Pentair Lean Enterprise Strategy Deployment

PENTAIR LEAN ENTERPRISE
Strategy Deployment
What We Will Cover
The goal of this Strategy Deployment training is to help

you learn the necessary tools and processes to drive
breakthrough objectives in alignment with our broader
corporate goals.
In this lesson, you will learn how to:
1. Explain the purpose and importance of strategy

deployment
2. Describe Pentair’s cascading process for strategy
deployment
3. Utilize x-charts and bowling charts to manage
strategy deployment activities
4. Manage X-Charts in a Matrix organization
PENTAIR 2
PURPOSE, OBJECTIVES, SCOPE, CHALLENGES
PURPOSE AND BENEFITS LEARNING OBJECTIVES SCOPE CHALLENGES TO OVERCOME
• Learn the necessary • Explain the purpose Module Addresses: • Lack of Executive/President
tools and processes to and importance of • Review of the PIMS sponsorship/involvement in
drive breakthrough Strategy Deployment Continuous Strategy Deployment
objectives in alignment Improvement model development
with our broader • Describe Pentair’s
cascading process for • What are the Strategy • Cross-Functional
corporate goals
Strategy Deployment Deployment steps involvement in Strategy
• Increase consistency Deployment development
• Utilize X-Charts and • Overview of the tools
and rigor in the and templates used for • Desire to make everything a
application of the PIMS Bowling Charts / Plant breakthrough objective (vs.
Scorecards to manage Strategy Deployment
Strategy Deployment lower priority KPIs)
process Strategy Deployment
activities • Embedding Corp priorities
Out of Scope For Module: vs. GBU priorities
• Benefits: a sustainable
process and culture of • Understand linkage of • How to create a • Aligning measures cross-
continuous Strategy Deployment to Transformation Plan functionally & outside GBU
improvement that Transformation
• How to create A3’s • Cascading the plan
drives SQDCC gains year Planning
after year after year • Executing rhythm to touch
Bowling Charts / Scorecards
at regular frequency
Align The Organization For Break Through Results

PENTAIR LEAN ENTERPRISE CONFERENCE 2012 3
STRATEGY DEPLOYMENT – 1st LEAN DISCIPLINE
The compass that

keeps us pointed in
the direction of our
corporate goals
Strategy Deployment Sets the Priorities for The Lean Enterprise

4
PENTAIR 4
STRATEGY DEPLOYMENT OVERVIEW
Strategy Deployment:
 Is a 1 year plan reflecting the 3-5 year
strategic goals
 Focuses on the Critical Few Breakthrough
Objectives that are required for the
company's long term success
 Aligns the team around priorities and
accountabilities
 Links major objectives with specific resources
and support plans throughout the
organization
 Deploys/cascades strategy to the “point of
impact”
Create Sustainable Improvements In Key Processes & Results

PENTAIR 5
WHY DO WE NEED STRATEGY DEPLOYMENT?
To Build Sustainable Competitive Advantage
Strategic
Objective is
Strategy
Deployment Achieved!
New Level of
KAIZEN
Performance
Improvement
Strategy
is Sustained!
Deployment
KAIZEN
New Level of
Performance Base
Strategy
Deployment Base
is Sustained!
KAIZEN
Base
Base Base
Year 0 Year 1 Year 2 Year 3 Year 4
Process Change . . . or Not Sustained!

PENTAIR 6
WHY STRATEGY DEPLOYMENT WORKS -- ALIGNMENT
Alignment
Alignment is a key outcome of strategy

deployment. This alignment is a critical step if
good players are to be transformed into a high
performance team.
Like a team of rowers, we don’t get anywhere

fast unless we’re rowing together in the same
direction.
The executive team charts the destination and

the course that we all work toward together.
Team Must Be Aligned to Achieve Break Through Goals

PENTAIR 7
WHERE STRATEGY DEPLOYMENT FITS
Strategy Deployment
Strategic Plan X - charts Bowling Charts Transformation Plans

2010 Top Level 2009
2010 Breakthrough
Breakthrough Resource % to Improve Launch 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Actual
Targets
Processes Point
Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Total Net Sales of
$870M
Regional 4.7% 831.0
Sales Actual 0.0
Non-North American Dean & Goal 3.2 3.2 4.0 3.0 3.0 3.7 3.5 3.5 4.3 3.3 3.3 4.2 0.0
Hoffman-branded Net Regional 20.0% 35.0
Sales $42.0M Sales Actual 0.0
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
New Product Sales Mark &
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Goal 0.0
Total Global OEM
Sales of $XXX.X
Walter #DIV/0!
Actual 0.0
Branded Platform Goal 6.9 6.9 8.6 6.6 6.6 8.2 6.7 6.7 8.4 7.1 7.1 8.8 0.0
Sales "to" Emerging Regionals 16.0% 76.3
Markets of $88.5M Actual 0.0
Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
Less than 34.4%
Nick 3.1% 35.5%
Actual YTD
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing
Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0
Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of
$32.0M or less
John 0.3% 32.1
Actual 0.0
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax
ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
Actual 0.0 0.0 Actual
Quality: Reduce Goal 4,679 4,608 4,538 4,467 4,396 4,325 4,254 4,183 4,113 4,042 3,971 3,900 Goal
External PPM's to Nick 18% 4,750
3,900 Actual - - Actual
Customer First
Improve Non- Goal Goal
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
Standard DRA to Nick 12.3% 81.0%
91% Actual 0% 0% Actual
Strategy Alignment Accountability Action
Strategy Deployment
• Bridges Strategic Planning and Transformation Planning
• Creates alignment & accountability through all levels of the organization
• Is the process that turns strategy into action
Alignment & Accountability, Driven By Strategy, Resulting In Action

PENTAIR 8
STRATEGY DEPLOYMENT PROCESS STEPS
Process Steps
Strategic Planning/ Develop 3-5 • The longer term vision of the business is
Year Breakthrough Objectives established.
Develop Annual • The immediate focus is identified.

Breakthrough Objectives
Identify Process Improvement • The most impactful Process

Priorities Improvements are Identified.
• Measurements are chosen that identify if

Set Targets to Improve
the process changes are being impactful.
• Assign ones that will get it done! For L1,

Assign Resources, Implement
usually directPreports to the president.
Alignment on the Key Objectives and Processes Eliminates Confusion

PENTAIR 9
STRATEGY DEPLOYMENT PROCESS STEPS
Process Steps
Strategic Planning/ Develop 3-5
Year Breakthrough Objectives
These are supposed to be BIG-- Make
Develop Annual us think out-of-the-box!
Breakthrough Objectives
Identify Process Improvement These are Processes (not goals).

Priorities Key drivers of future performance.
Set Targets to Improve

Measure - Is the new process effective?
Assign Resources, Implement

P
Alignment on the Key Objectives and Processes Eliminates Confusion

PENTAIR 10
STRATEGY DEPLOYMENT CASCADING
Cascading Goals / Cascading Process Improvement
Responsibility for implementing process

changes cascades from the top down as does
the measurement of process improvement.
This aligns each level of the organization with
the level above
Pentair’s strategic plan sets the parameters

for GBU goals, GBU goals drive the process
improvements which cascade to the point of
impact. It is here that new levels of
performance are achieved.
Cascade Down To Point Of Impact

PENTAIR 11
STRATEGY DEPLOYMENT TOOL – X-CHART
X-Charts
X-Charts create alignment Strategy Deployment Matrix L1 PRESIDENT
through all levels of the x

x
x
Reengineering Inventory Managemetn Processes
M&A prospecting staff review & integration process
Emerging market penetration process X X
X X
X
P
X
X
P
X X
X
X
X
P
X
X
X
X X X X
organization. They can be X x Schroff channel and EMCa Cat mgt

x Reengineering Biz process (E2E)
x Sourced product cat team & process X
X X
X X
X
P
X
X
X P
X X
X
utilized by every leader within

2013
the company starting with our Top Level
Breakthrough
CEO. Processes
2013 2013
Transaction complete and PMO in place

Each GBU president creates an X- Regatta Businesses improve 5 pts
Breakthrough Breakthrough
Targets to
Developed Market Growth of 10%
$200M+ in transactions complete

Objectives
chart for their GBU. They then Fast Growth Markets Grow 30%
Improve
Project Excelerate Launched

$200M in acquisition closure
Dettmer - Human Resources

Share Gain: U S PFG > $40M
Project Excelerate DRM met

Inventory Reduced to $80M
Anderson - Legal Counsel

EMEA: EMCA grow > 8%
Basney - North America

Field - Global Accounts
work with their direct reports to
Sen - Global Marketing

Mexico > 30% Growth
Lamps - Engineering
Brazil > 30% Growth
Fowler - Operations
Humbert - Finance
Ruzynski - Supply
Inventory <$80M
3 Year GBU
create their X-charts, and the
Stirpe - EMEA
Breakthrough
Objectives
process continues until actions

are assigned at the “point of X
X 1. $1.4B in 2014 (Top Line Organic Sales)
2. ROS of 21.2% in 2015
Resources to Deploy
X X 3. Achieve After-Tax ROIC of 30.0% or higher by 2015
impact”. X
X X
4. Acquisitions of $600MM completed by end of 2015
5. 50% of Revenue outside of NA by 2015
P Primary
Responsibility
S Secondary
Responsibility
Drive Alignment and Process Improvement With X-Charts

PENTAIR 12
Strategy Deployment Matrix L1 PRESIDENT
The Process
x Reengineering Inventory Managemetn Processes X X P X
x M&A prospecting staff review & integration process X X P X X X X X X X X X
x Emerging market penetration process X X X P X X
X x Schroff channel and EMCa Cat mgt
3. X X
X X
X X X P X
1. 3-5 Year breakthrough
x Sourced product cat team & process X P X X X
Objectives – Strategic
2013 Plan
Top Level
Breakthrough
Processes
2. This Year’s Breakthrough
Objectives - Bold
2013 2013
3. Breakthrough Processes

2. Breakthrough Breakthrough
Targets to 4. 5. – New Capabilities
Regatta Businesses improve 5 pts

Objectives
Fast Growth Markets Grow 30%
Improve




4. Measurement of the
Mexico > 30% Growth
Lamps - Engineering
Brazil > 30% Growth
Fowler - Operations
Humbert - Finance
Ruzynski - Supply
Inventory <$80M
3 Year GBU
process effectiveness
Stirpe - EMEA
Breakthrough
Objectives

5. Who? – Assign
Resources to Deploy
X 2. ROS of 21.2% in 2015 Accountability
X
X
X 1.
3. Achieve After-Tax ROIC of 30.0% or higher by 2015
4. Acquisitions of $600MM completed by end of 2015 P Primary S Secondary
X X 5. 50% of Revenue outside of NA by 2015 Responsibility Responsibility
Cascade Goals Into Process-Focused Plans With Clear Accountability

PENTAIR 13
STRATEGY DEPLOYMENT TOOL – BOWLING CHART
Bowling Chart The Process

• Tracks the effectiveness of
process changes to plan for each
X-Chart.
• If performance is not
progressing as planned, identify
Root Causes and Counter
Measures using 8 Step RCCM A3
template. Manage monthly.
• Two bowling charts are

common, one for KPI’s and one
for breakthroughs.
Track Progress & Accountability With Bowling Charts

PENTAIR 14
OPS BOWLING CHART – PLANT SCORECARD
Pentair’s Plant Scorecard Is
• A standardized Bowling Chart for Pentair plants. This
enables
– Common measures and definitions
– Conversations focused on RCCM of results vs.
debating measurements
– Aggregation of results for GBUs & Pentair
• Consistent with and based on the Bowling Chart
format and principles
• Customizable for each GBU/Region/Site, using the
“Site Specific Strategy Deployment Metrics” section
at bottom
• In Pentair’s Plant Scorecard, much of the impact of

having two bowling charts (KPI’s and breakthrough)
can be achieved by shading the few metrics that
represent the breakthrough areas.
Use Plant Scorecard For Plant-Level Bowling Chart… Std Work

PENTAIR 15
STRATEGY DEPLOYMENT PROCESS
Strategy Deployment Process
The GBU’s strategy deployment

process begins with the
breakthrough objectives for the
next three to five years as
defined in the strategic plan.
All other breakthrough

objectives and activities should
align under these objectives.
Process Starts With Pentair’s 3-5 Year Breakthrough Objectives

PENTAIR 16
SD PROCESS – LEVEL 1, 3-5 YR BREAKTHROUGHS
Define Breakthrough Objectives
With the strategic plan L1 – GBU XXX

defined, each GBU
president creates a Level
One X-Chart (L1’s) starting
with the three to five year Example:
breakthrough objectives for GROWTH: Grow Global Sales from
$720M in 2008 to $1B in 2011
his or her GBU.
GBU Presidents Create 3-5 Year Breakthrough Objectives

PENTAIR 17
SD PROCESS – LEVEL 1, ANNUAL OBJECTIVES
Define Annual Objectives
Next, each GBU President

L1 – GBU XXX
defines the annual
breakthrough objectives Example:
(often through catch-ball Grow Global Sales from $720M in
2008 to $790M in 2009
with the Executive
Leadership)
These objectives focus their

organization toward
achieving the three to five
year objectives.
The dot indicates the linkage of

annual objective to three-five
year objectives.
GBU Teams Create Year 1 Breakthrough Objectives

PENTAIR 18
SD PROCESS – LEVEL 1 PROCESSES
Define Breakthrough Processes

Next, the top-level
processes that will best L1 – GBU XXX
contribute to the GBU’s
Example:
breakthrough objectives New Distributor Stocking
are added to the top Program
quadrant of the x-chart.
By selecting these
processes, we’re defining
how the GBU’s
breakthrough objectives
will be achieved for that
year.
Identify Driver Processes - To Hit Year 1 Objectives

PENTAIR 19
SD PROCESS – LEVEL 1, TARGETS TO IMPROVE
Assign Targets to Improve
Specific targets to improve L1 – GBU XXX

(TTI’s) are assigned to measure
if the process changes are being
effective. Without sustainable Example:
process improvement we will Achieve $X in Net Sales
not reach a new level of

performance.
Sometimes these TTI’s may be
the same as the annual
breakthrough objective. Other
times, the TTI may be very
specific to the process change.
Identify Targets To Improve To Achieve Process Gains

PENTAIR 20
SD PROCESS – LEVEL 1, RESOURCE ASSIGNMENT
Assign Resources
The last step in creating the

L1 X-Chart is to assign L1 – GBU XXX
responsibility to implement
each process improvement.
Direct reports to the GBU
president are listed and one
is assigned primary
responsibility while more
than one may be assigned
secondary or support
responsibility.
The L1 is complete!
Identify Resources For Achieving Targets

PENTAIR 21
SD PROCESS – Creating L2’s
Rotating the Matrix to begin an L2
First – select just the L1 – GBU XXX

processes assigned. In this
case, Marketing is assigned to
implement Processes #1 and
#2.
The Marketing L2 –
1. Processes #1 and #2 are
rotated to the 9:00
position
2. The annual breakthrough
objectives are rotated to
the 6:00 position.
3. 3-5 year Objectives noted
below the matrix.
Only Select the Processes for Which You are Responsible 22

PENTAIR
SD PROCESS – Creating L2’s
Rotating the Matrix to begin an L2
The first step in creating an L2 – GBU XXX

L1 – –GBU
Marketing
XXX
L2 is recognizing which L1
Processes are assigned. In
this case, Marketing is
assigned to implement
Processes #1 and #2.
The Marketing L2 begins with

Processes #1 and #2 being
rotated to the 9:00 position
in the Matrix and the annual
breakthrough objectives are
rotated to the 6:00 position.
Identify Accountability For Achieving Targets

PENTAIR 23
SD PROCESS – LEVEL 1 TO LEVEL 2 CASCADING
Creating L2’s
After the matrix data L2 – GBU XXX – Marketing

has been rotated, the
12:00 and 3:00
quadrants are empty,
ready for completion.
Create Level 2 X-Charts For Reports To Presidents & Corp VPs 24

PENTAIR
SD PROCESS – LEVEL 2 X-CHARTS
Creating an L2
L2 process are added L2 – GBU XXX – Marketing

that will specifically
address the L1 Example:
New Distributor On Boarding
processes assigned to Process
Marketing. These are
components of the
overall L1 process
change.
Targets and resources

are added in the same
manner as the L1.
Identify Level 2 Processes For Achieving Targets 25

PENTAIR
Creating an L2

that will accomplish L1 Example:
New SOP Process for
processes assigned to Distributor Inventory
Marketing.

manner as the L1.

PENTAIR
Creating an L2

that will accomplish L1
processes assigned to
Marketing.

manner as the L1.

PENTAIR
Creating Additional X-Charts
L3’s are then created in similar

fashion, then L4’s, and so on until
you reach the leader at the point of
impact.
Create Level 3 X-Charts, Cascading In Similar Fashion As Earlier

PENTAIR 28
SD PROCESS – BOWLING CHART CREATION
Creating Bowling Charts
Once a leader has finished

their x-chart, they can
create their accompanying
bowling chart to track
monthly progress.
Each Level Creates Bowling Charts To Track Monthly Progress

PENTAIR 29
SD PROCESS – BOWLING CHART CREATION
The Strategy Deployment Process
The bowling chart contains the Bowling Chart – GBU XXX – Marketing
targets defined in the right
quadrant of the x-chart.
The resources assigned to

implement the process
improvements are also
responsible for achieving the
targets to improve. Their
progress is tracked within this
document on a monthly basis.
Assign Resources/Accountability For Each Bowling Chart Target

PENTAIR 30
SD PROCESS – ADJUSTING AS NEEDS CHANGE
X-Charts are Not Static
L2 – GBU XXX – Marketing

X-charts are not static
documents that never
change. As the year
progresses, they can be
adjusted and changes
negotiated as new business
opportunities arise and the
business evolves.
Refresh X-Charts As Business Evolves

PENTAIR 31
SD PROCESS – UPDATING ANNUALLY
X-Charts Updated
Each year this process is

repeated with new x-charts
created at every level, and
every three to five years a
new or revised strategic plan
is put in place.
Repeat The Process Each Year, Top To Bottom

PENTAIR 32
STRAT. DEPLOYMENT IN A MATRIX ORGANIZATION
L1
L2 Processes from more than one President
organization may cascade into a
plant.
L2 L2
Region or Category Operations
L3
For example, Operations may be Plant
assigned by the L1 responsibility for 2010 Top Level
2010 Breakthrough
2009
implementing new delivery processes.

Targets
Processes Point
Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Total Net Sales of
$870M
Regional 4.7% 831.0
Sales Actual 0.0
The European region may be assigned

Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Goal 0.0
Total Global OEM
Sales of $XXX.X
Walter #DIV/0!
Actual 0.0
growth targets that involve a new

Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
Less than 34.4%
Nick 3.1% 35.5%
Actual YTD
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing
Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0
distribution center. Each of these L2’s

Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of
$32.0M or less
John 0.3% 32.1
Actual 0.0
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax
ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
could cascade process changes to a

Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
Customer First
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
plant in Europe.
Multiple L2’s can Cascade to an L3

PENTAIR 33
SD LINK TO LEAN TRANSFORMATION PLAN
L3 Plant Plant Scorecard
2010 Top Level 2009
2010 Breakthrough
Targets
Processes Point
Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Total Net Sales of
$870M
Regional 4.7% 831.0
Sales Actual 0.0
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Goal 0.0
Total Global OEM
Sales of $XXX.X
Walter #DIV/0!
Actual 0.0
Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
Less than 34.4%
Nick 3.1% 35.5%
Actual YTD
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing
Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0
Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of
$32.0M or less
John 0.3% 32.1
Actual 0.0
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax
ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
Customer First
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
Current Value Stream map Lean Assessment
Plant
Opportunities
Transformation Plan
Funnel
Filling Kaizens
Strategy Deployment Is A Driver Of Plant Transformation Plan

PENTAIR 34
SD CASCADING SUMMARY
L1
President 2010 Top Level
Bowling Chart 2009
2010 Breakthrough
Targets
Processes Point
Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Total Net Sales of
$870M
Regional 4.7% 831.0
Sales Actual 0.0
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Goal 0.0
Total Global OEM
Sales of $XXX.X
Walter #DIV/0!
Actual 0.0
Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
Less than 34.4%
Nick 3.1% 35.5%
Actual YTD
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing
Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0
Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of
$32.0M or less
John 0.3% 32.1
Actual 0.0
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax
ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
Customer First
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
L2 L2
Region or Category Operations
Bowling Chart
2010 Top Level 2009
2010 Breakthrough
Targets
Processes Point
Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Total Net Sales of
$870M
Regional 4.7% 831.0
Sales Actual 0.0
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Goal 0.0
Total Global OEM
Sales of $XXX.X
Walter #DIV/0!
Actual 0.0
Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
Less than 34.4%
Nick 3.1% 35.5%
Actual YTD
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing
Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0
Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of
$32.0M or less
John 0.3% 32.1
Actual 0.0
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax
ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
L3
Customer First
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
Bowling Chart
2010 Top Level
Breakthrough
Processes
2010 Breakthrough
Targets
Total Net Sales of

Resource % to Improve
Del, Dean &

2009
Launch
Point
2010
Goal
Jan
63.6
Feb
67.1
Mar
83.6
Apr
66.9
May
67.0
Jun
85.2
Jul
68.9
Aug
69.2
Sep
86.1
Oct
70.1
Nov
65.3
Dec
77.0
YTD Actual
0.0
Plant Plant Scorecard
$870M
Regional 4.7% 831.0
Sales Actual 0.0
2010 Top Level 2009
Hoffman-branded Net Regional 20.0% 35.0 Breakthrough
2010 Breakthrough
Resource % to Improve Launch 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Actual
Sales $42.0M Sales Actual 0.0 Targets
Processes Point
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
New Product Sales Mark & Del, Dean & Goal 63.6 67.1 83.6 66.9 67.0 85.2 68.9 69.2 86.1 70.1 65.3 77.0 0.0
Sales #DIV/0! Total Net Sales of
of $7.2M Steve
$870M
Regional 4.7% 831.0
Actual 0.0
Sales Actual 0.0
Goal 0.0
Total Global OEM Non-North American Dean & Goal 3.2 3.2 4.0 3.0 3.0 3.7 3.5 3.5 4.3 3.3 3.3 4.2 0.0
Walter #DIV/0!
Sales of $XXX.X Hoffman-branded Net Regional 20.0% 35.0
Actual 0.0
Goal 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.7 0.9 0.8 0.8 1.0 0.0
Sales "to" Emerging Regionals 16.0% 76.3 New Product Sales Mark &
Sales
of $7.2M Steve
#DIV/0!
Actual 0.0
Non-Material COGS
Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD Goal 0.0
Nick 3.1% 35.5% Total Global OEM
Less than 34.4%
Sales of $XXX.X
Walter #DIV/0!
Actual YTD
Actual 0.0
Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
Total Sourcing Branded Platform Goal 6.9 6.9 8.6 6.6 6.6 8.2 6.7 6.7 8.4 7.1 7.1 8.8 0.0
Cost Joe -62.3% 27.6
Savings of $10.4M Sales "to" Emerging Regionals 16.0% 76.3
Actual 0.0
Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
G&A Spending of Goal 35.8% 34.8% 32.9% 35.0% 35.1% 33.5% 34.4% 33.8% 33.1% 35.1% 35.8% 34.8% YTD
John 0.3% 32.1 Non-Material COGS
$32.0M or less
Less than 34.4%
Nick 3.1% 35.5%
Actual 0.0
Actual YTD
Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Achieve After-tax Goal 2.2 2.2 2.8 0.9 0.9 1.1 -0.1 -0.1 -0.2 0.2 0.2 0.4 0.0
ROIC John 19.0% 15.3% Total Sourcing
ROIC of 18.2% Cost
Savings of $10.4M
Joe -62.3% 27.6
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Actual 0.0
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
Achieve $89.8M in Goal 2.6 2.6 2.8 2.6 2.6 2.8 2.6 2.5 2.8 2.6 2.6 2.8 0.0
John -22.2% 115.4 G&A Spending of
Free Cash
$32.0M or less
John 0.3% 32.1
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Actual 0.0
Cash
Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Quarterly DOH from Goal 16.3% 16.8% 16.7% 17.2% 17.5% 17.8% 18.1% 18.4% 18.3% 18.6% 18.4% 18.2% Goal
Nick 4.2% 54.2 Achieve After-tax
54.2 to 52 ROIC
ROIC of 18.2%
John 19.0% 15.3%
Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Actual
Goal 8.9 -0.1 3.3 8.5 8.0 0.5 13.4 6.0 2.1 12.4 15.5 11.4 0.0
External PPM's to Nick 18% 4,750 Achieve $89.8M in
Free Cash
John -22.2% 115.4
Actual 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Customer First
Cash
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0% Goal 54.0 53.8 53.7 53.5 53.3 53.1 52.9 52.7 52.6 52.4 52.2 52.0 Goal
Standard DRA to Nick 12.3% 81.0% Quarterly DOH from
54.2 to 52
Nick 4.2% 54.2
Customer First
81.8% 82.7% 83.5% 84.3% 85.2% 86.0% 86.8% 87.7% 88.5% 89.3% 90.2% 91.0%
Linkage From Top to Bottom, with Monthly Accountability

PENTAIR 35
WHERE TO GO FOR MORE INSIGHT/SUPPORT
• Reference Book: “Policy Deployment & Lean
Implementation Planning”
• Content links and training via:
– The Well (PIMS Website): Training
Documents, Benchmark Pictures
http://teams.pentair.pvt/operations/pims/Shared%20Documents/Forms/Str
ategy%20Deployment.aspx
More Resources Available To Support Your Strategy Deployment

PENTAIR 36
SUMMARY TAKE AWAYS
• Effective Strategy Deployment
– Is the 1st step in achieving our goal of sustainable
continuous improvement
– Focuses on implementing the critical few processes
that will move the organization to a new level of
performance.
– Is led by GBU President and engages all functions,
who then cascade from L1 to “point of impact”
– Uses monthly bowling chart reviews to drive
accountability
– Feeds the plant’s lean transformation plans
• Strategy Deployment is the compass that
– Keeps us pointed in the direction of our goals
– Aligns us … across the organization (functions,
regions) and top to bottom
Strategy Deployment Drives Our Priorities & Aligns Our Teams

PENTAIR 37
Strategy Deployment,
a key tool to aid us as we Win Right!
Thank You!
PENTAIR
STRATEGY DEPLOYMENT TOOL – BOWLING CHART
Bowling Chart The Process

• Tracks the effectiveness of
process changes to plan for each
X Chart.
• If performance is not
progressing as planned Root
Cause must be understood and
Counter Measures developed.
Manage monthly.
• Two bowling charts are

common, one for KPI’s and one
for breakthroughs.
Track Progress & Accountability With Bowling Charts

PENTAIR 39
Strategy Deployment Matrix L1 PRESIDENT
The Process
x Reengineering Inventory Managemetn Processes X X P X
x M&A prospecting staff review & integration process X X P X X X X X X X X X
x Emerging market penetration process X X X P X X
X x Schroff channel and EMCa Cat mgt
3. X X
X X
X X X P X
1. 3-5 Year breakthrough
x Sourced product cat team & process X P X X X
Objectives – Strategic
2013 Plan
Top Level
Breakthrough
Processes 2. This Year’s Breakthrough
Objectives - Bold
2013 2013

2. Breakthrough Breakthrough
Targets to 4. 5. 3. Breakthrough Processes
Regatta Businesses improve 5 pts

Objectives
Fast Growth Markets Grow 30%
Improve
– New Capabilitites




Mexico > 30% Growth
Lamps - Engineering
Brazil > 30% Growth
Fowler - Operations
Humbert - Finance
Ruzynski - Supply
Inventory <$80M
3 Year GBU
4. Measurement of the
Stirpe - EMEA
Breakthrough
Objectives
process effectiveness
Resources to Deploy
X 2. ROS of 21.2% in 2015 5. Accountability
X
X
X 1.
3. Achieve After-Tax ROIC of 30.0% or higher by 2015
4. Acquisitions of $600MM completed by end of 2015 P Primary S Secondary
X X 5. 50% of Revenue outside of NA by 2015 Responsibility Responsibility
Drive Alignment And Accountability With X-Charts

PENTAIR 40

Pentair Lean Enterprise Strategy Deployment

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PENTAIR LEAN ENTERPRISE

The goal of this Strategy Deployment training is to help

In this lesson, you will learn how to:

1. Explain the purpose and importance of strategy

Align The Organization For Break Through Results

The compass that

Strategy Deployment Sets the Priorities for The Lean Enterprise

Create Sustainable Improvements In Key Processes & Results

To Build Sustainable Competitive Advantage

Process Change . . . or Not Sustained!

Alignment is a key outcome of strategy

Like a team of rowers, we don’t get anywhere

The executive team charts the destination and

Team Must Be Aligned to Achieve Break Through Goals

Strategic Plan X - charts Bowling Charts Transformation Plans

Strategy Alignment Accountability Action

Alignment & Accountability, Driven By Strategy, Resulting In Action

Develop Annual • The immediate focus is identified.

Identify Process Improvement • The most impactful Process

• Measurements are chosen that identify if

• Assign ones that will get it done! For L1,

Alignment on the Key Objectives and Processes Eliminates Confusion

Identify Process Improvement These are Processes (not goals).

Set Targets to Improve

Assign Resources, Implement

Alignment on the Key Objectives and Processes Eliminates Confusion

Cascading Goals / Cascading Process Improvement

Responsibility for implementing process

Pentair’s strategic plan sets the parameters

Cascade Down To Point Of Impact

through all levels of the x

organization. They can be X x Schroff channel and EMCa Cat mgt

utilized by every leader within

Transaction complete and PMO in place

$200M+ in transactions complete

Project Excelerate Launched

Dettmer - Human Resources

Project Excelerate DRM met

Anderson - Legal Counsel

Basney - North America

Sen - Global Marketing

process continues until actions

X X 3. Achieve After-Tax ROIC of 30.0% or higher by 2015

Drive Alignment and Process Improvement With X-Charts

Transaction complete and PMO in place

Developed Market Growth of 10%

$200M+ in transactions complete

Dettmer - Human Resources

Project Excelerate DRM met

Anderson - Legal Counsel

Basney - North America

X 1. $1.4B in 2014 (Top Line Organic Sales)

Cascade Goals Into Process-Focused Plans With Clear Accountability

Bowling Chart The Process

• Two bowling charts are

Track Progress & Accountability With Bowling Charts

• In Pentair’s Plant Scorecard, much of the impact of

Use Plant Scorecard For Plant-Level Bowling Chart… Std Work

Strategy Deployment Process

The GBU’s strategy deployment

All other breakthrough

Process Starts With Pentair’s 3-5 Year Breakthrough Objectives

Define Breakthrough Objectives