5 steps to demonstrate the value of process excellence
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Part 2: Translating Management Objectives in Practice – Credit Agricole Corporate & Investment Bank (CA-CIB) Case Study
Got stakeholders who are not convinced of the value of process improvement? Here are five steps to demonstrate your worth.
Read part 1: Strategic Thinking for Business Reality
In the first article of this 3 part series, we talked about how Strategy is in reality more fluid and less formalized than traditional management theory dictates. In practice, delivering benefit is essential for a process excellence program to survive - we do not have the luxury of undertaking woolly projects that do not deliver clear value to the business. This is especially true at a time when companies are extremely cash conscious.
The image below shows the five key steps we took to demonstrate our value to senior management.
Figure 1: Journey from ‘Proof of Concept’ through to creating a sustainable change agenda. (Click to enlarge)
These steps must happen in sequence, as they build on the successes achieved at each phase to create further buy-in and momentum to ensure that the business recognizes the value of our change program. We cannot start with keeping business clients happy if we have not proved our value to senior management by delivering ROI; satisfaction alone does not keep a change budget safe in cost conscious times.
Once we had proved the pilot as a success, we could afford for the program to focus on longer term objectives; wider client issues and become a voice for the transformation of the business.
Collaborative targets can then be set (Step 1) with data and learning from Step 5; from this point a change agenda linked to both short term and long term strategy can be developed and run through a traditional management system (or at least until the next crisis)!!
Step 1: ‘Negotiate Targets’
This is where you build the pillars of your process excellence program. Negotiate pragmatic targets that are based around current short-term delivery issues (being long term may put the program at risk in cost conscious times).
Senior Management needs to be aligned and their expectations managed realistically. Make sure that you do not over-commit - promise what you can achieve and ensure you have a measurable benefit that will impact Return on Investment (ROI). Not all functional group support is necessary in the pilot phase, but involving Finance early can give your program a boost of credibility and ensure transparency with data and benefits reported.
Political and cultural resistance is typically high in a pilot. The governance that comes with Process Excellence/Lean Six Sigma deployments are sometimes too heavy and formalized for a pilot, especially when the organization is not used to this approach. Spend your energy where the reward is highest, do not waste time and energy building a structure for which the organization is not ready.
Mobilize the appropriate resources to support and facilitate change within your organization. We were careful to use resources sparingly at all levels, ‘Champions’ and ‘Process Owners’ take time to establish and require a higher level of understanding about Lean Six Sigma, commitment and organizational buy-in.
Once you have set your targets, programs KPIs then need to be agreed and published. However, the metrics themselves are less important than their acceptance and the consistency of what the program reports. Get Finance involved in agreeing the budget for "hard" gains and involve the business in agreeing soft gains such as re-allocation and cost avoidance. If reinvesting resource, always show what this re-allocation is buying in terms of tasks performed; it is important that benefits are real and stand up to scrutiny. A project with unfounded benefits will tarnish the program as a whole.
Figure 2: How it all began…. we focused on building the organizational "gang-planks" to deliver and show benefit. (Click to enlarge)
Step 2: ‘EXECUTE’
Execution at the project level
Now that we have established the targets it’s time to get down to delivering against them in a quantifiable manner. This is where we move onto the "Execute" stage and we would break this down in execution at two levels: the project level and the program level.
The following factors are critical for a successful project execution:
- Strong Delivery framework (in our case, the Lean Six Sigma approach)
- Implication of the business in delivery (agreed targets upfront)
- Operational involvement in our project teams (Green Belts trained from the business were allocated 50% to each project and given a high profile/ exposure)
Whatever the project focus, we must ensure that the Voice of the Customer - by which we mean both internal and external customers - is captured up front in order to obtain a true client view on performance. The client view of what is critical to quality in a process is essential to ensure that what we do is aligned.
‘Define’ is appropriate for this as we do not want to risk raising client expectations in project selection in case we choose not to fix issues raised! The front office may want reporting accuracy, for instance, but it is often the case that they need to have information sooner and that a less accurate figure earlier improves hedging opportunities. Managers can have the wrong operational focus of these needs. Our job is to agree Critical to Quality measures (CTQs) that are prioritized appropriately and then share them front to back to ensure optimum delivery.
Meanwhile, external clients see the whole value chain, not just the silo’ed team’s performance (booking, confirmation, settlement & reporting) and our role is to challenge organizational boundaries to ensure processes are aligned to this front to back, end to end client need.
Deliver against these targets in a quantifiable manner at a project level and facilitate business engagement by working with the business (which also helps to build capability) and pragmatically adapting the project approach from Lean Six Sigma principles.
One of the things we did was run data-led workshops. This allowed us to build grass roots support for the initiative; we earned trust by working with the business and having complete transparency in the data led decisions that were made project by project. It was data - not politics or feeling - leading decision making.
Figure 3: Running data led workshops led by the operational Green Belts we had trained helped with business engagement. (Click to enlarge)
Execution at the Program level
It is also critical to execute well at a more global – i.e. program – level. Delivering at the program level is the cumulation of solid execution of each individual project that makes up the overall program.
We ensured there was a "burning platform", with consensus on what needed to be achieved for each project and then we delivered in a quantifiable and professional manner against this target. To achieve this we had to establish a strong control framework for each project undertaken. We created clear reporting to sponsors and top management on each phase of project delivery. We established transparent delivery timelines through strong governance; with transparent decision and control points for the senior Sponsors to ensure the success of each phase of delivery and each project’s contribution to the change agenda.
We had two critical success factors for establishing successful program execution:
1) Carefully select projects; each is effectively a ‘Pilot’ proving the concept; i.e. the technical fit of the LSS approach and mindset to business problems is a proof for each new business line. We ran a pragmatic expansion; meaning we did not over commit, and expanded at the correct pace, not too fast, but at the level the business could absorb.
2) Ensure control of delivery; do not let projects run off course. A poor pilot project can take several projects to recover from, it is better to admit a "blockage" and refocus delivery.
We set up a strong Project Management Office (PMO) to not only manage delivery, but also as our ability to show what the programme is achieving (ROI at first, but expanded to other deliverables).
Figure 4: A carefully planned approach to deployment strategy is essential to being able to achieve the overall program objectives. (Click to enlarge)
Step 3: ‘Demonstrate Benefit’
Developing dashboards and a clear reporting framework has been a key tool to enable us to demonstrate our value in real terms (signed off by Finance where appropriate for transparency and ability to audit results).
We established a ‘Program Dashboard’ for transparency on delivery and gains for the whole business in 2 layers:
- Project level with delivery tracked against milestones (with implementation and Gains tracked with KPIs for 3 years)
- Aggregate level to show our return on investment on a monthly basis to senior management
In addition, at a project-level specific management dashboards have given the business the opportunity to use new tools and share the data led mindset. We have also implemented Visual Management control boards after project delivery (during the Control phase) to help the individual teams work together better. This has been a highly visible way to show senior management the involvement of operational teams, as they see departments physically using « PRIME » branded visual management white boards to run day to day processing.
Figure 5: Dashboards tracked benefits at both project and program level. (Click to enlarge)
Our three strongest ways to demonstrate business satisfaction:
- Testimonies of people involved in projects from the business
- Satisfaction measures – quantifiable evidence of impact (surveys, etc.)
- Projects themselves owned by the business (through effective sponsorship and operational green belts contribution)
Step 4: ‘Develop Business Buy-in’
Build on the trust earned by transparent data led project delivery to develop shared objectives.
We delivered ROI for Senior Management, but helped the business through deliverables such as effective monitoring tools, visual management, improved operational control, etc.
Lean Six Sigma’s value to the business is not about cost cutting. It is about efficiency. The key message we carry around the company is about all of us looking for efficiency. Anyone can decide to do top down cost cutting, but we do not believe that brings sustainable efficiency to the organization.
The main areas of efficiency gain are the interactions between functions, because the nature of hierarchical reporting leads to silos and inefficiencies over time. By demonstrating how our pragmatic, data led, process excellence approach could take a step back and see the value chain from a Front to Back (or end to end) perspective was a powerful message for gaining business buy in.
In addition, in proving this concept in front to back, end to end processes (which we call the ‘Filieres’ in France) we gained the credibility the program needed to have a voice.
Figure 6: Dashboards and management tools helped the business while our program focused on breaking down operational silos. (Click to enlarge)
Step 5: ‘Develop a Balanced Portfolio’
Now it is time to tackle the cultural issues. Getting perspective on what the big issues are is important. You need to keep the big picture in mind and plan as far in advance as you can. We have had 3 different Senior Managers in the past 3 years; and rebuilding senior sponsorship takes time and energy, but you can to some extent prepare even for this. Good data and a good communication framework help with even this level of change. A surprise budget review is far more distressing than one you predicted may happen at a point in the future.
Good planning allows us to prepare for the likely needs of management and also helps us predict when we could get back to normal. Projects and programs have varying levels of intensity by their nature and it is important to invest the free time wisely and prepare as much as possible for some of the future challenges. Keep a good program risk and issue log and highlight as much as you can in advance and prepare an action plan for the likely risks with high potential impact.
To maintain management support we have always kept a balanced portfolio, allowing us to continue to contribute to a positive ROI (LSS programs should be cost positive) but also showing what other improvement axis can be delivering in a measurable way.
It is essential to develop a balanced project portfolio to meet both top management and business objectives in order to achieve sustainability.
Short term delivery of ROI allows the expansion of the programme into additional Quality areas with ‘SMART’ (Specific, Measurable, Achievable, Realistic & Timely) targets agreed with the C-suite and business managers. Against these shared targets, program delivery needs to be followed up and reported with data. This allows for more complete planning for the change agenda; ‘Data Led Planning’ where ‘Bottom up’ learning feeds ‘Top Down’ Strategy objectives and specific business level targets are agreed. The immediate focus is typically on cost reduction and savings but also reduced operational risk through improved control. At this stage we typically do more with less, but do not forget our customer needs or the operational control of the process.
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Longer term we build on this delivery to enlarge the program deliverables to include specific client improvement focus; we are not just looking at maintaining satisfaction, but improving it. Objectives are to improve service quality impacting on client satisfaction (internal & external) in a measurable way. Delay reduction and the improved fluidity of process are possible with both short and long-term focus, but aligning processes to what is critical to quality for a client’s satisfaction is where a mature Lean Six Sigma program adds true value and alignment.
Figure 7: It is critical to have both short-term & longer term objectives agreed transparently with C-suite and the business. (Click to enlarge)
By deploying a Lean Six Sigma approach, we contribute to performance. In a sense, we perform a sanity check on our current processes and on the organization.
We bring four key elements to the table with regards sustainable improvement. These elements are: securitization, monitoring, client satisfaction, and global efficiency. We believe that what Lean Six Sigma brings us is how to be better in a measurable way that our clients, the business and the employees recognize.
In the final of our 3-part series, we will look at how you communicate the process excellence vision to the wider organization.
Next - Read Part 3: Communicating the vision: Conducting a "process PR" campaign"
Editor's note: Credit Agricole Corporate & Investment Bank won PEX Network’s award for Best Process Improvement Project Over 90 days, a pan-European award judged on operational and business results as well as clarity in execution throughout the process and sustainability of change. You can download a full account of the award winning cash payment process improvement project here: FS Case Study: Improving the Cash Payment Process at Credit Agricole
