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Research Briefing

Coordinating Multiple Pathways for Transformation Progress

In this briefing, we share our research on companies pursuing multiple pathways, describe the necessity of coordinating the pathways, and highlight the experiences of commercial bank Bancolombia as it pursues multiple pathways.
By Stephanie L. Woerner, Peter Weill, and Andrea Patricia Diaz Baquero

In our research, executives we talked with at many large companies noted that a pathway well-suited to one business unit may not work as well for another. In such cases, it makes sense for a company to progress on multiple pathways. There’s a big caveat, though: a company pursuing multiple pathways must coordinate across them or risk increasing complexity and fragmentation, with progress slowing down measurably. In this briefing, we share our research on companies pursuing multiple pathways, and describe the experiences of commercial bank Bancolombia as it progresses on and coordinates across multiple pathways.

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Co-author Stephanie Woerner reads this research briefing as part of our audio edition of the series. Follow the series on SoundCloud.


As the world rapidly digitizes, companies are racing to create and capture value from digital. Those traditional companies whose existing business model is no longer viable are being compelled to undertake a digital business transformation. In MIT CISR research on future-ready companies, we identified four pathways that a company can follow to become Future Ready. The digital threat a company faces and the company’s competitive position influence the choice of pathways.[foot]Companies that are Future Ready have undergone business transformation using digital capabilities. Learn about the four pathways and criteria for choosing a pathway in P. Weill and S. L. Woerner, “Future Ready? Pick Your Pathway for Digital Business Transformation,” MIT Sloan CISR Research Briefing, Vol. XVII, No. 9, September 2017,[/foot]

In our research, executives we talked with at many large companies noted that a pathway well-suited to one business unit may not work as well for another. For example, one business unit may need to address gaps in customer experience quickly, while another business unit has more latitude to iteratively address customer experience and operational efficiency. Or the company has an innovation it wants to scale and exploit, while at the same time the company needs to transform. In such cases, it makes sense for a company to progress on multiple pathways. There’s a big caveat, though: a company pursuing multiple pathways must coordinate across them or risk increasing complexity (for example, from overlapping or redundant products, systems, data, or processes) and fragmentation, with progress slowing down measurably.

In this briefing, we share our research on companies pursuing multiple pathways, and describe the experiences of commercial bank Bancolombia as it progresses on and coordinates across multiple pathways.

The Challenge of Being on Multiple Pathways

In our latest survey[foot]MIT CISR 2019 Top Management Teams and Transformation Survey, N=1,311; companies on multiple pathways: N=278. Two percent of companies responding had not started on a transformation.[/foot], seventy-six percent of companies chose one primary pathway for their digital transformation. Twenty-two percent of companies reported they were on multiple pathways at the same time. Of those companies on multiple pathways, twelve percent said they were well coordinated across those pathways—sharing data, innovations, components, or a combination of these across the pathways. These companies assessed their transformation progress as being fifty-nine percent complete, higher than the average progress (fifty percent complete) in the survey, and further along than any of the individual pathways.[foot]We asked companies responding to the survey to assess how far along they were in their transformation—their percentage complete—based on what they had proposed to their board.[/foot] The companies that were on multiple pathways but not coordinated made the least progress on their transformation overall—just thirty percent complete.

Bancolombia’s Pursuit of Two Transformations

Intrapreneurship for a bank the size of Bancolombia—which manages forty-two percent of the financial transactions in [Colombia]—is a tremendous challenge. It is more difficult to change a successful business than to start a business from scratch.

Juan Carlos Mora, Chief Executive Officer, Bancolombia

One example of a company that is coordinating its multiple transformation pathways is Bancolombia S.A., the largest commercial bank in Colombia and one of the largest in Latin America, with 2021 revenues of US$1.1 billion.[foot]This description of Bancolombia is based on A. P. Diaz Baquero and S. L. Woerner, “Bancolombia: Coordinating Multiple Digital Transformations,” MIT Sloan CISR Working Paper No. 455, April 2022,[/foot]

Beginning in 2015, in response to new competitors, more demands from consumers, and the disappearance of industry boundaries, Bancolombia embarked on a wide-ranging digital transformation that encompassed two pathways: the implementation of an ecosystem strategy, and the launch of a neobank—an entirely online bank. Bancolombia’s shift to a focus on ecosystems was prompted by leadership’s belief that the bank would gain a competitive advantage by being involved in and supporting every aspect of its customers’ lives.

People don’t dream about getting a bank loan, they dream about buying their first home or having a better car. To offer nonfinancial services successfully and seamlessly, we needed to become an invisible bank, with the bank’s financial services underlying the nonfinancial offerings.

Luis Miguel Zapata, Vice President of Digital Ecosystems, Bancolombia

In 2005 Bancolombia commenced a digital transformation that would alternate focus on improving customer experience and operations. Through 2014, the bank concentrated on unifying redundant technology platforms and replacing its banking core.

In 2015 bank leaders, who aimed for Bancolombia to be a customer-centric company, saw changes in customer expectations and behavior that suggested the bank was not achieving that ambition. The leaders invested in building a technical foundation that would enable the bank to enter into new business partnerships and support the development of ecosystems. Bancolombia began this work by strengthening the bank’s internal API layer, with the eventual goal of creating a robust external API layer, an API marketplace, or both. Focusing first on developing the internal API layer helped Bancolombia to isolate the bank’s core. The bank built on its internal API efforts to develop an external API layer that exposed certain capabilities for outside consumption; this improved customer experience by enabling the availability of bank services via third parties.

Separately, anticipating the entry of new, digital-only financial competitors, in 2014 Bancolombia created its own digital-only entity: Nequi, Colombia’s first neobank. With Nequi, Bancolombia sought both to learn how digital-only entities work and to challenge the bank’s traditional work practices and revitalize its products and services. Nequi differentiated itself from its parent Bancolombia through its products, diversity, and different ways of working. Nequi prioritized an agile culture, with employees collaborating through self-organizing, cross-functional teams, which bank leadership believed led to faster creation and implementation of capabilities and products.

Bancolombia designed Nequi to function as a test laboratory for innovation and technology and to function as an internal competitor. This allowed Bancolombia to learn by observation the ins and outs of alliances and partnering around APIs; new market segments and strategies; and engaging with customers. For example, Nequi’s mobile app was the first one hundred percent cloud application developed at Bancolombia, an approach Bancolombia later moved to with its banking mobile apps. And Bancolombia tested part of its ecosystem strategy through Nequi by experimenting with APIs to develop partnerships; those learnings were eventually integrated into Bancolombia’s operations. As a Bancolombia brand, Nequi was integrated with the bank through its accounting systems, which permitted Nequi’s customers to use Bancolombia’s ATMs.

For Bancolombia, simultaneously following two separate digitally based innovation paths—the shift to digital ecosystems and the creation of Nequi—always raised the question of the end game. If Bancolombia eventually learned enough from Nequi that it had the same capabilities, what then? Through 2021, keeping Nequi as a business unit of Bancolombia proved more beneficial to both Nequi and Bancolombia.

The end of 2021, however, proved to be the tipping point in Bancolombia’s business case for Nequi. The COVID pandemic facilitated the rapid migration of Bancolombia’s customers to digital channels. By the end of 2021, almost eighty percent of Bancolombia’s clients were also digital users.[foot]Bancolombia S.A., “Corporate Presentation,” January 2022, page 2,[/foot] At the same time, Nequi saw big growth in its user base and its fees. By the end of 2020, the neobank had 4.8 million monthly active users, and it finished 2021 with 10 million users.[foot]Source for 10 million users was executive interviews. Other figures are from Juan Carlos Mora U., “Investor Day—Bancolombia,” page 39,[/foot] Separating Nequi from Bancolombia would give Nequi more opportunities to grow and exploit its technology. In late 2021, the Bancolombia board of directors authorized Nequi to operate as a one hundred percent digital credit company—a separate business from Bancolombia, with its own financial license.[foot]“Nequi will be a separate platform from Bancolombia – Financial Sector – Economy,” NewsBeezer, December 15, 2021,[/foot]

Nequi started as a lab experiment, and it gave Bancolombia the leverage to explore things that would be difficult to do inside Bancolombia. That experiment has now become a big company. By 2025 we plan to be the largest financial and nonfinancial services marketplace in Colombia, present in people´s daily lives and the daily operations of business and SMEs, helping them to fulfill their purposes.

Cipriano López, Vice President of Innovation, Bancolombia, and Chief Executive Officer, Nequi

Leadership Practices to Coordinate Pathways

Bancolombia intentionally pursued two distinct pathways on its way to Future Ready. Alternating improvements to customer experience and operations, which the bank pursued in its core digital transformation, is an example of what we call a pathway 3 transformation. Starting a new, independent business unit, as the bank did in launching Nequi, is an example of a pathway 4 transformation.[foot]Weill and Woerner, “Future Ready? Pick Your Pathway for Digital Business Transformation.”[/foot]

Being on multiple pathways makes sense for many large companies, but to be successful requires purposeful coordination and sharing of best practices. Leaders play an especially important role in coordinating the pathways. When we compared leadership practices of companies on multiple pathways that were coordinated versus those that were not coordinated, these three practices showed the biggest differences[foot]MIT CISR 2019 Top Management Teams and Transformation Survey (N=1,311). We compared leadership practices of companies on multiple pathways that were well-coordinated versus those on multiple pathways that were not coordinated using a difference of means test. The items described were the three measures that had the largest differences. The differences were significant at the p<.001 level.[/foot] (see figure 1):

  • Focusing on a cross-product customer experience. Successful customer solutions often involve integrating products and services from multiple business units. Creating a cross-product experience is even harder when pursuing multiple transformations across different business units—think about how the product and service modules need to work together. Specifically focusing on a cross-product experience ensures coordination will be top of mind, making it more likely customers will receive a seamless experience; creating reusable modules that are combined into services and are API-enabled is key to developing the cross-product customer experience. Bancolombia’s leaders focused on building out first the bank’s internal then external API layers to enable development of cross-product customer experiences.
  • Developing a coach-and-communicate orientation. A multiple pathway transformation is typically just too complex to manage centrally and requires every person’s active involvement and creativity. To succeed, companies have to move away from a command-and-control management style, communicate the vision and plan, and coach on how to succeed. Bancolombia’s executives laid out their vision of developing ecosystems and consistently communicates that vision to the entire bank and to external stakeholders such as investors; a consistent, common language helps keep people aligned in the transformation. Also, they drove adoption of agile methods, which involves coaching and requires that information is conveyed within and across teams and between executives and team members.
  • Leveraging innovation. Transforming on multiple pathways, while more complicated, opens up opportunities to apply and reuse innovations. Leaders who can solve the coordination issues of being on multiple pathways get more value from innovation. Bancolombia intentionally leveraged focused innovation to trial capabilities for reuse and implementation throughout the bank—developing Nequi, in part, to act as a test laboratory for Bancolombia.

Figure 1: Effective Leadership Practices for Companies on Multiple Pathways, Uncoordinated vs. Coordinated

Focusing on a cross-product customer experience 35% 65%
Developing a coach-and-communicate orientation 33% 60%
Leveraging innovation 38% 65%

Source: MIT CISR 2019 Top Management Teams and Transformation Survey, N=1,311; companies on multiple pathways: N=278. The measurement scale for each practice is percent effectiveness. These practices had the highest differences between coordinated multiple pathways and uncoordinated multiple pathways. Differences are significant at the p<.001 level.

For many large companies, following multiple pathways will be the right approach to digital transformation. But pursuing multiple pathways raises the bar for coordination, which has to be deliberate, measured, and communicated. And leaders need to focus on integration, communication, and innovation to help ensure that multiple pathways are coordinated and the enterprise transformation stays on track.

© 2022 MIT Sloan Center for Information Systems Research, Woerner, Weill, and Diaz Baquero. MIT CISR Research Briefings are published monthly to update the center's patrons and sponsors on current research projects.

About the Authors

MIT CISR Researcher

Andrea Patricia Diaz Baquero, Research Assistant, MIT Center for Information Systems Research (CISR)


Founded in 1974 and grounded in MIT's tradition of combining academic knowledge and practical purpose, MIT CISR helps executives meet the challenge of leading increasingly digital and data-driven organizations. We work directly with digital leaders, executives, and boards to develop our insights. Our consortium forms a global community that comprises more than seventy-five organizations.

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