Centralization versus Decentralization Evolution of BMO’s Six Sigma Organization

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Centralization versus Decentralization Evolution of BMO’s Six Sigma Organization

  1. 1. Centralization versus Decentralization Evolution of BMO’s Six Sigma Organization WCBF 4th Annual Conference – Lean & Six Sigma Summit April 29 – May 2, 2008, Chicago, IL Richard A. Lam Lean Six Sigma Deployment Leader, MBB BMO Financial Group
  2. 2. Topics <ul><li>BMO Financial Group – Who We Are </li></ul><ul><li>Six Sigma Deployment within Banking Operations </li></ul><ul><li>Centralization Versus Decentralization Models </li></ul><ul><li>Hybrid Model </li></ul><ul><li>Deployment Results </li></ul>
  3. 3. BMO Financial Group <ul><li>Founded in 1817 as Bank of Montreal </li></ul><ul><li>Highly diversified Personal / Commercial / Corporate / Institutional financial services provider </li></ul><ul><li>Entities cross Canada and United States </li></ul><ul><li>Expanding worldwide banking operations in U.K. and China </li></ul><ul><li>Approximately $376 billion in assets as at January 31, 2008 </li></ul><ul><li>Listed on NYSE & TSE as BMO </li></ul><ul><li>Head office – Toronto, Canada </li></ul><ul><li>More than 35,000 employees </li></ul>BMO Financial Group – Who We Are
  4. 4. Consolidation of Banking Operations (2004) <ul><li>Reduce operations costs by consolidating “like” functions </li></ul><ul><li>Improve business processes using breakthrough Lean/Six Sigma </li></ul>BMO Financial Group – Who We Are Personal & Commercial LOB Private Client LOB Capital Markets LOB Personal & Commercial LOB Private Client LOB Capital Markets LOB “ Operations” Fulfillment & Servicing Fulfillment & Servicing Operations manages, maintains and provides governance over Product Operations, Enterprise Infrastructure and Business Process Improvement Senior executives committed to deploy Six Sigma driving from top-down! Major Lines of Business (LOB) across Bank Enterprise P&C Product Operations PCG Product Operations Wholesale Banking PO Fulfillment & Servicing Fulfillment & Servicing Wholesale Banking PO PCG Product Operations P&C Product Operations 4,700 Employees
  5. 5. Six Sigma Journey in Operations Operational Excellence Six Sigma Deployment within Banking Operations June 2005 Six Sigma Pilot Nov 2004 Operations Consolidation 2006 Infrastructure 2007 Acceleration 2009 - 2010 Institutionalization 2008 Integration Critical Year to Build Success
  6. 6. Building Six Sigma Infrastructure (2006) Training Governance Strategy Project Portfolio Sponsorship HR Operations Risk Financials <ul><li>Executive Board commitment </li></ul><ul><li>Operations executive support </li></ul><ul><li>Organization commitment </li></ul><ul><li>Communications </li></ul><ul><li>5 year deployment </li></ul><ul><li>Signature/best practices </li></ul><ul><li>Strategic project ID </li></ul><ul><li>Centralized admin </li></ul><ul><li>Vendor consulting </li></ul><ul><li>Deployment standards </li></ul><ul><li>Documented processes </li></ul><ul><li>Process exceptions </li></ul><ul><li>Change Mgmt Review </li></ul><ul><li>Tollgate reviews </li></ul><ul><li>Corporate reporting </li></ul><ul><li>Project reporting </li></ul><ul><li>Hard vs. soft benefits </li></ul><ul><li>Cost centre mgmt </li></ul><ul><li>Risk assessment </li></ul><ul><li>Regulatory compliance </li></ul><ul><li>Project FTE saves </li></ul><ul><li>Six Sigma Org Design </li></ul><ul><li>Practitioner recruiting </li></ul>Quality & Productivity Management Office Six Sigma Deployment within Banking Operations
  7. 7. Six Sigma Results to Date <ul><li>Completed 230 projects and 36 projects in progress in U.S. and Canada </li></ul><ul><li>Implemented projects delivering cumulative benefits of $79 million hard savings over 5-year period to bottom line </li></ul><ul><li>Trained 940 people in Six Sigma and Lean </li></ul><ul><li>92% of Black Belts and Master Black Belt certified </li></ul><ul><li>Engagement of Black Belts and Master Black Belt has become more prevalent across Operations as the businesses recognized the power of Lean and Six Sigma </li></ul>Six Sigma Deployment within Banking Operations
  8. 8. Six Sigma Journey Continues in Operations <ul><li>80 new projects </li></ul><ul><li>Expand BB/MBB training and communication </li></ul><ul><li>Initiate Kaizen rapid improvements </li></ul><ul><li>Expand / improve Centre of Competency </li></ul><ul><li>90 new projects </li></ul><ul><li>Expand BB/MBB training and communication </li></ul><ul><li>Integrate Six Sigma with business unit strategic planning </li></ul><ul><li>Expand Kaizen rapid improvements </li></ul><ul><li>Design for Six Sigma (DFSS) </li></ul><ul><li>Improve process transparency </li></ul><ul><li>100 new projects </li></ul><ul><li>Expand deployment to Enterprise Infrastructure (EI) business division </li></ul><ul><li>Expand BB/MBB training and communication to EI </li></ul><ul><li>DMAIC/DFSS/Kaizen/Lean </li></ul><ul><li>Improve process optimization </li></ul>Today Six Sigma Deployment within Banking Operations Operational Excellence 2009 Institutionalization 2008 Integration 2010 Institutionalization
  9. 9. Black Belt Organizational Structure (2006) <ul><li>10 Black Belts reporting to divisional management, 4 reporting to Deployment Leader </li></ul><ul><li>No direct oversight from Deployment Leader on Black Belt utilization / selection / performance </li></ul><ul><li>Inconsistent Black Belt utilization across the pillars: </li></ul><ul><ul><li>Varied Black Belts utilization across Operations based on different business cycles, management styles </li></ul></ul><ul><ul><li>Some Operations groups have idle Black Belts while others have shortage </li></ul></ul><ul><ul><li>Inability to share Black Belt resources/skills between Operations groups </li></ul></ul><ul><li>Productivity between 2 to 6 projects per Black Belt per year (same project size) </li></ul><ul><li>Inconsistent Black Belt performance goals and objectives </li></ul>Six Sigma Deployment within Banking Operations
  10. 10. Black Belt Organization in Operations (2006) Six Sigma Deployment within Banking Operations Decentralized structure that has many decision makers…very inefficient to manage Six Sigma Management Office Wholesale Banking Product Ops Private Client Product Ops Personal & Commercial Product Ops BB, Toronto BB, Toronto BB, Toronto BB, Toronto BB, Montreal BB, Chicago BB, Toronto BB, Toronto BB, Toronto BB, Toronto BB, Vanc. BB, Toronto BB, Toronto BB, Chicago Sr. Manager Director Sr. Vice-Pres. Sr. Manager Director Vice-Pres. Manager Sr. Manager Sr. Manager Sr. Manager Vice Pres. Sr. Vice Pres. Sr. Vice Pres. Deployment Leader Available Across Pillars CAN USA
  11. 11. Centralized vs. Decentralized Organization Models Centralization versus Decentralization Model ADVANTAGES <ul><li>Strong working relationship between Black Belt and division employees </li></ul><ul><li>Black Belt has specific business knowledge </li></ul><ul><li>Black Belt familiars with key decision makers in division </li></ul><ul><li>Easier to identify project opportunities </li></ul>Black Belts reside in specific business divisions and report directly to local management Decentralized Black Belts and Master Black Belt managed by Lean Six Sigma Deployment Leader <ul><li>Improve deployment & strategic focus through increased resource flexibility </li></ul><ul><li>Improve organizational effectiveness and Black Belt productivity </li></ul><ul><li>Build on Black Belt best practices and consistency </li></ul><ul><li>Common motivation of Black Belts </li></ul><ul><li>Ease of coaching/mentoring of Black Belts by Master Black Belt </li></ul><ul><li>Increase Black Belt retention by providing opportunities to work in varied projects that encourage career development </li></ul><ul><li>Create Six Sigma community </li></ul>Centralized
  12. 12. Centralized vs. Decentralized Organization Models Centralization versus Decentralization Model DISADVANTAGES <ul><li>Less Six Sigma career management support for Black Belts (no critical mass) </li></ul><ul><li>Local management assigns Black Belts to engage non-Six Sigma work that does not require Black Belt skills </li></ul><ul><li>No sense of Six Sigma community for support </li></ul><ul><li>Idle time/delayed engagement - Black Belt completes training but no immediate Six Sigma projects to practice </li></ul><ul><li>Minimum Master Black Belt support from central services </li></ul>Black Belts reside in specific business divisions and report directly to local management Decentralized Black Belts and Master Black Belt managed by Lean Six Sigma Deployment Leader <ul><li>Short-term working relationship between Black Belt and LOB (case-by-case project engagement) </li></ul><ul><li>Perception of Black Belts as outsiders… “not one of us” </li></ul><ul><li>Challenging for Black Belts to identify Six Sigma projects within LOBs </li></ul><ul><li>Slower pace for project execution </li></ul>Centralized
  13. 13. Hybrid Organization Model <ul><li>Combined advantages from both models to develop new innovative Hybrid model </li></ul>Advantages/Disadvantages Centralized Model Advantages/Disadvantages Decentralized Model Combined Advantages Hybrid Model Centralization versus Decentralization Model Advantages Advantages
  14. 14. Hybrid Organization Model – Resource Flexibility <ul><li>16 Black Belts and Master Black Belt consolidated into flat, hybrid organization reporting directly to the Deployment Leader </li></ul>Hybrid Model MBB BB BB BB 25% of Black Belts centrally deployed with no specific priority. Deployment Leader can deploy for strategic initiatives wherever needed. Deployment Leader P&C PO BB BB BB BB PCG PO WB PO 75% of Black Belts forward deployed to specific Product Operations groups and projects. Deployment Leader can assign Black Belts to other groups’ projects as required – use it or lose it BB BB BB BB BB BB BB BB
  15. 15. Hybrid Organization Model – Resource Flexibility <ul><li>16 Black Belts and Master Black Belt consolidated into flat, hybrid organization reporting directly to the Deployment Leader </li></ul>Hybrid Model MBB BB BB BB 25% of Black Belts centrally deployed with no specific priority. Deployment Leader can deploy for strategic initiatives wherever needed. Deployment Leader P&C PO BB BB BB BB PCG PO WB PO 75% of Black Belts forward deployed to specific Product Operations groups and projects. Deployment Leader can assign Black Belts to other groups’ projects as required – use it or lose it BB BB BB BB BB BB BB BB
  16. 16. Hybrid Organization Model – Guiding Principles <ul><li>Vision </li></ul><ul><ul><li>Become a globally recognized, leading provider of Lean Six Sigma deployment services within BMO </li></ul></ul><ul><li>Purpose </li></ul><ul><ul><li>Achieve deployment flexibility and agility – assign Black Belts to projects as needed to avoid idle resources </li></ul></ul><ul><ul><li>Increase Black Belt retention – encourage career development and long term job assignment by providing opportunities to work in variety of projects across Operations </li></ul></ul><ul><ul><li>Create Black Belt Centre of Competency – continuous development and sharing of best practices among peers, to become ultimately a powerful high-performance team </li></ul></ul><ul><ul><li>Become Lean Six Sigma Centre of Excellence - common understanding of our progress, process and direction </li></ul></ul><ul><li>Roles & Responsibilities </li></ul><ul><ul><li>Deliver consistent, standardized Six Sigma DMAIC/DFSS/Lean project management practices </li></ul></ul><ul><ul><li>Provide Lean Six Sigma subject matter expertise to Operations </li></ul></ul><ul><ul><li>Validate business cases of process improvement opportunities </li></ul></ul><ul><ul><li>Standardize Lean Six Sigma training and train critical mass for Operations </li></ul></ul><ul><ul><li>Provide project portfolio management and reporting </li></ul></ul>Hybrid Model
  17. 17. Black Belt Mandate – Hybrid Model <ul><li>Complete 6 Black Belt projects per year </li></ul><ul><li>Accountable to lead minimum 2 projects at any given time </li></ul><ul><li>Deliver projects in quick succession by breaking down each opportunity into many little projects </li></ul><ul><li>Coach 1 to 2 Green Belts and/or Lean Practitioners at any given time </li></ul><ul><li>Provide due diligence on new business cases at request of Champion </li></ul><ul><li>Attend monthly ‘tollgate’ reviews including report-outs of their Green Belt project status </li></ul><ul><li>Accountable for project DMAIC milestones to point of project sign-off by Process Owner </li></ul>Hybrid Model
  18. 18. Six Sigma Success under Hybrid Model <ul><li>Very productive Black Belt workforce maximizing Return on Investment </li></ul>Deployment Results <ul><li>56 projects completed </li></ul><ul><li>$2.8 million hard annualized benefits delivered </li></ul><ul><li>ROI = 1.4 </li></ul>2006 2007 <ul><li>132 projects completed </li></ul><ul><li>$9.1 million hard annualized benefits delivered </li></ul><ul><li>ROI = 4.5 </li></ul>(Old Organization) (New Organization) - effective Jan ’07 -
  19. 19. Questions ? Richard Lam Lean Six Sigma Deployment Leader, MBB [email_address]

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