Aligning Expectation in a Business Transition.V1

Why do so many initiatives fail? 60%+ of change initiatives fail in North America 70%+ of leaders expectations arenot understood by their people about a major change – particularly when down-sizing 72% of people hired are terminated within 2 yrs due to lack of alignment In the last 12 years, 2 in 3 failure rate has not changed – From Kotter (1996) to McKinsey (2009)

Non-Financial Factors Valued Most By Investors Only 1 in 10 can consistently achieve their Strategy’s full potential Factors <10% Strategy Execution >90% Management Credibility Quality of Strategy Innovativeness Companies Not Delivering Consistently on Strategy Attract Talented People Implementation Challenge Strategy Execution Poor Strategy Execution - Impact 95% of employees don’t understand company strategy 50% of average employee’s time spent on non-productive work 50% more likely to have turnover Sources: “The Balanced Scorecard” David P. Norton; Arthur Andersen estimate: Corporate Strategy Board research; Measures That Matter,” Ernst & Young, LLP, Gates, Stephen, Aligning Strategic Performance Measures and Results

The elastic band of dependence Organization Owner

What do you allow employees to do? Habits of dependence they think is required: It’s easier – “if I don’t make decisions, I can’t make mistakes” Lean on the founder because they fear change...who will take over after…On the plus side….. Employee Involvement (EI) is greater in companies under 25 employees who typically have developed a working relationship with the owner: Encourages commitment to managerial goals & the success of the enterprise Increases profitability

Signs of misaligned expectations “That’s not what I meant…” “This is not what I asked for!” “My colleagues don't seem to do what I expect...” “They never tell us the whole story!” “I can never do anything right!” “They never send us information, we’re always sending information to them!” Sound familiar? Copyright PDS Group 2009 All Rights Reserved

1 2 4 3 Can you Transition? Dependency Analysis Hi You ain’t going Anywhere! They don’t get it! What you expect You can Transition! You don’t get it! Independent Lo Lo Hi What they think you expect

Copyright PDS Group 2009 All Rights Reserved Increased sales by 10%-15% in 30 weeks Increased Customer Sat. Ratings (4th – 1st) Gross Revenues Up from $20m to $30m AlEx™ Prevented Restructuring Failures Closing Rate Improved by 66% Isolated Hi Performing Teams Factors Delivered Building OTIF & No Legal Issues Increase Revenue 14% in 6 months

Genzink Steel Case Study “My aim was to transition out of operations while getting more visibility and insight about GS people. I needed an approach that could show: Which people are that understand their job; Which people need a little help to get the job done; Who are the people who just don’t get it? With bringing in new people quickly, an assessment was needed to see if the blend of new and existing team were able to sit down and understand what needs to get done. “Are they going to hook up?”

Genzink Steel Case Study (contd.) AlEx™…..helped me: Gain insight about the new people and those we had on-board for some time Realize more than ever that many decisions and observations were assumptions....AlEx™ verified and challenged my assumptions Verify and test other peoples’ assumptions by mapping out the key inter-relationships… Depend on five key managers …which showed how well they hooked up and how I could get to the point of standing back.

Cliff & Tom Case Study Cliff’s Expectations of Tom What Cliff Thinks Tom Expects of Him 12 22 What Tom Thinks Cliff Expects of Him Tom’s Expectations of Cliff 13 4

Unresolved Issues PerformanceCriteria Discards New & Matched Expectations Aligning Expectations Process (ALEX™) My Expectations of Others(MEOs) What Others’ Think I Expect Them(OEMs) AlignmentDiscussions Copyright PDS Group 2009 All Rights Reserved

My Expectations What I expect of people during the transition. Includes: What I expect you to Keep doing . . . . What I want you to Startdoing . . . . What I want you to Stop doing . . . .

Others’ Expectations What I think others will expect of me during the transition, Including: What things I think others will expect me to Keepdoing . . . . What I think others want me to Startdoing . . . . What things I think others want me to Stop doing . . . .

Keep, Start & Stop In all planned change the minimum number of alignment components needed is: ,[object Object]

What do they need to start doing

What they must stop doing,[object Object]

Start Expectations Help people in the plant look at the big picture when planning the work at each station and be able to quickly adapt the schedule according to the availability of parts and the work required at the next station. Support me to work with the service people and sales people to change their attitude from "us" to "we" (cross functional problem solving) All PO's or subcontracting of raw materials will be directed through Matt G and progress of any subcontracting will be followed up by Matt G

Stop Expectations Become increasingly less involved in the MRO improvement process with me in an overview of the objectives limitations and capabilities of the modified software Stop being so impatient! Overcoming the mindset "These are our customers and we do every thing to take care of them" with balancing their needs with our ability to do profitable work with on-time delivery. Stop people finger pointing by getting them together to resolve issues when an incident occurs and consistently stress that this is not acceptable

AlEx™ - The Alignment Process 2 4 1 3 Introduce Components & Process DevelopStrategic Components Select Key Players &/or Focus Groups Mission & Strategy Coach Participants &Collect Their Expectations 6 Key Component Prioritization& Implications Use CrossHairs Reports todevelop problem definitions AlEx 5 7 9 8 Alignment Process Brief, Train, Coach Rapid Improvement Cycles (Based on Tracking TBDs, Discards, Complete & Unresolved Expectations) Integration &Transfer Capability Knowledge Skills Capacity Develop Metrics & Rewards per Component Copyright PDS Group 2009 All Rights Reserved

Project Sizes Royal Bank of Canada IMS Health (Canada) Qwest Telecoms Genzink Steel Turner Construction 20 participants/6 weeks 25 participants/10 weeks – Phase 1 12 participants/8 weeks – Phase 1 6 participants/14 weeks 12p/8w;86p/1yr; 100+/Ongoing Copyright PDS Group 2009 All Rights Reserved

Cliff & Tom’s Four Blocker Cliff’s Expectations of Tom What Cliff Thinks Tom Expects of Him 12 22 4 13 What Tom Thinks Cliff Expects of Him Tom’s Expectations of Cliff Copyright PDS Group 2009 All Rights Reserved

Right Focus Right People Right Responses Achieving Successful Transition

Cross Hairs - Targeting on what counts OAC’s as a percentage of total expectations – 11:2489=.44% RFI’s /design issues expectations as a total percentage of total expectations 116:2489=4.6% CO’s as a total percentage of total expectations 128:2489=5.1% Copyright PDS Group 2009 All Rights Reserved

The Alignment Process Agree Evidence Rate Coach Rate Again AlEx™ Easy Entry AlEx™ Cross Hairs AlEx™ Priority 5 AlEx™ Cross Hairs New Expectations Hold Receivers Accountable Copyright PDS Group 2009 All Rights Reserved

Seven Alignment Challenges Embedding Change Coaching Strategically Replicating Success Removing Distractions Operational Excellence Aligning Expectations Rewarding Change 39 Copyright PDS Group 2009 All Rights Reserved

Aligning Expectation in a Business Transition.V1

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