Moving the normal distribution
in a large organization
Dr. Johannes Meier
25 September 2003
HHL
Agenda

Introduction: Where is the Problem?

Tools for Moving the Normal Distribution

The Essence of Performance Cultu...
Introduction

Large organizations
 Normal distributions of talent, skill, will

So why do systems like GE function so w...
Return on Capital Employed
Improved Performance
Merger Tax Credits
Revenue
Divestments
Net Cash Flow
Operating Costs
Perso...
Tools for Moving the Normal Distribution
1. Common Language and Good Communication
2. Process Management and Generic Heuri...
1. Common Language

Common language preprequisite for
communication, comparing performance, best-
practice sharing, learn...
1. … and Good Communication

Good Listening

Elegant Simplification

Authenticity

Consistency

Relentlessness
2. Process Management …

6Sigma driving process management

Driven by customer (internal and external)
COPIS = Customer ...
2. … and Generic Heuristics
Examples

SG&A ratios

Gross Margin trends

Pricing waterfalls

Productivity metrics

„Fi...
Fix it - Mindset

Multi-generational plans

„It will get better every month, every quarter, every year“

No silver bull...
3. Creating Organizational Flexibility
Organizational flexibility
capability to move individuals freely within the
organiz...
Session C - Grading
7
gGE Capital IT S olutions – GE CompuNet -
Direct Reports
G. B. σ       
A. K.       
E...

Focus on Top 20% - „love them to death“

Incentives

Trainings

Mentoring

Critical Assignments

Focus on Top 10% -...
5. Performance Culture

Performance culture grows over decades!

Key elements of GE performance culture

Commitment

M...
What is in a number?

Goals & Objectives driven by many (!) numbers

Over-determined system of goals

Stretch targets
...
Conclusion: Important Distinctions

Good Soldier vs. Leader

Values as a Means vs. Values as an End

A Job vs. Meaning
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Moving the normal distribution in a large organization

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Lecture given on 25 September 2003 in HHL's MBA Leadership Seminar.
The lecture draws on lessons on leadership from GE where Johannes Meier was CEO of the subsidiary GE CompuNet from 2000-2003.

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Moving the normal distribution in a large organization

  1. 1. Moving the normal distribution in a large organization Dr. Johannes Meier 25 September 2003 HHL
  2. 2. Agenda  Introduction: Where is the Problem?  Tools for Moving the Normal Distribution  The Essence of Performance Culture  Conclusion: What Does It Mean For You?
  3. 3. Introduction  Large organizations  Normal distributions of talent, skill, will  So why do systems like GE function so well?  How can managers influence the normal distribution?  What are important tools of the management system?  Finally, what is the entry fee into the system?
  4. 4. Return on Capital Employed Improved Performance Merger Tax Credits Revenue Divestments Net Cash Flow Operating Costs Personnel Reductions Net Income SENSE OF URGENCY FLEXIBILITY The Neo-Liberal Context
  5. 5. Tools for Moving the Normal Distribution 1. Common Language and Good Communication 2. Process Management and Generic Heuristics 3. Creating Organizational Flexibility 4. Focus on the Tales of the Normal Distribution 5. Performance Culture
  6. 6. 1. Common Language  Common language preprequisite for communication, comparing performance, best- practice sharing, learning  Example: Semtiocs of Net Income Categories  Denotation (NI >25%, 10-25%, 0-10%, Fix-Sell- Close)  Connotation (Hero vs. Loser)
  7. 7. 1. … and Good Communication  Good Listening  Elegant Simplification  Authenticity  Consistency  Relentlessness
  8. 8. 2. Process Management …  6Sigma driving process management  Driven by customer (internal and external) COPIS = Customer Output Process Input Supplier  Stringent project management DMAIC = Define Measure Analyze Improve Control
  9. 9. 2. … and Generic Heuristics Examples  SG&A ratios  Gross Margin trends  Pricing waterfalls  Productivity metrics  „Fix it, sell it, close it“
  10. 10. Fix it - Mindset  Multi-generational plans  „It will get better every month, every quarter, every year“  No silver bullet, but attention to detail  „The harder you work, the luckier you get.“  “Always be more prepared than the other guy … it is not about luck.”  Quick action  “When you smell smoke, there usually is a fire.”
  11. 11. 3. Creating Organizational Flexibility Organizational flexibility capability to move individuals freely within the organization to a best match of their capabilities and the organization‘s needs  Grading (Session C)  Succession Planning (Session C)  Action Learning & Coaching & Hyper-mobility
  12. 12. Session C - Grading 7 gGE Capital IT S olutions – GE CompuNet - Direct Reports G. B. σ        A. K.        E. S.        K. Sc.        S. M.        M. P.        U. L.       CR CR G. K.        Key: Excellent:    Satisfactory:   Needs Improvement:  Cannot Rate: CR 4 months or less in position  ~20% ~10% P o t e n t i a l ~70% High Medium Limited Summary Assessment P e r f o r m a n c e CustomerFocusEnergy Energize Edge Execution e-BusinessSixSigma Values/Initiatives Input Banding Decision: • Banding K. EB • Banding L. LPB • Banding Ku. LPB  K. (4/L)  L. (3/L) Sc. (3/M) P. (3/L)  B. (1/H) S. (3/M )  K. (2/M) M. (3/L) for E-Bands: use Black font and  for SP-Band: use Blue font and  for LP-band: use Green font and  for below LPB: use red font and Up Since ‘01 C Down Since ‘01 C Performance change only = Female  = Minority σ = QL/MBB/BB Experience  = Non-country Citizen
  13. 13.  Focus on Top 20% - „love them to death“  Incentives  Trainings  Mentoring  Critical Assignments  Focus on Top 10% - „take action“  New job  Exit  Comment: Tough to implement in European labour law context 4. The Tales of the Normal Distribution
  14. 14. 5. Performance Culture  Performance culture grows over decades!  Key elements of GE performance culture  Commitment  Making your numbers  Annual productivity increases  Personal career progress and development  Strong emphasis on measurements  „you get what you measure“
  15. 15. What is in a number?  Goals & Objectives driven by many (!) numbers  Over-determined system of goals  Stretch targets  Many good soldiers on dedicated „missions“ to keep corporate initiatives in focus  Good management = Finding right priorities
  16. 16. Conclusion: Important Distinctions  Good Soldier vs. Leader  Values as a Means vs. Values as an End  A Job vs. Meaning

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