A lean approach for the frontline
All too often we see failed attempts at achieving operational excellence at the frontline of business. Swedbank’s Lars Linder explains the reasons for this and suggests an approach that may help.
Operational excellence is sometimes deﬁned as knowing what the customer wants and then delivering exactly that, without any waste in the process. Companies aiming to achieve operational excellence should be always learning and continuously looking to improve their ways of working. Many ﬁnancial institutions have been engaged in programmes based on lean principles or Six Sigma to reach that vision. Some of the most encouraging results include drastically reduced lead times, freed- up time, reduced costs and improved quality and customer satisfaction.
Typically these results are achieved in front-to-back processes, like mortgage applications or payments.
However, the number of banks and ﬁnancial institutions with success stories based on applying lean principles to a customer facing environment are few. It seems that the closer we get to the frontline, the harder it is to create a culture of continuous improvement that sticks. Reducing waste based on employee suggestions and ﬁnding ways to gather and act on customer complaints is often the most progressive action in many frontline operation excellence efforts. So why is it so difﬁcult to get customer facing managers and employees to embrace the culture of continuous improvement? Is the lean philosophy only suited for ‘production oriented’ back ofﬁce environments?
One size does not ﬁt all
I had the opportunity to work with lean companies in production industries including automotive, pharmaceuticals and telecom, before I specialised in banking. One ﬁnding I have made is that the lean philosophy can – and should – be the same regardless of industry, but the tools and methodologies used must be adapted to the industry and to the processes in a company’s front and back operations. Unfortunately, the adaptation is often missed or only done partially. Therefore, corporate and private advisors or customer relationship managers don’t understand how value stream mapping and standardised ways of working can apply to their daily customer meetings. Branch and telephone bank managers fail to see why joint problem solving in whiteboard meetings can have something to do with reaching tough sales targets. Experts from other manufacturing or service industries are recruited or consulted, but they too fail to ﬁnd the key to the customer facing banker’s heart and mind.
Here is a series of steps that, in my experience, need to be different in a lean approach for the frontline environment:
1. Train managers on all levels
Effectively training managers and employees is fundamental for all companies working with lean principles. What is special for banks and ﬁnancial institutions is that very few managers, especially top managers, have solid backgrounds and ﬁrst-hand experience of working in a lean company. For most bankers, lean is something they have read about in an article or a management book. Therefore, the training must be more basic and targeted at getting the hang of the mindset and behavioural changes that the managers themselves have to go through to lead by example.
Gemba, or ‘management by walking around’, in banking may simply become a question about moving the branch or department manager out of their own ofﬁce into the branch ofﬁce or the open space of the advisors. The managers need to be in the driving seat of customer sales and service and lead their teams by being visible to all staff.
2. Set the right goals and targets
It is important to analyse the current performance focus on customer, sales and proﬁtability metrics rather than just internal cost efﬁciency. Sometimes reviewing the current customer value proposition is also required to ensure that the offer is clear and meets the market need. Take time to understand the current goals and incentives for the advisors and sales people. More often than not, the targets are conﬂicting or ill-aligned from the top to the branch or department all the way to the individual personal development plans.
Set goals for the lean initiative that address the issues at hand and that align with top priorities. For example, sales performance metrics like revenue and proﬁtability, client acquisitions, net new money and also client revenues and contribution margins.
3. Improve the lean toolbox
In order to drive improvements in sales performance, the lean methodology has to be adapted. The tools used with great success in the back ofﬁce are not well suited for the slow paced sales cycles and low volume transaction environment in the frontline. The most signiﬁcant differences are:
• Customer focus: customer surveys and improved value propositions.
• Sales tools and processes: standardised approaches, for example when meeting with new clients, working with referrals from existing clients or conducting more efﬁcient advisory meetings.
• Performance management: sales performance metrics.
• Skills and organisation: customer meeting trainings, clariﬁed roles for advisors and assistants or strengthened peer-to-peer learning.
• Mindset and behaviour: new mandates for employees in order to achieve a sales and performance oriented culture.
4. Engage employees and deliver quick wins to create positive momentum
With management on board, the right targets set and a toolbox adapted to the sales organisation, the ﬁnal success factor for a frontline lean initiative is to engage the employees in the change. And this is the moment of truth that will deﬁne whether a culture of continuous improvement will stick and improve performance or if the initiative will fade away without any marks in the organisation and no evidence of improved bottom line results.
What’s most important in order to create engagement is that employees get a good understanding of what it is about and why it is important to reach the overall goals. The now trained managers train and coach their employees to raise awareness and create a common ground for the new ways of working. To deﬁne and implement a couple of quick wins that leads to measurable results and to communicate these throughout the organisation creates positive momentum.
There is also a commonly made mistake that can ruin the chances of creating engagement: to launch a cost reduction programme that reduces staff at the same time as a lean initiative.
An employee that is encouraged to share and put into practice their best time-saving ideas will be less prone and often demotivated if it is very likely that a colleague will lose their job.
Lean is a philosophy that works well for ﬁnancial institutions, other service industries and manufacturing alike. But the tools and methods have to be quite different. Using the above suggested approach is no silver bullet to success, but it dramatically improves the chances of achieving operational excellence in a customer facing organisation in retail banking.