Learning About Risk the Risk-Free Way

When ANZ decided to sell its internally developed e-learning tools on the external market, the bank bravely stepped outside the comfort zone of its core business. A year and a half later, ANZ has a solidly profitable business line that's attracting big-name clients from several industries.

At first blush, in an era where "focus on your core business" has become not so much a mantra as an article of faith, it might seem difficult to know what to make of a bank that tries to put on the clothing of a learning provider.

But in response to popular demand the ANZ bank has effectively been hawking the online training know-how it has acquired over recent times to other organizations, having recognized a unique opportunity to build a business. Scott Mahoney, head of product for ANZ Online Learning Services, says it is the value-based approach born out of its risk management expertise - and the marketability of that expertise itself - that has helped the bank to make its new business line a solid success.

"As a financial institution, risk management is at the core of everything we do," Mahoney says. "My background is in start-up companies and working for this organization you can understand that financial heritage they are trying to preserve. And one of the biggest areas where we've developed a lot of expertise is around that whole risk profiling, risk management approach, which meant we would not have implemented online learning if we thought it was going to fail. In fact the bank has moved a lot of its risk-based training online, which is where our team comes in: helping others with their risk and compliance regimes."

As ANZ employees around the globe work to transform the organization from a traditional banking business into "the e-bank with a human face", its corporate strategy stands on three sturdy legs: specialization, e-transformation and growth. Underlying all three is the bank's "breakout" program, which encourages people to embrace change and seeks to overturn deep-held beliefs about the role of employees, senior management and the operation of major corporations. As part of that new thinking, employees are encouraged to get products and services out into the marketplace and then learn from the experience.

However, although that might appear like the bank is giving its people a blank cheque to unleash untried products on the market at will, the bank actually takes a values-based approach to everything it rolls out to the marketplace, and it relies on an extremely sophisticated approach to risk management to help it assess that value. This is why the ANZ was able to do something extremely unusual for a bank - take its internally developed e-learning capabilities to the external marketplace as a new commercial product - with a high degree of confidence.

And since it was the risk profile it developed as part of a risk management approach that convinced the organization it could implement online learning without much chance of failure, what could be more natural than to move its risk-based training online, in order to help other organizations with their risk and compliance regimes?

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Going Commercial

Two key aspirations underlined the decision to commercialize ANZ's online learning expertise: growth and differentiation. The ANZ works hard to differentiate itself from its three main competitors through value-added services and aims to exploit its strong base of intellectual property wherever and whenever possible. Mahoney says while a lot of the products ANZ offers to its external client base may have little product differentiation from offerings of its competitors, being able to assist organizations with their online learning initiatives can differentiate its tender.

"These ideas [growth and differentiation] blended with the desire to enhance the ANZ brand in the community and generate additional revenue," explained researcher Kaye Schofield in a case study into ANZ's Online Learning Initiatives published by the Australian Centre for Organizational, Vocational and Adult Learning. "What emerged was a plan to help corporations and the wider community through providing online training on a just in time basis."

And so the decision to expand ANZ e-Train to corporate clients was born. Launched in mid November 2000, e-Train was jointly sponsored by the group general manager for human resources and recently retired former CIO David Boyles as part of the bank's e-Transformation program. It proved highly successful, generating approximately 18,000 course completions in its first six months in the more than 400 online programs on offer, ranging from compliance training to a full MBA. By the end of its first year, 23,000 staff had accessed ANZ e-Train programs and there were predictions around 175,000 training hours would be delivered online each year. That success quickly attracted a range of admirers among ANZ corporate clients, inspiring the notion of extending the service to that customer base, complete with value-added services. In June 2002 the ANZ launched ANZ Online Learning Services to satisfy those clients.

ANZ Online Learning Services delivers consultancy services in implementation of online learning, troubleshoots existing online learning implementations and also provides implementation services for online learning. It also offers a learning management system delivery mechanism for providing training courses and training management to a client organization. And finally the product set includes course content, from "white label" or generic courses to courses sourced from external vendors ranging from business professional development to IT desktop-type training and training around risk management and compliance - an increasingly popular part of the product offering. To ensure those clients' e-learning initiatives are successful, the group has developed a successful risk management strategy for clients, focused on making those clients' businesses work.

Mahoney says the bank's unusual move into the e-learning business, which continues to surprise some observers, was inspired by the frustration of some clients struggling with their own online learning initiatives.

"We get comment all the time to the effect that this doesn't really sound like a core thing that a bank should do, but it has actually been born from ANZ's success internally in implementing online learning," he says. "We had a fairly high profile, so a lot of organizations were approaching us when we successfully implemented online learning, asking us how we made it work when they were struggling. Through a lot of those discussions we had with other organizations - who weren't necessarily all in the finance sector - we realized that there was an opportunity to be able to build a business out of that."

And build a business it has. Over its first 12 months the bank has successfully delivered online learning to tier-two finance sector clients as well as organizations outside the financial sector.

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Internal Lessons

Mahoney says much of this success can be attributed to ANZ's strong risk management credentials and its value-based approach to the adoption of new projects. And underlying those credentials is the belief that anyone can implement any form of technology, but to make it work depends more on how you implement than what you implement.

"It's how you go about implementing that technology or that delivery mechanism that determines whether you succeed, and one of the major approaches we do is to take a value-based approach, which says we will not implement internally or externally unless we will get value from it," Mahoney says. "And value isn't just financially based - there are a lot of other elements to it. It really goes back to saying: 'How do we support the strategic outcomes of the business, not just delivery of a training mechanism to satisfy an HR requirement?'

"This is really an area where we learned from a lot of experiences, certainly internally with our internal product, which is ANZ e-Train, and from our experiences from that we've developed quite a successful risk management strategy for our clients," he says. Part of that approach involves early consideration of every area that could potentially cause failure and then finding an approach designed to mitigate or minimize the chance of that failure occurring.

To help with that analysis the ANZ makes inverted use of the Reason Model, a conceptual and theoretical approach originally developed to improve the safety of large, complex socio-technical systems such as aviation by professor James Reason of the University of Manchester. "Reason is actually used to investigate airline accidents, and what it looks at is any cause of failures not due to just one action, but rather due to systematic failure," Mahoney says. "It covers everything from looking at an organization in terms of its latent considerations (culture, policies and procedures), to actions like someone pressing the wrong button at the wrong time.

"We turn that model on its head and say: 'Okay, well in order to ensure success you need to address everything, not just the sourcing strategy.' So if I'm going to pick this learning management system because its got this, this and this, I need to also look at the other components, which are the organizational factors, and those processes, policies and procedures that support the technology and the delivery, to come up with the optimum outcome for the organization. We look at a number of factors there. First and foremost is actually risk profiling the reasons why they want to put this into an organization. So it's about identifying both primary and secondary drivers for delivery."

Take the example of an organization that has a strategic driver of wishing to lower the risk profile of its business, and that recognizes it has an issue of compliance that is likely to cause it financial or reputational heartache down the road. Mahoney says the typical response is to turn immediately to a sourcing strategy to identify an appropriate technology to address that issue. "Generally what we find is that that tends to lead to disaster, because they haven't considered the learner outcomes that they're trying to undertake, as part of supporting that strategic objective."

He says instead the organization should first develop a risk profile that not only considers the risk of failure to address that compliance issue but also the reputational risk - internal and external - the organization might incur should the solution fail, or the organization fail to achieve the strategic objective. The risk profile should consider every possible risk, from the reputational risk to the financial risk and the number of people likely to be touched by the solution.

"I also think the one absolutely fundamental consideration when you're risk profiling is: How long do I have to put this in place? What's my time frame for that? And certainly what we found from our existing client base is that a lot of organizations leave the whole training process to the last. In putting in place a risk profile around the considerations you have to make to deliver your strategic directive, you can also consider the potential impact from a risk perspective on your learners.

"From that combination of risk profiling, your strategic objectives and the learner outcomes you're looking for, that's when you can look at your sourcing strategy."

Apart from failure to draw up a risk profile, Mahoney says one of the more common mistakes organizations tend to make is to fail to bring in someone with risk management expertise to advise them. Flawed decisions often flow from false assumptions arising from a basic lack of understanding of the likely risks of the project. Another common mistake is to fail to consult all parts of the business in drawing up the risk profile.

"A lot of organizations look at trying to implement something like online learning with maybe just one person driving it, and from a management perspective, that is just never going to cut it," he says. "I think stakeholder management is absolutely critical. So from our perspective, what we do is we try to get across as broad a spectrum of people in an organization as we possibly can, to first of all try to look at understanding the strategic objectives they're trying to achieve, and then going through the process of looking at those objectives, risk profiling those with an organization, and doing that across a fairly broad spectrum. We need representatives from the business, we need HR and learning and development because ultimately they'll be driving it, and you need to involve IT."

A crucial part of the ANZ risk management strategy, Mahoney says, is to make sure all stakeholders are on board throughout the project, and are consulted at key touch points to maintain that buy-in.

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Bridging the Capability Gap

ANZ Online Learning relies heavily on what Mahoney calls a "Teach a Man to Fish" approach, where rather than take on all the work and gain all the skills themselves, project teams work very closely with the client organization to develop the skills and expertise of as many of their people as possible.

To this end the group starts every project for an external client with a readiness assessment to determine their capabilities to deliver on the work. Is there executive sponsorship? Does the organization have people who can act as project managers to move the project forward in the organization? Is there a strategy in terms of learning development that the project can dovetail in with? Is there a strategic outcome that this directly supports? Do they have the stakeholders on board? If not, who are the stakeholders, and can they be put in place?

"All these sorts of things we look at, and then we look at the technology aspects, we look at the content aspects, et cetera, and from that we build a profile of the organization and say: 'Okay, this is where you want to be, this is where you are now, here are the gaps. What do we need to do to address those gaps?'" Mahoney says. He says identifying those abilities and risks up front makes implementing the project much easier.

When the group and its client agree on the capability gap, Mahoney's team puts in place an implementation project plan that includes processes to address each of those capability gaps, identifies the project owner and lays out a time frame for implementation. He says the team typically then maintains daily contact with the client to help smooth project progress and success and allow it to impart knowledge to the clients as they go through the project phase.

"I think the key thing is to involve basically a cross-section of your intended audience. One of the things we've found is that there is definitely a broad cross-section of understanding and I suppose ability to use technology or to even support technology across an organization . . . So to involve [a spectrum of users] in the testing process is important, because by getting them involved with something early on, they actually become advocates, if they're supported right, and in that way it's a lot easier to implement something within an organization when you have people at the grass roots level who are willing to support what you are doing."

The final phase is stakeholder review, and then the product launch, which gives the client a chance to brand the product. The group always conducts a post-implementation review to ensure it continues to learn from each project as it moves forward.

Mahoney's central message is that organizations should always look at any project first from the perspective of risk, and should never jump straight to a sourcing strategy. "Don't whatever you do jump to your sourcing strategy first," he says, "because you'll make flawed decisions based on what looks nice on an Excel spreadsheet with all your boxes ticked, as opposed to what you actually need. Understanding what you need first, from a strategic and learner perspective, before you go to your resourcing strategy - that's absolutely critical.

"And I think part of being close to your client is making sure that you continue to add value back to your client by imparting skills and experience through them all the way through the community."