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Lessons Learned in Program Execution

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  • Still to do: Insert explanatory notes where missing Check slide headers for clarity, flow, logic Get most updated course agendas (in process) Have Tony Iacono review Building Skills section (in process)
  • Measurement 0.3
  • PMP is a process improvement methodology used to identify improvement opportunities, measure performance and make recommendations for improvement based on data and analysis. PMP 0.2
  • Implementing PMP 1.0
  • Establishing these factors in your business provides the seeds of success. They need to be integrated uniquely to fit each business. They are all necessary for the best result. The most powerful success factor is “committed leadership” Implementing PMP 1.0
  • Commitment is defined as the ability to “walk the talk” and model desired behaviors Change means incorporating new behaviors (e.g. teamwork, or using PMP approach) into everyday work, which starts with leadership LESSON LEARNED : Senior leaders must be visible and active champions of PMP throughout the business! Implementing PMP 1.0
  • For a business that wants to improve, it must begin by viewing itself from the perspective of its customers. How do customers view a business? Customers look at a business in terms of their experience around the use of its products and services. Most customers may see little or none of the functions and departments which make up the business. They only see the outcomes of its business processes (a software package, an ATM, or a credit card statement). Businesses that want to improve must learn to view themselves in terms of the processes that deliver products and services to customers. The figure above illustrates how the processes that provide products and services to customers are horizontal, and require the participation of virtually everyone in the business. Improving customer satisfaction requires that a business understand and improve these processes. Project Identification and Selection 7.0
  • Key Discussion Points: By listening to our customers, we determined that Quality of policy issuance was an important attribute of quality service. We then determined how often we failed to meet their expectations: 88% of the time. After the teams looked at the process and made changes, we are now failing to meet expectations only 8% of the time. What makes this achievement that much more outstanding is that timeliness has not suffered and production has increased! Questions to Prompt Discussion: Does anyone know where they can learn about the results of other projects that have occurred as a result of PMP in AIG? (PMP website on the AIG Intranet.) Transition to Next Slide: Let’s examine the first phase of the DMAIC methodology, Define. The Define phase sets the team up for success.
  • Measurement 0.3
  • Measurement 0.3
  • Transcript

    • 1. … . Over the Rainbow…or How to Avoid Potholes in the Yellow Brick Road…. Lessons Learned in Program Execution
    • 2. Discussion Topics
      • Who is AIG?
      • Why PMP?
      • What is PMP?
      • How does it work ?
      • Project Success
      • Lessons Learned in Program Execution … follow the Yellow Brick change road
    • 3. RIMS Survey Ranked 23rd of 23! Why PMP? Ranked 16th out of 16! Ranked 16th out of 16! Independent Survey #1 Independent Survey #2
    • 4. Why PMP? Long Term Benefits
      • Operational Advantage
      • Substantial long term change
      • Reduce frustration & turnover
      • Improve capacity and efficiency
      Reverse Adverse Selection Excellent service is required for long term growth Competitive Opportunity There is an opportunity for any insurer, who can deliver quality service to attract and retain business
    • 5. What is the Performance Management Program (PMP) ?
      • A process improvement methodology based on the six sigma principles grounded in a project management discipline
      • Purpose: Improve Customer Satisfaction through Service Excellence -- driven by “critical customer requirements and performance vs. the “must haves”
      • Based on facts and data, measures performance, drives continuous improvement
      • Started in 1999 with AIG’s largest business group – Domestic Brokerage Services (DBG) on the Underwriting side
      • Large End-to-End Projects tied to Business Drivers distilled down to small scope projects
      • New projects started in 2003 in the Claims organization when it became part of DBG
      • New projects started in Underwriting in 2004
    • 6. Change Management: Transform or else!!
      • A vehicle for strategic change … an organizational approach to performance excellence.
      • TRANSFORMATIONAL CHANGE Across-the-board. Large-scale integration of fundamental changes throughout the organization --- processes, culture, and customers --- to achieve and sustain breakaway results.
      • TRANSACTIONAL CHANGE Business processes. Tools and methodologies targeted at reducing variation and defects, and dramatically improving business results.
    • 7.
      • PMP Is A 4-phased Integrated Business Strategy That Requires A Comprehensive Approach To Implementation :
      Typical PMP Deployment TECHNOLOGY PROCESS MANAGEMENT CHANGE MANAGEMENT BUSINESS STRATEGY PMP implementation linked to business strategy Manage core processes; develop a process-oriented culture Committed leaders, communications, training, incentives Enabler of process improvement & flow of data ANALYZE PLAN FOCUS BUILD
    • 8. Critical Success Factors
      • There are a seven key contributors to PMP’s success. All of these must be addressed for PMP to be successful.
    • 9. Critical Success Factors Committed Leadership The rest of the organization looks to senior leadership for signals about what is important, so commitment, ownership & responsibility from the top is crucial for PMP. A well-developed Customer & Market Network provides constant customer feedback High impact results come from well-selected projects that support the business strategy. In order to drive accountability and rapid results, full-time, dedicated resources are critical to a successful PMP initiative. The ability to sustain the gains of PMP relies upon creating a culture which values the ongoing management of core business processes A measurement “infrastructure” must exist to be able to reliably track process performance against key business metrics. The ability to sustain the gains of PMP relies upon creating a culture which values the ongoing management of core business processes
    • 10. Program Highlights
      • Over 175 strategically aligned projects started and completed over 5 years. Implementation philosophy “do not to do projects for project sake.”
      • Have generated over $375 million in bottom line savings for DBG over 5 years. Primary savings driven by the capacity to sell more by streamlining processes and improved customer satisfaction.
      • Have trained cadre of Project Managers (BBs & GBs) – 200 fulltime resources over 5 years.
      • 2005-2006 Focus Areas:
        • Revitalize PMP in Underwriting Business: Since 1999 … next generation?
        • Ensure Claims Projects are successful: started in 2004
        • Work on supporting critical enabling functions: IT, & Regulatory Reporting, Human Resources.
        • Grow PMP across AIG – Internationally: Use the formula for success
    • 11. How Does It Work? PMP: Views a Business as Processes The process by which our customer defines our business -- Issuing A Policy, ( for example ) -- crosses the functional boundaries of Underwriting, Underwriting Assistance, Service Delivery Centers, etc. Binding & Booking a Policy Premium Collection Issuing A Policy Claims Processing
      • Horizontal – Involves Many Departments
      • Focused on Customer Needs
      • Information Flows Across Departments
      • Customer-Focused Measures
      Marketing Sales Underwriting Underwriting Assistance Billing Collections Actuarial
    • 12. PMP Methodologies
      • PMP Improvement Process (DMAIC) - a process improvement methodology used to solve business problems on existing processes, products and/or services that are directly aligned to the customer requirements and the business strategy.
      • Design for Six Sigma (DMEDI / DFSS) - a process development methodology used to develop new or significantly change a processes, products and/or services that are directly aligned to the customer requirements and the business strategy.
      • Process Management - achieving breakthrough business performance by managing the alignment and integration of strategy, culture and structure, and managing process and event analysis. T he system that enables leverage and sustaining gains achieved by DFSS and DMAIC
      Design for Six Sigma SIGMA Improvement Process Process Management
    • 13. PMP Program Management Office Training Group Communications Group Metrics Group Project Facilitators PMP Teams
    • 14. Infrastructure and Design (1 of 4) Steering Committee PMP Director Organization and Recruitment Budget and Financials Training Assistance from the Experts
        • Roles and Responsibilities :
          • Review/approve strategic plan.
          • Develop organization structure.
          • Provide resources.
          • Review performance and recommend improvements.
          • Prioritize projects.
          • Update CEO, etc.
        • Meeting frequency : Bi-weekly in the first 6 months, then monthly.
        • Membership : Chairman, PMP Senior VP, HR Sr. VP, IT Director , COO, Chief Acturial Officer, Chief Underwriting Officer
        • Job description : Enhance customer satisfaction and loyalty, productivity enhancement through process improvement.
        • Requirements : AIG veteran , knowledge of AIG structure/functions, personal network, experience in process and change management, numerical, not necessarily Six Sigma expert.
        • Reporting line : Report directly to AIG President, EVP/SVP level.
        • Performance measurement : The PMP Group’s setup, impact of improvement delivered, staff development.
    • 15. Infrastructure and Design (2 of 4) Steering Committee PMP Director Organization and Recruitment Budget and Financials Training Assistance from the Experts
        • Headcount . ~7-10 by month 6, reaches full initial targeted capacity of ~25 by month 12, eventually ~50 (?).
        • Structure . 4 key functional teams at full strength:
          • Project Facilitation . (16 headcounts at full strength on first anniversary) Experienced PMP project managers who utilize PMP/Six Sigma methodologies to conduct projects for various AIA units in the field.
          • Training . (3) Develop and deliver training to both PMP staff and clients. Initially as guided by theSix Sigma Expert, and be supported by PMP Training Department going forward.
          • Performance Metrics . (3) Define relevant performance metrics for individual AIA units, regularly monitor them and report to management.
          • Marketing . (1) Raise and maintain awareness of the PMP Group within AIG.
        • Recruitment . Most PMP Project Managers will be experienced external hires, the rest will be provided with intensive internal training.
    • 16. Infrastructure and Design (3 of 4) Steering Committee PMP Director Organization and Recruitment Budget and Financials Training Assistance from the Experts * For ~30 client unit managers dedicated to PMP projects within individual business units/profit centers ** For ~25 staff within the PMP Group 65% 29% 3% 3% Salary + related Travel + Misc Marketing Other SG&A Second Year Operating Expense Breakdown US$ MM per annum, percent 100% = $5.8MM PMP’s Total Cost to AIG US$ MM per annum Total opex Client unit expenses* PMP Group expenses**
    • 17. Infrastructure and Design (4 of 4) Steering Committee PMP Director Organization and Recruitment Budget and Financials Training Assistance from the Experts
        • Multiple training modules developed by NY PMO can be used to train AIA PMP staff, management and unit heads with minimal customization. These include a 3-day executive orientation for AIA top management.
        • More advanced training for PMP project managers will be developed in the first half year and delivered as new hires come on board.
        • While Six Sigma-qualified staff in the PMP Training Team will act as the core technical trainers, help from Consultants should also be sought in coordinating and facilitating the on-going delivery of quality training to PMP Project Managers.
        • Six Sigma Consultant(s) to work with the PMP Director on a daily basis and assist him in developing the group and its internal client base.
    • 18. PMP Roles/Responsibilities: Evolving at AIG to “Belts” Executive Sponsors/Champions Subject Matter Experts Team Leads/Active Project Sponsors MBB/Facilitators Support Project Managers >>>> Black Belts Projects >>>>> Green Belts Part Time Team Members Full Time Team Members Business Goals
    • 19. Success Case Study 1 – Policy Issuance at DBG
      • Challenge – The team was charged with improving the quality and timeliness of policies. Feedback from customers revealed policies were inaccurate and were not issued in a timely manner and not accurate .
      • Solution – Five projects were identified to improve policy issuance and timeliness. The accuracy or rework team identified ways to improve accuracy and avoid rework. A forms team developed a process for appropriate and simplified use of forms. The quality control or inspected-by team developed a process for improved document quality. Another team reviewed use of renewal certificates, as opposed to issuing an entire policy, in order to improve policy issuance, timeliness and accuracy. The roles and responsibilities team determined responsibilities associated with issuing and servicing a policy.
      • Results – Refinements in the underwriting issuance process reduced rework and produced a 90 percent increase in policy accuracy and timeliness within one year of implementing process improvements.
    • 20. DBG Results Policy Issuance: Reduction in Defects … . From 2000 to 2003
    • 21. Success Case Study 2 – Billing at DBG
      • Challenge – The Billing and Collections team was established to improve premium collections and customer satisfaction for more timely acknowledgement and resolution of premium collection issues.
      • Solution – Project teams worked to streamline premium collection issues into one central repository, established business rules and standards, developed common parameters for similar issues, and improved internal and external client communications. Management reports were created for root cause analysis and continuous improvement. Outsourcing opportunities were identified for printing and mailing and use of electronic filing rescissions. A database was developed to track returned mail and targeting returned mail to the collections department.
      • Results – Premium collection issues were funneled into one central repository that allowed better tracking and more timely resolution of issues with customers. New dispute resolution processes were developed for call center coordination and communication. Cycle time to resolve disputes was decreased from 60+ days to an average of eight days. The team also implemented an email notification for cancellation activities. This improved account information for underwriting follow through and broker satisfaction.
    • 22. PMP Sample Successes
      • DBG Completed Major Projects
        • Policy Issues Initiative
          • Eliminated $1.6 M Cost of Re-work by Reducing Policy Issuance Defects by 82%
          • Identified $5M in Cost Avoidance through Process Improvements
          • Reduced Cycle Time to Improve Investment Income Benefit by Over $1M
        • Reinsurance Coding Project Improved Cash Flows by $24 M Through Correction of Reinsurance Coding Problems
        • U/W Quality Project Established Underwriting Rules, Training and Communication and Audit Procedures
      • Total Combined Benefit for the Projects above: 1/10 of 1% GPW annually or $210 million – all related to improved customer service and the capacity to issue more with only incremental additions to headcount
    • 23.
      • DBG Completed Projects, cont.
        • MARI Project Established a New Multinational Servicing Advisory (MAS) Unit, Established Global Metrics, Developed Uniform Training and is Developing a New Technology Platform to Manage Multinational Deals
          • annual savings of $8.6M & new business opportunity of $100M!
        • Account Transfer & Communications Project
          • Implemented solutions to keep underwriting contact information current and available. Solutions include eStart Best Practice Guide, Training & U/W information in InfoExchange GOLD
              • benefit: $300K a year
      PMP Sample Successes
    • 24.
      • DBG Completed Projects, Cont.
        • Environmental Post Issuance Endorsement Project (Houston)
            • Reduce UW efforts spent on post issuance endorsement that do not need the expertise of the UW. Deliver completed deals to the broker/agents within 30 days.
              • benefit: $700K and being replicated in other regional offices
      PMP Sample Successes
    • 25. PMP Success Performance Management Program Receives Arthur Quern Quality Award The Risk and Insurance Management Society (RIMS) recognized the Performance Management Program (PMP) policy issuance quality and timeliness initiative as the recipient of the Arthur Quern Quality Award presented at the 40th RIMS Conference and Exhibition. The Quern Award is presented for a product or program that personifies quality in risk management, and has contributed towards raising the quality of products and/or services offered within the field of risk management
    • 26. Lessons Learned: Over the Rainbow…. or How to Avoid Pot Holes in the Yellow Brick Road
      • … .. “Toto, I have a feeling we’re not in Kansas anymore!” Dorothy
      • Define:
        • To Discover or not to Discover
        • Scope Creep …Son of The Blob …
        • Time to Process Map … “Wow, this is hard work”
        • VOC…. “Who is our Customer?”
      • Measure :
        • Baseline What?
        • Lots of Data, Little Information
        • Integrity of the data collected?
      … . I will get you my pretty .. And your little dog too! …. The Wicked Witch of the West
    • 27. Lessons Learned: Over the Rainbow …. or How to Avoid Pot Holes in the Yellow Brick Road
      • “ How do I get to Oz?” “Follow the Yellow Brick Road” The Munchkins
      • Analyze:
        • How do you Spell Stratification? You have entered the twilight zone
          • “ We don’t have the right type and amount of data to get to cause and effect.”
        • Avoid Analysis by Paralysis: Tool Time with Tim the Tool Man
          • “ Let’s look at the data just one more way;”
          • “ Oh, maybe we will get a better answer if we use this tool!”
        • Validation of Root Cause: Treating the symptom not the cause
          • “ We are behind schedule .. We have some root causes, we don’t have time to collect more data … let’s just get on to it and move to improve”
      … . Lions, Tigers and Bears, Oh My!
    • 28. Lessons Learned: Over the Rainbow…. or How to Avoid Pot Holes in the Yellow Brick Road
      • “ We’re off to see the Wizard, the wonderful Wizard of Oz” Dorothy, Scarecrow, Tin Man, Lion
      • Improve:
        • Correlate Ideas for Improvement with Root Cause
          • “ I know the answer…. this idea box technique is a waste of time”
        • Not Invented Here …. The Idea Assassin
          • “ Been there, done that .. “tried that before and it didn’t work”
          • “ We are industry leaders, why do we need to benchmark best-in-class?”
        • Adopt an Accountant
          • “ How do I know this Cost benefit analysis is correct .. It doesn’t look real”
        • Death of a Salesman? …. Sell your recommendations
          • “ The MGP and the Stakeholder Analysis is only done in Define”
    • 29. Lessons Learned: Over the Rainbow …. or How to Avoid Pot Holes in the Yellow Brick Road
      • … “ Pay no attention to that man behind the curtain” The Wizard of Oz
      • Control:
        • Process Owner Identified? Who is accountable for the implementation, who owns the solution? The earlier the better … rely on Project Sponsor
        • Plan, Pilot, Check, Plan, Do, and Act .. Establish accountability for meeting implementation deadlines
        • Apply Change Management Practices: lower resistance to change
          • Communicate, Train, “Incent,” Measure
        • Process Control System: Document & Dashboards
        • Replicate Solutions
        • CELEBRATE ….
    • 30. Lessons Learned: Over the Rainbow …. or How to Avoid Pot Holes in the Yellow Brick Road
      • “… .. There is no place like home, there is no place like home”
      • Dorothy
      • Process Management & Change Management:
        • Manage t he alignment & integration of strategy, culture, & structure
        • Monitor specific performance measures and scorecards focused on the Customer: f(x)  Y
        • Prioritize six sigma projects where core process steps are not meeting performance targets and not consistently meeting customer requirements
        • Sustain leadership commitment and accountability to the process framework
        • Manage the change management “formula”
          • Align + Communicate + Incent + Measure + Training > Resistance to Change