Assignment 37

Lean six sigma project management – a stakeholder management perspective

Vijaya Sunder M. Department of Management Studies,

Indian Institute of Technology – Madras, India

Abstract Purpose – The purpose of this paper is to understand the success of Lean Six Sigma (LSS) in banking and financial services industry and to develop a structured stakeholders management model for successful LSS project management. Design/methodology/approach – A two-phase methodology is used. Phase 1 establishes the literature to understand two key process improvement methodologies – Lean and Six Sigma and to derive synergies by their combination leading to success in banking and financial services. The literature also helps to recognize the importance of stakeholder management in LSS projects and to understand how it helps in accelerating change in organizations. Phase 2 of the methodology is based on the interviews conducted by 56 global LSS project managers. This is to understand the practical challenges faced by the LSS project managers in banking and financial services tying back to the existing literature. Findings – The paper identifies the possible opportunities for structured stakeholder management across different phases of Define-Measure-Analyze-Improve-Control (DMAIC) project flow. The first of this kind, “Inform-Involve-Influence” model has been developed based on the understanding from literature and conclusions from the interviews conducted. The proposed model highlights the different set of stakeholders involved in LSS projects and their role in the project. The model also helps categorizing the stakeholders based on the DMAIC phases. Research limitations/implications – The paper is limited to readymade use in banking and financial service environments for LSS projects. However the paper sets a platform for further research to customize the proposed model for other service industries. Practical implications – The model proposed as part of the paper helps project managers to inform, involve and influence different set of stakeholders at different phases of the DMAIC flow. The model leaves an opportunity for further research and customization for other service industries outside the banking and financial services space like hospitality, government, heath care, etc. Benefits and limitations of the model were presented as part of the paper. Originality/value – The paper is the original work contributed by the author. Both the survey findings and the model developed are author’s original contribution for both academicians and corporate professionals. Keywords Process improvement, DMAIC, Lean six sigma, Model, Banking and financial services, Stakeholders management Paper type Research paper

1. Introduction The usage of Lean Six Sigma (LSS) methodology for process improvements has gained interest across various industries past few decades. While many researchers believed that applying both Lean and Six Sigma simultaneously as an integrated approach makes the

The TQM Journal Vol. 28 No. 1, 2016 pp. 132-150 © Emerald Group Publishing Limited 1754-2731 DOI 10.1108/TQM-09-2014-0070

Received 2 September 2014 Revised 12 November 2014 Accepted 30 December 2014

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1754-2731.htm

The author dedicate this work to Sri Sathya Sai Baba, who taught him the value of Man Management. The author is thankful to Dr Shashank Shah (Visiting Scholar, Harvard Business School) for his valuable insight in the area of stakeholders management.

132

TQM 28,1

business results more effective, corporate professionals applied this philosophy and proved successful, in the past few years. This most well known, hybrid methodology attracted multiple quality practitioners across various organizations in both manufacturing and service industries from all parts of the globe. Though organizations initially realized LSS as an effective toolkit for process improvements, later the evolution of understanding clarified LSS as an organization strategy and a leadership gizmo for imbibing the quality culture in organizations. The usage of LSS across services, especially in banking and financial services has been looked up the increasing trend past few years. Bank of Montreal, American Express, HSBC Holdings, Bank of America, Capital-One are few of the many organizations which established the LSS programs for advancement in process excellence. While the success speaks for itself, many banking organizations which implemented LSS did not reap its complete benefit. According to Bain & Company management survey of 184 companies, 80 percent of the companies were failing to drive the anticipated value of LSS, as not implemented in the right way (Guarraia et al., 2008). Few researchers identified multiple factors leading to the failure of LSS programs if not implemented correctly. Lack of supervision, low motivation, lack of leadership commitment, short of employee engagement, resistance of cultural change, lack of resources, poor communication, lack of understanding of different types of customers, etc., are few of the failure factors of LSS (Albliwi et al., 2014; Zafar et al., 2014). The common feature observed across all the major failure factors is inappropriate stakeholders management in LSS projects, as “stakeholder” is a broad term which includes leadership team, operations personnel, communicators, customers, employees and so on. Stakeholders interact with the firm and thus make its operations possible, and hence become important for success in project management ; (Nasi, 1995). Though many researchers claim that inappropriate stakeholders management could lead to failure of LSS projects, there is no literature found on systematic stakeholders management for LSS project management. Considering this as a valuable opportunity, author has derived a structured stakeholders management model for LSS projects, as part of this paper. The paper aims at reviewing the literature on LSS and stakeholders management to develop basic understanding of important linkage between the two. Interviews conducted with LSS practitioners from banking and financial services helped the author to identify the challenges faced, while implementing LSS programs. The paper also aims to formulate a conceptual model for structured stakeholders management across different phases of Define-Measure-Analyze-Improve-Control (DMAIC) projects.

2. What is LSS? The Six Sigma framework was initially developed at Motorola in the 1970s as a response to their poor product quality. Motorola initiated the Six Sigma program focusing on customer requirements in order to produce defect free output. Later in 1988, Motorola won the Malcom Baldrige Quality Award and published its results along with its use of Six Sigma. Six sigma has often been presented as something different from total quality management (Bengt et al., 2008). According to Pyzdek, Six Sigma is so different from other quality initiatives because it makes organizations make more money by improving customer value and efficiency, with the benefits going straight to the bottom line (Pyzdek, 2003). Motorola saved $15 billion during 11 years of Six Sigma discipline. Following Motorola many organizations realized the importance of this unique methodology and deployed Six Sigma in their capacity. AlliedSignal has had productivity gains of 6 percent in manufacturing in a two year period, and General Electric produced more than $2 billion as customer benefits in 1999, because of the Six Sigma efforts (Lucas, 2002). When Six Sigma was introduced at GE, more than 100,000 people were

133

LSS project management

trained in its science and methodology, leading to build a quality mindset in the organization (DeFeo, 2000). Gerald Defoe, a quality engineer in New York Air Brake Company, says that Six Sigma puts the whole problem solving process into a very structured format (DeFeo, 2000). Nothing compares to the effectiveness of Six Sigma when it comes to improving a company’s operational efficiency, raising its productivity, and lowering its costs (Welch and Welch, 2007). Though Six Sigma originated from the manufacturing industry, its reach to service industry has delivered multi fold benefits. Six Sigma’s popularity and success is catching fire throughout the service industry across the globe as no other Process improvement movement before (Vijaya Sunder, 2013). DMAIC is the most commonly used roadmap which organizations use for process improvements through Six Sigma project management. Define-Measure-Analyze-Design-Validate (DMADV) and Define-Measure-Analyze-Design-Optimize-Validate (DMADOV) are few other Six Sigma roadmaps used for process design or redesign projects.

Lean is thought of as a cost-reduction measure (Pettersen, 2009) Lean methodology is another famous process improvement methodology having its roots from Toyota Production Systems (TPS). Between the years 1968 and 1978, Japanese firms experienced an impressive 89.1 percent increased productivity by TPS way (Teresko, 2005). Lean Enterprise is a methodology that focuses on reducing cycle time and waste in the processes. Later, James P. Womack and Daniel T. Jones coined the term “Lean Thinking” in 1996 (Womack and Jones, 1996). Lean is a systematic approach to identify and eliminate waste through continuous improvement; flowing the product at the pull of the customer in pursuit of perfection ( Jerry, 2003). The expanded application of Lean methodology in the recent years across the world has been popularized from manufacturing to transactional and service industries. According to Meyers and Stewart, waste is defined as anything that does not add value to the end product from the consumer perspective (Meyers and Stewart, 2002). According to Lean methodology, waste can be of seven categories: Overproduction, inventory, over-processing, motion, waiting, defects and transportation (Rawabdeh, 2005). Lean organizations are capable of producing high-quality products economically in lower volumes and bringing them to market faster than mass producers. A lean organization can make twice as much product with twice the quality and half the time and space, at half the cost, with a fraction of the normal work-in-process inventory (Sharma, 2014). Lean management is about operating the most efficient and effective organization possible, with least cost and zero waste. (Minggu, 2009). According to Lean methodology, the value of a product is defined solely based on what the customer actually requires and is willing to pay for. All activities can be grouped into three types (Nielsen, 2008):

(1) value-added activities: are activities which transform the inputs into the exact product or service that the customer requires;

(2) non-value-added activities: are activities which are not required for transforming the materials into the product or service that the customer wants; and

(3) necessary non-value-added: are activities that do not add value from the perspective of the customer but are necessary to deliver the product or service, unless the existing supply or process is radically changed.

5S, value stream mapping, JIT, Poka-Yoke and Visual controls are few of the Lean techniques which organizations follow to deploy Lean. Chrysler used resources to extend in-house training of Lean philosophy to its major suppliers, emphasizing the commitment needed from all parties in order to establish lean, and realize the full

134

TQM 28,1

potential for everyone involved (Fitzgerald, 1997). Delphi and Mitsubishi are few other organizations which got benefited by Lean.

Lean and Six Sigma complement each other. Lean accelerates Six Sigma, delivering greater results than what would typically be achieved by Lean or Six Sigma individually. Combining these two methods gives the process improvement a comprehensive tool set to increase the speed and effectiveness of any process within the organization and could help in increasing revenue, reducing costs and improve collaboration. However few scholars feel that there are differences in the methodologies from deployment perspective. Lean programs rely on value stream managers who coach teams to improve processes. The kaizen events featured in lean tend to be of short duration, with many limited to a week’s time. By contrast, Six Sigma programs require organizations to develop a group of black belts who work upon collecting data and analyze process variation, often with little input from people on the operations floor (Robert, 2003). Jenicke et al. (2008) emphasize that defining customers is most important while implementing Six Sigma, which again complements Lean methodology. While the definitions of Six Sigma and lean differ, the aim of these concepts seems to be similar (Roy Andersson et al., 2006). The phrase “Lean Six Sigma” is used to describe the integration of Lean and Six Sigma philosophies (Sheridan, 2000). The integration of Lean and Six Sigma aims to target every type of opportunity for improvement within organizations. Whereas Six Sigma is only implemented by a few specific individuals within a company; Lean levels the empowerment and education of everyone in the organization to identify and eliminate non-value adding activities (Higgins, 2005).

3. LSS in banking and financial services Many service organizations started deploying LSS methodology and got benefited in past one decade. The success of LSS in services is attributed to multiple reasons. The characteristics of the services are the primary reason for the reach of LSS in service industry:

• Intangibility: although services often include tangible actions the services performance itself is basically intangible (Lovelock, 1992). Customers perceive services as good or bad based on the feeling while experiencing them. Quantifying the customer feeling or perception becomes important due to this nature of intangibility. LSS helps creating a measurement system for services.

• Heterogeneity: according to Edgett and Parkinson, heterogeneity of services concerns the difficulty in standardizing services (Edgett and Parkinson, 1993). However LSS success stories in past one decade proved that based on the stages and related resources, it is possible to identify the aspects of services which offer possibilities for standardization (Alharthi et al., 2014). It has been put forth that services of a retail bank equipping an ATM is as standardized as many other goods (Gummesson, 2000)

• Inseparability: delivery and consumption of services is simultaneous. This adds complexity to service processes unlike in manufacturing. Having customers waiting in line or on the phone involves some emotional management, not present in a manufacturing process (Laureani, 2012). LSS offers tools like SIPOC, process mapping and value stream mapping which helps organizations to tackle the inseparability, by identifying the complexities in the process like hand-offs, decision steps, inventory, etc.

135

LSS project management

LSS has been used across services, and banks are no exception. Banking and financial services has changed the ways of working using LSS concepts. The finance industry more than most other service industry players is looking for ways to cut costs and improve efficiency, and this is where LSS comes becomes important. LSS project management for banking and financial services is different from other industries because of the following reasons ( Jawaher et al., 2012; Vojislav et al., 2010; Antony, 2007; Delgado et al., 2010):

• Banking and financial services have a direct financial impact on every change or improvement which gets implemented. This is because of the risk involved in the transactional processing of the financial sector.

• Banking and financial services generally has a huge customer base and looking at the evolving customer needs without structured analysis becomes challenging and many times heads toward failure. LSS offers structured problem solving approach.

• LSS projects in banking services helps the project results to sustain over the time with robust controls and mistake proofing concepts.

• Measurement of the performance becomes the key indicator of the financial service firm’s productivity measure. LSS offers ways to measure and visually depict the firm’s measurements in a structured way.

• Other project management methodologies do not offer tools cutting across different logical and intuitive philosophies of management. But LSS encourages firm to balance logical thinking (for measurement) and intuitive thinking (for ideation). This makes the methodology most suitable for the banking practice.

According to Sun Life Finance’s Senior Recruiting Consultant, the reason for seeking LSS professionals is that “Every business is looking to improve itself and, quite frankly, that’s what we’re trying to do” (Galt, 2013). Few of the success stories of LSS in banking and financial services are highlighted below:

• Bank of Montreal: it launched LSS in 2005. Since then the bank has reduced errors, improved cycle time, eliminated waste and is already anticipated to provide annualized savings of nearly $55 million over a five-year benefit period on just $5.3 million in investments (Online Source, 2012: www.goleansixsigma.com/ lean-six-sigma-success-stories-in-the-financial-services-industry/).

• Bank of America: Barbara J. Desoer, (Senior Executive – Global technology at Bank of America Corp.) said that “The investment on LSS is already paying off with more efficient processes, with better alignment with business and even increased sales.” The IT and business staffers applied Six Sigma techniques to reduce the number of screens it takes to open an online account from ten to four. The online banking team also developed improved desktop authentication techniques and introduced live text chat to help facilitate new sales and provide improved customer support, according to Desoer (Hoffman, 2006).

• Capital One: when a major shift in strategy propelled Capital One Direct Banking business in a new direction, the organization arming itself with Six Sigma expertise and capabilities started setting out to change its management model. They started to redesign its major business processes, and nurture a culture centered approach on customer focus and continuous improvement. Three years

136

TQM 28,1

later, the associates have embraced this new culture of customer focus and a commitment to continuous improvement (Immaneni and McCombs, 2007).

• HSBC Holdings plc: in a business environment where many questioned the applicability of LSS, the Quality team at HSBC transformed an underperforming unit in HSBC’s Investment Banking unit with a single DMAIC project, using tools such as Process Mapping and Activity-Based Costing and data partitioning. The result is a 274 percent improvement in net income and a business 100 percent focused on continuous improvement (Dan, 2004).

• American Express: they began their Six Sigma journey with a pilot initiative late in 1998. A small group of Black Belts across disciplines, functions and business units were trained and completed projects. After the initial pilot the program spread slowly to other business units. In 2001, Six Sigma became part of the global reengineering initiative and began to become more integrated into the company. In 2002, Six Sigma activities produced nearly $200 million in financial benefits and delivered important quality enhancements at Amex (Marx, 2005).

• Westpac: Australian financial services firm Westpac has launched a large-scale initiative to overhaul its information technology services, part of which was to accomplish the application of LSS techniques to reduce waste and remove unnecessary banking processes. To help accomplish these goals, Westpac has expanded its Six Sigma training efforts in recent months. So far, over 600 frontline and operations employees have been involved in LSS workshops (Woods, 2010a, b).

• Standard Bank Group: it is one of the largest financial institutions in South Africa, with more than 1.33 trillion Rand (US$200 billion) recently released a case study about how it deployed LSS methods to reduce waste and errors, and also created a balanced scorecard system to track its progress. As a result of these improvements, the bank realized hard aggregate savings of R438 million ($64.84 million) over a four-year period (Woods, 2010a, b).

• Bank One: Bank One’s use of these principles and methods started with an initiative in their National Enterprise Operations called Focus 2.0. Launched in February 2002, it began with a series of carefully selected, strategically important projects. As a result of their efforts, the NEO group has the opportunity to generate millions of dollars in revenue per year due to improvements in one operation and saved thousands of dollars in cost avoidance and waste reduction in others.

4. Stakeholder definition Stakeholder buy-in is an essential component of LSS project management. A leading cause of project failure is inattention to the stakeholders with the greatest influence over implementation and sustainability. Effective management requires proactive and ongoing stakeholder engagement which includes identification, communication and risk planning, and most importantly active collaboration throughout the project life cycle (Kangas, 2011). Hence it becomes essential to understand the best possible methods of stakeholder management for Six Sigma projects.

The historical roots of the Stakeholder concept date back to the 1960s when academicians at the Stanford Research Institute first articulated what was considered at

137

LSS project management

the time to be a controversial proposal and first used the actual word “Stakeholder” (Freeman, 1984). Given below is a comprehensive enumeration of the various definitions of the term Stakeholder extracted from the work contributions of Mitchell et al. (Table I).

5. Understanding the key stakeholders in LSS project management It is essential to understand the key stakeholders in LSS project management. It is a known fact that every LSS project is unique on the style of the project manager, the project case, the business criticality, scope and the change acceleration process involved in execution. However, there is a bigger impact on LSS project success based on the key stakeholders. The below mentioned are the key stakeholders of LSS project management across different DMAIC phases. This grid is developed based on the interviews conducted across 56 global LSS Project Managers at Black Belt level from Banking and Finance industry. The details of the research methodology are discussed in detail in the “Methodology” section.

The primary stakeholders in “Define” phase of the LSS project are the end customers, as the “Define” Phase deals with collecting voice of the customers by doing

Source Definition of “Stakeholder”

1. Stanford Memo (1963) Those groups without whose support the organization would cease to exist. (cited in Freeman and Reed, 1983 and Freeman, 1984)

2. Freeman and Reed (1983, p. 91)

Stakeholder is one who can affect the achievement or is affected by the achievement of an organization’s objectives

3. Freeman (1984, p. 46) Stakeholder can affect or is affected by the achievement of the organization’s objectives

4. Evan and Freeman (1988, p. 79)

Stakeholders benefit from or are harmed by, and whose rights are violated or respected by corporate actions

5. Bowie (1988, p. 112, no. 2)

Stakeholders are those without whose support the organization would cease to exist

6. Thompson et al. (1991, p. 209)

Stakeholders are those in relationships with an organization and can influence the organizational practices

7. Savage et al. (1991, p. 61) Stakeholders have an interest in the actions of an organization and have the ability to influence it

8. Hill and Jones (1992, p. 33)

Stakeholders are constituents who have a legitimate claim on the firm […] established through the existence of an exchange relationship. They supply the firm with critical resources (contributions) and in exchange each expects its interest to be satisfied by inducements

9. Brenner (1993, p. 205) Stakeholders are individuals/groups having some legitimate, non-trivial relationship with an organization (such as) exchange transactions, action impacts and responsibilities

10. Freeman (1994, p. 415) Stakeholders are participants in the human process of joint value creation

11. Starik (1994, p. 90) Stakeholders are or might be influenced by, or are potentially the influencers of the organization

12. Nasi (1995, p. 19) Stakeholders interact with the firm and thus make its operations possible

13. Brenner (1995, p. 76, no. 1)

Stakeholders are or which could impact or be impacted by the firm/organization

14. Donaldson and Preston (1995, p. 85)

Stakeholders are identified through the actual or potential harms and benefits that they experience or anticipate experiencing as a result of the firm’s actions or inactions

Source: Mitchell et al. (1997)

Table I. Definition of stakeholder

138

TQM 28,1

surveys, interviews, etc., followed by the making of Project charter. “Define” Phase also deals with vetting the Project charter with the project champion. Project Champion is generally from the operations, who will be involved in providing production-level governance to the project. The study reveals that project sponsor, who is decision making authority or head of operations in most of the LSS projects, also plays a responsible role in “Define” phase as a stakeholder.

“Measure” Phase deals with collecting data and mapping the process and assessing the process capability. Project Manager plays an important role of doing these important activities. However in few cases project leads facilitate the process and data collection agents and process mapping expects do the ground work. Performing an initial Failure Mode Effects Analysis (FMEA) to understand the hidden process risk also forms part of the Measure phase. The interview participants feel that it is a good practice to review the FMEA with the Risk and Control team if one exists in the organization.

“Analyse” Phase of the LSS process is an important phase of the overall project life cycle as this is the phase where the root cause of the problem gets investigated with the help of Lean and statistical tools. Project lead predominantly performs almost every activity of this phase. However Process matter experts who form part of the brainstorming sessions to identify understand the root causes also form part of stakeholders here. The process matter experts also form part of the “Improve” Phase where ideas are generated for improvement. Alongside these stakeholders, Change acceleration agents also play an important role in Improve Phase. As improvements need to be implemented into operations at right time and right proportions, change accelerations become important. These are generally some influential or powerful candidates who can smoothen the penetration of changes proposed as part of the project. Interview results show that, in many LSS projects the Project Champion plays the role of Change acceleration agent.

“Control” phase of the LSS project deals with placing right controls for sustaining the improvements and documenting the lessons learned out of the project. Matured banking organizations generally have knowledge management teams which help documenting the project and maintaining the lessons learnt log. Hence they also forms part of the stakeholders group.

The success of the LSS project is dependent on the interaction, intervention and involvement of other stakeholders with the project Lead. Hence understanding the stakeholders and planning the execution style accordingly is the challenge which every Project Manager often faces throughout the life cycle of the project. Hence becomes essential for the Project Manager to understand the key stakeholders. Mitchell, Agle and Wood (Mitchell et al., 1997) have generated a typology of stakeholders based on the three attributes – legitimacy, power and urgency. Based on these attributes, seven stakeholder categories have emerged. Carroll and Buchholtz (2002) described these attributes as below:

Legitimacy – it refers to the perceived validity or appropriateness of a stakeholder to a stake. Hence Project Champion, Sponsor, customers represent a high degree of legitimacy due to their explicit, formal and direct relationships with the LSS project.

Power – it refers to the ability or capacity to produce an effect – to get something done that otherwise may not be done. Therefore whether one has legitimacy or not, power means that the stakeholder could affect the business. Hence Project Champions, Change Acceleration Agents, etc. represent this attribute predominantly for influencing Change into the Operations floor.

139

LSS project management

Urgency – it refers to the degree to which the stakeholder claim on the business calls for the business immediate attention or response. Urgency may imply that something is critical – it really needs to get done. Or it may imply that something needs to be done immediately (Figure 1).

Latent stakeholders – latent stakeholders are those possessing only one of the attributes and include dormant, discretionary and demanding stakeholders:

• Dormant stakeholders – they possess power to impose their will on a firm, but by not having legitimate relationship or an urgent claim, this power remains unused (e.g. cross-functional team members who do not have any direct benefit from the LSS project.).

• Discretionary stakeholders – they possess the attribute of legitimacy, but have no power to influence the firm and no sense of urgency (e.g. process matter experts from operations, as they would have affinity to see the process improvement but cannot influence change or speed up the process).

• Demanding stakeholders – where the sole relevant attribute of the stakeholder – manager relationships is urgency, the stakeholder is described as demanding (e.g. process owners or operations team leaders, who has the urgency to provide defect free service).

Expectant stakeholders – Expectant stakeholders are those possessing two attributes and include dominant, dependent and dangerous stakeholders:

• Dominant stakeholders – in the situation where stakeholders are both powerful and legitimate, their influence in the firm is assured, since by possessing power with legitimacy, they form the “dominant coalition” in the organization (e.g. project sponsor).

Dominant StakeholderDormant

Stakeholder

Dangerous Stakeholder

Definitive Stakeholder

Discretionary Stakeholder

Dependant Stakeholder

Demanding Stakeholder

URGENCY

POWER LEGITIMACY

Source: Mitchell et al. (1997)

Figure 1. Attributes of stakeholders

140

TQM 28,1

• Dependent stakeholders – stakeholders who lack power but who have urgent legitimate claims as dependent, because these stakeholders depend on others for the power necessary to carry out their will (e.g. project team members who has direct benefit from the project).

• Dangerous stakeholders – where power and urgency characterize a stakeholder who lacks legitimacy, this stakeholder will be coercive and possibly violent, making that stakeholder literally “dangerous” for the project success (e.g. competitors to the project champion or project manager).

Definitive stakeholders – they are stakeholders possessing all the three attributes. Managing this kind of stakeholders becomes very important while execution of project. This is because these stakeholders can always make a big difference to the success or failure of the LSS project. Any expectant stakeholder can become a definitive stakeholder by acquiring the missing attribute.

It has to be noted that every stakeholder falls into any of the seven categories based on several factors. Position, power to influence, need for LSS project are the key factors. However these alone do not make any person fall into the mentioned categories. An individual’s personality also helps in determining how a particular stakeholder fall into the above mentioned categories. For example, a stakeholder who has power and urgency toward the project, but not having legitimacy or interest over the project need not be dangerous always. Though that particular stakeholder falls under “Dangerous stakeholder” category as per the above classification, he may be neural or indifferent to the project and not dangerous by literal meaning. But there could be situations where these kinds of stakeholders could be dangerous in practical sense as per their personality and dynamics of the organization. This differs from case-case basis, and Project manager has the responsibility to perform stakeholder analysis considering these sensitive factors into consideration.

6. Research methodology and findings The view point based study was conducted through interviews with 56 global project managers to understand their views on stakeholder management for LSS projects from banking and financial services industry. Interview method is made to use for this study, as interviews help in getting the story behind a participant’s experiences; and while dealing with success or failure factors it becomes essential to understand the experiences (McNamara, 1999). Conversational interviews were conducted with an aim to understand the challenges and approaches in managing the stakeholders while leading LSS projects. A qualitative research interview seeks to cover both a factual and a meaning level, though it is usually more difficult to interview on a meaning level (Kvale, 1996). The professionals were selected for the interviews based on their global exposure to different multinational banking or financial service firms, with a median experience of 15 years. The respondents cover a wide range of geography across eight different countries covering Asia, Europe and the USA. Different technological methods like skype video calling, telephone calls and face-face methods were adapted for conducting the interviews. The interview questions were framed in such a way to trigger the respondents to speak about the challenges they encountered during LSS projects. The respondents being from top management, from reputed organizations, major portion of the interview time was devoted with open ended questions followed by one-one discussions, which encouraged the respondents to express their view points in an elaborate way. Few of the questions included

141

LSS project management

were – “Can you talk about the LSS project which you felt could have been done in a better way?,” “How often do you interact with the key stakeholders while leading a LSS project?,” “What kind of conversations do you build with the key stakeholders to establish the connect for the LSS project success?.” Each interview lasted for an average of 30 mins. The interview recording was documented and analyzed systematically. Quantitative analysis of the respondents’ view points was performed using Microsoft Excel.

Below mentioned are the findings – challenges expressed by the interview respondents as part of the research study conducted by the author:

• 60 percent of the respondents felt that failure of appropriate stakeholder management results in failure of overall LSS projects in banking organizations;

• more than 50 percent of the respondents conveyed that change acceleration process would be challenging without right stakeholder connect;

• 90 percent of the respondents conveyed that internal stakeholders of the financial organizations have a major role to play during the improve phase of the project. Internal stakeholders include project champion, sponsor, cross-functional team members, operations (Ops) leadership, etc.;

• interviewees felt that informal discussions with the stakeholders and networking opportunities help in understanding the nature and the personality of the stakeholders, which further helps in building appropriate strategy to manage them;

• few respondents added that stakeholder management is an art and is totally based on the project manager’s style of strategizing it. However, they conveyed that a structured way of managing could be helpful;

• respondents added that documenting stakeholder traits to bring in trait-based structure or knowledge base of the future project managers will not be a professional way of dealing with stakeholders in corporate environment;

• 89 percent of the respondents felt that identifying the root cause of the problem is not a challenge when LSS approach is followed provoking total employee engagement. However the key challenge lies in convincing the stakeholder and obtaining their sign off on the root cause analysis;

• few of the respondents felt that conflict of interest among the stakeholders is another key challenge which LSS project manager often faces without a proper stakeholder analysis;

• 90 percent of the interviewees said that, though stakeholder analysis is part of the define phase of the LSS project, it is often performed based on the prior understanding of the stakeholder. However for a new project manager who is completely unaware of the stakeholders, cannot perform stakeholder analysis with at-most accuracy and confidence;

• 100 percent of the respondents when questioned, felt that a structured stakeholder model/framework could help in LSS project management;

• when questioned about structured stakeholder management, 92 percent of the respondents conveyed that they are not aware of any structured stakeholder management framework for LSS projects; and

142

TQM 28,1

• almost all the respondents felt that a single way of engagement with stakeholders may not help in establishing a strong connect for success in LSS projects. Respondents expressed a need for different engagement levels with stakeholders. However, they were not aware of one such kind of a model for application in LSS projects.

7. Inform-involve-influence (3I) model for stakeholder management The model has been designed based on the understanding of the literature on LSS and the interviews conducted by the author. Unavailability of the literature supporting structured stakeholders management for LSS projects, and the challenges expressed by the interview respondents were taken as the basis to justify the need to conceptualize a model, on these lines. The model proposed, helps LSS project managers to overcome the challenges identified as part of the study. The model highlights three different levels of managing stakeholders in LSS projects namely – Inform, Involve and Influence. Identification of right stakeholders, and appropriate engagement with them throughout the DMAIC project flow becomes essential. The model clearly articulates which stakeholders to engage at which stage of the LSS project, and at which level of engagement.

7.1 Operation definition of the terms used in the model This section highlights the commonly used lingo of different stakeholders involved in LSS projects. Though this list is not exhaustive, the author at his best information highlighted the most common terms comprehensively. Understanding this nomenclature helps the readers to understand the model in a better way:

• Project sponsor: in most of the cases in banking industry operations unit head plays the role of the sponsor. Operations unit head is the chief executive of the organization unit or his delegate.

• Operations leadership team: this is the executive bench which runs day to day operations. Ops leadership team has the decision making authority and in many banking organization structures, sponsor will be a member of Ops leadership team. However in some financial organizations sponsor will not part of this bench.

• Knowledge management team: this team maintains the record of all the projects completed and guides the project manager to use the existing knowledge to resolve new project opportunities without reinventing the wheel. This team also lays guidelines in documenting the lessons learned from the LSS projects. In some banking organizations Project Management Office takes this responsibility partly.

• Process matter experts from operations: this is the team of tenured and knowledgeable resources from operations, specifically from the domain in which the LSS project is being executed. This team comprises of junior or mid-level resources who work on banking transactional processes on day to day basis.

• Project champion: project champion is from Ops leadership team who will be from the domain in which LSS project is undertaken. Champions play an important role in reviewing and sign off at every phase of the project. Project champion also plays the role of management leader from project governance perspective.

143

LSS project management

• Customers: this the team of banking clients, counter parties, regulatory bodies, etc. The group of customers varies from case to case basis of the LSS project under study.

• Data management team: this is team which maintains the data at a dashboard level for the leadership. Without going into granular transaction by transaction details, this team gathers gives the leadership heads-up on the trending of key metrics or key performance indicators.

• Ops risk and control team: this is part of the support functions of the bank which monitors the key risks involved in the transaction processing.

• Data collection agents: agents who help Project manager in collecting data as per the data collection plan.

• Critical evaluators: these are the group of people who can evaluate the problem discretely with highlighting practical root causes in a logical way. These can be from operations, or even part of management team.

• Process mapping experts: in many LSS projects Project manager takes the responsibility of mapping processing for understanding the transaction-level processing. However in few banking environments, few candidates from operations are selected and trained for performing the process mapping exercise.

• Out of box thinkers: these are the group of people who can ideate out of box solutions for the problems naturally or by using structured thinking process. These can be from operations, or even part of management team.

7.2 Using the 3I model It is evident from the interviews, that different levels of engagement of stakeholders are required at different phases of DMAIC projects. Few respondents shared experiences of how involving stakeholders at inappropriate stages of project could harm the success of the LSS project. Other respondents expressed their views about influencing stakeholders by developing relationships and through networking opportunities. Few respondents mentioned about the importance of communication in project management at different phases of DMAIC. Considering these opinions and inferences derived from the interviews, different levels of engagement of stakeholders were framed by the author as Inform, Involve and Influence. Various stakeholders identified in above discussion are categorically segregated under the three different engagement levels. Figure 2 clearly articulates the different stakeholders in LSS project management, who need to be informed, involved and influenced at every stage of the project. Stakeholders falling under “Inform” are the ones to be informed about the happenings of the phase of the project. Keeping these stakeholders informed about the milestone success and next steps is important from the overall project management perspective. Informing stakeholders could be performed in multiple ways. E-mail communication and communicating over a formal meeting are few of the ways. However the minutes of the meeting should be documented for future reference. It is very important for the project manager to formulate a robust communication plan referencing the modes of communication for different stakeholders falling under inform category.

Involving selected stakeholders in different project phases gives multi fold benefits. Benefits include smooth change acceleration of the improvements without much resistance, developing the knowledge base, giving a sense of involvement,

144

TQM 28,1

identifying the pain areas in the process for improvement and generating ideas for solutions. However not all stakeholders need to be involved at every stage of the project. Involving unnecessary stakeholders could lead to project hurdles at times. However, not involving appropriate stakeholders also could lead to serious problems.

For example, involving a critical evaluator in a brainstorming session with out of box thinkers could lead to judgmental discussions from critical evaluators which may prevent innovative ideas coming from the out of box thinkers. Also missing operations risk and control expert in measure phase could lead to heading toward an incorrect failure mode effects analysis.

Influencing stakeholders is inherent feature of any project management initiative. Influencing stakeholders is an imperative feature of LSS project management. This is because the project manager, in most of the LSS projects comes from a support function of LSS experts (black belt level) or from external consulting firms, and do not belong to the operations itself. Hence it becomes challenging for the project manager to manage the change acceleration process throughout the project life cycle. Resistance from operations, lack of co-operation and penetrating the changes into the ways of working of the process are few of the challenges faced in LSS project management. Hence it becomes very essential for the LSS project manager to exhibit the skill of influencing. Influencing a particular stakeholder could be developed by informal catch-ups, networking sessions, formal meetings, group discussions, one-one focused discussions or even over a coffee table. Influencing senior leaders like project sponsors requires a solid business case highlighting the benefits which the project could deliver to the organization.

Inform Involve Influence

Define

Measure

Analyze

Improve

Control

- Project Sponsor

- Project Champion

- Project Champion

- Project Champion - Project Sponsor

- Project Sponsor

- Project Sponsor

- Project Champion

- Project Champion

- Operations Leadership Team

- Operations Leadership Team

- Operations Leadership Team

- Operations Leadership Team

- Operations Leadership Team

- Operations Leadership Team

- Knowledge Management team

- Knowledge Management team

- Process Matter experts from Operations

- Ops Risk and Control Team

- Customers - Customers

- Data Management Team

- Data Management Team

- Data Management Team

- Data Collection Agents

- Data Collection Agents

- Ops Risk and Control Team - Process Mapping Experts

- Process Mapping Experts

- Process Matter experts from Operations

- Process Matter experts from Operations

- Critical Evaluators

- Change Acceleration Agents - Out Box thinkers

Figure 2. “3I” model

145

LSS project management

The proposed model could be tested in service organizations, especially in banking and financial services for DMAIC projects. The LSS project manager needs to follow the below sequential steps in order to validate the model:

(1) identification of right stakeholders for the LSS project;

(2) revisiting the stakeholder grid mentioned in Table II;

(3) validation of stakeholder grid mentioned in Table II;

(4) segregating the stakeholders according to the proposed model (Figure 2);

(5) managing stakeholders according to the three engagement levels proposed;

(6) conducting the LSS project as defined by the DMAIC methodology; and

(7) making notes of stakeholder-related issues (if any) throughout the project life cycle.

8. Benefits and limitations of the 3I model Benefits

• The model suggests a phase wise approach for LSS project management. This helps the project manager to plan the people factor of the project accordingly at every milestone.

• The 3I model is best suitable for the banking and financial services industry, as these organizations have high risk at every level of decisions taken for implementing changes. This is because every change or investment for improvement has a direct financial impact for the bank or the financial institution. The model involves cross-functional stakeholders at different stages, which helps to identify and eradicate risk.

• The model promotes team work across all levels of the organization. This complements the LSS project management as collaboration is an important feature for LSS success.

• The model promotes employee engagement, and helps promotes group dynamics.

Key stakeholders Define phase

Measure phase

Analyze phase

Improve phase

Control phase

Change acceleration agents from operations | Customers | | | Data collection agents | | Knowledge management team | | Operations business head (sponsor) | | | Operations risk and control team | | Process mapping experts | Process matter experts from operations | | Project champion | | | | | Project manager (lead) | | | | | Project team members | | | | |

Table II. Key stakeholders for DMAIC project

146

TQM 28,1

• The 3I model clearly categorizes the stakeholders into three segments, which can be worked both dependently or independently according the organization culture.

• The model though developed based on the inputs from banking and LSS literature and interviews, has a scalability to be explored in other domains where LSS is used, with certain customizations.

Limitations

• The model does not include the personality traits of the project manager into consideration. The same model followed by different project manager could yield similar results but not same results.

• The model does not have a standard mention of the timing of informing, involving or influencing the stakeholder in any particular phase of the project. This is left for the purpose of flexibility of the project manager based of the uniqueness of the project and the set of stakeholders.

• The 3I model does not take all corporate stakeholders into consideration, but scoped only to key stakeholders of LSS project management. Other corporate stakeholders like government, competitors and environmental factors are not part of the model.

9. Conclusion LSS project management approach has been adopted across banking and financial services. The methodology has many aspects of success and stakeholder management becomes the key element for the success of any LSS project. Handling different set of stakeholders across different levels in the organization is a challenging art. Though there is no hard and fast rule to manage a set of stakeholders, interviews with global project managers revealed that a structured approach in managing LSS stakeholders will help for the smooth execution of the project. The 3I model is developed focusing on the banking and financial services, as part of the research. The model is a readymade fitment to any LSS Project executed in banking and financial services environment. However the project manager needs to exhibit the pro-activeness of understanding the personality traits of the stakeholders alongside using the 3I model. The model helps project managers to inform, involve and influence different set of stakeholders at different phases of the DMAIC flow. The model leaves an opportunity for further research and customization for other service industries outside the banking and financial services space like hospitality, government, heath care, etc. Benefits and limitations of the 3I model were presented as part of the paper.

References

Albliwi, S., Antony, J., Lim, S.A.H. and van der Wiele, T. (2014), “Critical failure factors of lean six sigma: a systematic literature review”, International Journal of Quality & Reliability Management, Vol. 31 No. 9, pp. 1012-1030.

Alharthi, A.A., Sharaf, M.A. and Aziz, T. (2014), “An integrated approach of lean six sigma and risk management in entertainment and media industry”, Proceedings of the 2014 International Conference on Industrial Engineering and Operations Management, Bali, January 7-9.

Andersson, R., Eriksson, H. and Torstensson, H. (2006), “Similarities and differences between TQM, six sigma and lean”, The TQM Magazine, Vol. 18 No. 3, pp. 282-296.

147

LSS project management

Antony, J. (2007), “Six sigma and its role in financial services”, The TQM Magazine, Vol. 19 No. 5, available at: http://dx.doi.org/10.1108/tqmm.2007.10619eaa.001

Bengt, K., Bergquist, B. and Garvare, R. (2008), “Quality management and business excellence, customers and stakeholders: do we agree on what we are talking about, and does it matter?”, The TQM Journal, Vol. 20 No. 2, pp. 120-129.

Carroll, A.B. and Buchholtz, A. (2002), Business & Society – Ethics & Stakeholder Management, Thomson South Western Publishing.

Dan, S. (2004), “How Six Sigma transformed HSBC’s US Futures business”, available at: www.jmp.com/software/success/pdf/hsbc_sixsigma.pdf (accessed September 2, 2014).

DeFeo, J.A. (2000), “An ROI story”, Training and Development-Alexandria-American Society for Training and Development, Vol. 54 No. 7, pp. 25-28.

Delgado, C., Ferreira, M. and Branco, M.C. (2010), “The implementation of lean six sigma in financial services organizations”, Journal of Manufacturing Technology Management, Vol. 21 No. 4, pp. 512-523.

Edgett, S. and Parkinson, S. (1993), “Marketing for service industries”, The Services Industries Journal, Vol. 13 No. 3, pp. 19-39.

Fitzgerald, K.R. (1997), “Chrysler training helps suppliers trim the fat”, available at: http:// findarticles.com/p/articles/mi_hb3381/is_199709/ai_n8127241/?tag¼col1;co-competitors (accessed September 2, 2014).

Freeman, E.R. (1984), Strategic Management: A Stakeholder Approach, Pitman Publishing, Boston, MA.

Galt, V. (2013), “There’s heavy demand in all sectors for ‘lean’ specialists”, The Globe and Mail, available at: www.theglobeandmail.com/report-on-business/careers/career-advice/life-at- work/heavy-demand-for-lean-specialists/article13795394/ (accessed September 2, 2014).

Guarraia, P., Carey, G., Corbett, A. and Neuhaus, K. (2008), Lean Six sigma for Manufacturing, Bain and Company Inc., Mexico City.

Gummesson, E. (2000), “Evert Gummesson”, in Fisk, R.P., Grove, S.J. and John, J. (Eds), Service Marketing Self-Portraits: Introspections, Reflections, and Glimpses from the Experts, American Marketing Association, Chicago, IL.

Higgins, K.T. (2005), “Lean builds steam”, Food Engineering: The Magazine for Operations and Manufacturing Management, available at: www.foodengineeringmag.com/Articles/ Feature_Article/1e1b90115c2f8010VgnVCM100000f932a8c0

Hoffman, T. (2006), “Bank of America: investing in Six Sigma”, available at: www.computerworld. com/s/article/265873/Investing_in_Six_Sigma?taxonomyId¼14&pageNumber¼3 (accessed September 1, 2014).

Immaneni, A. and McCombs, A. (2007), “Capital one banks on six sigma for strategy execution and culture transformation”, Global Business and Organizational Excellence, Vol. 26 No. 6 pp. 43-54.

Jawaher, A.B.J., Burt, R.P. and Buttram, B. (2012), “An exploration of quality control in banking and finance”, International Journal of Business and Social Science, Vol. 3 No. 6, pp. 273-277.

Jenicke, L.O., Kumar, A. and Holmes, M.C. (2008), “A framework for applying six sigma improvement methodology in academic environment”, The TQM Journal, Vol. 20 No. 5, pp. 453-462.

Jerry, K. (2003), Lean Principles, Manufacturing Extension Partnership, Utah, UT.

Kangas, P.J. (2011), “Consider those most affected to create lasting change”, Quality Progress, March, pp. 72-73.

148

TQM 28,1

Kvale, S. (1996), Interviews An Introduction to Qualitative Research Interviewing, Sage Publications.

Laureani, A. (2012), “Lean six sigma in the service industry”, in Holtzman, Y. (Ed.), Advanced Topics in Applied Operations Management, InTech Publishers, pp. 3-14.

Lovelock, C. (1992), “Are services really different?”, Managing Services, Marketing, Operations, and Human Resources, Prentice-Hall, Englewood Cliffs, NJ.

Lucas, J. (2002), “The essential six sigma”, Quality Progress, Vol. 35 No. 1, pp. 27-31.

McNamara, C. (1999), General Guidelines for Conducting Interviews, Authenticity Consulting, LLC, MN, available at: www.managementhelp.org/evaluatn/intrview.htm

Marx, M. (2005), “American Express – Six Sigma”, available at: www.isixsigma.com/community/ blogs/american-express-six-sigma (accessed September 2, 2014).

Meyers, F. and Stewart, J. (2002), Motion and Time Study for Lean Manufacturing, 3rd ed., Prentice Hall.

Minggu (2009), “A brief history of lean manufacturing” available at: http://accubekas.blogspot. com/2009_02_01_archive.html (accessed September 2, 2014).

Mitchell, R.K., Agle, B.R. and Wood, D.J. (1997), “Toward a theory of stakeholder identification & salience: defining the principle of who & what really counts”, Academy of Management Review, Vol. 22 No. 4, pp. 853-886.

Nasi, J. (1995), “What is stakeholder thinking? A snapshot of a social theory of the firm”, Understanding Stakeholder Thinking, LSR Publications, FL, pp. 19-32.

Nielsen, A. (2008), Getting Started with Value Stream Mapping, Gardiner Nielsen Associates Inc.

Online Source (2012), available at: www.goleansixsigma.com/lean-six-sigma-success-stories-in- the-financial-services-industry/

Pettersen, J. (2009), “Defining lean production: some conceptual and practical issues”, The TQM Journal, Vol. 21 No. 2, pp. 127-142.

Pyzdek, T. (2003), “The Six Sigma Handbook”, Six Sigma Implementation and Management, McGraw Hill, New York, NY.

Rawabdeh, I. (2005), “A model for the assessment of waste in job shop environments”, International Journal of Operations and Production Management, Vol. 25 No. 8, pp. 800-822.

Robert, B.P. (2003), “Lean, six sigma, and the systems approach: management initiatives for process improvement”, Environmental Quality Management, Vol. 13 No. 2, pp. 85-92.

Sharma, A. (2014), “What is lean manufacturing”, International Journal of Sciences, Vol. 3 No. 9, pp. 44-49.

Sheridan, J.H. (2000), “Lean sigma synergy”, Industry Week, Vol. 249 No. 17, pp. 81-82.

Teresko, J. (2005), “It came from Japan!” Industry Week, 1 February, pp. 49-56.

Vijaya Sunder, M. (2013), “Six sigma-a strategy for increasing employee engagement”, The Journal for Quality & Participation, Vol. 36 No. 2, pp. 34-45.

Vojislav, S., Milosavljevic, P. and Randjelovic, S. (2010), “Six sigma concept within banking system”, African Journal of Business Management, Vol. 4 No. 8, pp. 1480-1493.

Welch, J. and Welch, S. (2007), Winning, Harper Collins Canada Ltd., CA.

Womack, J.P. and Jones, D.T. (1996), Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Simon & Schuster, New York, NY.

Woods, R. (2010a), “Australian bank to revamp IT with Lean Six Sigma”, available at: www. isixsigma.com/industries/financial-services/australian-bank-revamp-it-lean-six-sigma (accessed September 2, 2014).

149

LSS project management

Woods, R. (2010b), “Scorecards help South African bank reap savings”, available at: www. isixsigma.com/consultants/balanced-scorecard-consultants/scorecards-help-south-african- bank-reap-savings (accessed September 2, 2014).

Zafar, F., Nazir, F. and Abbas, G. (2014), “Attaining quality in business processes using new derived approach of stacked lean six sigma”, European Journal of Business and Social Sciences, Vol. 2 No. 10, pp. 182-191.

Further reading Lean Six Sigma for Services (2003), Micheal George, ROI of Lean Six Sigma for Services – Pg. 5,

McGraw-Hill, New York, NY.

About the author Vijaya Sunder M. is a Lean Six Sigma Leader with experience in leading cross-functional projects for process improvements and operational effectiveness. He is a Six Sigma Master Black Belt (from Indian Statistical Institute) and Lean facilitator. He has led and mentored various reengineering and process improvement programs that helped improve the customer experience, employee satisfaction, eliminate process defects, increase productivity and reduce costs across service organizations. He is a Lean Six

Sigma Trainer – trained more than 800 people in Lean Six Sigma Yellow, Green and Black Belts till date. He also is certified in Business Process Modelling and Six Thinking Hats. He is a distinction holder in Master of Business Administration from the Sri Sathya Sai University and gold medalist in Bachelor of Engineering from the Anna University, India. He has publications in international journals on topics relating leadership and Lean Six Sigma. Alongside corporate job, Vijaya Sunder practices teaching for MBA students in subjects like Six Sigma and total quality management, as a Visiting Faculty at the Business Schools. He is currently pursuing his doctoral research for PhD from Indian Institute of Technology-Madras, India. Vijaya Sunder M. can be contacted at: [email protected]

For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected]

150

TQM 28,1