Caterpillar Confidential: Green (11/09/05)

Warm up Quiz

Question 1:

How do you put a giraffe into a refrigerator?

The correct answer is:

Open the refrigerator, put in the giraffe, and close the door.

This tests whether you tend to do simple things in an overly complicated way.

Question 2:

How do you put an elephant into a refrigerator?

The correct answer is:

Open the refrigerator, take out the giraffe, put in the elephant and close the door.

This tests your ability to think through the repercussions of your previous actions.

Question 3:

The Lion King is hosting an animal conference. All the animals attend except one. Which animal does not attend?

The correct answer is:

The elephant is in the refrigerator. You put him there.

This tests your memory.

The elephant

Question 4:

There is a river you must cross but it is used by crocodiles, and you do not have a boat. How do you manage it?

The correct answer is:

You jump into the river and swim across. All the crocodiles are attending the animal meeting.

This tests whether you learn quickly from your mistakes.

Mining & Construction Equipment DivisionDecatur, Illinois

February 1, 2006

•85,000+ employees who generate over $36 billion in annual sales and revenues

work on every continent of the world

share a vision of $50 billion

share a mission to make progress possible around the world

• World's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines.

Build roads, dams, houses and mines.

Provide transportation and electric power to the world.

Support the logistics needs of a variety of companies.

• Technology leader in construction, transportation, forestry, energy, logistics and electric power generation.

Caterpillar Confidential: Green (11/09/05)

We design, develop and deliver superior products

. . . that delight our customers.

. . . that deliver superior value to our customers.

. . . that give our customers the best alternate.

Superior products

Superior products is our Driving Force.

The best product always wins.

Our products are the reason every job here exists.

We design, develop and deliver superior products which create excellent value for our:

Excellent Value

. . . Customers: Product and Delivery Performance

. . . Employees: Fulfillment, Development, Compensation

. . . Community: Growth, Philanthropy and Environment

. . . Suppliers: Collaboration, Development and Sales

. . . Stockholders: Share Value and Dividends

. . . from the money we make selling our products we create value that :

. . . pays our salaries, benefits and retirement

. . . pays our suppliers

. . . allows us to invest in future products

. . . allows us to invest in our plant

. . . allows us to invest in our community

Excellent Value

We are proud to be healthy, high-performing members

of Team Caterpillar that design, develop and deliver

superior products which create excellent value for our

employees, customers, suppliers, stockholders and

community.

One healthy, high-performing team

Engaged people are critical to our success.

A Constructive Culture engages people.

What is Culture?Culture is the shared beliefs and values guiding the thinking and behavior of the organization.

The impact of a constructive culture can be measured on the bottom line.

Constructive cultures provide the customer better products and services than defensive cultures.

Source Michael O’Brien: Human Synergistics International

What is Its Impact?

Copyright © 1998 Human Synergistics International. All Rights Reserved.

The Circumplex:

Red:Aggressive/Defensive

Styles Green:Passive/Defensive Styles

Blue: Constructive Styles

Defensive Cultures Constructive Cultures

166%

74%

1%

Revenue

Stock Prices

Net Income

682%

901%

756%

11 YearChange in

Circumplex/OCI Copyright 1998 Human Synergistics International. All Rights Reserved.

Financial information from Kotter & Heskett "Corporate Culture and Performance," Free Press 1992

Culture and Performance

Kotter & Heskett: Study of 207 firms over an eleven year periodas reported in their book Corporate Culture and Performance

Defensive Cultures Constructive Cultures

Circumplex/OCI Copyright 1998 Human Synergistics International. All Rights Reserved.

Financial information from Kotter & Heskett "Corporate Culture and Performance," Free Press 1992

Encourages Employees to be: Inactive and Reactive

• Resists change• Assigns blame when something

goes wrong• Uses Chain of Command to control

and direct

Encourages Employees to be: Proactive

• Communicate open and freely• Takes responsibility and

accountability• Is innovative and take risks

Our Goal:

Transform Decatur into a constructive culture where:

• people enjoy coming to work

• people retire as healthy as they started

• customers receive superior products on time

• we deliver excellent value

IndividualsLeadersCulture

People create our products.

People make the difference.

We are proud to be healthy, high performing members of Team

Caterpillar that design, develop and deliver superior products which

create excellent value for our employees, customers, suppliers,

stockholders and community.

Organizational Culture• Cultural Consensus Building

• Values in Action - Behaviors

FutureFutureMar 2003Mar 2003

Personal Effectiveness• Imagine 21 – Employees/Spouses• Pathways to Excellence• Imagine 21 – Community Leaders

Leadership Effectiveness• Leadership Impact• Leadership Facilitator Education• Purpose in Life

Organizational Effectiveness

One healthy, high-performing team

IMPROVEMENT

2003

2005

Upper Management

+213

Current Culture

2003

2005

IMPROVEMENT+148

Organizational Culture• Cultural Consensus Building

• Values in Action - Behaviors

GoalGoalMar 2003Mar 2003

Personal Effectiveness• Imagine 21 – Employees/Spouses• Pathways to Excellence• Imagine 21 – Community Leaders

Leadership Effectiveness• Leadership Impact• Leadership Facilitator Education• Purpose in Life

May 2005May 2005

One healthy, high performing team

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