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Current Trends and Lesson Learned in the Application of Lean Six Sigma in Financial Services

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  • 1. Six Sigma in Financial Services Conference New York, New York May 11-12, 2006 Current Trends and Lessons Learned in the Application of Lean Six Sigma in Financial Services
  • 2.
    • Introduction
    • Purpose & Methodology
    • Study Findings
    • Insights and Lessons Learned for Accelerating Results from Lean Six Sigma in Financial Services Organizations
    Agenda
  • 3. Introduction
  • 4.
    • Conducted the study to gain a better
    • understanding of the awareness, needs,
    • and experiences of banks with
    • respect to the Lean Six Sigma (LSS)
    • methodology.
    • Partnered with Leap Technologies, Inc.
    • on the survey design.
    Introduction
  • 5. Purpose & Methodology
  • 6. Purpose & Methodology
    • Administered the online survey over a ten-day
    • period in March.
    • Sampled approximately 385 “large” institutions.
    • Surveyed executive-, senior-, and middle-level
    • managers.
    Methodology Purpose
    • To gauge perceptions of Lean Six Sigma among banking executives.
  • 7. A Note Before We Start What it Isn’t… What this Study Is…
    • A “snapshot” of attitudes toward Lean Six Sigma in Financial Services Organizations useful for mining ideas and insights.
    • An exhaustive research study from which to draw “set-in-stone” conclusions.
  • 8. Respondents
  • 9.
    • Visited the survey site: 93 bankers
    • Responded: 42 completed (usable) surveys
    • 20 partially completed surveys
    • Only the completed surveys were used in the
    • analysis (42 of the 385 banks surveyed – 11%)
    Respondents
  • 10. Survey respondents represented “large” banks of all asset sizes. Respondents
  • 11. Respondents were divided equally between executive management and senior/middle management.
    • Deployment Leader
    Respondents
  • 12. Respondents’ responsibilities spanned the functional areas of banking. Respondents
    • Finance
    • HR
    • Marketing, Investor Relations,
    • Product Development
    • Project Management
    • Finance and Risk
    • Management
    • Office of Quality Assurance
    • Finance and Treasury
    • Marketing, Training
    • Customer Experience
    • Strategist
    • Corporate Security Services
    • Overall Administration
    • Project Management,
    • Process Improvement
    • Finance
    • Marketing
    • Quality Director
    • Marketing
  • 13. Familiarity with LSS
  • 14. Familiarity with LSS Twice as many executives at the nine banks that had implemented LSS were familiar with the methodology as those who were unfamiliar . LSS Users
  • 15. Familiarity with LSS Of the executives at the 33 banks that had not implemented LSS, most were not familiar with the methodology. LSS Non-Users
  • 16. Deployment
  • 17. Deployment Of the 42 banks completing the survey instrument, approximately 20% (9) responded affirmatively to whether LSS had been deployed in their institutions. LSS Users
  • 18. Deployment LSS appears to be more common among the very largest banks. All Respondents 2 29 9 40 Total 0 3 5 8 Greater than $50 billion 0 0 1 1 $25 billion - $50 billion 0 4 1 5 $10 billion - $25 billion 1 5 1 7 $5 billion - $10 billion 1 17 1 19 Less than $5 billion Not Sure No Yes Has your bank ever deployed Lean Six Sigma? Total   Asset Size
  • 19. Deployment Of the nine banks that have used LSS in their organizations, five have deployed it during the past year. LSS Users
  • 20. Deployment Banks that have deployed LSS were divided on the scope of that deployment. LSS Users
  • 21. Deployment LSS deployment spanned the major functional areas of banks, with Operations and Retail Banking heading the list.
    • Securities Processing
    • No idea
    LSS Users
  • 22. Drivers and Priority
  • 23. Drivers and Priority Among LSS users, the initial decision to explore the potential of the methodology was triggered by one of several factors.
    • Blend of Lean & Six
    • Sigma tools works best
    • No idea
    LSS Users
  • 24. The range of business reasons underlying a bank’s decision to deploy LSS reflects the power of the methodology.
    • No idea
    Drivers and Priority LSS Users
  • 25. Drivers and Priority While LSS initiatives are clearly important to banks, such efforts are not among the leading priorities of those institutions.
    • Investigating opportunities
    • for use
    LSS Users
  • 26. At banks that have not deployed LSS, about one in six may be leaning toward launching an LSS initiative within the next 12 months. LSS Non-Users Drivers and Priority
  • 27. When asked to speculate on the possible reasons their banks might cite for launching an LSS project within the next 12 months, LSS non-users were inclined to focus on customer and financial objectives. LSS Non-Users Drivers and Priority
  • 28. Regarding the decision to launch an LSS initiative within the next 12 months, LSS non-users provided a glimpse at where many banks are with respect to their “LSS thinking.”
    • Selected Positive Comments
    • We are in the process of establishing the
    • foundation and education to be able to execute
    • Lean Six Sigma within the next year.
    • We are constantly looking for ways to improve
    • efficiency and have re-processed twice in the
    • past two years. We would have to consider the
    • benefits of Lean Six Sigma before considering
    • an additional process improvement initiative.
    • We already use Six Sigma in pockets of the
    • organization. The original question asked if
    • the bank deployed Six Sigma. Six Sigma is
    • done by lines of business and is not
    • mandated.
    • Interested in the concept…sounds like
    • something we would be interested in looking
    • into.
    • We have identified several processes that are
    • impeding our customer service and need to be
    • addressed.
    • We have begun discussions and are currently
    • visiting with other organizations that have
    • implemented Six Sigma
    • Selected Neutral or Negative Comments
    • Not sure that it has anything to do with
    • trust work, since I have never heard of it.
    • If it can help with trust work, I would be
    • more than eager to hear more about it.
    • We are currently implementing several
    • other priority programs around software
    • and process enhancements. I doubt this
    • would be a priority within that time period.
    • Cost issues.
    • Since I am unfamiliar with this, I do not
    • anticipate our using it. Would like more
    • information.
    • We do not use Six Sigma now and, I
    • assume, Lean Six Sigma is based on Six
    • Sigma.
    • I have no idea what the term means, so I
    • have no way of knowing whether my
    • organization is interested or not.
    • Not on our radar screen.
    • Since I don’t know what it is, I don’t know if
    • we would launch it or not.
    LSS Non-Users Drivers and Priority
  • 29. Among banks that have not deployed LSS, the functional areas in the bank most likely to implement an LSS initiative are Operations, Retail Banking, IT, and Lending.
    • Human Resources
    • Loan Operations
    • Deposit Operations
    LSS Non-Users Drivers and Priority
  • 30. At banks that have not deployed LSS, issues surrounding the lack of understanding of the methodology (including the time required to learn more about it) represent the most significant barrier to implementation.
    • Corporate culture
    LSS Non-Users Drivers and Priority
  • 31. Financial Considerations
  • 32. The average cycle time of LSS projects appears to be distributed around the interval of six to nine months. Financial Considerations LSS Users Average Project Cycle Time
  • 33. Financial Considerations Almost half of the respondents from banks that deployed LSS were unable to estimate “out-of-pocket” costs. LSS Users Deployment Costs
  • 34. Financial Considerations To date, the returns on the investments made in LSS training and infrastructure have been positive among the surveyed LSS users. 0 0 LSS Users ROI
  • 35. Satisfaction and Impact
  • 36. Satisfaction and Impact Most surveyed banks were satisfied with their LSS implementation and results. LSS Users
  • 37. Satisfaction and Impact While overall satisfaction among the LSS-user banks was positive, respondent comments indicated a range of opinions regarding the level of that satisfaction.
    • All divisions of the bank have used Lean Six Sigma with
    • positive results.
    • We still have more to do to be successful in the deployment.
    • Knowledge transfer is good; time to [results] is slower than
    • anticipated.
    LSS Users Representative Comments
  • 38. Most respondents from banks that deployed LSS felt that the implementation and results had a positive impact on corporate culture. LSS Users Corporate Culture Satisfaction and Impact
  • 39. Most respondents viewed the LSS impact on corporate culture as positive.
    • Representative Positive Comments
    • More fact-based decision-making is taking place.
    • People are now asking for data before making decisions.
    • Opportunity identification process has yielded unintended process
    • improvements.
    • LSS is seen as a positive solution to issues and leads to cost-effective
    • results.
    • Representative Neutral and Negative Comments
    • Six Sigma is not included in all major undertakings.
    • Spotty training has left a number of executives outside the loop.
    LSS Users Satisfaction and Impact Corporate Culture Comments
  • 40. Most executives at banks using LSS agree with the statement: “Lean Six Sigma has significant potential for widespread success in financial services.” LSS Users LSS General Potential Satisfaction and Impact
  • 41. As expected, most executives at banks not using LSS appear to be relatively neutral about the statement: “Lean Six Sigma has significant potential for widespread success in financial services.”
    • Representative Comments
    • I’ve been a process improvement
    • practitioner and have seen it provide
    • hard dollar results.
    • There are always opportunities to improve
    • and, since product differentiation is
    • challenging in banking, service is critical.
    • The level of diligence and complexity is
    • difficult for many organizations to sustain.
    • I don’t have a clue since this is the first
    • time I have ever heard of Lean Six Sigma.
    • Unsure, need more information.
    • Just another fad that will come and go.
    LSS Non-Users LSS General Potential Satisfaction and Impact
  • 42. LSS Needs
  • 43. LSS Needs A broad range of needs underlies current LSS initiatives among those using the methodology.
    • Continually improving
    • approach and reach
    • Drill into more depth in
    • our business units
    LSS Users
  • 44. Training needs appear to be distributed evenly across a range of areas.
    • Too early to know
    • at this time
    • Just beginning our
    • program and can
    • enhance
    • N/A
    LSS Users LSS Needs
  • 45. Executives at banks using LSS rate the LSS training programs they have attended as effective.
    • Representative Comments
    • We ran our own executive
    • training with great success.
    • Broader reach would be an
    • advantage.
    • Champion and project
    • selection training offered by
    • consultant were excellent.
    LSS Users LSS Needs Personal Training Experience
  • 46. Executives at banks using LSS are split on whether they would consider participating in further training. Representative Comment Depends on what would be offered LSS Users LSS Needs Personal Training Needs
  • 47. Executives at banks not using LSS appear to be inclined toward participating in LSS training. LSS Non-Users LSS Needs Personal Training Needs
  • 48.
    • Training and location would be a key factor.
    • Looking for information in a concise fashion
    • so we can “fast track” the process.
    • Would need to be first-class presenters with
    • more emphasis on application than concepts.
    • I would be interested in attending if the
    • program content were specifically geared
    • toward implementation within the banking
    • industry.
    LSS Non-Users
    • To learn more about the application of
    • Lean Six Sigma in the financial services
    • industry.
    • I am interested in learning more about
    • any process that would help us improve
    • quality, reduce costs, enhance customer
    • service, etc.
    • From working at [Name of Bank], I know
    • this is a good program.
    When LSS non-users were asked to explain why they would or would not consider attending, their responses provided insights into the type of training that would be attractive. LSS Needs Personal Training Needs
    • I need more information to determine whether
    • the product is beneficial to me and my
    • organization.
    • I am not familiar with concept; never
    • heard of it.
    • A waste of time.
    Optimistic Pragmatic Pessimistic Objective
  • 49. Summary Comments from Respondents
  • 50. Summary Comments These general comments offered by respondents sum up the principal conclusions of the study.
    • Really don’t know very much about Lean Six Sigma.
    • The success of Lean Six Sigma is well
    • documented in the manufacturing sector, but
    • less known in the financial services sector.
    • Combination of Lean tools with Sigma quality
    • drives most practical approach in financial services.
    • Creates great enthusiasm among its practitioners.
    All Respondents Representative Comments
  • 51. Key Insights and Lessons Learned
  • 52. Getting Value from This Study
    • How would your leaders/managers responses compare with those in the study?
    • Is there a gap between leadership perceptions about your Lean Six Sigma deployment and the “reality”?
    • Why does that gap exist?
    • What is the potential impact of leadership perceptions on your deployment?
    • How effective is your deployment strategy in managing and shaping leadership perceptions?
    Some Questions to Consider:
  • 53. Insights & Lessons Learned KEY INSIGHT:
    • Awareness and appreciation for the impact Lean Six Sigma can have in banking organizations appears to be an “all or nothing” proposition .
      • Large organizations are leading the way. “Filtering down” to mid-sized and smaller organizations is proceeding more slowly than in many other industries.
      • Even within organizations deploying LSS, there appears to be many “left on the sidelines”.
  • 54. Common Barriers to Faster “Spread” of LSS Capability within Organizations
    • Inadequate linkage between the Business Planning Process and the Lean Six Sigma Project Selection Process.
    “ I’m all for this initiative but it’s not really helping me with what’s on the plate today.” Senior Executive Trust Operations STOP!
  • 55. 2. Treating all projects the same regardless of scope and complexity. “ It took us two years before we recognized that DMAIC is not a universal hammer for all problem nails. We probably wasted a lot of time optimizing processes that really needed to be leaned out or blown up.” Master Black Belt Money Center Bank Common Barriers to Faster “Spread” of LSS Capability within Organizations STOP!
  • 56. 3. Extensive training requirements make it difficult to get “non-belts” engaged. “ Compelling as it is, we simply can’t afford to pull people off the line for multi-week training sessions.” CEO Community Bank Holding Company Common Barriers to Faster “Spread” of LSS Capability within Organizations STOP!
  • 57. LSS Accelerators
    • Provide leaders with a fast, simple process for developing an improvement game plan linked to strategic objectives.
    • Match the right tools and resources to projects based on problem complexity.
    • 3. Deploy tools and training “just-in-time”.
    GO! GO! GO!
  • 58. Y = f (x 1 , x 2 , x 3 ,…) What do you want to improve? What actions will get you there the fastest? Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Top Priority Outcome and Metrics Y X X X X X X X X X X X X X X X X X X X X X X X 1 X 2 X 3 Top Priority Performance Drivers Rapid Action Projects Expert Study Projects Leadership Decisions Improvement Game Plan Breakthrough Projects Leadership Planning Process
  • 59. Leadership Planning Process – Key Tool: 4 Box Project Planning Tool EXPERT STUDY PROJECTS BREAK-THROUGH PROJECTS LEADERSHIP DECISIONS RAPID ACTION PROJECTS Apply Advanced Six Sigma Statistical Tools Apply Advanced Lean, Innovation and Intermediate Six Sigma Tools Apply Workout & Basic Lean & Six Sigma Tools Complexity “ Just Do It” – Apply Leadership Decision Making Tools Need for Engagement
  • 60. LEADERSHIP ALIGNMENT Rapid Action Projects Breakthrough Projects Expert Study Projects AFTER ACTION REVIEW AND REPLANNING Executive Decision Projects (ongoing)
    • Engage people closest to the problem
    • Simplified toolset
    • Green Belt/Yellow Belt Driven
    • Use Black Belts as Coaches/Mentors
    • Engage cross-functional stakeholders from the start
    • Black Belt/MBB Driven
    • Black Belt driven with engagement as needed to “get the data”
    • Ensures linkage of all projects to the business strategy
    • Secures leadership commitment for all projects
    • Allows leadership team to control pace of deployment
    • Review results
    • Recognize participants
    • Lock-in process control plans
    • Identify best practices and opportunities for “spread
    A Repeating 90-Day Cycle of Improvement Accelerated Lean Six Sigma Deployment Model
  • 61. Thank you.
  • 62. Appendix: Additional Detail on the 4 Box Project Planning Model
  • 63. EXPERT STUDY PROJECTS BREAK-THROUGH PROJECTS LEADERSHIP DECISIONS RAPID ACTION PROJECTS Apply Advanced Six Sigma Statistical Tools Apply Advanced Lean, Innovation and Intermediate Six Sigma Tools Apply Workout & Basic Lean & Six Sigma Tools Complexity “ Just Do It” – Apply Leadership Decision Making Tools Leadership Planning Process – Key Tool: 4 Box Project Planning Tool Need for Engagement
  • 64. Leadership Decision Projects Accelerate results by making, communicating and enforcing a clear management decision to take action. Best used when:
    • Action required to improve performance is ABSOLUTELY CLEAR AND SPECIFIC .
    • Minimum risk/significant gain in making a DECISION TO ACT.
    • Making a clear decision will accelerate OTHER IMPROVEMENT ACTIONS.
    EXPERT STUDY BREAK-THROUGH LEADERSHIP DECISION RAPID ACTION
  • 65. Rapid Action Projects Achieve fast results by tapping into resident know-how and experience close to the improvement needed. Best used when: EXPERT STUDY BREAK- THROUGH LEADERSHIP DECISION RAPID ACTION
    • Action required to improve performance is CLEAR but how to best do it is not.
    • Minimal risk in taking action at the local level. High risk in not involving those who must OWN THE IMPROVEMENT.
    • LOCAL KNOW-HOW EXISTS and can be tapped with effective team approach.
  • 66. Breakthrough Projects Achieve “quantum leaps” in performance on complex, cross-functional and silo-challenged processes and systems. Best used when:
    • It’s clear that existing process/ system is NOT CAPABLE of achieving desired performance.
    • Risk in maintaining the status quo FAR OUTWEIGHS risk in experimenting with new approaches.
    • STAKEHOLDER SUPPORT for change exists and can be leveraged through effective application of best practices for process redesign.
    EXPERT STUDY BREAK- THROUGH LEADERSHIP DECISION RAPID ACTION
  • 67. Expert Study Projects Accelerate results by gathering data and applying graphical and statistical analysis to identify root causes of problems and potential breakthrough paths. Best used when:
    • Action required is NOT CLEAR nor supportable with existing data.
    • HIGH RISK to current performance levels in taking action without more knowledge.
    • Application of STATISTICAL ANALYSIS will build the case for action needed to identify solutions and secure broad stakeholder support.
    EXPERT STUDY RAPID ACTION CORE REDESIGN LEADERSHIP DECISION