapt or decline.

The acceleration of innovation cycles (or innovation half-life, as I like to call it) drives greater accessibility in all industries, including housing. Across all sectors, we’re experiencing a technology transformation that increases velocity, reduces cost and improves quality — and the housing finance process is no exception. The pace of change throughout the mortgage process, particularly during the pandemic, has been steadily increasing, and that trajectory is likely to continue in years ahead. 

So how do smart organizations manage, or get ahead of, the innovation half-life? There are resources to guide companies through their tech transformations and help them address the challenges everyone faces, like improving the quality of software delivery, customer collaboration and user experiences. As CIO of Freddie Mac, I am looking beyond the current table stakes to fully transform how we work by integrating a customer mindset into all that we do — a framework and model we call Modern Delivery.

The engine behind our innovation

Building Blocks of Modern Delivery
  • Technology Enablement
    Interconnecting and automating tools that streamline software production
  • Agile Execution
    Building collaborative teams that encompass IT and the business
  • “Design for Zero”
    Also called “no-ops,” it’s all about scale, with end-to-end automation that empowers customers with real-time feedback
  • Framework-Based Thinking
    Using a key set of principles that apply to various scenarios, enabling reuse and improving quality
  • Culture Change
    Evolving roles, expectations and accountability and showing willingness to change

Modern Delivery is a long-term shift in thinking and acting that is powering our tech transformation, driving innovation and delivering value to the business and our customers. It includes three main components: technology enablement, customer-centric (Agile) execution and organizational culture change. Each part is crucial to the success of our transformation.

With Modern Delivery we attacked a key set of pain points common to all technology organizations: financial transparency, decision-making and benefit realization. Organizations face constant pressure to do more — to deliver more value with fewer dollars and resources. Technology leaders can no longer afford to support the toil that pet projects create. That’s why a key tenet of our Modern Delivery practice is technology enablement: interconnecting and automating the tools we use to build, test and deliver applications, allowing us to streamline and accelerate the software production process. Like the advancements we saw when late 19th century handcrafting shifted to factory production, today’s smart, accessible development toolsets are delivering advanced capabilities that allow us to develop at scale, reduce error and cost and, most importantly, create better technology.

The most significant piece of our transformation, and the most challenging one, has been shifting the mindset of the organization. With Modern Delivery, we turned our technology organization structure sideways. We broke down the traditional silos that limit agility by creating cross-cutting teams and a culture focused on customer outcomes.

Modern Delivery is helping us eliminate traditional boundaries between the business and IT, dramatically improving collaboration, increasing speed and productivity, and reducing risk. In addition, we’ve opened the flood gates for innovation — everyone now has the freedom to create while being supported by guidelines that help effectively manage risk. Employees are empowered because they are part of teams that work independently, have end-to-end product ownership and, most importantly, are accountable for their progress and results.

Modern Delivery in action

The benefits of Modern Delivery have been more than evident this year amid the COVID-19 pandemic. Not only was this agile approach fundamental in helping transfer 95% of Freddie Mac’s workforce to remote-enabled workers practically overnight, it played a pivotal role in helping the business respond to stressed market conditions while helping homeowners stay in their homes.

For example, when the pandemic struck, transactions through our Single-Family cash window, which provides critical access to community banks, credit unions and other small lenders for selling loans to Freddie Mac, more than doubled. Our ability to meet this need quickly and efficiently was largely due to our strong Modern Delivery teams. This allowed us to continue providing critical liquidity and stability to the housing market.

The big lesson: It’s about the path, not the endpoint

What we’ve learned through our Modern Delivery experience is that to be truly successful in modernizing how a company works, you must have an open mind about where the organization is headed. Allow for experimentation and embrace change by applying agile practices to the broader organization. Any approach must be directionally sound while leaving room to maneuver and adjust. A broader vision, versus a specific target, supports a learning mindset that allows for continuous improvement and leads to significantly better outcomes.

Anyone can make a Modern Delivery mind shift with these ingredients to chart your path:

  • Petri Dish: Find a willing partner in the business to test a hypothesis. Form a team. 
  • Starting Point: Don’t overanalyze the starting point with a specific endpoint in mind. Just get started and let the journey inform progress and outcomes.
  • Advisory Support: Don’t be afraid to get help. A trusted consultancy can be an asset if used correctly.
  • A Good Deck for Selling: Develop a presentation that showcases the plan well. Then make the rounds and get buy-in for your new course.

Most of all, particularly for large-scale transformations, leaders must step up as coaches who push people forward. Organizational muscle memory tends to pull people back toward old hierarchies and ways of working. The role of leadership, now more than ever, is to inspire, teach, support and reinforce new thinking.

Building the innovation-ready workplace

Looking ahead, almost every company will require technical expertise, business knowledge and a coaching mindset to successfully lead their organizations through rapid technological change. IT organizations themselves must be ready as the lines between IT and business increasingly dissolve and innovation continues at record pace.

That’s why Modern Delivery is the future of the way we work at Freddie Mac. It’s cutting friction out of the system and delivering speed, simplicity and quality into product delivery. It’s already made an impact across the enterprise, elevating many products that are crucial to our mission of making home possible. The more we modernize and fuel our digital transformation, the better we’ll be able to meet the needs of our customers and the market.

 

The article will be the first of several on real experiences from actual practitioners. I hope you enjoy the series.