Continuous Improvement Programs in Service Businesses and Financial Institutions

Continuous Improvement Programs in Service Businesses and Financial Institutions

By: Jim Gitney   |     April 29, 2013

Continuous Improvement Program ConsultantsContinuous improvement programs are great for manufacturing but how do they apply to service businesses? The usual answer to this question is that process excellence works across functional silos. It is horizontal, transversal and industry agnostic. Although true, this answer does not always address the concerns of the leaders in service businesses and financial institutions.

In a recent article we highlighted five fundamental things you need to do to drive continuous improvement in any type of industry. A continuous improvement program that is tailored to the industry will significantly accelerate execution and achieving targets. The following apply to service businesses in general and financial services in particular.

1. Lack of physical products:
The output of a manufacturing line is a finished product which is unique. Workers involved in the production can relate easily to the measurable characteristics of the product that impact customer satisfaction. The situation is more complex when it comes to the customer experience in a branch, processing a loan application, dealing with a call center or transferring funds. We can however fully define the product in any industry and rally employees by engaging them as we collect the performance data and ‘Voice of Customer’ information that can be translated into ‘critical to quality’ metrics.

2. Invisible defects:
Walk on the shop floor of a manufacturing facility and you will easily see the defective parts and other waste piling up in designated areas – sometimes surrounded by specific color codes and loud system alerts. In service organizations, the identification of waste is usually invisible to the naked eye. All cubicles look the same and waste may occur across many locations and organizations. In this situation, aggregated measures often fail to highlight rework and bottlenecks. Activity based analysis of the value stream will accelerate identification of pain points.

3. Measuring Soft Activities:
Manufacturers have done a great job in integrating health & safety and other regulatory requirements to their business cases and ROI. Financial services consider risk management, compliance and controllership as some of their top priorities. Although their impact could be measured with continuous data on cost and penalty avoidance, it is often enough to focus on discrete and attribute data. Such characteristics can be powerfully integrated in business cases with basic prioritization tools such a QFD/‘house of quality’.

4. High level of human involvement:
Compared to manufacturing, the high level of human involvement is still a major characteristic of the service industry. Human behaviors dramatically impact process performance. The good news is that continuous improvement methodologies are tailored around this human element. The first phase of Six Sigma is “Define” and sets people up for success in the process improvement journey. The goals of Lean are to eliminate waste and develop people. It often starts by eliminating Muri – unreasonable tasks imposed on the workforce. Goldratt’s TOC states that ‘people are good’ and always guides towards win-win solutions when developing a process of ongoing improvement (POOGI).

5. Customer touch-points throughout the process:
At the end of the production line, quality control is very effective at preventing us from shipping defective products to customers. In a service organization however the customer is often present throughout the process. The customer may be on the phone with a representative, trying to navigate through the screens of an online application or understanding their monthly reports or bills. There is no safety net. Therefore, failure mode analysis plays a critical role in preventing any unnecessary rework or burden to customers.

All service industries including financial services deal with complex products, services and systems. This makes defects difficult to find and fix without the appropriate knowledge of how these processes work and perform. In financial services, the volume of human and system based activities in every process is very high, making measurement and value analysis two important aspects of continuous improvement.

In order to have a successful continuous improvement program in any service business, but especially financial services, it is critical to tailor the continuous improvement tools you use to the unique processes and services of your business. The output of these tools must provide information on the customer experience, the quality performance of your business processes and the identification of non- value added activities.

Doing so will give your organization the ability to properly re-design business processes creating better financial performance and differentiation in the marketplace. Robust continuous improvement programs are a key to creating a high performance culture in all industries.

About The Author:
Bernard Borowski, the head of Group50’s continuous improvement practice has been working in the financial services industry most of his career with GE and Morgan Stanley. He is a certified six sigma master black belt and has used these tools to significantly improve processes in commercial and consumer finance, treasury and auditing. You can reach Group50 at (909) 949-9083, send a note to or by requesting more information here.

This entry was posted in Continuous Improvement, Strategic Execution, on April 29, 2013

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