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By 2005, AXA had become one of the world's largest and most successful insurance companies, but Claude

Brunet, Member of the Management Board, in charge of Transversal Operations, Communication, Marketing and Human Resources, believed that to achieve its ambitions the company was going to have to become much more customer focused. AXA Way, a culture change program that included many elements of Six Sigma philosophy and methodology, was the spearhead of this change. The case describes the AXA Way program, the challenges of its implementation, and how AXA overcame those challenges. Learning objectives: Understand how to manage the culture change necessary to improve customer service using Six Sigma. Six Sigma is sometimes seen as a technical change, as just a methodology, but change in attitude and mindset--in culture--are required for Six Sigma to succeed. Understand how Six Sigma can be successfully adopted in a service industry.

The case discusses the implementation of process improvement technique called 'The AXA Way' in AXA, a France based insurance and wealth management company. In a span of two decades, AXA went in for several mergers and acquisitions and gained global presence. In order to improve the quality of its services, the company launched 'AXA Way,' which involved the application of DMAIC principles. The AXA Way was a continuous improvement program that focused on improving the existing processes and making them more customeroriented. The case also describes the benefits reaped by AXA after implementing the program including cost reduction and customer retention.

Issues:
Study the importance of 'Six Sigma' quality in the service industry Examine the systems employed by AXA to improve the quality of its services Understand benefits of process improvement and making services customer-oriented Appreciate the benefits reaped by AXA by adopting 'The AXA Way' program

The Problems
The late 1990s and early 2000s presented many challenges for the global insurance industry. Major events that affected the global economy were the oil price hikes in 1999 and 2000, and the burst of the speculative bubble in technology stocks. The year 2001 witnessed a global economic slowdown, which resulted in a decline in corporate earnings. The insurance industry was among the worst hit and underperformed the general indices. Lower equity returns,low interest and high default rates - all had a negative effect on the industry. The September 11, 2001 terrorist attacks in the US resulted in total insurance claims of over US$ 70 billion...

The AXA Way

AXA had set priorities which included strengthening the group's businesses in most developed and high potential markets like Western Europe, North America and in selected countries in the Asia Pacific region. Another priority was to achieve operational excellence in each market by leveraging organic growth and improving quality and productivity. In 2002, when AXAmeasured its customer satisfaction , the score was 53, with defaults at about 20%, thus presenting great scope for improvement...

Reaping the Benefits


By the first half of the year 2005, AXAhad more than 400 Black Belts and 10,000 employees had been sensitized to the AXA Way. By then, the AXA Way had been launched in 23 of its companies which accounted for 90% of the group's revenues. The implementation of the AXA Way helped in improving customer satisfaction atAXA. This was revealed through the Scope survey on customers conducted in 16 countries, which accounted for 94% of group's revenues. Customer satisfaction on servicing had increased to 69% during the first half of 2005 as compared to 64% in the corresponding half of the year 2004...

"If you want to innovate, you must always do so in a cost-effective, predictable way, and for that you must master your processes. Excellent manufacturers know how to do this. We will, too"1
- Claude Brunet, Member, AXA Management Board in 2005.

"This (AXA Way) is a powerful tool that harnesses all of the internal energies we have to mobilize in order to step up the pace of our quest for operational excellence."2
- Henri de Castries, Chairman, Management Board, AXA Group in 2003.

Improving Customer Satisfaction


France based insurance and investment management conglomerate; AXA Group3's operations were spread across the world. In the year 2001, the company's German operations had some difficulty in retaining customers. The company conducted a survey and found that although most customers wanted to obtain accurate information about the loss and claims processes, in writing, only 22% of the company's customers were actually receiving such information. The customers also expected to receive such information within the span of one week. However, in most cases, AXA Germany was unable to provide the information in the specified time frame. The main reason was that the processing of claims in the company was geared to the needs and ease of operations of those working in the company, rather than the needs and preferences of the customers. To overcome this problem, a team from the company took feedback from customers on claims-related services

being provided to them. Having understood their requirements, the team devised a specimen letter, which informed the customers about how their claim was being settled, the details of the employee from AXA who was looking into the matter and how to go about settling their claims. Letters on these lines were, from then on, dispatched to all the customers who filed for claims. The result of these efforts was instantaneous. The number of calls the customer service center received about claims-related information reduced by half. The retention rate increased, and customers came back to AXA. The change in the company's outlook towards its customers could be attributed to 'the AXA Way,' a continuous improvement program launched by AXA in 2002, to achieve operational excellence and bring about changes in its business processes based on customer feedback.

The parent company of AXA, Mutuelle Contre de l'Assurance contre l'incendie (MCI), was founded in 1816 by Jacques-Thodore le Carpentierand 17 other entrepreneurs. The company was located at Rouen4 and was established as a fire insurance company. For a period of five years, every shareholder in the company was both insurer and insured party. This was the beginning of a mutual company, where the company was owned by insured parties. With growing competition from companies like La Providence (founded in 1838) and La Paternelle (founded in 1843), MCI decided to diversify and develop its activities. For this purpose two companies were created, Mutualit Immobilire and Mutualit Mobilire for insuring movable risks; these companies started operating in 1847. In the 1850s, the companies expanded their activities across France and started covering real estate risks. In 1881, the companies merged under the name Ancienne Mutuelle (AM). In 1922, AM began offering automobile insurance under the name - AM Accidents. During the Second World War, in 1944, the company's offices were bombed by US forces. The accident and life insurance divisions were not severely affected by the war, but tighter controls became necessary. This led to constitution of Groupe AM in 1946, under the leadership of Andr Sahut d'Izarn. The company's first merger, with AM du Calvados, took place in 1946. In the following decade,AM acquired Mutuelle d'Orlans,Mutualit Grale life insurance company and La Participation. In 1955, AM ventured overseas, starting its operations in

Quebec, Canada. In 1958,Claude Bbar (Bbar) joined the group as a senior manager. Bbar was sent to Canada on an assignment and he developed the Canadian subsidiary of AMnamed Provinces Unies. After the death of Andr Sahut d'Izarn in 1972, the company went through a turbulent period. In 1974, activities at AM were paralyzed for over two months, owing to a strike in the company. Bbar's successful resolution of the strike impressed the board members and he was brought in as Chairman in 1975. Bbar brought in several changes beginnning with a change in name of the company. AM was renamed Mutuelles Unies (MU) in 1978. In the same year, MUacquired another French company, Compagnie Parisienne de Garantie...