0905 The CEO Challenge Creating A Culture Of Growth, Innovation & Leadership

Asia/Pacific Chairman’s Series on Growth

The CEO Challenge:

Developing a Culture of Growth, Innovation and Leadership

26 May, 2009

Today’s Presenters

Craig BatyGlobal VP, IT Practice

Frost & Sullivan

Sydney

Moderator:

Michael Buchholz

VP, Marketing, APAC

Frost & Sullivan

Warren ParryManaging Director

Change Track Research

Sydney

Agenda

1. Recap on poll results from the previous webcast

2. Brief overview: Where we are in the series

3. The CEO’s Challenge: Creating the Growth, Innovation and Leadership

(GIL) culture

4. What the CEO can do to develop a GIL culture?

5. Alignment of the CEO’s vision and staff

6. Best practices in the development of a GIL culture

7. Serious about growth: Next steps

Polling Responses from April APAC/J CSG

1. With regard to growth strategies, which challenges exist in your company?

Company is not in alignment on vision

0.0%

The company culture does not support fast growth

33.3%

We are great at strategy and poor at implementation

66.6%

We are great at implementation and poor at strategy

33.3%

We do not properly evaluate growth opportunities

0.0%

We have no ability to create future scenarios for strategy development

0.0%

2. How would you rate your company’s ability to generate a powerful growth strategy?Highly Successful

0.0%

Good

50.0%

Average

25.0%

Poor

25.0%

We are lost

0.0%


3. How would you rate your company’s ability to implement a powerful growth strategy? Highly Successful

0.0%

Good

33.3%

Average

0.0%

Poor

66.6%

We are lost

0.0%

4. Looking in the rear view mirror, How would you rate your company’s historic growth performance relative to your top competitors?

The best0.0%

About the same50.0%

Somewhat worse50.0%

Significantly worse0.0%

Don't Know0.0%


Looking forward, relative to your industries top competitors how would you rate your company’s future growth potential?The best

0.0%

About the same

100.0%

Somewhat worse

0.0%

Significantly worse

0.0%

Don't know

0.0%

The Growth Acceleration System

What is a Growth, Innovation and Leadership (GIL) Culture?

• Teamwork is Focused on Growth

• Business Units, Regional Units Cooperate to Drive Growth

• An Innovative, Dynamic, Trusting and Fun Environment

• Leaders are Humble, Team Players, and Inspirational

• Communication and Collaboration on Vision

• Visionary Leaders Who Set the Standard

• Growth is Celebrated

Developing a Growth, Innovation and Leadership Culture

• The Human Element of Success

• An Inspiring Vision: Total Shareholder Return Doesn’t Work

• Focused on Leadership Skills

• GIL Culture Sits on CEO’s Desk

• Continuing Research into GIL Culture

• The Top 10 To Do’s for GIL

• A Best Practice Case History

Specific activities performed to solve a tough business

challenge that 9 out of 10 companies are NOT performing

but SHOULD, with measurable results proving

effectiveness

Definition: What is Best Practice?

Olympic Performance

Measure and forecast the future growth potential of your company vs. the competitors

Growth Excellence Matrix: Future Growth Potential

� New York� KL

©2008 Dialect, all rights reserved

Warren ParryManaging Director

Change Track Research

Sydney

[email protected]

Introducing our Guest Speaker…

1 • © CTRE Pty. Ltd. 2009 • Presentation: Inside ChangeTracking® • 25/05/2009

FOR USE BY CTRE

Creating a Culture of Growth,

Innovation and Leadership

It is not enough to state, We need to Grow or to implement processes that you want your team to follow to achieve growth. Nor is it enough to simply instruct the individuals and departments responsible for driving growth.

It is the behaviour, beliefs, and the establishment of a growth-focused culture that lead to successful growth. By establishing a culture of growth, you will ensure that all members of the organisation understand and participate in driving the organisation to be on the forefront of innovation and leadership.

Managers are struggling to identify the underlying drivers of high performance change and looking in the wrong place to find the answers.


FOR USE BY CTRE

ChangeTracking® is the result of extensive research over 9 years linking people, change and business performance

Comprehensive database built from over 280,000

individuals in more than 250 companies undergoing

change across industries, nationalities and

languages:- Government

- Financial services

- Health services

- Mining and Resources

- Manufacturing

- Engineering

- Energy Utility

- Pharmaceutical, Motoring, Sanitation, Biotech

- Telecommunications

Delivering benefit to change stakeholders:

Transformation, SAP/IT enabled change, new business strategy,

IT systems implementation, manufacturing best practice, global

post-merger integration, building an environment to foster scientific

innovation, cost management, occupational health and safety

research, emergency department performance improvement, shared

services implementation, change risk assessment, culture change

Transformation

Restructure (Reorg)

Cost management (Reorg)

IT implementation (Reorg)

Merger/Aquistion (reorg)

Shared Services (Reorg)

Culture change

Performance Improve

2%

22%

3%

15%

0%12%5%

0%

13%

7%

11%

1%

0%

9%

0%Transport

Consulting

Telecommunications

Utilities

Banking

Insurance

Government

Community services

Defence

Health Services

Manufacturing

Pharmaceutical

Resources

Oil and Gas

Communications and Media

35

19

1

22

1714

42

31


FOR USE BY CTRE

Feb Mar April May Jun July Aug Sept Oct Nov Dec Jan Feb Mar

Project preparation

Business blueprint

Final preparation

Go live and support

Continuous improvement

Off TrackDeclining

Performance and low Change

Capability

UnsustainableBetter Performance Improvement but

low Change Capability

On TrackGood Performance

Improvement and above the norm Change Capability

Groups that improve performance across times of change define the benchmarks for high performance

Performance

Our research shows 1 in 9 work groups improve their performance across times of change

With the best intentions the norm on change projects is that they typically take longer than planned and cost more – 16% of projects hit their targets– 18% average overrun on budgets – 23% average over run on schedule– 7% do not achieve scope/functionalityThe state of IT project management in UK 2002–2003, Chris Sauer and Christine Cuthbertson, University of Oxford Stage of project

High Performance

Peak Performance and high Change

Capability


FOR USE BY CTRE

What is ChangeTracking®?

Leaders implementing change need to know what actions to take that will give them the best chance of success

ChangeTracking shows leaders if their change is on track?- properly defined and resourced- are people actively engaged- will deliver required financial outcomes- in the shortest possible time - with the highest probability of success

………where change is off track,ChangeTracking shows the corrective actions that are required

Acquisition, Restructuring, ERP, Merger, Cost Reduction, Turnaround, Culture Change, CRM, Growth, BPR, New Strategy, Transformation, Downsizing…


FOR USE BY CTRE

Validated research that sits behind ChangeTrackinghas proven what drives performance improvement

Improving business

performance

Realising Business Benefits

Change Capability

Performance

Is the change on track to high performance?

Turbulence Resources Aligned Direction

Change Leadership

Work Roles

Emotional Energy

Dri

vers

Passion and Drive

Training and Capability

Vision and Direction

ManagementCommitment

Team Leadership

Risks and Roadblocks

Changes Taking Place

DisturbanceSystems and

ProcessesCommunication

Involvement

AccountabilityClu

ster

s

ChangeTracking measures the extent to which the benefits of the change program have been realised, whether or not business performance is improving or declining while change takes place, and the strength of six change Drivers


FOR USE BY CTRE

New knowledge has provided hard evidence about what is important to deliver high performance change

Change Leadership

Systems and Processes

Risk and Roadblocks

Passion and Drive

Involvement

Disturbance

Vision and Direction

Team Leadership

Communication

Training and Information

AccountabilitySource: ChangeTrack Research (R2=0.482, N=41725)

High negative High positive

Relative importance of factor in driving improvement in

business performance


FOR USE BY CTRE

Our research shows what is required to bring about a New Way of Working, changes in Culture, Values and Attitude?

> Clear direction, a positive team spirit> Clear direction, a positive team spirit

Culture change

1. Cultural Change must be linked to Company performance improvement

2. Teams must be actively involved in managing change

3. Individuals must have

something at stake

Primary drivers Secondary drivers

> Emotionally Engaged Leaders

> Strength to face the challenge

People must be actively involved in planning and implementing change in their team and willing to initiate change

Emotional agreement to the vision and high confidence and trust in the leadership

When there is a degree of personal risk and urgency because of the change

People need to understand the vision, feel valued and have clear performance objectives

People feel a degree of fear, but are not thinking of leaving

People must be confidence that the culture change program will improve company performance and need to see signs of improvement in effectiveness and cost management

Culture change

1. Cultural Change must be linked to Company performance improvement

2. Teams must be actively involved in managing change

3. Individuals must have

something at stake

Primary drivers Secondary drivers

> Emotionally Engaged Leaders

> Strength to face the challenge

People must be actively involved in planning and implementing change in their team and willing to initiate change

Emotional agreement to the vision and high confidence and trust in the leadership

When there is a degree of personal risk and urgency because of the change

People need to understand the vision, feel valued and have clear performance objectives

People feel a degree of fear, but are not thinking of leaving

People must be confident that the culture change program will improve company performance and need to see signs of improvement in effectiveness and cost management


FOR USE BY CTRE

Breaking the cost-cutting cycle

1. Co st-cutting b eg ins. In to ug h tim es manag ers

fo cus o n increasing

acco untab ility to achieve co st reductio n.

2. Co st-cutting g o es too far. Manag ers then find staff spirit

suffers, so they p lace a

g reater emp hasis o n m aking p eop le feel b etter.

3. Lead ership training , creativity and innovatio n

p rog ram s are put in

p lace.

5. The cycle o f co st-cutting b egins ag ain.

4. Acco untab ility is fo rg o tten fo r the

tim e b eing and co sts

creep up again.


FOR USE BY CTRE

Change is off track 3 months after go-live, a major IT system had been installed and not implemented - $3.8 million over budget,

1000 manual overrides on the new system…

When change is off track the impact ripples through reporting levels in different ways - here,

there is a disconnect between the Driver profile for managers and those reporting to them

Team Member

Other

Team Leader

Manager

AccountabilityChange Leadership Passion & Drive DisturbanceInvolvementVisionDirection

Communication Management Skills Feeling Valued

Aligned Direction Engagement Emotional EnergyTeam Leadership

Vision declines under leaders

Communication is OK

Management Skills are OK but not great

Accountability is low at all levels

Disturbance is too high

Case study 1:Bringing an IT implementation back on track


FOR USE BY CTRE

The large gains in cost effectiveness was achieved without a detrimental effect on service quality

60%

65%

70%

75%

80%

85%

90%

95%

2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1

Act ivat ion (%)

Restorat ion (%)

Assurance (%)

Target %

$14

$10

$12

$8

$6

$0

$2

$4

$6

$8

$10

$12

$14

$16

2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1

Sig nificantly

ove r b ud g et on

lab our costs

First Chang e-

Tracking Projec t

Area Volumes

ad d ed

Seco nd Chang e-

Tracking Projec t

Sig nificantly

ove r b ud g et on

lab our costs

First Chang e-

Tracking Projec t

Area Volumes

ad d ed

Seco nd Chang e-

Tracking Projec t

Cost pe r Unit o f Act ivit y (includes all labo ur and o ver head exp enses)

Service Q ua lit y Leve ls

“Without ‘hard’ data about how my people were responding to change, I would still be reacting, rather than proactively driving effective change,” Bill says. “Validated through direct and open discussions with my people, we learnt to focus on the drivers of improvement and act where it really mattered. The end result for my team was that complaints about the IT system moved off the agenda, we reduced unit costs by 25 per cent, improved customer service levels by over 10 per cent in less than six months and our people measures improved significantly.” Bill Lyon, National General Manager for telecommunications group

Case study 1:Bringing an IT implementation back on track

Financial rigour improved:

Budget back on track, taking 3.8 million out of costs and maintaining customer servicelevels


FOR USE BY CTRE

Summary

Leaders need to know if their change program is on track; if change is off track what corrective actions to take

Does everyone:See the way forward and understand what is involvedHave the required resources Have clear roles and objectivesEngage and commit Have passion and drive to over come obstacles along the way!

To ensure success they need to: Have the facts - accurate measuresHave insight – know what mattersTake action – in the areas that really matter

Manage change based on understanding how to achieve high performance. To Contact ChangeTrack research: [email protected], +612 9247 6988

Companies to Watch for a GIL Culture…and Why?

• Google

• Apple

• Outsell Research

• TED

• Starbucks

• McKinsey

Generation of

Opportunities & StrategiesGenerate

Evaluation of Opportunities & Strategies

Evaluate

Implementation

of Strategies

Implement

Establishing the GIL Culture: The Growth Model

GROWTH

MODEL

Growth Workshops: Strategy Sessions to Build Teamwork and The Same Page

CEO's Growth Team Building Teamwork & A Culture of Growth Innovation & Leadership

Starting the GIL Culture Program

1) Communicate GIL through Town Hall Meetings

2) Benchmark with Top 20 Competitors

3) Benchmark Growth with Industry Average Over Time

4) Internal Growth Excellence Matrix

5) External Growth Excellence Matrix (with competitors)

6) Training on Best Practices & Growth Models

7) Invest in Growth: Budget, Workshops, Time

8) Shift Incentive to Stretch Growth Targets

9) Develop a Best Practices Perspective on Growth

10) Bring Team to Annual GIL Event

www.frost.com/gilglobalGIL GLOBAL 2009A global community focused on Growth, Innovation and Leadership

October 2009

Kuala Lumpur

October 2009

Shanghai

December 2009

Sao Paulo

May 2010

London

September 2009

Phoenix, Arizona

October 2009

Dubai

October 2009

Bangalore

Next Steps

� Request a proposal for Growth Partnership Services to support you and your team to

accelerate the growth of your company.

� Attend Frost & Sullivan Executive MindXchange best practice networking events

(http://www.frost.com/cal) to share and address strategic challenges

� Consider Conducting a 360 Degree Growth Workshop to support your long-term growth

strategy

� Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress

on Corporate Growth (www.frost.com/gilglobal)

� Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac)

� Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email

us: [email protected])

� Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth

Consultant (email us: [email protected])

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team

Membership e Bulletin to keep abreast of growth opportunities in your industry and best

practices in your career track. (www.frost.com)

Contact Us

If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.

Alvin Chua

Account Manager

Automotive, Transportation & Logistics

DID: +65 6890 0997

Mob: +65 9199 4566

eMail: [email protected]