## ENTERPRISE - WIDE STRATEGIC  MANAGEMENT 

## Strategic Ob jective 

Our strategic objective is to be a leading transnational financial services provider by c ontinuing to invest in our core Canadian franchise, expanding selectively and substantially in the United States and building on our long-standing capabilities. 

As a leading transnational financial services provider, in five years BMO envisions being: 

b recognized as a key player in selected regions or business niches in North America; 

b significantly larger in size, with most of the growth in the United States; 

b a demonstrated leader in selected businesses such as small business and co mmercial banking, mid-market investment banking, full-service investing, personal banking and private banking, including trust and discretionary asset ma nagement; and 

b recognized for delivering top-tier shareholder returns through a focus on improvi ng operating efficiency and business growth. 

b Achieve top-tier customer loyalty among personal and commercial customers in Canada. 

b Achieve the number one market share in small business banking in Canada. 

b Maintain leading investment banking positions in Canada and further build out our mid-market capabilities in the United States. 

b Build out franchises in the prime wealth markets in the United States. 

b Become the dominant full-service bank in the Chicagoland area. 

b Maintain market-leading risk management capabilities. 

b Enhance leading positions in talent management, performance alignment, diversity and employee engagement. 

## Enterprise-Wide Strategic Management 

Developing a specialized competency in strategic management has been an important priority for BMO. This competency is embedded across the organization, providing BMO with a com- parative advantage in the marketplace. Strategies are developed at the line of business level, and in turn support operating group and enterprise level strategies. The results of this effort are pre- sented in the Review of Operating Groups Performance section of this MD&A, demonstrating that BMO’s enterprise strategy clearly reflects the group and line of business strategies, which are well-grounded in proven strengths and capabilities. 

Strategic management includes coordinating standards and activities related to establishing corporate targets and line of business financial and strategic commitments, developing and updating strategies, optimally employing resources, tracking and managing performance against commitments and linking com- pensation to performance. 

Operating in accordance with these strategic management stan- dards promotes dialogue about the highest-value strategic issues, ensures comparability in assessing investment opportunities, and enables effective business mix and resource allocation decisions. 

## Strategic Management Standards and Processes 

b BMO’s Office of Strategic Management (OSM) is responsible for guiding the development and implementation of strate- gies. Through the OSM, processes are designed, developed and implemented to support effective strategic management decision-making throughout the enterprise. 

b Clear and concise strategic management standards and meas- ures are documented and are communicated through formal and informal training and coaching. 

## Strategic Milestones 

b Shortfall relative to the average has narrowed. 

b Leader in growth in market share, up to 19.48% from 19.04%. 

b Number one in equity research for 22 years, number one in equity block trading; launched the U.S. equity derivatives business. 

b Entered majority of targeted wealth markets through four acquisitions. 

b Deposit growth of 8.3%, well above the target of 5%. 

b Five-year average loan losses of 35 bps versus 48 bps for peers. 

b NamedaGLYPH<210>Top100EmployerGLYPH<211> ,placedintheGLYPH<210>NorthAmericanTop25inTrain- ingGLYPH<211> and awarded the GLYPH<210>Gold Standard for Employee Assistance ProgramGLYPH<211>. 

b Strategies are developed for each line of business using a rigor- oussetofstandards.Thesestandardsincludeariskassessment, completed in conjunction with Risk Management Group, and an analysis of alternatives to ensure that the highest-value strategy is selected. 

b These line of business strategies provide the foundation for the development of the financial plan. 

b Financial and strategic performance commitments are tracked and managed to monitor the implementation of strategies and to measure performance against milestones. 

b Line of business and group strategies are regularly updated. The frequency of update is influenced by performance tracking, with reviews prompted by significant variances from com- mitted financial or strategic performance targets. 

b Value creation opportunities are identified through the strat- egy development process and resources are directed toward value-creating businesses. 

## Strategic Governance 

b Each line of business is responsible for developing and execut- ing strategies and for ongoing monitoring. 

The OSM, which reports directly to the Chief Executive Offi- cer, oversees strategic activities and ensures adherence to standards. 

b Strategies are approved by BMO’s Management Board Execu- tive Committee. 

b Group strategies, significant line of business strategies and significant change management initiatives are approved by the Board of Directors. 

b A Board Strategy Session is held annually in which all group strategies are reviewed and discussed by the Board and BMO’s Management Board Executive Committee. 

## Progress in 2002 

