The RBS team featured Barry Varcoe (right) and Barry Horrell (left). Joining them was Greg Schementi of awards co-sponsor Equis Corp.

Royal Bank of Scotland (RBS) is one of the world's largest banks, and you'd think it embodies the traditional image of staid management for which financial institutions are known.

But RBS belies that image, not only as a fast-growth global enterprise, but through its “Embedded Culture of Innovation,” a comprehensive set of methods and approaches driven by corporate real estate. The culture, according to Head of Group Workplace Operations (GWO) Barry Varcoe, has won the support of senior management because as it permeates almost every aspect of internal support services, it provides an integrated platform for real estate and workplace to add strategic value to the enterprise.

“Innovation is our innovation,” Varcoe stressed. “Our innovation strategy has been a key enabler of our achievements and strategic alignment to the business. All innovation programs are prioritized and aligned to one of our strategic objectives. At a holistic level, our innovation strategy has transformed a part of the business that was, prior to 2002, seen to be apathetic and unglamorous, into a significant contributor to the development, expansion and agility of the whole RBS Group. GWO innovation has driven cultural change and is now fast becoming a way of life. We have reduced like-for-like costs by 20% while increasing and maintaining customer satisfaction by a similar amount.”

The program stretches across all areas of the bank's operations except for its emerging North America markets.

For example, the RBS “Front of House” concept was launched as a series of pilot projects in 26 buildings across northern U.K. city centers. “The basis of Front of House is to invest in the quality of service delivery and overall 'experience' received by workplace users through an integrated 'one team' approach,” Varcoe said.

“We used the first wave of this initiative to learn about how to profile user needs and customize the integrated services to match. We have now extended this to 126 sites across the UK, benefiting up to 20,000 of our staff. As part of this RBS are the first UK corporate franchisee of 'Starbucks' coffee.”

Varcoe added that the bank is now turning its attention to the occupation of its new world headquarters campus in Edinburgh, highlighted by a 'street' concept. “Drawing on service excellence 'exemplars' such as Ritz-Carlton, we have been training our service provider teams to a new level of capability,” Varcoe commented. “This is augmented by the recruitment of a 'Street Manager' who not only looks after all aspects of service in the key spine of the complex, but is also responsible for a continuous program of events to complete the world class experience for our internal customers and other stakeholders.”

The coordinated and measured management of suppliers is another key focus of the embedded culture of innovation, according to Varcoe.

“We have continued our supplier engagement strategy of matching the most appropriate method for the nature and type of relationship required. This has included extending our reverse auctioning program - which achieved a 9% saving in the first tranche of contracts - to successfully include construction contractors, property consultants and photocopiers.”

Varcoe shard the outlook that “we fully engage with our suppliers to leverage their extensive knowledge. We invited our key suppliers who undertake 80% of our $380-million outsourced work to join with us in forming an Innovation Round Table. For 2005-06, we have initiated a zero-defects-in-services program.”

The GWO is also funding a full time researcher for three years to undertake “action research” in support of the roundtable.

Another initiative aims to improve RBS's collective performance management and analysis capabilities and is also research-based.

This year saw the launch of our Workplace Innovation Centre (WIC) in the Bartlett School at University College London,” Varcoe related. “This center is funded exclusively by GWO and has a staff of two full-time researchers plus a director and office staff. Our research is coordinated in-house by our full time innovation manager. The WIC is now coordinating all our research-oriented innovation activities, which for 2005 sees us working in synergy with a number of cutting-edge researchers in major corporate real estate and facilities management centers around the U.K.”

Of course, process management is also a centerpiece of the bank's innovation strategy.

Varcoe reported, “In 2004 we process-mapped our entire GWO operation. These are available via an interactive intranet site. This operational business support library, which is maintained by a network of owners and advocates, is our process map hub. We now use this as the basis for continuous improvement initiatives.”

Process control is yielding good results, he said. “During the last 12 months we have held 11 'workouts', saving about $2-million and 28,000 man-hours. We have now commenced a second phase of process improvement, based on a $20,000 feasibility study on cutting-edge process management concepts with the University of Salford. Our approach allows a common, integrated, and systemic platform to operate across all GWO operations and our supplier base.”

Next in the process area is a Lean Manufacturing training initiative, which seeks to take the production rigor of the manufacturing or processing environment and transfer it to the often 'looser' world of customer service. “We are already finding through this that efficiency and effectiveness go 'hand-in-hand' - improving cycle time, for example, creating a positive impact on customer delivery,” Varcoe remarked.

Promoting and making real the actual culture of innovation is another focus.

“Embedding an innovation culture amongst our staff has been of prime importance. It makes innovativeness sustainable, and allows everyone to fulfill their potential. This has been nurtured in a number of ways. One is that we have established a network of GWO Innovation Champions throughout the country who stimulate and encourage innovation activity throughout GWO, organize local workshops, set up local innovation teams, and help push ideas forward,” Varcoe explained.

“We now have a pipeline of ideas for deployment, ideally one every two months or so - simple innovations which are engineered to make the day-to-day work life of our staff that little bit easier. These give our people the tools and confidence to embrace innovation as the way we do work,” summarized Varcoe.