Can the Fed promote stability through agility? Can the Fed promote stability through agility?

Being an agile org can lead to cultural transformation and innovation – the Boston Fed has seen it Being an agile org can lead to cultural transformation and innovation – the Boston Fed has seen it

February 17, 2022

The Federal Reserve seeks always – in good times and bad – to promote and project stability. It’s the focus of half of our Congressionally established dual mandate (stable prices, maximum employment). It’s also implied in our 108 years and counting.

But “stable” can sometimes be a euphemism for slow-moving, inflexible, or overcautious.

The Fed has been accused of being all those things, and we know we can’t be if we want to keep pace with an evolving economy. I’ve come to believe that one of most important ways to ensure the Fed continues to foster stability is by prioritizing agility. It can help us stay firm on shifting ground – and that’s exactly what the public expects.

Agility does not necessarily come easily in a century-old, federated 12-Bank system. But we’ve recently seen a great example of how agile we can be, and it’s convinced me that becoming a truly agile organization is much more than just an aspiration for the Fed. It can be something that defines us.

Cultural transformation, in the guise of a tech project

Three years ago, I was charged with leading a project that would align the Federal Reserve’s human resources, finance, and procurement functions. That might sound boring. It was anything but to me and the 350-plus people System-wide who contributed to the project (including employees from our consulting partner). We knew it would impact all 22,000 Federal Reserve System employees.

We named the project Orion, and the Fed needed it because over decades different Reserve Banks had developed their own proprietary processes for numerous critical functions. These inevitably became antiquated, and the different processes made it challenging to work across boundaries.

On paper, this was a technology project. But to the team, Orion was really about cultural transformation. It could help make the Fed more agile and always innovative. We could become a place where our norms didn’t ossify us, restrain us, or turn us inward. Instead, they would push us to adapt and always adopt leading practices.

Orion began in August 2019 with a two-year timeline. Of course, we couldn’t have predicted that in seven months the COVID-19 pandemic would send most of us to remote work and force us to divert critical resources to other Fed priorities. Still, we beat our deadline and launched in 23 months.

Looking back, it was clear some key principles kept us focused, flexible, and fast. Here are a few of them:

  • Start at “Phase 0”: We gathered stakeholders to hash out the toughest issues up front. This got us aligned early on program design and cleared the way for fast decision-making.
  • Develop empowered decision-makers: Decisions were made by smaller groups that relied on their knowledge and expertise and avoided unneeded analysis and discussion. Broad consensus was not required.
  • Encourage calculated risk-taking: Risk aversion can slow progress. Orion always carried a degree of acceptable risk that we accommodated through mitigations and tradeoffs.
  • Enforce rigorous change control: Proposed changes had to be fully vetted within program governance before being enacted. Changes did not derail us or compromise timelines.
  • Monitor scope progression: We used a model that continuously tracked any broadening or narrowing of scope. This kept us on track to deliver the project’s intended benefits.
  • Challenge the status quo: We never assumed, “We can’t.” Orion always asked if we could. This led to new and unique features, such as mobile capabilities for various functions that Orion addressed.

Our agile methods worked with Orion, and I hope it’s just the start. I believe the success of Orion can help reset expectations at our Bank, the Federal Reserve System, and among employees. I want people here to always be asking, “What’s next?” Because we all know something new is coming. Improved agility will enhance our stability and make us even more ready to lead through both the ordinary times and the unexpected.

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