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New Balance Case Study – Business Transformation
Paul Kennedy
HR Director
Our Mission
“To be recognised as the world’s leading manufacturer of high performance athletic and active lifestyle products while operating in a socially responsible manner”
NB Famous for………World cup -1982 Euro Champs 1996
HISTORY• Established 1906
Cushion madeArch Supports
‘Trackster’In MultipleWidths
Welcome the990
World marathonRecord 1999Khalid KanouchiRC 110
RC 1001Tecnological AdvancesReleased
EMEA Region- Key Facts•46 countries•750 million people
NB:•2005- NB 1% market share•Break Even at best•High Cost structure •Chaotic Leadership•Culture of failure and poor execution•Everything was complicated
25 Years of European Operation and Under Achievement
The Argument for Change?
Retail environment
changing
Consumers more
informed
Pressure to reduce costs and improve speed to
market
Continuing to work the way
we work today is not an option
Need to fulfil our potential
Need to be
passionate about
execution
Need to make significant
contribution to our future success
Map the future• Right Leadership on board
• Z corporation exercise
• Cultivate the Culture
• Organisation design
• Create the lean and winning machine
BY 2012• £250 Million company
• No 1 in Performance Running
• No 1 in Performance Apparel
• Top 3 in Lifestyle
• Top 100 employers to work for
• 15% ROS
• And….Marathon world record in NB shoes
Can we get to our goal by carrying on as usual?
NO!
£250million
“If we keep doing what we’re doing, we’re going to keep getting what we’re getting”
Stephen R Covey
So we need to change …
NB TransformationZ corporation
Facilitate Change to Understand Value as seen by the Consumer/Customer
Leadership Fit for Purpose Focus our time on
Value Added Activities
European Centre ofExcellence
Simplify andStandardise
‘Partners that areFit for Purpose’
Culture ofExecutional Excellence
In all that we do
The Focus For Executional Excellence
Culture/Speed/Agility
Organisation
Product/Consumer Focus
Customer Service
Profit, Margin/CostsRevenue Growth
Stages of change commitment
I’m being told about something
I know What it is
I see the implications for us
This is good
Let’s test it
Let’s do it
Internalisation
Institutionalise
Adoption
Installation
Positive perception
Understand the need for change
Aware of change
Contact
How people commit to change We have to keep it going
Risk of loss of change commitment
Prepare Phase
Commitment Phase
Acceptance Phase
Unaware Confused Negative Perception
Decision notto support
Aborted afterInitial use
Aborted afterExtensive use
8) Internalisation
7) Institutionalise
6) Adoption
5) Installation
4) Positive perception
3) Understand the need change
2) Aware ofChange
1) Contact
Results 2007• On target – 25% growth
• New Organisation
• 5 Key shoes ‘never out of stock’
• 72 hours replenishment for key customers
• Simplify and Standardise Everything we do
• Customer and Associate Surveys
FLIMBY FACTORY
• 2006
• 1.4 Million Shoes
• 6-4 Person Teams
• 22% Productivity Improvement
• 25% Space Reduction
• Executional Excellence Well Established
Remember
• Use the resources you have
• Focus on where you want to go
• Measure your improvement not just in financial results
• Ensure you have senior management support and sponsorship
• Involve everyone
We are what we repeatedly do.
Excellence, then, is not an act, but a habit.
Aristotle