Project Management Institute

Delivering strategic change through projects

a UK bank’s quest for world-class performance

Introduction to Lloyds TSB

Formed in 1995 from the merger between Lloyds Bank and TSB, Lloyds TSB is a leading UK-based financial services group whose businesses provide a comprehensive range of banking and financial services in the UK and overseas. At the end of 2001, total Group assets were £237 billion; market capitalization was £41.5 billion. The Group comprised over 81,000 employees.

Summary History of Lloyds Bank

The origins of Lloyds Bank stretch back to 1765, when John Taylor and Sampson Lloyd set up a private banking business in Birmingham, England. Two sons of the original partners followed in their footsteps by establishing a bank in London's Lombard Street. Eventually, this became absorbed into the Lloyds Banking Company. Over the years, Lloyds Bank expanded through a series of mergers; by 1923, Lloyds Bank had made some 50 takeovers.

A strong connection with South America began in 1918 with the acquisition of the London and River Plate Bank. The later merger with the London and Brazilian Bank resulted in the Bank of London and South America (BOLSA). In 1971, Lloyds Bank bought the controlling interest in BOLSA and merged it with Lloyds Bank Europe to form Lloyds and Bolsa International Bank. This name changed in 1974 to Lloyds Bank International (LBI) and LBI was itself merged into Lloyds Bank in 1986.

By the early 1990s, Lloyds Bank had offices in 30 countries, from Argentina to the United States. In New Zealand, an already commanding presence as the National Bank of New Zealand was further strengthened by the 1994 takeover of the Rural Bank, making it the leading provider of agricultural finance. In 1995, Cheltenham and Gloucester (C&G) joined the Lloyds Bank Group; later the same year, Lloyds Bank Group merged with TSB Group to form Lloyds TSB Group plc.

Summary History of TSB

In 1810, the Reverend Henry Duncan of Ruthwell, Dumfriesshire, Scotland, set up a bank to help his poorest parishioners save for times of hardship. It proved to be such a popular scheme that by 1818 there were 465 savings banks in Britain. The Trustee Savings Bank Association (TSBA) was established in 1887 to help the individual banks cooperate and to advise on matters of common concern.

The Central Trustee Savings Bank was set up in 1973 to provide the savings banks with a banking and clearing service. In 1975, a reorganization put 73 local institutions in place, and a later review reduced this again, to 16 regional savings banks. There was considerable growth during the 1970s and 1980s as the range of services expanded and the number of depositors increased. To keep pace, another reorganization was necessary and, in 1983, the remaining 16 savings banks gave up their individual identities to form TSB England and Wales, TSB Scotland, TSB Northern Ireland and TSB Channel Islands. The 1985 TSB Act of Parliament opened the way for the group to restructure in preparation for its stock market flotation in 1986. The following year saw a network of estate agencies set up, the acquisition of Hill Samuel Bank and Target Life, and the launch of Speedlink, Britain's first telephone banking system.

In 1995, TSB Group merged with Lloyds Bank Group to form Lloyds TSB Group plc.

Lloyds TSB—Business Overview

The main businesses and activities of the Lloyds TSB Group during 2001 were:

UK Retail Banking—Providing a full range of banking and financial services to 16 million personal and small business customers through 2,300 branches throughout the UK, as well as telephone and Internet banking services.

Mortgages—Cheltenham & Gloucester (C&G) is the Group's specialist residential mortgage provider, selling its products through branches of C&G and Lloyds TSB in England & Wales, as well as through the telephone, Internet and postal service. The Group is the third largest mortgage lender in the UK, with a market share of 9.5%.

Insurance and Investments—Scottish Widows is the Group's specialist provider of life assurance, pensions and investment products, distributed through the Lloyds TSB branch network, independent financial advisers and directly via the telephone and the Internet.

Wholesale Markets—Provides banking, treasury, large value lease finance, share registration, venture capital, factoring/invoice discounting and other related services for major UK and multinational companies, banks and institutions, and for medium-sized UK businesses.

International Banking—Provides banking and other financial services overseas in four main areas: The Americas, New Zealand, Europe and Offshore Banking.

Projects and Project Management Within Lloyds TSB

Under a governing objective of “maximizing shareholder value over time,” the key features of the Group's strategy are:

•  Becoming a leader in our chosen markets

•  Making ourselves first choice for customers

•  Driving down day-to-day operating costs.

Lloyds TSB makes extensive use of projects and programs to improve the way we conduct our business day to day. Projects are not our core business, but they are the way in which we change our core operations. Project management is driven by a central function, Group Project Services, which has three main components:

•  A project management arm, which provides a pool of specialist resources (business analysts, project and program managers) to work with business units to manage and deliver the company's major projects

•  The portfolio management team, which establishes and manages the Group's project portfolio (the company's order book for projects)

•  A policy and standards arm, which is responsible for the way projects are run within the company (a role that covers standards, training, accreditation, etc.), with the broader mission of developing Lloyds TSB's ability to deliver change through projects. This area is responsible for understanding how well we manage change through projects, and for initiating activities to improve our capability companywide.

The Increasing Need for the Effective Management of Change

While Lloyds TSB does not run projects as a line of business, we increasingly need to be good at managing change through projects, as the financial services industry becomes increasingly competitive:

Competition—Large retailers are diversifying into financial services, and there have been many new entrants. Existing players are diversifying by exploiting new channels, and there are plenty of people operating in niche markets in an effort to cherry-pick the best and most profitable customers away from organizations such as Lloyds TSB.

New technology—As the cost of new technology continues to reduce, it is altering the way that financial services are delivered to customers. Telephone Banking and Internet Banking continue to grow, and we are seeing an increasing level of globalization.

Increased regulation—We are seeing increasing attention from regulatory bodies (e.g., the Financial Services Authority in the UK) and growing pressure from independent reviews and commissions.

Customer mobility—In the past, customers of banks such as Lloyds TSB tended to stay with their bank for life. There was not much difference between one bank and another; switching from one bank was complex, and it was hard for customers to find out what the benefit of moving from one bank to another might be. Increased consumer awareness, and easier access to information about the products and services available from different providers, have meant that the tendency for customers to switch their financial services provider is becoming much more frequent.

So it is against a backdrop of real and increasing pressures for change within the financial services industry—increased competition, development of new channels, increased regulatory pressure and increased consumer awareness—that an organization such as Lloyds TSB needs to be able to change itself quickly and effectively.

Understanding Our Corporate Project Management Strengths and Weaknesses

Since the autumn of 1998, we have been working to understand how well we carry out the end-to-end process of managing change through projects and programs, and putting into place initiatives to improve our capability, with the goal of raising our capability to world-class levels.

We set up a study to examine how well we managed change through projects and programs as an organization. The team interviewed more than 50 people from 22 business units across the Lloyds TSB Group and studied six of our major programs. Interviewees ranged from project practitioners, through program and planning managers, and up to Managing Director level. We listened to their views on our relative strengths and weaknesses, and then reviewed the interview transcripts to identify the good things we do that make our projects succeed and the poor things we do that slow progress down.

Our research also extended outside the company. Our approach here had several threads:

•  We identified organizations of similar size and status who faced similar strategic and technology issues and endeavored to engage them as benchmarking partners. Within the target population of companies were such global names as GE, Coca Cola, Hewlett Packard, Microsoft and Shell, and we were able to arrange benchmarking discussions with several partners on a one-to-one basis. Lessons learned from this strand of activity include:

•  There can be a long lead time in setting up this sort of discussion.

•  Sincerity of intent and professionalism of approach is essential (otherwise the door you've worked so hard to open will quickly close.

•  Both parties need to be comfortable with the agenda and the level of information disclosed (do not expect to receive more than you are prepared to give).

•  Take care to identify the most appropriate people to speak to (these opportunities take a lot of effort to arrange, so it's essential that time spent face to face is as productive as possible).

•  Conversations may vary in depth and detail from one relationship to another (so don't rely on getting the same level of detail from every partner organization; they may not all sign up for the same level of disclosure).

•  We used our membership of a leading-edge project management benchmarking network—the project management Knowledge Networks facilitated by Human Systems Limited—to gain deeper insights. Through this forum, we were able to compare our own project management performance, at a detailed level, with the performance of the set of partner companies. This gave us a good source of cross-industry comparative data—other members included Halifax (now HBOS) and Nationwide from the financial services industry, Glaxo Wellcome and SmithKline Beecham (now GlaxoSmithKline) from pharmaceuticals, and others from a variety of industries—e.g., Consignia plc (who operate the UK's postal service), the INFRACO companies (who manage and operate London Underground) and Cable & Wireless Global. Lessons learned from this strand of activity include:

•  This type of forum is useful for ongoing benchmark data.

•  The level of comparative information obtained is consistent across participating organizations.

•  The agenda is driven by the voting of members (so unless you can persuade other members to support your agenda, it may not satisfy all your information needs).

•  Information disclosed to the network is protected by a suite of reciprocal confidentiality agreements.

•  Member working parties are convened to tackle issues of common interest.

•  Informal discussions outside the formal network proceedings are comparatively easy to set up, as key contacts are known and relationships are already established (indeed, most participants welcome such extended conversations).

•  Support for this type of network is growing, and as a result access to a wider pool of benchmark data is growing (Human Systems facilitate cross-industry networks in the UK and Europe, in Australia and in North America, and also one specifically for the Pharmaceutical industry).

•  We invited a group of experienced people from a cross-section of UK industries to attend a series of informal discussions. Attendees were not representing their company but attended as individuals, and were free to air their own views, derived from their years of experience. Lessons learned from this strand of activity include:

•  The issues concerning depth of information exchanged and lead time to arrange are similar to those connected with one-to-one benchmarking discussions.

•  This can be a particularly rich source of information, but having set topics gives focus to the discussions.

•  At some stage, acknowledge that the agenda will dry up, and the parties will then drift apart.

•  We explored what the professional associations—the Association for Project Management (APM) in the UK and the Project Management Institute (PMI®) in the USA—were doing, in order to find out what was on their agenda and their views of best practice. We also established dialogs with the academic world's leading lights in the field of project management. Some of the people with whom we have had recent conversations include Peter Morris (formerly of UMIST, now with University College London), Francis Hartman (from the University of Calgary), Rodney Turner (from Erasmus University in Rotterdam), and Bill Ibbs (from the University of California at Berkeley). Lessons learned from this strand of activity include:

•  Knowing what the profession's “thought leaders” have on their radar (some of which might be relevant, some of it not) allowed us to tune into “direction setting activities” and to factor this into our plans.

•  These discussions have given us the opportunity to engage in relevant research work—for example, Lloyds TSB are active members of PMI's Organizational Project Management Maturity Modeling project (see below), and have taken part in research studies being run by several of the academic institutions listed above.

•  Attendance at conferences, including PMI's own Seminars and Symposium in Philadelphia in 1999, in Houston in 2000, the World Congress on Project Management in London in May 2000 and

PMI's first Research Conference held in Paris in June 2000. As attendance at international conferences remains comparatively expensive, we made every effort to derive every ounce of learning and insight from the presentations that were given; and of course they provided a tremendous opportunity to establish direct contact with potential partner organizations. Through the PMI events in particular, we have been able to see what other organizations are doing in the subject areas we are trying to address, and (in a number of cases) open the communication channel between us.

Taking all these external activities into account, we were able to develop a well-informed view of what constituted leading-edge project and change management practice in organizations outside of Lloyds TSB, compare that to the findings from our internal research and factor it into our action plan.

Constructing the Assessment of Our Corporate Project Management Capability

Realizing that there was no “industry-standard mechanism” for assessing an organization's capability to manage change through projects, we had to develop our own. A review of our internal and external findings identified 26 major topics, which we classified under five broad headings—Leadership, Strategic Alignment (making sure we are all pulling in the same direction), Culture, Commitment and Project Management (which includes methods and approach).

Within these five main headings we developed evidence-based criteria and a scoring mechanism (using a seven-point scale) for each of the 26 topics, which we used to evaluate our own performance and draw comparisons with external organizations. We produced both a summary and a detailed performance assessment, plotting our own results against the best of what we'd seen from our research into other organizations. We saw that we had some obvious strengths—for example, some program management practices within our initiative to prepare Lloyds TSB for the first phases of European Monetary Union compared favorably with anything we had found externally, from which we could deduce that we were capable (at least in pockets) of leading-edge practice; but we also saw room for improvement. Interestingly, we concluded that none of our external partners excelled in all dimensions.

Having identified the gaps, we then came up with some propositions as to what we had to do to close the gaps—and to deliver some real benefits:

•  Reduced project cost and time overrun

•  Earlier delivery of benefits, and full and enhanced benefits capture

•  Improved management information and decision-making.

Our agreed actions spanned three dimensions—improving the construction and management of the Group's portfolio and its alignment to strategy, improving performance within individual projects, and improving the corporate environment within which projects are conducted. This was be achieved by:

•  Developing our portfolio management processes to ensure that our investment in projects across the Group is aligned to strategic direction

•  Working to improve our return on investment in projects

•  Taking steps toward the automation of the end-to-end project management process by making our guidance materials more widely available across the Group, as well as working to extend our supporting standards and training to build change management (as opposed to project delivery) skills across the Group

•  Improving practitioner skills through the adoption of best practice, continuous improvement of our approach and the establishment of a project practitioner community to facilitate knowledge sharing

•  Developing a dashboard of systematic measures to track the development of our change management capability.

Progress and Ongoing Appraisal

Three years on, we are now seeing the fruits of our labors. An independent assessment of our progress undertaken in April 2001 showed a significant improvement in the areas of Strategic Alignment and Leadership, with some improvement in Commitment, Project Management and Culture.

Major progress has been made in the area of Strategic Alignment, with the introduction of a Group-wide Portfolio Management process. Our first step adopted a distributed approach, in which we created a network of 10 linked project portfolios (one for each operating division and one for each major program). We used this approach for the construction of the Group-wide project portfolio for 2001, providing our top team with an end to end process for ensuring that investment in change was focused to meet strategic business objectives, and which dovetailed with the corporate planning and budgeting processes. This enabled the top team to see the complete picture when trying to balance project investment and corporate budget/performance targets.

Closely linked to our work on improving the alignment of projects to strategy are our efforts to improve the delivery of benefits from projects. We are now better able to establish the links between projects/programs and strategic objectives, leading to improved project selection and optimized project investment decisions and, downstream, robust benefits management plans and increased confidence in benefits delivery.

We now provide our guidance materials faster, more responsively and to a wider audience. We have moved away from paper-based delivery to electronic distribution mechanisms, replacing the 4,000+ copies of the organization's project management standards that were previously in circulation with electronic access. This has not only dramatically reduced the unit cost of providing guidance information, but has also enabled us to provide this information more effectively and more responsively. We have achieved our short-term goal by providing access to the Group's Project Standards (and additional materials such as Lessons Learned, Tools and Techniques and Training Materials) from the desktop/laptop via Intranet and via CD-ROM; looking ahead, we are aiming to “e-enable” the end-to-end project management process.

Lloyds TSB's project management training courses are now available Group-wide through the University for Lloyds TSB's “Project Professional” scheme. More than 1,000 practitioners have registered for this three-level education program. Each level is accredited by the University for Lloyds TSB; people who successfully complete the three internal levels can sit for an external qualification—the Association for Project Management's APMP (APM Professional) qualification. We are now working to introduce 2nd and 3rd tier project management professional qualifications into this framework.

Continuous learning and sharing of knowledge are critical to developing world-class change management capability. The traditional mechanism for capturing experience has been through formal review processes (PIRs). Whilst these are included in the Group's standards, all too often reviews rarely lead to learning from experience or share of knowledge with others (Cooke-Davies, 2000). Evidence from leading companies such as NASA (Hoffman, 1999) suggests a need to encourage active learning throughout the project life cycle, under-pinned by an appropriate technical infrastructure. So while technical infrastructure is an essential component, the introduction of technical mechanisms and procedures is of little value if practitioners are not motivated to share their experiences or to seek the knowledge of others before embarking on a major initiative. We are therefore establishing a “community of practitioners” (Crawford & Cooke-Davies, 1999), creating opportunities for practitioners to share experience and engage in the continuous improvement of the Group's methods. By engaging the practitioners themselves in the promotion and development of the Group's tools and methods, we believe that we can best ensure that the Group's tools and methods will be effectively applied, with a corresponding improvement in project delivery capability.

We have also refined the mechanisms by which we measure our corporate change management effectiveness. While our original assessment mechanism (with its 26 topics grouped under five major headings) was a useful device for gaining executive attention in the early stages of our work, it is labor-intensive to maintain (as it involves conducting many interviews). We now use a dashboard of measures that are gathered regularly and systematically to track our progress, and use the original mechanism for repeat assessments, which we plan to conduct at two-year intervals. The dashboard of measures we use in its place establishes a direct link between our activities to develop project management capabilities and outcomes which senior executives regard as desirable. Within Lloyds TSB—as with many other organizations—projects and programs are the vehicles by which corporate strategies are implemented. Our dashboard helps us show how improving project management capability—which can all too often be regarded as “nice to have” rather than “essential for survival in a competitive world”—can directly influence the speed, cost, and quality of the implementation of corporate strategies and return on investment. It allows us to show, in graphical form, where our improvement efforts are focused and the improvements we expect to make. As our improvement initiatives unfold, we can see whether the expected results actually flow through to the measures we collect. In this respect, the dashboard is a powerful tool not only for illustrating our current capability and for showing where improvement is required, but also for tracking the progress and impact of our improvement initiatives.

At this stage, it is appropriate to reference the link that this work has with the Project Management Institute's Organizational Project Management Maturity Model (OPM3) project. The aim of the OPM3 project (Schlichter & Skulmoski, 2000) is to develop an international standard for measuring and growing organizational project capabilities. Lloyds TSB's agenda and the agenda of the OPM3 project are directly aligned—both are trying to identify what activities an organization needs to pursue in order to grow its project management capability, how those activities link together, the stages of progression, the sequence and the performance measures. Lloyds TSB are playing an active role in the Alpha and Beta testing of the model prior to release.

Key Learning Points/Conclusions

My purpose in writing this paper was twofold:

•  To share with fellow practitioners some of the insights we have developed during our quest to improve organizational project management capability, and to offer some tips on how to tackle such an activity

•  To illustrate the sincerity of Lloyds TSB's intent to become world class in the management of change through projects, and to state why that is so important (it is essential for survival in a competitive world).

On a personal level, the journey has been richly rewarding. It has opened my eyes to the global nature of project management, and has allowed me to work with and learn from industry leaders and thought leaders from around the world, both face-to-face and via the Internet. My advice to anyone planning a similar activity is to cast the net wide; there are many rewards to be found.

The key challenge remains one of “demonstrating cause and ef-fect”—and it is in this area that our dashboard of measures has served us well. It has helped us to demonstrate that the capability improvement initiatives we put in place have a direct impact on our corporate ability to manage change through projects in terms which senior executives find compelling.

Despite the good progress we have made, we cannot afford to be complacent. In order to continue to grow our capability, it is essential that we sustain and extend our conversations with the best practitioners and the best researchers in the world of project management. If any of readers this paper are sincere about developing project management capability, I hope that you will now consider Lloyds TSB as a potential partner in your work going forward. I can be contacted by email at nick.warrillow@lloydstsb.co.uk

References

Cooke-Davies, Terry. 2000. “Knowledge Management In Project-Based Organisations.” 15th IPMA World Congress on Project Management, May 2000.

Hoffman, Edward. 1999. “The Learning Through Stories Project: How The Best Leaders In Defense, NASA And Across Government Make Things Happen.” PMI '99, October 1999.

Crawford, Lynne, & Cooke-Davies, Terry. 1999. “Enhancing Corporate Performance Through Sustainable Project Management Communities.” PMI '99, October 1999.

Schlichter, John, & Skulmoski, Greg. 2000. “Organizational Project Management Maturity: New Frontiers.” 15th IPMA World Congress on Project Management, May 2000.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
October 3–10, 2002 • San Antonio, Texas, USA

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