Lean management

enterprise:
Becoming the
best imaginable
Moving towards your vision
You can see where your
organization could go….?

“successfully launched
more new products
this quarter than in the
“named the most three previous quarters
sought-after employer combined”
in the industry”

“unveiled an
“increased retention all-new digital offering
of top salespeople whose mobile app became the top
by 15 percent” financial-services download”
 “increased
revenues even after the
bankruptcy of its largest customer
meant it lost an estimated
18 percent of its sales”

“improved
companywide
cost efficiency led “reduced patient
to a long-awaited “building on wait times
restoration of its its reputation for 35 percent”
A+ rating” simplicity and ease of use, the
new product took 18 percent
of the market in its first year”

“ranked first “rocketed up the

in customer survey results to
experience for the “smoothly integrated become one of the
first time across all an acquisition that 10 most valuable
three of its major doubled the size of its brands”
business lines” leading business”
 You’re making big investments…

“announced a
series of initiatives designed
to accelerate innovation and
new-product development”

“launched a three-year
IT platform renewal and
digitization effort”

“started a
cost-efficiency program
that led analysts to raise their
profit estimates for the year
by half a point”

Transforming an organization is always a huge bet, is possible only by changing much more than a
against long odds. process or function. It begins with a much deeper
sense of what the organization wants to see:
The reason is simple: real transformation requires
more than most organizations realize. We describe ƒƒ People who are fully engaged in their work
individual people as transformed if they transform ƒƒ Managers who are able to lead and develop
how they behave. The same is true for organizations, their teams
whose “behavior” is, fundamentally, management.
ƒƒ Teams who can respond flexibly as the business
An organization is therefore transformed only if it changes each day
transforms how it manages.
ƒƒ Businesses that can anticipate what customers
Few do. As a result, the changes eventually fade— will value and deliver exactly that.
often sooner rather than later, and no matter how
Making this ideal an everyday reality means returning
much time and effort they may have cost.
to first principles—to the disciplines that reinforce
Organizations can, however, reverse the odds and a thoughtful approach to management, taming the
become the best imaginable. Reaching those heights complexity that drains energy from the organization.
…could you raise the odds of their success?
“rushed launches of
recent products omitted
crucial features, resulting
in 30 percent loss of
market share”

“disclosed another 9-month

delay in its automation
program, which is rumored to
be 60 percent over budget and
only 40 percent complete”

“former employees
report a bottom-line focus
so intense that they spent more
time on budget planning than
on their ‘day jobs’ ”

It means linking the organization’s vision to Together, these disciplines allow organizations to
actions that people take as part of their work, focus on what really matters. Leaders can focus
building a common purpose toward common on leading. Managers can focus on managing.
goals across the entire enterprise. Workers can focus on their real work.
It means developing people with the expectation Our role is to serve as a guide and interpreter, helping
that everyone, throughout the organization, should the organization immerse itself in a new language
have the opportunity to contribute to the best of of management: new skills and habits of mind,
their abilities. reinforced by practices and tools that make change
It means seeing problems as irreplaceable tangible. As the organization learns, the guidance
opportunities to make the business stronger, and changes, until the enterprise is able to improve itself
solving problems by addressing their deepest causes. on its own—and not just once, but continually as its
business needs to.
Finally, it means creating new ways to understand
customers and meet their needs with the fewest The language the organization learns is the lean
resources possible. management system.
Becoming easier to
work with – and for
A digital helping hand for new clients

A large European bank’s biggest concern centered on its

commercial business, particularly the process of bringing new
customers on board. Although clients praised the bank’s security
and institutional reach, they also said it was “hard to work with”
and “inflexible,” requiring too many forms that they could not
understand. Company treasurers hoping for a quick start in
managing their organization’s assets instead reported slow,
even “painful” processes while lost opportunities accumulated.

While some degree of complexity was inevitable given regulatory constraints,

the bank recognized that many of the problems originated from its own systems
– some of them which were outdated and heavily manual. But rather than
immediately digitize, it completely reexamined the entire onboarding process
from top to bottom, looking for redundancies and communication gaps that a
fresh start could eliminate. And at each step, it listened closely to how clients
said they felt about the process.
That listening led the bank to assign new clients a single point of contact who
would help lead them through the first few days and weeks. Overlapping forms
were combined into a single digital portal so that the clients could input all of the
required information just once, rather than multiple times for different purposes.
A limited investment in new technology allowed bank representatives to walk
clients through the new processes via remote connections to the client’s own
computers. The learning environment was not just realistic, but real.
Within the first year, client satisfaction increased by more than 10 percent.
The net economic impact—revenue increases and cost decreases—combined
to more than €5 million. And employee engagement rose by more than
15 percent, as relationship managers and specialist personnel alike reported
that they felt better able to exceed their clients’ expectations.
 Learning to act on
what customers want
“Why should picking up a rental car
at the airport have to take so long?”

That was the question too many customers

were asking of one of the largest rental-car
agencies—even after it had invested years of
effort on performance improvement. Just one
slip-up at any point from the rental counter to
the exit gate would be enough to cause a delay.
And that was happening too often.

The problem was that no one person at the company was responsible for making sure that the whole process
went smoothly. Instead, each of the functions involved—marketing and sales, IT, customer service, shuttle buses,
car cleaners, security personnel at exit gates—focused only on its own performance. Even when everyone tried
their best, small miscommunications led to big breakdowns.
The solution required the groups to start collaborating, something they had rarely done in the past. Breaking down
internal barriers allowed the company to shift its goal from having the most available cars—a figure that only indirectly
served customers—to one that reflected what customers really cared about: the right car for them at the right time.
The company provided more options for choosing vehicles and managing reservations, such as new mobile-device
applications and innovative kiosks that reduced waiting times while still connecting customers with live agents.
As these changes took hold, customer-service scores rose—doubling in some locations—while revenue
increased and cost-to-serve fell.

More is more 80 79% Completed

In a late 2014 survey on corporate 75 transformations
only
70
transformation, we asked 1,700 65
Success rate of transformations

executives about 24 actions 60

55
58% All transformations
(including in-progress)
organizations can take (ranging from 50
45
alignment on transformation goals to 40
role-modeling of new behaviors), which 35
30
change how people work. Rather than 25 26% Total average
(i.e. average of
yield a list of priorities, though, the 20 all transformations,
15 regardless of number
results showed that sustained success 10 of actions taken)

correlated most closely to the number 5

0
of actions taken. The more actions, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Number of actions taken (out of 24)

the better the results.
A partner along the way

For the past 20 years, we have helped organizations around

the world transform themselves. The people who will help you
include executives with decades of industry experience and
leading experts in every functional specialty, from call-center
design and procurement analytics to organizational behavior
and IT integration.

Kweilin Ellingrud | Principal, Minneapolis

The leader of McKinsey’s Minneapolis office, Kweilin Ellingrud has spent more
than a decade working with senior leadership teams on topics ranging from
operations to strategy, primarily in financial services. Her focus is on technology
enablement in business processes, contact-center operations, and related
customer-experience fields.

Ron Fardell | Senior Expert, Detroit

Ron Fardell has more than 25 years of experience in operations, strategy, industrial
engineering, and continuous improvement, with certification as a Lean Institute
Sensei and as a Six Sigma black belt. His expertise aided three organizations in
winning the Shingo Prize for Operational Excellence, including the first enterprise-
level gold medal to be awarded. He has organized and conducted more than
100 enterprise-, site-, and department-level lean assessments in industries
from automotive and aerospace & defense to insurance and banking.

Valerie Moyses | Senior Expert, Munich

For the past 15 years, Valerie Moyses has helped institutions in the insurance,
electric power, natural gas, and banking sectors generate powerful customer
insights and achieve new levels of performance throughout the organization.
She helps leaders design the management systems and cultural changes
that lead to continuous improvement, year after year.
It’s a commitment. But you won’t be starting anew, because
you will build on what your organization has already done.
And you won’t be depending on others, because you will
be enabling your people to keep building on their own.

Francisco Ortega | Director, Buenos Aires

With more than dozen years of experience in leading lean-management
transformations throughout Latin America, Francisco Ortega, leader of
McKinsey’s Buenos Aires office, specializes in serving the financial-services
industry. His expertise extends from reimagining customer experience in
branch networks to redefining customer experience across entire institutions,
from credit cards to corporate banking.

Ruben Schaubroeck | Principal, Antwerp

Ruben Schaubroeck leads McKinsey’s Business Technology Office in Benelux,
with a practice centered on helping telecommunications, public-sector, and
financial-services clients execute end-to-end IT strategies that break through
internal barriers and increase enterprise-wide collaboration. He recently
supported a fiber-to-the-home deployment project for a telecom company
and a digital-enterprise transformation for a retail bank.

Joydeep Sengupta | Director, Dubai

As the leader of the McKinsey Implementation hub in the Middle East,
Joydeep Sengupta uses his 20 years of experience financial services,
telecommunications, and manufacturing to help transform the business and
operational performance of organizations across sectors. Examples of his
work include the design and creation of a world-class operations company;
and overhauling the digital platform for one of the world’s largest sovereign
wealth funds.

We understand day-to-day challenges, whether at the front line, the management

level, or the executive suite. We help build a complete support structure of
resources and skills that help people transform how they work each day.
Management
transformation

“Go and See” programs

To experience firsthand the impact that the lean management system can achieve, consider
joining us in visiting one of the organizations that is already making it happen. Ranging from
banks and insurers to logistics providers and utilities, host institutions on four continents give
an intense, one-day overview of their operations, which may be combined with workshop,
academy, and certification programs for additional capability building.

Operational Excellence Index

Through an intensive one- to three-day review of their management practices, organizations
develop lasting insights about their potential for operational excellence, along with practical
ideas for raising performance and strengthening a culture of continuous improvement.

Client Learning
A variety of learning methods integrate years of research insights, turning them into tailored
curricula. Using the latest digital and immersive technologies, clients translate what they learn into
daily business practices for lasting performance improvement. Programs include the McKinsey
Academy for senior professionals and leadership teams, the McKinsey Capability Centers’
hands-on model factory experiences, targeted McKinsey Leadership Development programs
such as Centered Leadership or the Change Leaders Forum, and online professional development
options such as the McKinsey Capability Building Assessment—Leadership evaluation.

Digital Labs
McKinsey Digital Labs combines strategic thinking and technology expertise to help clients
separate digital opportunity from hype, while building capabilities across the organization.
Designing business prototypes proves that opportunities are real, and orchestrating delivery
to ensure that technology investment translates into business outcomes.
Implementation
Implementation experts work on-site with clients to help them move beyond
recommendations and pilots to achieve long-term improvement and measurable,
bottom-line results. Rigorous and supportive coaching helps strengthen and align
leadership, transform processes, optimize management practices, and enable the
client organization to develop a new way of working.

Solutions
McKinsey Solutions are are combinations of specialized data, software, and expertise
that channel McKinsey knowledge and provide a clear view of complex problems.
More than 20 solutions provide insights in fields ranging from organizational health,
transformational change, and corporate performance through to mining operations
and insurance asset-allocation decisions.

Analytics
To help organizations turn data into actionable insights and improved performance,
McKinsey Analytics identifies the highest-value opportunities, sources the most relevant
internal and external data, applies world-class analytics and modeling, and drives
enterprise-wide adoption.

Recovery & Transformation Services (RTS)

RTS helps distressed companies and underperforming business units drive rapid
and dramatic performance improvement, from acute crisis management through to
long-term recovery.
 Getting better happens naturally
“We started our journey in 2007. In the first
year, we increased our lending capacity “Across the
by about 40 percent without adding organization, we
personnel. Since then we keep finding feel a confidence that
ways to serve more clients. We now realize was missing before. People know
that we aren’t finished, and probably never that they can finally rely on our processes –
will be. Moreover, we don’t want to be, they don’t have to waste their time triple-checking
because then we might stop improving.” to make sure other departments get their work done.
Instead, they can focus on doing more of their own
– Retired CEO, North American lender work, and finding new ways to serve customers.”
– Division head, European insurer

“Our clients now know “There’s a remarkable

exactly what we’re doing for them freedom that comes from knowing
at any given point in time. It gives that as a leader, you can easily see what is
them a much stronger sense of control, happening everywhere in the organization—
and makes the whole relationship much right now. That lets us as a leadership team use
more collaborative.” our time and energy on the strategic questions
– Senior partner, professional-services firm that matter, rather than on trying to collate
three-month-old data just to get an idea of
how we’re doing.”
– CFO, global insurer
“As a public agency,
we’re under extraordinary
pressure to use resources carefully.
It’s a huge victory for us to be able to say
that we’re serving far more people, far more “We’re to a point now where we
quickly, but at the same standard of accuracy continually reassess how the management
and with the same staffing levels. ” system is doing—is it still meeting our needs?
How should it evolve? We’re finding new
– senior civil servant, ways to integrate the organization together
European government more closely, so that even our contractors are
speaking the same management language.”
– COO, financial data company
Published work
Compendiums
The Lean Management Enterprise: A system for daily progress,
meaningful purpose, and lasting value (McKinsey & Company 2014).
Winner, Shingo Research and Professional Publication Award

Lean Management: New frontiers for financial institutions

(McKinsey & Company 2011).

Banking on Lean
(McKinsey & Company 2008).

Articles (selected)
“A new order for law”
Alex D’Amico and Christian Johnson
McKinsey Insights & Publications, August 2015, www.mckinsey.com

“How to beat the transformation odds”

David Jacquemont, Dana Maor, and Angelika Reich
McKinsey Insights & Publications, April 2015, www.mckinsey.com

“Building a culture of continuous improvement in insurance”

Alex D’Amico, Zachary Surak, and Alex Singla
McKinsey Insights & Publications, April 2015, www.mckinsey.com

“Bringing out the best in people”

Stefan de Raedemaecker, Javier Feijoo, and David Jacquemont
McKinsey Insights & Publications, January 2015, www.mckinsey.com

“Next frontiers for lean”

Ewan Duncan and Ron Ritter
McKinsey Quarterly, February 2014, www.mckinsey.com

“(Still) learning from Toyota”

Deryl Sturdevant
McKinsey Quarterly, February 2014, www.mckinsey.com

“When Toyota met e-commerce: Lean at Amazon”

Marc Onetto
McKinsey Quarterly, February 2014, www.mckinsey.com
Contacts
Europe:
David Jacquemont Thierry Nautin
Principal Principal
+33 (1) 4069 9363 +33 (1) 40 69 95 01
[email protected] [email protected]

Paul Jenkins Jasper van Ouwerkerk

Director Director
+47 22 86 2656 +31 (20) 551 3220
[email protected] [email protected]

Americas:
Deniz Cultu Krish Krishnakanthan
Principal Principal
+1 (612) 371-3125 +1 (212) 446-7208
[email protected] [email protected]

Andy Eichfeld Francisco Ortega

Director Director
+1 (202) 662-3341 +54 (11) 5776-3817
[email protected] [email protected]

Kweilin Ellingrud Rohit Sood

Principal Principal
+1 (612) 371-3132 +1 (416) 313-3313
[email protected] [email protected]

Middle East and Asia-Pacific:

John Lydon Sasi Sunkara
Director Principal
+61 2 8273 1820 +91 22 6630 2625
[email protected] [email protected]

Joydeep Sengupta
Director
+971 (4) 389 9286
[email protected]
Lean Management
November 2015
Copyright © McKinsey & Company
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www.mckinsey.com