1. FitzGerald Associates www.ManagementConsultants.com Tom FitzGerald www.ManagementConsultants.com Thriving in Recession University Of Chicago GSB Nov. 10, 2008

2. FitzGerald Associates www.ManagementConsultants.com Since 1976 www.ManagementConsultants.com Introductions

3. FitzGerald Associates www.ManagementConsultants.com Objectives 1. How to increase profits NOW 2. How to increase competitiveness NOW - and for the long term

4. FitzGerald Associates www.ManagementConsultants.com Our Objectives Have Fun Answer Lots of Questions

6. A Little History

7. Longitudinal studies by The London School of Economics (LSE) and McKinsey & Co. Study

8. 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

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

10. FitzGerald Associates www.ManagementConsultants.com www.ManagementConsultants.com The Concepts ManageMENT Vs Managers The Operating Dynamic / Will to Compete Intrinsic Trajectory The Company: a living entity

11. Business Processes Management Systems Corporate Will Origins of Performance

12. Corporate Culture Corporate Will Will to Combat Corporate Drive Business Motivation Corporate Energy Corporate Psychology

13. Will to Compete (AKA The Operating Dynamic) Root Cause Of All Business Performance If strong, company succeeds If weak, the company falters Corporate Will

14. That complex of organizational and human factors that underlie, cause and impel all corporate performance (~100) (Entirely within the control of management) Corporate Will

15. Origins of Performance Cost of Change Business Processes Management Systems Corporate Will

16. FitzGerald Associates www.ManagementConsultants.com The ROI In changing Corporate Will Can be extraordinary (The McKinsey/LSE Studies)

17. 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 FitzGerald Associates www.ManagementConsultants.com

18. Where the Results Come From 1. Systemic Efficiencies 2. Process Improvements 3. New Tactics 4. New Strategies FitzGerald Associates www.ManagementConsultants.com

19. Corporate Will 6 Critical Functions 9 Generators FitzGerald Associates www.ManagementConsultants.com

20. A small change In three Critical Functions Generates a large change in Financial Returns FitzGerald Associates www.ManagementConsultants.com

21. These Drivers Are entirely within The control of Management!

22. Critical Functions are changed by changing the Generators FitzGerald Associates www.ManagementConsultants.com

23. I The 6 Critical Functions 6 Innovation / Creativity 5 Customer Orientation 4 Profitable Growth Orientation 3 LEAN OPERATIONS 2 TALENT MANAGEMENT

24. The 9 Generators 1. CORPORATE DECISIVENESS 2. ACKNOWLEDGEMENT OF WORK 3. ACCOUNTABILITY 4. CORPORATE ASSERTIVENESS, ENERGY 5. COMMITMENT OF MANAGE-MENT 6. OPENESS OF MANAGE-MENT 7. ADAPTABILITY 8. EFFECTIVENESS 9. COOPERATION

25. FitzGerald Associates www.ManagementConsultants.com 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

26. FitzGerald Associates www.ManagementConsultants.com Measurement + How we do it

27. FitzGerald Associates www.ManagementConsultants.com Since 1976 www.ManagementConsultants.com Coding Convention All line items can have a + or – value A, B, C, D are positive (descending) E, F, G are negative (descending)

28. 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

29. Consolidated Statements of Operating Dynamic Gamma, Inc. Balance Sheet 06/2008 Score %Level PERFORMANCE MANAGEMENT % of Max (Min)A – G Vision of Future21.429 D Goal Definition42.857 C Action Plans 7.143 D Plans Communicated (14.286) E Understanding Personal Contribution64.286 B Decisions Implemented 7.143 D Decisions Followed Up 7.143 D Planning/Envisioning Capability85.714 A Appropriate KPI's Measured 0.000 D Performance Management Balance 19.841 D

30. Consolidated Statements of Operating Dynamic Gamma, Inc. Profit (Loss) Score Level % of Max (Min) A – G CORPORATE DECISIVENESS Need for Consensus21.429D Move to Decision 0.000D Move to Action28.571C Manager Confidence71.429B Net Corporate Decisiveness 27.679 C ACKNOWLEDGEMENT OF WORK Communication Re Work21.429D Quality of Evaluations64.286B Appreciation50.000C Net Acknowledgement of Work 44.048 C ACCOUNTABILITY Peer Accountability35.714C Frequency of Reporting64.286B Deadline Enforcement21.429D Net Accountability 38.571 C CORPORATE ASSERTIVENESS, ENERGY Manager Assertiveness 7.143D Manager Enthusiasm 7.143D Manager Competitiveness57.143B Net Corporate Assertiveness, Energy 27.976 C COMMITMENT OF MANAGEMENT Manager Commitment64.286B Peer Commitment28.571C Net Commitment of Management 46.429 C OPENESS OF MANAGEMENT Worker Trust42.857C Worker Empowerment57.143B Net Openness of Management 50.000 C ADAPTABILITY Speed of Adaptation 0.000D Willingness to Change35.714C Net Adaptability 17.857 D EFFECTIVENESS Success Momentum 0.000D Schedule Consistency 14.286D Focus on Issues(28.571) F Net Effectiveness ( 4.762) E COOPERATION / INTERNAL COMPETITION Manager Cooperation42.857C Conflict Resolution50.000C Net Cooperation / Internal Competition 47.321 C Net Gain (Loss) 34.841 C

31. Consolidated Statements of Operating Dynamic Gamma, Inc. Gain (Loss) 06/2008 Score %Level CORPORATE DECISIVENESS % of Max (Min)A – G Need for Consensus21.429 D Move to Decision 0.000 D Move to Action28.571 C Manager Confidence71.429 B Net Corporate Decisiveness 27.679 C

32. 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

33. Consolidated Statements of Operating Dynamic Beta Food Company Gain (Loss) Score Level % of Max (Min) A – G CORPORATE DECISIVENESS Need for Consensus16.670D CMove to Decision25.000D C Move to Action33.335C B Manager Confidence41.670CB Net Corporate Decisiveness 29.168 C B ACKNOWLEDGEMENT OF WORK Communication Re Work33.337C B Quality of Evaluations58.333B C Appreciation50.000CB Net Acknowledgement of Work 46.529 C B ACCOUNTABILITY Peer Accountability41.666C B Frequency of Reporting 0.000D B Deadline Enforcement83.333AA Net Accountability 44.443 C B Net Gain (Loss) 40.093 CB

34. FitzGerald Associates www.ManagementConsultants.com The Discovery Process Feet to the Fire

35. FitzGerald Associates www.ManagementConsultants.com The Discovery Process & Action Plans

36. FitzGerald Associates www.ManagementConsultants.com 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.

37. FitzGerald Associates www.ManagementConsultants.com 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

38. Questions?

39. FitzGerald Associates www.ManagementConsultants.com Wrap Up

40. 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

41. 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

42. The Rewards An improvement of 25% in three Critical Functions results in a 40% increase in financial returns. (LSE/McKinsey) (High Performers as well as troubled) The cost is virtually ZERO The first year ROI is extraordinary Wrap Up III

43. What would it mean to you If your company / client Increased profits by just 10%? Question

45. FitzGerald Associates www.ManagementConsultants.com Since 1976