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 Baty Global VP, IT Practice

Warren Parry Managing Director

Frost & Sullivan Sydney

Change Track Research Sydney

Moderator: Michael Buchholz VP, Marketing, APAC Frost & Sullivan

Agenda

1. 2. 3.

Recap on poll results from the previous webcast Brief overview: Where we are in the series The CEO’s Challenge: Creating the Growth, Innovation and Leadership (GIL) culture What the CEO can do to develop a GIL culture? Alignment of the CEO’s vision and staff Best practices in the development of a GIL culture Serious about growth: Next steps

4. 5. 6. 7.

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%

Polling Responses from April APAC/J CSG
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 relative to your top competitors? performance
The best 0.0% About the same

50.0% Somewhat worse 50.0% Significantly worse 0.0% Don't Know 0.0%

Polling Responses from April APAC/J CSG
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

Definition: What is Best Practice?
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

Olympic Performance

Growth Excellence Matrix: Future Growth Potential
Measure and forecast the future growth potential of your company vs. the competitors

New York KL

Introducing our Guest Speaker…

Warren Parry Managing Director

Change Track Research Sydney wparry@changetracking.com

©2008 Dialect, all rights reserved

Creating a Culture of Growth, Innovation and Leadership
FOR USE BY CTRE

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

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

0% 2% 0% 1% 9% 22% 11%

Transport Consulting Telecommunications Utilities Banking Insurance Government

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
7%

3%

Community services Defence Health Services

15% 13%

Manufacturing Pharmaceutical Resources

5% 0%

12%

0%

Oil and Gas Communications and Media

31

35

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

Transformation Restructure (Reorg) Cost management (Reorg)
19 42 1 22 14

IT implementation (Reorg) Merger/Aquistion (reorg) Shared Services (Reorg) Culture change Performance Improve

17

Groups that improve performance across times of change define the benchmarks for high performance
FOR USE BY CTRE

Our research shows 1 in 9 work groups improve their performance across times of change
High Performance Peak Performance and high Change Capability

Project preparation

Business blueprint

Final preparation

Go live and support

Continuous improvement

Feb

Mar

April

May

Jun

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Performance

On Track Good Performance Improvement and above the norm Change Capability

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/functionality
The state of IT project management in UK 2002–2003, Chris Sauer and Christine Cuthbertson, University of Oxford

Unsustainable Better Performance Improvement but low Change Capability

Stage of project

Off Track Declining Performance and low Change Capability

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

What is ChangeTracking®?
FOR USE BY CTRE

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

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

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

Validated research that sits behind ChangeTracking has proven what drives performance improvement
FOR USE BY CTRE

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

Is the change on track to high performance?
Realising Business Benefits Improving business performance
Performance

Change Capability

Drivers

Turbulence

Resources

Aligned Direction

Change Leadership

Work Roles

Emotional Energy

Clusters

Risks and Roadblocks Changes Taking Place

Training and Capability Systems and Processes

Vision and Direction Communication

Management Commitment Team Leadership

Involvement

Passion and Drive Disturbance

Accountability

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

New knowledge has provided hard evidence about what is important to deliver high performance change
FOR USE BY CTRE

Change Leadership Systems and Processes Risk and Roadblocks Passion and Drive Involvement Disturbance Vision and Direction Team Leadership Communication Training and Information Accountability
Source: ChangeTrack Research (R2=0.482, N=41725)

High negative

High positive

Relative importance of factor in driving improvement in business performance

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

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

1. Cultural Change must be linked to Company performance improvement
People must be confidence that the confident that the culture change program will improve company performance and need to see signs of improvement in effectiveness and cost management

> Emotionally Engaged Leaders

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

2. Teams must be actively involved in managing change

> Clear direction, a positive team spirit

Culture change

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

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

3. Individuals must have something at stake
When there is a degree of personal risk and urgency because of the change Primary drivers

> Strength to face the challenge

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

Secondary drivers

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

Breaking the cost-cutting cycle
FOR USE BY CTRE

1. Co st -cut t ing b e g ins.
In t o ug h t im e s ma nag e rs fo cus o n incre a sing a cco unt ab ility to a chie ve co st re duct io n.

4. Acco unt ab ility is fo rg o t t en fo r t he t im e b e ing a nd co st s cre e p up a ga in.

5. The cycle o f co st cut t ing b e gins ag ain.

3. Lea d e rship t raining , 2. Co st -cut t ing g o e s t oo fa r.
Ma nag e rs t he n find sta ff spirit suffe rs, so t he y p la ce a g re a t e r emp ha sis o n m aking p e op le fe e l b e t t e r. cre a t ivity a nd innova tio n p rog ram s a re put in p la ce .

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

Case study 1: Bringing an IT implementation back on track
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

Aligned Direction

Engagement

Team Leadership

Emotional Energy

Vision Direction

Communication

Change Leadership

Involvement

Management Skills

Feeling Valued

Accountability

Passion & Drive

Disturbance

Manager Team Leader Team Member Other

Vision declines under leaders

Communication is OK

Management Skills are OK but not great

Accountability is low at all levels

Disturbance is too high

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

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
Se r vice Q ua lit y Le ve ls Co st p e r Unit o f Act ivit y
(includ es all lab o ur and o ver head exp ens es )
$16 $14 $12 $10 $8 $6 $4 $2 $0 $10 $8 $6 $14 $12

95%

Financial rigour improved: Budget back on track, taking 3.8 million out of costs and maintaining customer service levels

90%

85% Act ivat ion (%) Rest orat ion (%) 75% Assurance (%) Target % 70%

80%

65%

60% 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1

2004 Q1

2004 Q2

2004 Q3

2004 Q4

2005 Q1

Sig nifica ntly ove r b ud g e t on la b our c osts

First Cha ng e Tra cking Proje c t

Are a Volum e s ad d ed

Se co nd Cha ng e Tra cking Proje c t

Sig nifica ntly ove r b ud g e t on la b our c osts

First Cha ng e Tra cking Proje c t

Are a Volum e s ad d ed

Se co nd Cha ng e Tra cking Proje c t

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

Summary
FOR USE BY CTRE

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 involved Have the required resources Have clear roles and objectives Engage and commit Have passion and drive to over come obstacles along the way! To ensure success they need to: Have the facts - accurate measures Have insight – know what matters Take action – in the areas that really matter Manage change based on understanding how to achieve high performance. To Contact ChangeTrack research: wparry@changetracking.com, +612 9247 6988
11 • © CTRE Pty. Ltd. 2009 • Presentation: Inside ChangeTracking® • 25/05/2009

Companies to Watch for a GIL Culture…and Why?
• • • • • •

Google Apple Outsell Research TED Starbucks McKinsey

Establishing the GIL Culture: The Growth Model
em en Im pl
Implementation of Strategies

t

GROWTH MODEL

al u at

e

Evaluation of Opportunities & Strategies

Ge ne r

at

e

Ev

Generation of Opportunities & Strategies

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) 2) 3) 4) 5) 6) 7) 8) 9) 10)

Communicate GIL through Town Hall Meetings Benchmark with Top 20 Competitors Benchmark Growth with Industry Average Over Time Internal Growth Excellence Matrix External Growth Excellence Matrix (with competitors) Training on Best Practices & Growth Models Invest in Growth: Budget, Workshops, Time Shift Incentive to Stretch Growth Targets Develop a Best Practices Perspective on Growth Bring Team to Annual GIL Event

GIL GLOBAL 2009

www.frost.com/gilglobal

A global community focused on Growth, Innovation and Leadership

September 2009 Phoenix, Arizona

October 2009 Kuala Lumpur October 2009

October 2009 Dubai

Shanghai

October 2009 Bangalore

December 2009 Sao Paulo May 2010 London

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: alvin.chua@frost.com) Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth Consultant (email us: alvin.chua@frost.com) 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: alvin.chua@frost.com