Centralization versus Decentralization Evolution of BMOs Six Sigma Organization

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Centralization versus DecentralizationEvolution
of BMOs Six Sigma Organization

• WCBF 4th Annual Conference Lean Six Sigma
  SummitApril 29 May 2, 2008, Chicago, IL

Richard A. Lam Lean Six Sigma Deployment Leader,
MBB BMO Financial Group
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Topics

• 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 Group
BMO Financial Group Who We Are

• 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

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Consolidation of Banking Operations (2004)
BMO Financial Group Who We Are

• Reduce operations costs by consolidating like
  functions
• Improve business processes using breakthrough
  Lean/Six Sigma

Personal Commercial LOB
Private Client LOB
Capital Markets LOB
Personal Commercial LOB
Private Client LOB
Capital Markets LOB
PC Product Operations
PCG Product Operations
Wholesale Banking PO
Wholesale Banking PO
PCG Product Operations
PC Product Operations
Operations Fulfillment Servicing
Fulfillment Servicing
Fulfillment Servicing
Fulfillment Servicing
4,700 Employees
Operations manages, maintains and provides
governance over Product Operations, Enterprise
Infrastructure and Business Process Improvement
Major Lines of Business (LOB) across Bank
Enterprise
Senior executives committed to deploySix Sigma
driving from top-down!
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Six Sigma Journey in Operations
Six Sigma Deployment within Banking Operations
2007 Acceleration
2009 - 2010 Institutionalization
June 2005 Six Sigma Pilot
Critical Year to Build Success
Nov 2004 Operations Consolidation
2006 Infrastructure
2008 Integration
Operational Excellence
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Building Six Sigma Infrastructure (2006)
Six Sigma Deployment within Banking Operations
Sponsorship
Governance
Strategy

• Executive Board commitment
• Operations executive support
• Organization commitment
• Communications

• 5 year deployment
• Signature/best practices
• Strategic project ID

• Deployment standards
• Documented processes
• Process exceptions
• Change Mgmt Review

Quality Productivity Management Office
Training
Operations Risk

• Centralized admin
• Vendor consulting

• Risk assessment
• Regulatory compliance

HR
Financials
Project Portfolio

• Project reporting
• Hard vs. soft benefits
• Cost centre mgmt

• Project FTE saves
• Six Sigma Org Design
• Practitioner recruiting

• Tollgate reviews
• Corporate reporting

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Six Sigma Results to Date
Six Sigma Deployment within Banking Operations

• 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

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Six Sigma Journey Continues in Operations
Six Sigma Deployment within Banking Operations

• 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

Today
2009 Institutionalization
2008 Integration
2010 Institutionalization

• 80 new projects
• Expand BB/MBB training and communication
• Initiate Kaizen rapid improvements
• Expand / improve Centre of Competency

• 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

Operational Excellence
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Black Belt Organizational Structure (2006)
Six Sigma Deployment within Banking Operations

• 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

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Black Belt Organization in Operations (2006)
Six Sigma Deployment within Banking Operations
Six Sigma Management Office
Wholesale Banking Product Ops
Private Client Product Ops
Personal Commercial Product Ops
Vice Pres.
Sr. Vice Pres.
Sr. Vice Pres.
Deployment Leader
CAN
USA
Sr. Vice-Pres.
Vice-Pres.
Sr. Manager
Director
Sr. Manager
Director
Sr. Manager
Sr. Manager
Manager
Sr. Manager
BB, Toronto
BB, Toronto
BB, Montreal
BB, Toronto
BB, Vanc.
BB, Chicago
BB, Toronto
BB, Toronto
BB, Chicago
BB, Toronto
BB, Toronto
BB, Toronto
BB, Toronto
BB, Toronto
Available Across Pillars
Decentralized structure that has many decision
makersvery inefficient to manage
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Centralized vs. Decentralized Organization Models
Centralization versus Decentralization Model
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Centralized vs. Decentralized Organization Models
Centralization versus Decentralization Model
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Hybrid Organization Model
Centralization versus Decentralization Model

• Combined advantages from both models to develop
  new innovative Hybrid model

Centralized Model
Decentralized Model
Advantages/Disadvantages
Advantages/Disadvantages
Advantages
Advantages
Hybrid Model
Combined Advantages
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Hybrid Organization Model Resource Flexibility
Hybrid Model

• 16 Black Belts and Master Black Belt consolidated
  into flat, hybrid organization reporting directly
  to the Deployment Leader

25 of Black Belts centrally deployed with no
specific priority. Deployment Leader can deploy
for strategic initiatives wherever needed.
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
Deployment Leader
MBB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
PC PO
PCG PO
WB PO
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Hybrid Organization Model Resource Flexibility
Hybrid Model

• 16 Black Belts and Master Black Belt consolidated
  into flat, hybrid organization reporting directly
  to the Deployment Leader

25 of Black Belts centrally deployed with no
specific priority. Deployment Leader can deploy
for strategic initiatives wherever needed.
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
Deployment Leader
MBB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
BB
PC PO
PCG PO
WB PO
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Hybrid Organization Model Guiding Principles
Hybrid Model

• 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

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Black Belt Mandate Hybrid Model
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

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Six Sigma Success under Hybrid Model
Deployment Results

• Very productive Black Belt workforce maximizing
  Return on Investment

2006
2007
(Old Organization)
(New Organization) - effective Jan 07 -

• 56 projects completed
• 2.8 million hard annualized benefits delivered
• ROI 1.4

• 132 projects completed
• 9.1 million hard annualized benefits delivered
• ROI 4.5

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Questions?
Richard Lam Lean Six Sigma Deployment Leader,
MBB Richard.Lam_at_bmo.com