Beyond Open Book T H E G R E A T G A M E O F B U S I N E S S

The Front Line Drives the Bottom Line T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

When Employees Think, Act & Feel Like Owners… Everybody Wins. T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

Every employee is given the measures of business success and taught to understand them Every employee is expected and enabled to act on their knowledge to improve performance Every employee has a direct stake in the company’s success Open Book Management T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

Every employee is given the measures of business success and taught to understand them

Every employee is expected and enabled to act on their knowledge to improve performance

Every employee has a direct stake in the company’s success

In 1983 – a failing division of International Harvester Company Today - 26 year employee owned company 320 Million in Sales 17 highly diversified business units 10 cents per share to $234 per share (FY 2007) Great Game of Business – One of the most celebrated approaches to Open-Book Management Background T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

In 1983 – a failing division of International Harvester Company

Today - 26 year employee owned company

320 Million in Sales

17 highly diversified business units

10 cents per share to $234 per share (FY 2007)

Great Game of Business – One of the most celebrated approaches to Open-Book Management

Great Game of Business Think (Educate) Feel (Engage) Act (Enable) T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

Don’t know the most important goal Don’t feel empowered to act Don’t see how they make an impact Are not held accountable Wonder WIIFM T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book Disengaged Employees…

FOCUS ON THE CRITICAL NUMBER ACT ON THE RIGHT DRIVERS FOLLOW THE ACTION & KEEP SCORE PROVIDE A STAKE IN THE OUTCOME 90 DAY MINI-GAME CALLENGE Find a Common Goal Create Line-of-Sight Hold Each Other Accountable You Gotta Wanna! 1 2 3 4 T H E G R E A T G A M E O F B U S I N E S S Engaged Employees… Beyond Open Book

It’s the number that at any given time, is going to have the greatest impact on your business It’s the number you must do well in order to succeed, or maybe even survive. The CRITICAL NUMBER FOCUS ON THE CRITICAL NUMBER Find a Common Goal 1 What does Winning Mean in your business in the next 3 to 12 months? T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book

It’s the number that at any given time, is going to have the greatest impact on your business

It’s the number you must do well in order to succeed, or maybe even survive.

The RIGHT DRIVER T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book It’s the number that directly impacts the financial outcome or Critical Number It’s the number that reveals Cause-and-Effect and provides Line-of-Sight How can you impact the CRITICAL NUMBER? ACT ON THE RIGHT DRIVERS Create Line-of-Sight 2

It’s the number that directly impacts the financial outcome or Critical Number

It’s the number that reveals Cause-and-Effect and provides Line-of-Sight

How can you impact the

CRITICAL NUMBER?

The Critical Number Return on Assets = Net Profit / Total Assets Engineering Control capital spending Help the shop beat their standards Reduce Design flaws & scrap Materials Reduce inventory levels Make better buys Eliminate obsolete material Accounting Focus on receivables Manage cash Manage interest payments Educate employees Operations Beat the labor standard Do it right the first time Produce only what we need General & Administrative Watch expenses Eliminate waste Manage support Reduce Overhead Spending Sales Increase sales Don ’ t discount Focus on high margin product Sell what we have Sally What is the Right Driver for Sally? ACT ON THE RIGHT DRIVERS Create Line-of-Sight 2

Engineering

Control capital spending

Help the shop beat their standards

Reduce Design flaws & scrap

Materials

Reduce inventory levels

Make better buys

Eliminate obsolete material

Accounting

Focus on receivables

Manage cash

Manage interest payments

Educate employees

Operations

Beat the labor standard

Do it right the first time

Produce only what we need

General & Administrative

Watch expenses

Eliminate waste

Manage support

Reduce Overhead Spending

Sales

Increase sales

Don ’ t discount

Focus on high margin product

Sell what we have

FOLLOW THE ACTION & KEEP SCORE 3 Purchase Variances Product XYZ Financial Statements Revenue Cost of Sales Profit Purchasing Materials Material Usage Material Receipts Purchase Variance Sally’s Scorecard Workgroup Scorecard Department Scorecard Financial Scoreboard Cascading the Score Line-of-Sight

HUDDLES Evaluate Game Conditions Check the Score Plan the Next Play (manage deviations) Get Fired Up T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book FOLLOW THE ACTION & KEEP SCORE Hold Each Other Accountable 3

Evaluate Game Conditions

Check the Score

Plan the Next Play (manage deviations)

Get Fired Up

Numbers Focused Enhance Teamwork Promote Action Educate the Team Spread & Maintain Accountability Forward Looking T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book HUDDLES FOLLOW THE ACTION & KEEP SCORE Hold Each Other Accountable 3

Numbers Focused

Enhance Teamwork

Promote Action

Educate the Team

Spread & Maintain Accountability

Forward Looking

Why Forecast? It’s our early warning system - Alerts everyone to opportunities and emerging challenges Line-of-sight, Cause-and-Effect Sustains commitment The ability to forecast accurately is an indication of how well employees understand their numbers T H E G R E A T G A M E O F B U S I N E S S Beyond Open Book FOLLOW THE ACTION & KEEP SCORE Hold Each Other Accountable 3

It’s our early warning system - Alerts everyone to opportunities and emerging challenges

Line-of-sight, Cause-and-Effect

Sustains commitment

The ability to forecast accurately is an indication of how well employees understand their numbers

T H E G R E A T G A M E O F B U S I N E S S Great Game of Business Beyond Open Book FOCUS ON THE CRITICAL NUMBER ACT ON THE RIGHT DRIVERS FOLLOW THE ACTION & KEEP SCORE PROVIDE A STAKE IN THE OUTCOME 90 DAY MINI-GAME CALLENGE Find a Common Goal Create Line-of-Sight Hold Each Other Accountable You Gotta Wanna! 1 2 3 4