fitzgerald associates tom fitzgerald thriving in recession university of chicago gsb nov. 10,

FitzGerald Associateswww.ManagementConsultants.com

Tom FitzGerald

Thriving in

RecessionUniversity Of Chicago

GSBNov. 10, 2008

http://www.managementconsultants.com/

FitzGerald Associateswww.ManagementConsultants.comSince 1976

Introductions



Objectives

1. How to increase profits NOW

2. How to increase competitiveness NOW - and for the long term


Our Objectives

Have Fun Answer Lots of Questions

A Little History

Longitudinal studies by

The London School of Economics (LSE)

and McKinsey & Co.

Study

A 20% Improvement In 3 Critical Functions

Generates a 42% Increase in Financial Returns

(High performers as well as low)

(Reverse also true t.f.)

Results

Equivalent to

Increase of 5% in ROCE 25% increase in workforce Going from 10 plants to 17 Increasing capital investment by 70%

Results


The Concepts

ManageMENT Vs Managers The Operating Dynamic / Will to Compete Intrinsic Trajectory The Company: a living entity


Business Processes

Management Systems

Corporate Will

Origins of Performance

Corporate Culture

Corporate Will

Will to Combat

Corporate Drive

Business Motivation

Corporate Energy

Corporate Psychology

Will to Compete(AKA The Operating Dynamic)

Root Cause

Of All Business PerformanceIf strong, company succeeds

If weak, the company falters

Corporate Will

That complex of organizational and human factors that underlie, cause

and impel all corporate performance

(~100)

(Entirely within the control of management)

Corporate Will

Origins of Performance

Cost of Change

Business Processes

Management Systems

Corporate Will


The ROI

In changing Corporate Will

Can be extraordinary

(The McKinsey/LSE Studies)

Why Transform Corporate Will Ambition (the 40%) Recession (the 40%) On-boarding New sr. execs have an 18 month, 50% retention rate

($1M per failure) M&A 70% failure rate Only 30% of reengineering programs work

placebo effect and luck Mobilizing the company Other


Where the Results Come From

1. Systemic Efficiencies

2. Process Improvements

3. New Tactics

4. New Strategies


Corporate Will

6 Critical Functions

9 Generators


A small change In three

Critical Functions

Generates a large change in

Financial Returns



These Drivers

Are entirely within

The control of

Management!

Critical Functions

are changed by changing the

Generators


I

The 6 Critical Functions

6 Innovation / Creativity

5 Customer Orientation

4 Profitable Growth Orientation

3 LEAN OPERATIONS

2 TALENT MANAGEMENT

The 9 Generators

1. CORPORATE DECISIVENESS

2. ACKNOWLEDGEMENT OF WORK3. ACCOUNTABILITY4. CORPORATE ASSERTIVENESS, ENERGY5. COMMITMENT OF MANAGE-MENT6. OPENESS OF MANAGE-MENT7. ADAPTABILITY8. EFFECTIVENESS9. COOPERATION


The Transformation Process

1. Measure the 15 drivers (Functions and Generators) of performance and their subsidiary functions – a profile of the causes of performance

2. Determine the desired profile – item by item

3. Cause the individual managers to commit to specific action steps, with dates, to fix or improve key drivers and subs

4. Cause the individuals to execute the action steps


Measurement+

How we do it

FitzGerald Associateswww.ManagementConsultants.comSince 1976

Coding Convention

All line items can have a + or – value

A, B, C, D are positive (descending)

E, F, G are negative (descending)


Consolidated Statements of Operating Dynamic

Gamma, Inc.

Balance Sheet

06/2008 Score %Level

% of Max (Min) A - G

PERFORMANCE MANAGEMENT

Vision of Future 21.429 D

Goal Definition 42.857 C

Action Plans 7.143 D

Plans Communicated (14.286) E

Understanding Personal Contribution 64.286 B

Decisions Implemented 7.143 D

Decisions Followed Up 7.143 D

Planning/Envisioning Capability 85.714 A

Appropriate KPI's Measured 0.000 D Performance Management Balance 19.841 D

TALENT MANAGEMENT

Attracting / Hiring 7.143 D

Leadership Development 35.714 C

Retention 71.429 B

Out-Placement 28.571 C

Leadership Skills 28.571 C

Individual Development Plans 0.000 D

Talent Management Balance 35.714 C

LEAN OPERATIONS

Competitive Information 50.000 C

Efficiency Improvement Efforts 42.857 C

Implementation of Improvements 50.000 C

Lean Operations Balance 47.024 C

PROFITABILITY/GROWTH

Growth (14.286) E

Profitable Growth Focus 28.571 C

Profitability / Growth Balance 20.000 D

CUSTOMER ORIENTATION

Customer Communication 21.429 D

Enhancement of Customer Service 57.143 B

Customer Experience 42.857 C

Knowledge of Customer Wants 42.857 C

Customer Orientation Balance 47.321 C

INNOVATION

Innovation Encouraged 35.714 C

Purposeful Innovation 21.429 D

Innovation Balance 28.571 C

Total Assets (Liabilities) 29.993 C

Consolidated Statements of Operating DynamicGamma, Inc.

Balance Sheet

06/2008

Score % LevelPERFORMANCE MANAGEMENT % of Max (Min) A – G

Vision of Future 21.429 DGoal Definition 42.857 CAction Plans 7.143 DPlans Communicated (14.286) EUnderstanding Personal Contribution 64.286 BDecisions Implemented 7.143 DDecisions Followed Up 7.143 DPlanning/Envisioning Capability 85.714 AAppropriate KPI's Measured 0.000 D

Performance Management Balance 19.841 D

Consolidated Statements of Operating DynamicGamma, Inc.

Profit (Loss)

Score Level % of Max (Min) A – G

CORPORATE DECISIVENESS Need for Consensus 21.429 D Move to Decision 0.000 D Move to Action 28.571 C Manager Confidence 71.429 B

Net Corporate Decisiveness 27.679 C

ACKNOWLEDGEMENT OF WORK Communication Re Work 21.429 D

Quality of Evaluations 64.286 B Appreciation 50.000 C

Net Acknowledgement of Work 44.048 C

ACCOUNTABILITY Peer Accountability 35.714 C Frequency of Reporting 64.286 B Deadline Enforcement 21.429 D

Net Accountability 38.571 C

CORPORATE ASSERTIVENESS, ENERGY Manager Assertiveness 7.143 D Manager Enthusiasm 7.143 D Manager Competitiveness 57.143 B

Net Corporate Assertiveness, Energy 27.976 C

COMMITMENT OF MANAGEMENT Manager Commitment 64.286 B Peer Commitment 28.571 C

Net Commitment of Management 46.429 C

OPENESS OF MANAGEMENT Worker Trust 42.857 C Worker Empowerment 57.143 B

Net Openness of Management 50.000 C

ADAPTABILITY Speed of Adaptation 0.000 D Willingness to Change 35.714 C

Net Adaptability 17.857 D

EFFECTIVENESS Success Momentum 0.000 D Schedule Consistency 14.286 D Focus on Issues (28.571) F

Net Effectiveness ( 4.762) E

COOPERATION / INTERNAL COMPETITION Manager Cooperation 42.857 C

Conflict Resolution 50.000 CNet Cooperation / Internal Competition 47.321 C

Net Gain (Loss) 34.841 C

Consolidated Statements of Operating DynamicGamma, Inc.Gain (Loss)

06/2008

Score % LevelCORPORATE DECISIVENESS % of Max (Min) A – G

Need for Consensus 21.429 DMove to Decision 0.000 DMove to Action 28.571 CManager Confidence 71.429 B

Net Corporate Decisiveness 27.679 C

Consolidated Statements of Operating Dynamic

Alpha Detector

Balance Sheet

06/2008 Score % Level

% of Max (Min) A - G

PERFORMANCE MANAGEMENT

Vision of Future (33.336) F

Goal Definition (41.669) F

Action Plans (50.000) F

Plans Communicated (54.169) G

Understanding Personal Contribution 33.333 C

Decisions Implemented (20.838) E

Decisions Followed Up (62.500) G

Planning/Envisioning Capability 20.825 D

Appropriate KPI's Measured (62.500) G Performance Management Balance (35.928) F

TALENT MANAGEMENT

Attracting / Hiring (66.667) G

Leadership Development (58.338) G

Retention (41.667) F

Out-Placement (29.167) F

Leadership Skills (33.350) F

Individual Development Plans (50.000) F

Talent Management Balance (46.414) F

LEAN OPERATIONS

Competitive Information (25.000) E

Efficiency Improvement Efforts ( 4.170) E

Implementation of Improvements (16.662) E

Lean Operations Balance (13.542) E

PROFITABILITY/GROWTH

Growth (58.350) G

Profitable Growth Focus (20.838) E

Profitability / Growth Balance (28.340) F

CUSTOMER ORIENTATION

Customer Communication (37.500) F

Enhancement of Customer Service 4.167 D

Customer Experience (45.829) F

Knowledge of Customer Wants (25.000) E

Customer Orientation Balance (18.054) E

INNOVATION

Innovation Encouraged (20.833) E

Purposeful Innovation (37.500) F

Innovation Balance (29.167) F

Total Assets (Liabilities) (31.633) F

Consolidated Statements of Operating DynamicBeta Food Company

Gain (Loss)

Score Level % of Max (Min) A – G

CORPORATE DECISIVENESS Need for Consensus 16.670 D C Move to Decision 25.000 D CMove to Action 33.335 C BManager Confidence 41.670 C BNet Corporate Decisiveness 29.168 C B

ACKNOWLEDGEMENT OF WORK Communication Re Work 33.337 C B

Quality of Evaluations 58.333 B CAppreciation 50.000 C BNet Acknowledgement of Work 46.529 C B

ACCOUNTABILITY Peer Accountability 41.666 C BFrequency of Reporting 0.000 D BDeadline Enforcement 83.333 A A

Net Accountability 44.443 C B

Net Gain (Loss) 40.093 C B


The Discovery Process

Feet to the Fire


The Discovery

Process

&

Action Plans


Vision of Future: As acknowledged and bought into by managers and supervisors. It has a possible range of 11.000 +/-. The score for this element is 2.357.

LEVEL D 21.429%

CEO 7/15/08 With team, create a business blueprint and action steps and

discuss in detail with subordinates. Obtain their input and make changes as appropriate.


1) PERFORMANCE MANAGEMENT

The most important of the six Critical Functions. It is a complex function, comprised of more than twenty elements, ranging from strategic vision to action plan development to follow up. In this survey we address nine. This Function is driven primarily by the Corporate Decisiveness component (generator) of the Gain and Loss statement (G&L). It has a possible range of 90.000 +/-.The Overall score for this Critical Function is 17.857 This indicates a weak positive pressure on the business.Level D 19.841% CEO:

6/25/08 . - Create with senior managers a “business blueprint”. Issue to all management ranks for discussion.7/24/08 - Rank order all immediate reports (and theirs) and review with board in special session. Make hire and outplace decisions and implement.

COO – Incompetence is tolerated too long.7/24/08 - Rank order all immediate reports.

CMO 7/24/08 - Rank order all immediate reports.CFO

7/01/08 – review report against financials and financial model and reconsider forecasts. Review with CEO and team.7/24/08 - Rank order all immediate reports

Questions?


Wrap Up

The 6 CFs constitute the Balance Sheet The 9 Generators constitute the G&L Negatives are where you find the motivation to

change

Wrap Up I

The Balance Sheet and P&L (the Citical Functions & Drivers) Show

The Trajectory of the company The root causes of performance What needs to be changed Where to get the greatest return on effort

Wrap Up II

The Rewards

An improvement of 25% in three Critical Functionsresults in a 40% increase in financial returns.

(LSE/McKinsey)

(High Performers as well as troubled)

The cost is virtually ZEROThe first year ROI is extraordinary

Wrap Up III

What would it mean to you

If your company / client

Increased profits by just 10%?

Question


Since 1976

fitzgerald associates tom fitzgerald thriving in recession university of chicago gsb nov. 10,

Documents

study slide

cooperation slide

talent management slide

origins of performance

corporate performance

corporate culture corporate

negative descending

little history slide