1. special feature A Global 4 LIMRAs MarketFacts Quarterly / Summer 2009

2. from BEST PRACTICEtoSuccessBy Robert Epner TransferGlobal Operational IT Consultant Operations Network Modelf rom my experience as chief of staff andregional chief operating officer for ING Insur- ance Asia/Pacific, the second largest insurer in the region, we learned that a strategy andstructure are needed in order to explicitly realizethe value of best-practice synergies and standardizationacross multiple countries. In our case we tackled theIT and Operations back office of the region through anapproach called the Global Operations Network Model.Using this model we achieved a transformation in back-a companys various and often far-flung operations. Thedrill is to identify the best practice such as an innovativeproduct, an efficient IT system, or a fast delivery process then copy it across the full organization to maximizethe impact. The company, in effect, raises the whole orga-nization to a new, more standardized best-practice level ofperformance. Who could argue with the desirability of thisconcept? Clearly, a companys investors and customersassume this sort of thing happens all the time. The onlyproblem is that it doesnt.office operations producing the following results: And it is indeed a problem. By not replicating successes,you not only leave money on the table, you also miss an Operational efficiency improved by 15 percent in keyopportunity to make the company a more integrated andclient processes while still supporting business growthmanageable organization as best practice becomes standardof over 30 percent a year across 10 countries.practice a way of doing business. The benefits of a more Simultaneously we reengaged back-office employeesintegrated organization can range from increased scaleand raised morale.efficiency to better support for global product launchesThe Advantages to Being a to tighter risk management. Risk management is par-Multinational Company ticularly important given the current financial crisis. AWhile there are many advantages to being a multi- more integrated organization across business and countrynational company, an important one often cited is the boundaries is more transparent and less likely to haveability to reap the benefits of what are called best prac- isolated and perhaps even rogue operations.tices. These are successful initiatives that emerge from LIMRAs MarketFacts Quarterly / Summer 2009 5 3. [Figure 1] PLANNING: BALANCED SCORECARD FRAMEWORKTOWARDS PERFORMANCE EXCELLENCE(INTEGRATED FRAMEWORK IDEAL FOR PROCESS IMPROVEMENT )2. Marketing Success 5. ReputationSuccess Mission 1. Portfolio Performance and 3. Organizational Strategy Success SuccessExcellence 6. Financial4. OperationalSuccess Success6 Drivers of Performance ExcellenceThere are many reasons why best practices are not eas-we created a common language to not only share best ily shared. Some objections that are often voiced insidepractices but to also jointly develop new regional processes a company include: our business line is different; our as a cross-country network of operations professionals. country is different; or our regulations are different. Applying the 4Ps in a global context means having a Unspoken reasons may include the not invented herecommon language for each of the following: refrain and perhaps conflicts with lesser initiatives already 1. Planning Business plans have quantitative targets under way. While there is often some slight truth to these for each staff area with the measures defined con- concerns, they are used more often to create roadblockssistently for all countries. This allows easy and than to fi nd solutions. clear communication across staff areas and acrosscountries.A Common LanguageThe Global Operations Network Model grew from the2. Process Management Countries are required torecognition that in order to identify and deliver a stan- achieve a basic level of process sophistication. Alldardized best-practice solution for back-office operationscountries are expected to defi ne process scope we needed a standardized structure to foster our imple- from start to finish consistently and to monitormentation. In other words, you first need a common and share process performance. Key processeslanguage to work together. with performance below target are candidates for As the then-Regional COO, I developed a broad busi-improvement projects.ness model for Planning, Process Management, Problem3. Problem Solving Once process performance gapsSolving, and People the 4Ps and put the modelare identified, a problem-solving methodology willin place for all the countries in the region utilizing ourbe applied to reach objectives. Lean Six Sigma Operations Network of local COOs (sidebar box andmethodology a data-driven process-improve-figure on next page). By adopting the 4Ps approachment methodology to reduce non-value-added6 LIMRAs MarketFacts Quarterly / Summer 2009 4. How to Transfer Success THE 4PS APPROACH What we accomplished in ING Insurance Asia/Pacificis particularly relevant in todays economic environmentas businesses begin to look to ways to grow and rebuildThe ING experience of developing best practices while still controlling costs and improving employee collaboratively across international businesses is morale. a model of great value to other multinationals. Rather The steps we took are not easy and are the result of than transferring practices from one country to another, considerable time and effort to refine. this approach stresses the need for communication and However, the structured nature of the approach is clear partnership. This is achieved and facilitated throughand repeatable. With senior management support and the right a common language for each element of the model:leadership this model is highly transferable to other Planning, Process Management, Problem Solving, and companies. People. The result is that the whole is larger than the What follows are the steps we took to achieve this sum of the local best practice parts. The approach success making the case for how the best-practice creates additional value, innovation and buy-in, pro-approach to success-transfer approach can be effectivelytransferred to other companies. ducing an elegant solution to a complex problem that is highly transferable to other organizations. Global Operations Network ModelObjectives:To leverage the Global Operations Network Model which was developed and implemented successfullyacross 12 insurance businesses in 10 countries for ING Planning Insurance Asia/Pacific as a blueprint for other globalorganizations in order to gain synergy and scale benefits.Further, from a strategic growth perspective, the Global People Operations Network Model establishes a standard-ized platform that is attractive to Global Distribution ProblemProcess Partners and facilitates Global Product Strategies. Solving Management Benets: Synergy The Model is based on standardizing thefour Ps across multiple countries and businesses.steps and establish tight quality control is used By having a standardized, customer-centric globalas the process problem-solving methodology forplatform across local operations, the synergy benefitsthe region. By having all countries use the sameof a shared service center model are gained while stillmethodology it is easier to collaborate and easiermaintaining a local presence to stay close to the market.to share new improvement initiatives. Synergy is accelerated because the replication of local 4. People Employees are developed through Lean improvement projects is greatly simplified by havingSix Sigma training and from shared leadership just one standardized process and one set ofin regional work-stream teams. The work-streammeasurements for all businesses. Therefore, a localteams are established for major process areas suchimprovement can create a rapid multiplier effectas the claims process. These teams have explicitacross the organization as a whole.responsibilities and accountabilities to share best Scale The global standardized platform can ultimatelypractices and develop regionwide initiatives. operate cross-border with processes originating LIMRAs MarketFacts Quarterly / Summer 2009 7 5. [Figure 2] PEOPLE: SHARED LEADERSHIP NATURAL WORK TEAMSAustraliaChina 1 Hong India Japan Korea Malayasia China 2 Taiwan ThailandNewKong Zealand1New Business and Underwriting Work-Stream Team2Policyowner Services Work-Stream Team3Claims Processing Work-Stream Team Contact Center Work-Stream Team4Work-stream team leaders selected from each business in one country with subsequent steps handled by 2. Operational risk management including busi- another business in a different country to manageness continuity planning peak volumes or gain increased cost efficiency. In 3. Compliance program implementation and moni- Thomas L. Friedmans best-selling book The World Istoring. Flat, he clearly documents this macro trend of inter- connectivity based on Web-based applications andMore generally, putting in place a management system workflow automation in effect allowing processes like the Global Operations Network Model increases the to travel flat across countries. transparency and flow of information among businesses,reducing the likelihood of isolated rogue activity. Support Global Strategy As more global opportunities arise in business, an advanced standardized platformImplementation will become a significant competitive advantage.How is the Global Operations Network Model run? By Examples include global distribution partnerships, andextending the 4 Ps approach, which is a macro-structure global product development and deployment.supporting the Global Operations Network Model inInsurance Asia/Pacific. It brings all the pieces of the Risk Management Benefits will not only includeprogram together and enables the alignment of strategy significant improvement in cost, speed, and customerand execution among global, regional, and local levels. satisfaction but will support and simplify 1. Sarbanes-Oxley initiatives for effective control The components of the Model are highly transferable to otherimplementationGlobal organizations.8 LIMRAs MarketFacts Quarterly / Summer 2009 6. 1. PlanningING Insurance Asia/Pacific effectively Established and tracked process measurements or used a more comprehensive balanced scorecard key performance indicators (KPIs) framework called Towards Performance Excellence Developed risk-management control plans. both regionally and for all country-level businesses (Figures 1 and 2). The framework, developed byFurther, a number of tools were developed to facili- then-CEO ING Insurance Asia/Pacific Jacques Kemp, tate these activities, such as intranet KPI templates; emphasizes the interrelationship of each business icon-based process-maps for easy country-to-country driver (Marketing, Operations, Finance, Portfolio,comparisons; multicountry voice-of-the-customer Organization, and Reputation) in achieving overallsurvey instruments; and a KPI Dashboard for eachPerformance Excellence and establishes clear and core process showing, by country, whether it is above, concrete measures for each driver. This framework below, or on plan. was used as an overlay to the annual business plan- Organizationally, separate work-stream teams were ning process to clearly articulate planning prioritiescreated for each core process such as for the claims in each driver and align group, regional, and country process. The teams were composed of representatives organizational levels. It also served as the foundation from each country business and were led by desig- of the Global Operations Network Model to ensurenated senior operations people. Governance for the processes delivered on broader business needs.work-stream teams was established in a Workstream Each country-level business in ING Insurance Asia/Charter reviewed and approved by the Operations Pacifics region set specific performance targets for Network made up of all the business-level COOs in each of their four core processes new business, the region plus the regional COO. The work-stream claims, customer service, and call center. The targetsteams were the regional Process Owners for their covered the basic areas of process performance: cost, respective processes and were responsible for tracking speed, and quality. Further, as part of the planningand improving performance. Further, work-stream process, key projects were identified and program teams managed all cross-country projects, reviewed development metrics set.process control plans, and oversaw all local improve- ment projects in their process area.Extending the Model The Towards PerformanceExcellence tool has already been transferred from Extending the Model The KPIs and work-streamAsia/Pacific to ING Insurance Central Europe and team approach developed in ING Insurance Asia/to ING Insurance Latin America. It is importantPacific were also transferred to ING Insurance Cen-to implement the full TPE for all business drivers tral Europe. The measures, work-stream teams, and not just operations to promote consistent prior- Process Related Tools were all used in each of the 10ity setting and measurement across all areas of thecountries in ING Insurance Asia/Pacific and are allbusiness.easily extended to other businesses. Note the busi- ness line countries in the region have a diverse set of businesses covering various distribution approaches 2. Process ManagementIn ING Insurance Asia/ including dedicated and independent channels in Pacific, it was recognized that the day-to-day work of both emerging and mature markets. This breadth the businesses was done through processes. To pro- makes the Global Operations Network Model mote a process-orientation, the Operations Network relevant to a wide range of global organizations in did the following: terms of both process and business structure. Identified and mapped all core processes3. Problem Solving At the beginning of this journey Defined their scope as end-to-end (meaning they of improving the processes in ING Insurance Asia/ begin and end with the customer to promote focusPacific a number of early conclusions were reached. on the customer)First, it was determined that the processes in the busi- LIMRAs MarketFacts Quarterly / Summer 2009 9 7. nesses across the region were more similar than they analytical and reporting tools for regional projects andwere different. Second, it was realized that the pastimplementation management. Further, the region devel-level of IT investment was not correlated to process oped and refined an intranet knowledge managementperformance high IT spending didnt translate to tool with collaborative sites that were both popular andbetter business performance. And third, there waseffective.no evidence of continuous improvement in process Extending the Model When this initiative wasperformance among the businesses. Clearly somethingtransferred to ING Insurance Central Europe,was missing. the businesses in Central Europe went through a The missing element was an analytical problem-streamlined version of the initial Lean Six Sigma solving approach to systematically close processregional standardization projects and utilized the performance gaps. While there are many ap-project tools developed in Asia Pacific plus con- proaches for analytical problem solving, Lean Six ducted local voice-of-the-customer research. So Sigma was chosen because it was an established, as new countries were added to the Standardized proven methodology that could be taught to front- Process Platform there were also new opportunities line employees. to learn and add new best practices while ensuring local needs were met. The regional office subsequently developed a straightforward yet extensive training curriculum 4. People The main elements for people development covering Green Belt, Black Belt, Train-the-Trainer, involved progressing in project skills and in shared and Executive Workshops.leadership. Business-Level Projects: ING Insurance Asia/Pacific,As had been recognized by other organizations, Lean across all businesses, typically had 60 business-levelSix Sigma provides for an effective approach to Lean Six Sigma projects in progress. Using the work- stream team structures many projects were then repli- cated to other countries to further increase savings to the region.Regional Process Standardization: Once the businesses developed more maturity with the Lean Six Sigma meth- odology, regional projects were launched to standardize and optimized core processes. The work-stream teams were utilized to serve as project teams with region office support. Standardization projects were completed for all four work streams.Overall, results included improving operations effi- ciency in key client processes region-wide by 15 percent at a time when the region was growing at over 30 percent and the implementation of true straight-through process- ing (STP) for the new business/underwriting process at least two of the 10 countries, with a roll-out schedule for six more countries. Having the STP capability greatly facilitated the regions growth in bank distribution, which demanded fast, consistent performance.As part of the standardization initiative, ING Insurance Asia/Pacific refined a number of customized 10 LIMRAs MarketFacts Quarterly / Summer 2009 8. develop people in both analytical Models Initial Implementation: INGand project management skills Insurance Asia/Pacific operations functionprogressing to higher Belt levels.(across 10 countries)Further, all training workshops and Subsequent Extension of the Model: INGprograms fully promoted cross-countryInsurance Asia/Pacifics other functionsinteraction and team-building.including finance and HR (across 10 countries)Shared leadership was a hallmark of theapproach (Figure 2). Sharing programBased on this track record, the Global Opera-leadership with the local businesses createdtions Network Model can be extended to othercountry buy-in and kept headquarters staff multinational organizations in a way that willto a minimum. For example, instead of having increase overall synergy and scale benefits; anda regional head of claims, there was a claimspromote global strategies and risk management.work-stream leader who was from a business unit Ultimately, the Model can allow large organizations toand held the role in addition to their regular position. take full advantage of being multinationals by effectivelyThe work-stream leader role was highly valued by our balancing local market prowess with a world-class globalOperations executives and gave them an opportunity platform.to gain regional experience.Finally, a mainstay of the insurance business hasRobert Epner is an independentalways been sales agent contests and award ceremonies.global operational/IT consultant withAs this global operations initiative gained momentum,the question was asked: Why should salespeople have more than 20 years experience inall the fun? To remedy this situation I initiated the the financial services industry. Epner Customer Cup Awards for excellence in process per- has held multiple leadership positionsformance (based on KPIs) and Lean Six Sigma project at ING, most recently as Senior Viceresults. The Customer Cup became an annual event President and Chief of Staff for INGand was received with great enthusiasm, festivity, and Investment Management. From 2002support from our senior regional and group management. to 2008, he was based at INGs Asia/Pacific headquartersThe Customer Cup became a great motivational tool forin Hong Kong where he held the positions of Chief of Staffall the businesses.and Regional Chief Operating Officer covering 12 insuranceExtending the Model All of the above people develop- companies across 10 countries. Epners tenure with INGment approaches can be extended to other organiza- began in 1999 when he joined the Americas regional officetions. The more countries and businesses involved, in strategic marketing. He played a key leadership rolethe more opportunity there is for global rotationalduring the $7.7 billion Aetna Financial acquisition, whichassignments, work-stream leadership slots, and a included assets in the United States, Asia, and Latin Americamore vibrant awards competition. The net resultand, subsequently, led the successful Integration Team withis the rapid ramping-up of employee engagement in INGs new joint venture partner Sul America the largestthe improvement transformation. insurance company in Brazil. Before joining ING, Epner held senior positions at MetLife in both its New York and Hong Real Synergies Kong offices; marketing positions at GE Major Appliance; and In summary, ING Insurance Asia/Pacific produced a consultant role for the Michael Allen Company. He holds significant hard-dollar results through developing cus- an M.B.A. in finance from New York University and a B.S. in tomized tools and methodologies that facilitated effec- tive cross-country participation and buy-in. This approachfinance from the University of Pennsylvania The Wharton has been refined and proven over a number of years. School. Epner can be reached at 347-635-2232 (email, bob. epner@gmail.com).LIMRAs MarketFacts Quarterly / Summer 2009 11