Chris FlemingVP Life Strategic Planning and Business DevelopmentHead of USFS Six SigmaING US Financial Services

Embedding Lean Six Sigma and Linking Deployment to Business Strategy

May 11, 2006

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• European company based in the Netherlands• Provider of banking, insurance and asset management

services• Operating in over 50 countries• 114,000 employees

• Strong and positively trending financial results• As of 4/4/2006, ING has the 13th largest market cap among

global financial institutions (source: Bloomberg)

• Enormous effort has improved brand awareness• US companies built through acquisitions…

acquirer of acquirers• Insurance Americas contributes 22% of ING’s profits

ING

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• Strong Financial Results, pressure to grow• Organization tired of new methodologies…• Recent history of restructuring, moves, etc.• Company focused on two major initiatives

• Your Future. Made Easier• Economic Value

Background

Why does ING need Lean Six Sigma?

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ING Brand

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ING Brand

• Focus on customer success

• Being easy to do business with

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Managing For Value

• Creating sustainable economic value• Drive profitable growth• Increase return on book• Reduced cost of capital

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Critical Elements of a Successful Deployment

• Leadership Commitment• Dedicated Resources• Alignment and Integration with Business

Strategy• Incentives and Accountability• Quantifiable Measures and Goals• Business Process Framework• Customer Focus

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Building Support

• Retail Life business hired a new leader• Open to Six Sigma methodology, had

seen the results before…former skeptic converted

• Recognized a need for change

Finding a Business Champion

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Building SupportStating the Need…Getting Started in the Life Business

• Business was generating strong results; however…

• Falling application counts• Customer complaints/dissatisfaction• Processes and organization not aligned• Lack of metrics, very few customer-

centric metrics• High-cost organization

Business Leader Created the Burning Platform

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Building the Team

• Established a Quality Council to ensure consistency and govern the program• Resource alignment, project selection and

results owned at the business unit• Quality Leaders named for each business

area• Full-time Black Belts and Master Black Belts• Mix of internal and external resources• Aligned by core process where scale

permitted• Established one year staffing target of 1%

full-time six sigma resources

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Building the Team

Quality Leaders• Influential business leaders• Not a full-time role• Champion local deployment• Drive local program alignment with

strategic objectives

Master Black Belt• Hired externally• Full-time position• Certified, experienced from well-respected

programs• Assigned to each business area

Black Belts• Hired primarily internally with a few

experienced Black Belts hired externally• Full-time position• Deployed by business area, assigned to

Master Black Belts

Green Belts• Executive Green Belt training rolled out

to all leadership• Part-time Green Belts• Green Belt training deployed though

Black Belt-led project teams

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Training Model

• Leveraged external resources to deliver off-the-shelf training• Executive Green Belt• Green Belt for Teams• Black Belt

• External resources experienced with program launch phase• Critical consideration as many six sigma people come from

mature programs • First round of training material enhancements completed

(Black Belt)• Incorporating ING business examples• Integrating Lean methodology more closely

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Measures, Goals and Accountability

• Mix of global and area measures and goals

• 1% full-time six sigma resources

• Leadership trained

• Offset cost of program first 12 / 18 months

• Leadership six sigma goals and accountability

• Black Belts benefit targets established by

area($500k - $1MM)

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ING Lean Six Sigma Model

Build customer-centric culture focused on value creation

DMAIC DFSS ProcessManagement

• Improve existing processes, products or physical space

• Design new processes and products when none exist or the current environment is not capable

• Build Six Sigma Structure through process documentation, defining customer requirements, and tracking critical process indicators

Lean Process Design

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Linking to Strategy

Your Future Made Easier

Manage for Value Creation

ING Strategic Objectives

Superior Compliance Environment

ING Strategic Objectives

ING Strategic Objectives

Winning Performance Culture

ING Strategic Objectives

DMAIC DFSS ProcessManagement

• Improve existing processes, products or physical space

• Design new processes and products when none exist or the current environment is not capable

• Build Six Sigma Structure through process documentation, defining customer requirements, and tracking critical process indicators

Lean Process Design

Execution

Lean Six Sigma Becomes “How” We Execute

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Sustaining the Momentum• Communication

• Brownbag sessions• Department meetings and

overviews• Internal web site• Articles

• Sharing the Results• Gallery walks• Employee meetings• Management reviews• Goals and metrics

• Employee Engagement• Leadership• Process owners• Employees

• Leadership Driven• Visible• Goals and metrics

• Strategic Alignment• Project efforts focused on

high-impact areas

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Linking to Strategy

• Business to Unit to Department Strategies Linked• Consistent, aligned metrics• Critical Projects Driven by Strategic Objectives,

linked with consistent metrics

What We Can Learn from Hoshin Kanri (Policy Deployment)…

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Linking to Strategy

Voice of CustomerVoice of BusinessMarket FactorsCompetition/ BenchmarksSWOT

USFSStrategic

Objectives

BusinessLine

Strategies

BusinessLine

Tactics

Strategy Deployment

Review Process

METRICS METRICS

PROJECTS

METRICS

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• VOC – timeliness, accuracy, satisfaction

• VOB – Increase sales, reduce expenses, improve productivity, enhance performance review process

• VOE – Increase employee retention, improve employee satisfaction

• Legal or Compliance – reduce day two items, control compliance risks, reduce fines

Sources of Six Sigma Projects

Six Sigma projects may be generated from a number of sources, some examples below…

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Inputs

Voice of the customer

Voice of the business

Voice of the employee

Market and environmental

factors

Knownsolution with supporting

data?

Translate into project

opportunities

YESNO

Implement solution,

follow six s principles

Capable process,

DMAIC project methodology

Not Capable process, DFSS

project methodology

Prioritize Projects

Strategic FitEconomic ValueTime/Effort

Project Selection Process

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Six Sigma Failure Factors

• Leaping to Solution• Not data driven or based on faulty assumptions

• Serving the Wrong Customer• Not based on the voice of the “next” customer

• Selecting the Wrong Projects• Not linked to strategy

• Solution-Caused Problems• Poor sequencing, stakeholder under-involvement, resource

planning, change management or project closure

Adapted from Six Sigma’s Seven Deadly Sins by James P. Zimmermanand Dr. Jamie Weiss of Kepner Tregoe

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Use COPQ as a Source of Projects

• Hidden Factories• Re-work of defects in processes or products• Complex workarounds• Excessive phone calls, emails, faxes and other correspondence

as a result of poor performance• Inspections and Audits

• QA functions in the process• Back-end audits and approvals• Multiple approval steps

• Lost Sales and Market Share• Market product requirements not met• Service or delivery requirements not met

• Fines and Other Penalties

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Case Study: ING’s Life BusinessLeadership Commitment President of the Life business

- Visible supporter of six sigma methodology- Six sigma positioned as method Life business will

use to achieve its business objectives- Created the burning platform: growth and

efficiency

Process Owners- Build awareness, support deployment

Dedicated Resources Built team of full-time MBBs and BBs- First hires 6/2005- Certified MBB hired externally from recognized

program- BBs hired internally from pool of strong candidates- External certified BBs hired to supplement six sigma

expertise and accelerate team knowledge building

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Case Study : ING’s Life BusinessAlignment and Integration with Business Strategy

Incentives and Accountability

Team aligned with core processes

Project selection and prioritization supported business strategic objectives

- Increase front-end service and capacity tosupport growth model

- Improve product delivery capability- Create value through efficient in-force

management

Six Sigma team goals and metrics aligned with business strategy

- Increase policy count growth by 10x- Improved profit margins- Enhance service capabilities and customer

satisfaction metrics

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Case Study : ING’s Life Business

Quantifiable Measures and Goals

Incentives and Accountability Leadership incentives put in place to support ownership of program results

Shared program goals across USFS- Staffing- Program expense coverage- Training

Life business unit goals- Staffing- Program expense coverage- Training- Metrics

Individual six sigma team member goals- Projects- Creating the culture- Training and development

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Case Study : ING’s Life Business

Customer Focus

Business ProcessFramework

Black Belts aligned by core process area- Customer acquisition- Service the customer- Manufacture the product

Functional structure versus process alignment

- Business model versus shared servicemodel

Followed business and ING brand strategy- Your Future. Made Easier- Project selection

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Case Study : ING’s Life BusinessEarly Project Results Orange Express

Goal: speed and capacity- Underwriter first-look actions improved from

7% to over 80%- Cycle time reduced by 50%- Unit cost reduced by over 60%

Producer Contracting ProcessGoal: speed and capacity- Cycle time reduced by 70%- Variation reduced by over 80%

Servicing the Customer (multiple projects)Goal: speed and cost reduction- Cycle times reduced by 70+%- Variation reduced by over 80+%- Cost reduction targets achieved

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Learnings

• Deployment is never finished• Program objectives play a big part in determining the

nature of commitment that is required• Local versus global deployment• Culture change versus project execution

• Do not underestimate program support and communication challenges

• Have additional expertise available to provide coaching and mentoring when internal resources become strained

• Gain early commitment on metrics and goals• Keep senior leadership engaged throughout• Select top influencers to drive deployment• Identify early adopters and leverage