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Centralization versus DecentralizationCentralization versus DecentralizationEvolution of BMO’s Six Sigma Evolution of BMO’s Six Sigma
OrganizationOrganization
WCBF 4th Annual Conference – Lean & Six Sigma SummitApril 29 – May 2, 2008, Chicago, IL
Richard A. LamLean Six Sigma Deployment Leader, MBB
BMO Financial Group
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TopicsTopics
• BMO Financial Group – Who We Are
• Six Sigma Deployment within Banking Operations
• Centralization Versus Decentralization Models
• Hybrid Model
• Deployment Results
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BMO Financial GroupBMO Financial Group
• Founded in 1817 as Bank of Montreal
• Highly diversified Personal / Commercial / Corporate / Institutional financial services provider
• Entities cross Canada andUnited States
• Expanding worldwide banking operations in U.K. and China
• Approximately $376 billion in assets as at January 31, 2008
• Listed on NYSE & TSE as BMO
• Head office – Toronto, Canada
• More than 35,000 employees
BMO Financial Group – Who We Are
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Consolidation of Banking Operations (2004)Consolidation of Banking Operations (2004)
• Reduce operations costs by consolidating “like” functions
• Improve business processes using breakthrough Lean/Six Sigma
BMO Financial Group – Who We Are
Personal & Commercial
LOB
PrivateClientLOB
CapitalMarkets
LOB
Personal & Commercial
LOB
PrivateClientLOB
CapitalMarkets
LOB
“Operations” Fulfillment & ServicingFulfillment
& Servicing
Operations manages, maintains and provides governance over Product Operations, Enterprise
Infrastructure and Business Process Improvement
Senior executives committed to deploySix 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
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Six Sigma Journey in OperationsSix Sigma Journey in Operations
Operational Excellence
Six Sigma Deployment within Banking Operations
June 2005Six Sigma Pilot
Nov 2004OperationsConsolidation
2006Infrastructure
2007Acceleration
2009 - 2010Institutionalization
2008Integration
Critical Year to Build Success
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Training
GovernanceStrategy
Project Portfolio
Sponsorship
HR
Operations Risk
Financials
• Executive Board commitment • Operations executive support• Organization commitment• Communications
• 5 year deployment• Signature/best
practices• Strategic project ID
• Centralized admin• Vendor consulting
• Deployment standards• Documented processes• Process exceptions• Change Mgmt Review
• Tollgate reviews• Corporate reporting
• Project reporting• Hard vs. soft benefits• Cost centre mgmt
• Risk assessment• Regulatory compliance
• Project FTE saves• Six Sigma Org Design• Practitioner recruiting
Quality & ProductivityManagement
Office
Building Six Sigma Infrastructure (2006)Building Six Sigma Infrastructure (2006)
Six Sigma Deployment within Banking Operations
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Six Sigma Results to DateSix Sigma Results to Date
• Completed 230 projects and 36 projects in progress in U.S. and Canada
• Implemented projects delivering cumulative benefits of $79 million hard savings over 5-year period to bottom line
• Trained 940 people in Six Sigma and Lean
• 92% of Black Belts and Master Black Belt certified
• 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
Six Sigma Deployment within Banking Operations
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Six Sigma Journey Continues in OperationsSix Sigma Journey Continues in Operations
80 new projects Expand BB/MBB training
and communication Initiate Kaizen rapid
improvements Expand / improve Centre of
Competency
90 new projects Expand BB/MBB training and
communication Integrate Six Sigma with business
unit strategic planning Expand Kaizen rapid improvements Design for Six Sigma (DFSS) Improve process transparency
100 new projects Expand deployment to
Enterprise Infrastructure (EI) business division
Expand BB/MBB training and communication to EI
DMAIC/DFSS/Kaizen/Lean Improve process optimization
Today
Six Sigma Deployment within Banking Operations
Operational Excellence
2009Institutionalization
2009Institutionalization
2008Integration
2008Integration
2010Institutionalization
2010Institutionalization
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Black Belt Organizational Structure (2006)Black Belt Organizational Structure (2006)
• 10 Black Belts reporting to divisional management, 4 reporting to Deployment Leader
• No direct oversight from Deployment Leader on Black Belt utilization / selection / performance
• Inconsistent Black Belt utilization across the pillars:
Varied Black Belts utilization across Operations based on different business cycles, management styles
Some Operations groups have idle Black Belts while others have shortage
Inability to share Black Belt resources/skills between Operations groups
• Productivity between 2 to 6 projects per Black Belt per year (same project size)
• Inconsistent Black Belt performance goals and objectives
Six Sigma Deployment within Banking Operations
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Black Belt Organization in Operations (2006)Black Belt Organization in Operations (2006)
Six Sigma Deployment within Banking Operations
Decentralized structure that has many decision makers…very inefficient to manage Decentralized structure that has many decision makers…very inefficient to manage
Six SigmaManagement Office
Wholesale BankingProduct Ops
Private ClientProduct Ops
Personal & CommercialProduct 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
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Centralized vs. Decentralized Organization Centralized vs. Decentralized Organization ModelsModels
Centralization versus Decentralization Model
ADVANTAGES
Decentralized Centralized
Black Belts reside in specific business divisions and report directly to local management
Black Belts and Master Black Belt managed by Lean Six Sigma Deployment Leader
• Strong working relationship between Black Belt and division employees
• Black Belt has specific business knowledge
• Black Belt familiars with key decision makers in division
• Easier to identify project opportunities
• Improve deployment & strategic focus through increased resource flexibility
• Improve organizational effectiveness and Black Belt productivity
• Build on Black Belt best practices and consistency
• Common motivation of Black Belts
• Ease of coaching/mentoring of Black Belts by Master Black Belt
• Increase Black Belt retention by providing opportunities to work in varied projects that encourage career development
• Create Six Sigma community
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Centralized vs. Decentralized Organization Centralized vs. Decentralized Organization ModelsModels
Centralization versus Decentralization Model
DISADVANTAGES
Decentralized Centralized
Black Belts reside in specific business divisions and report directly to local management
Black Belts and Master Black Belt managed by Lean Six Sigma Deployment Leader
• Less Six Sigma career management support for Black Belts (no critical mass)
• Local management assigns Black Belts to engage non-Six Sigma work that does not require Black Belt skills
• No sense of Six Sigma community for support
• Idle time/delayed engagement - Black Belt completes training but no immediate Six Sigma projects to practice
• Minimum Master Black Belt support from central services
• Short-term working relationship between Black Belt and LOB (case-by-case project engagement)
• Perception of Black Belts as outsiders… “not one of us”
• Challenging for Black Belts to identify Six Sigma projects within LOBs
• Slower pace for project execution
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Hybrid Organization ModelHybrid Organization Model
• Combined advantages from both models to develop new innovative Hybrid model
Advantages/Disadvantages
Centralized ModelAdvantages/Disadvantages
Decentralized Model
Combined Advantages
Hybrid Model
Centralization versus Decentralization Model
Advantages Advantages
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Hybrid Organization Model – Resource Hybrid Organization Model – Resource FlexibilityFlexibility16 Black Belts and Master Black Belt consolidated into flat, hybrid organization
reporting directly to the Deployment Leader
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 POWB 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
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Hybrid Organization Model – Resource Hybrid Organization Model – Resource FlexibilityFlexibility16 Black Belts and Master Black Belt consolidated into flat, hybrid organization
reporting directly to the Deployment Leader
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 POWB 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
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Hybrid Organization Model – Guiding Hybrid Organization Model – Guiding PrinciplesPrinciples
• Vision Become a globally recognized, leading provider of Lean Six Sigma deployment services within
BMO
• Purpose Achieve deployment flexibility and agility – assign Black Belts to projects as needed to avoid
idle resources Increase Black Belt retention – encourage career development and long term job assignment
by providing opportunities to work in variety of projects across Operations Create Black Belt Centre of Competency – continuous development and sharing of best
practices among peers, to become ultimately a powerful high-performance team Become Lean Six Sigma Centre of Excellence - common understanding of our progress,
process and direction
• Roles & Responsibilities Deliver consistent, standardized Six Sigma DMAIC/DFSS/Lean project management practices Provide Lean Six Sigma subject matter expertise to Operations Validate business cases of process improvement opportunities Standardize Lean Six Sigma training and train critical mass for Operations Provide project portfolio management and reporting
Hybrid Model
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Black Belt Mandate – Hybrid ModelBlack Belt Mandate – Hybrid Model
• Complete 6 Black Belt projects per year
• Accountable to lead minimum 2 projects at any given time
• Deliver projects in quick succession by breaking down each opportunity into many little projects
• Coach 1 to 2 Green Belts and/or Lean Practitioners at any given time
• Provide due diligence on new business cases at request of Champion
• Attend monthly ‘tollgate’ reviews including report-outs of their Green Belt project status
• Accountable for project DMAIC milestones to point of project sign-off by Process Owner
Hybrid Model
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Six Sigma Success under Hybrid ModelSix Sigma Success under Hybrid Model
• Very productive Black Belt workforce maximizing Return on Investment
Deployment Results
• 56 projects completed
• $2.8 million hard annualized benefits delivered
• ROI = 1.4
2006 2007
• 132 projects completed
• $9.1 million hard annualized benefits delivered
• ROI = 4.5
(Old Organization) (New Organization) - effective Jan ’07 -
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Richard LamRichard LamLean Six Sigma Deployment Leader, MBB
QuestionsQuestions??