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