In this article, Reuben Karuna-Nidhi of Deutsche Bank highlights some of the key concepts that are being discussed at the bank as it embarks on a lean programme in its Global Technology Production organisation, giving an insight into the types of challenges that financial institutions face when implementing lean.

For the last 10 to 15 years financial institutions have been adopting lean techniques to help improve the quality of the services they provide to their customers and increase client satisfaction, in the face of tightening costs. Particularly driven by regulatory controls and trading conditions, lean is being increasingly used as a cost play, as organisations focus on driving down the internal cost of the services provided.

Early implementations have been a mixed bag: for every example of a project or group with a strong adoption of lean, there are several examples of failed programmes that have either gotten caught up in trying to simplify extremely complex business processes or departments or become victims of the “yet another improvement programme” syndrome many of us are so familiar with.

In more recent years, as various financial companies and their partners (for example other technology companies that provide services or client partners that either supply or are the recipients of services) learnt by trial and error how lean can help in service industries, we’ve seen the focus shift to some more mature applications. This is a key step change for the industry as companies are now focusing on the longer term aspects of not just maintaining continuous improvement and sustaining lean initiatives, but also considering the true end-to-end process, both internal and related to suppliers and clients.

So how does a newcomer to the lean game set up, and sustain, a successful programme navigating some of the pitfalls and avoiding potential hurdles that are out there waiting to strike?

Here is a list of the most common challenges financial institutions face as they try to sustain lean.

SUSTAINABILITY

Sustainability is a fundamental concept in lean. How does one sustain and maintain the improvements that are being implemented?

A common mistake when setting off on the lean journey is to leave sustainability as something to be tackled later on. The valid argument often proposed is, why think about sustainability when you are not sure what it is that you want sustained? While discussing with colleagues in the industry who had embarked on lean programmes, this featured on everyone’s list of things they would do differently. They would now think about sustainability at the outset.

Additionally, in financial institutions that are used to dealing with front-office clients or to providing back-office support functions dealing with major outages, the culture is focused on short, sharp projects aimed at solving the current problem before moving on to the next one. This mindset can be difficult to change while introducing not just a lean project to improve the area but a sustained continuous improvement culture.

The key to understanding sustainability is concentrating not on what we are sustaining, but on who. The emphasis we’ve placed on lean is about making the right tools available to people so they can deliver the right product, of the right quality and at the right time. Therefore, the operational team that are providing the service undergoing a lean transformation is a key element. In our programme, alongside this are the management team owning the service and the senior management team, often called the ExCo (Executive Committee). Other groups involved are clients and suppliers (vendor partners) that deliver elements of the service to the customer.

Each of these groups has the potential on its own to jeopardise the sustainability of a programme either at the very beginning or further down the line. For example, if clients don’t buy in or don’t see any benefit to service quality, then they do not understand why the operational teams are spending time and effort on using lean techniques.

A commonly used concept is the WIIFM – What’s in it for me? We found this is a beneficial approach to use for each of the groups that we felt were impacted by the programme or would be a critical part of it.

SUSTAINMENT FROM A CUSTOMER PERSPECTIVE

As in many other industries, engaging with the client in a financial institution can be tricky, depending on the type of relationship and the nature of the programme. For our projects, the Voice of the Customer tool has been particularly beneficial for both launching a lean initiative and helping us to sustain it in the eyes of the customer.

There are two key reasons why the Voice of the Customer has worked well for us.

The first is due to the engagement with customers and with the idea of establishing a relationship with them. The programmes in which this has been particularly effective are those where there was no regular communication with the clients. Engaging with them has contributed to opening up channels of communication and developing strong relationships.

The second reason is that the VOC helps to start the discussion on business benefits/quality KPIs. In back-office support type functions, we have noticed a tendency of teams to focus on operational and productivity KPIs, such as turnaround time of tickets or number of tickets per person that are closed. From a client’s perspective, however, whether tickets are closed in 20 minutes or two hours is not important. If tickets relating to a particular business process like the generation of risk reports are closed more quickly and we can use a KPI like delivery time with accurate figures as a metric, a client will find this meaningful in terms of measuring quality and will see a business benefit.

This has been an area in which implementing metrics and looking at the project from a client’s perspective has proved challenging. Early projects tend to focus on the operational metrics, which result in the customer asking, “So what’s the benefit to me?” or in a situation where customer satisfaction surveys are the only way to assess the quality of service. These surveys are less meaningful in a production support service, where 30 days of stability followed by an outage on the 31st day can impact the client’s perception of the whole month.

Implementing metrics which capture quality and business benefits is a key focus for all of our projects and the teams are starting to see how engaged clients are when improvements levers can be tied back to business benefit/quality KPIs.

SUSTAINMENT FROM THE OPERATIONAL TEAM’S PERSPECTIVE

A simple approach is required here: daily huddles. Over 800 daily huddles are in place across the project teams, and we have yet to come across a team which doesn’t want to use them. Teams appreciate the opportunity to get together to discuss the problems of the day, perform shift handovers and review the customer’s quality KPIs.

Several team members said that they like the opportunity to discuss problems as a team (and the transparency the huddles facilitate) related to the key business priorities for the day, and the use of metrics to scientifically measure the quality of their work.

In a test of sustainability, I recently asked a couple of the teams that have been implementing huddles for 18 months what they would say if we suggested that they should no longer use them. They were extremely concerned and appeared very keen to continue using them.

The real challenge for the team is to think about how they can continually evolve the huddles to keep them fresh and interesting. A recurring theme is how they can start focusing the discussions on predictive demand and capacity, moving on from just analysing the day’s priorities and any backlogs from the previous shifts.

SUSTAINMENT FROM THE MANAGER’S PERSPECTIVE

The middle management layer in organisations is sometimes suspicious of lean and questions the potential benefit that can be brought in by deploying it.

The approach we took at Deutsche Bank was the traditional show and tell: we chose a couple of areas where we knew the management team was supportive of process improvement in general. We ran the first three projects in these areas, to demonstrate and prove the concept of lean and the positive impact to the management team. This allowed us to show how, if a function adopts the lean methodology and a continuous improvement culture, the manager sees an improvement in the selfsufficiency of that team and in the quality of delivery. This results in the managers spending less time fire-fighting, for example being called in to tackle incidents or specific tickets, and being able to focus their efforts on proactive problem prevention.

SUSTAINMENT FROM THE EXCO’S PERSPECTIVE

A world class IT service is one of the drivers of lean. Alongside this, as well as the improvement of the quality of delivery to our clients, there is a focus on the bottom line. The expectation is that by simplifying our processes and removing waste, we will see a clear financial benefit.

This was one of the key areas I needed advice on at the start of our lean journey. The balance between implementing quality improvements and efficiency/capacity gains is difficult to strike. If there’s too much focus on capacity gains, the programme is viewed merely as headcount reduction. On the other hand, if all of the focus is on improving quality, then any financial savings may have been forgotten about. Additionally, teams might think that the programme is really about reducing headcount without mentioning it.

The approach we took was to only report on financials to the ExCo. Each of the project leads and programmes focused on quality benefits for each improvement lever, and where they measured capacity benefits we used man-months as the metric, so as not to concentrate on financials or headcount.

Overall, the lean programme saved €14m last year. This is not a metric we widely report internally, focusing instead on the quality benefits and capacity generated in each team.

SUSTAINING THE OVERALL PROGRAMME

It’s important to ensure buy-in from each of the groups above in order to sustain the programme. However, this can still fail from a sustainability point of view, if the teams are not working in a continuous improvement culture. Without it, any effort will prove useless and people will eventually lose interest.

The objective we’ve focused on is to ensure lean behaviours become second nature to the operational teams, so that they are not making the decision to use a certain lean tool but adopting the methodology on a daily basis. The clearest example of this is the daily huddles, which have been widely adopted by the operational teams. Those who implemented them at the start of our journey say that they wouldn’t be able to operate without them. We named our programme Muri, as the overburden concept captured what we are looking to do with the operational teams. We have recently branded and launched the Muri Way.

Finally, to measure sustainability we have implemented the use of an assessment scorecard. However, we are still trying to understand how to get the balance right between measuring sustainability and ensuring the scorecard doesn’t become a governance process. If the teams are using the tools and adopting continuous improvement just to gain a higher score, then we have failed.

The opinions or recommendations expressed in this article are those of the author and are not necessarily representative of Deutsche Bank AG.