FORMING, NORMING & REFORMING

1. FORMING, NORMING & REFORMING Building a Vision and Culture of Learning Jerry L. Marlar, Former President Sulzer Orthopedics, Inc. A Company of SulzerMedica Zurich, Switzerland

2. Marlar’s Six Questions • Why Are We Here? • How Are We Doing? Really!! • Why Am I here? • How Am I Doing? Really!! • Are We Committed to Excellence? • Can I Trust You?

3. PRESENTATION PURPOSE To describe the evolutionary journey of Sulzer Orthopaedics & to illustrate Learning Organization principles.

4. Key Learning Objectives • To illustrate learning organization principles with the experience of Sulzer Orthopaedics. • To define a process for linking vision, mission and strategy of the organization. • To describe the challenges of leading an organization to develop an adaptive capacity to change.

5. LEARNING ORGANIZATION • A Learning Organization is an organization skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.

6. Learning Organization Principle • A learning organization is a means to an end, not an end in itself. • The intimate aim is to safeguard the survival of the firm through continuous renewal.

7. To Safeguard Survival… We must understand “life cycle” dynamics.

8. REFORMING (Integrating) NORMING FORMING PHASES OF GROWTH Growth and Complexity Time

9. FORMING PHASE ExploringandInventingthePattern • Organizational Characteristics • Entrepreneurial • Divergent • Inventive • Creative • Exploratory Growth and Complexity Time

10. Norming Phase Extending and Improving • Organizational Characteristics • Management • Duplication • Improvement • Modification • Commonality--Likeness Growth and Complexity Time

11. Reforming (Integration) Phase Integrating the New and Different • Organizational Characteristics • Shared Leadership • Divergence & Innovation • Sharing & Integrating Differences • Partnering Growth and Complexity Time

12. Organizational Growth: Reforming (Bifurcation) Phase 1 Phase 2 Phase 3 New Phase 1 Re-inventing the Future A NEW form Reforming New Phase One GROWTH • Organizational Characteristics • New inventions/innovations • Integrating new elements into the basic business • Created outside the old system TIME

14. Executive Team Development of Purpose, Service and Economic Missions and initial mapping of Values and Strategies Mid-Management Team Confirmation of Purpose, Service and Economic Missions and initial mapping of Values and Strategies Total Management Team Finalize Purpose, Service and Economic Missions and Strategies Total Company Team Confirmation of Purpose, Service and Economic Missions , beginning of implementation of tactics. Demonstration of Values

15. Sulzer Orthopaedics Purpose To Improve the Quality of Life By Advancing Orthopaedic Medicine and Creating Model Learning Organizations

16. Sulzer Ortho. Service Mission • Sulzer Orthopaedics will improve the quality of life by utilizing innovative proprietary product/process technologies and services and by establishing business and learning partnerships with key individuals, institutions, and companies in carefully selected sectors of orthopaedics such as: • Orthopaedic devices • Biologically active products focused on orthopaedic applications • Ancillary devices and services important to obtaining optimal results with our implants and meeting our customer’s requirements. Sulzer Ortho’s mission will be accomplished in a business environment that is enjoyable, enabling and empowering.

17. Sulzer Ortho. Economic Mission • We Exist to Increase Value for Customers, Employees and Stockholders. We are Committed to – • Growth - Minimum Three-Year Rolling Average Compound Growth Rate of 50% Higher than the Market Growth Rate • Profit -Meet the Financial Requirements of Our Owner • Asset Management– Sufficient Cash to Cover Expenses, Investments in Growth, and Debt. This mission will be accomplished in a business environment that is enjoyable, enabling and empowering.

18. Sulzer Orthopaedic Values Create and maintain an environment where all stakeholders are encouraged to share a passionate commitment to our vision for the future based on mutually held values. The cornerstone for all our values is being customer-oriented. • Quality as defined by the customer • Support for all our people in their growth toward higher levels of competence • An environment of mutual trust and respect that honors and integrates individual differences • A culture that rewards the achievement of goals • Effective communication of ideals, information and feelings • A spirit of teamwork • An environment that facilitates change

19. Learning Organization Principal Learning must link directly to the firm’s vision, mission and strategy.

20. Strategies embody the organization’s learning challenges… to be focused and successful the organization must prioritize it’s learning.

21. Life Cycle of Strategies Critical Success Factor Opportunity Importance Waste! Birth! Performance

22. Sulzer Ortho. Evolution of Strategies 1992-1993 Immediate Opportunities • Passionate Commitment to Vision/Values • Rapid Product Deployment • Duplicate the Best Sales/Distribution Models Challenges • Partnerships with Sales/Distribution Networks • Effective Communication

23. Sulzer Ortho Evolution of Strategies 1994 Immediate Opportunities • Sales to Large Buying Groups • Product Line Extensions • Rapid Product Deployment Challenges • Extend/Enhance Current Distribution System • New Geographic Markets • Effective Business Tools • Meet US/ISO Requirements • Effective Communication Mid-Range Opportunities • Leading Innovator Value-Added Services

24. Sulzer Ortho Evolution of Strategies 1995-1996 Immediate Opportunities • Sales to Large Buying Groups • Product Line Extensions • Rapid Product Deployment • Reduce Product Costs Challenges • New Innovative Products • Effective Business Tools • New Geographic Markets • New Anatomical Markets Mid-Range Opportunities • Leading Innovator Value-Added Services

25. Sulzer Ortho Evolution of Strategies 1997 Immediate Opportunities • Reduce Product Costs • Leading Innovator Value-Added Services • New Anatomical Markets • Effective Management Challenges • Effective Teamwork (Cross-Functional) • Total Inventory Management

26. The “S” Curve (Gompertz) – A Market Destiny • All homogeneous markets follow an “S” Curve during growth. • The “Gompertz Curve is a mathematical Function that has been shown to be the “best fit” for actual data that follows an “S “ curve. • Using a “best fit” instead of actual data minimizes or eliminates variations in revenue due to the economy, internal strategies, etc. • Use of the Gompertz Curve allows you to predict the future growth and the key transition points for strategic planning.

27. Implication of The Three Key Strategic Points • The Point of Success • Success is clearly established – Revenue increasingly exceeds expenses • Strategies should be implemented based upon growth potential • Too early to identify the Point of Inflection

28. Implication of The Three Key Strategic Points • The Point of Inflection • Point of Inflection can only be identified after it has happened • Once the Point of Inflection is identified, the Point of Destiny can be predicted! • Most likely time to be overconfident • Period during which most foolish strategic actions are accomplished • Time to benchmark competitors and “best in class”

29. Implication of The Three Key Strategic Points • The Point of Destiny • Market share battles are looming • Efficient operations is mandatory for optimum survival • Market share increases must be “purchased”; it will not be free • Strategies for expanding geographies or product scope are also appropriate • Strategies for increasing market share are appropriate • Margin/profits will be squeezed

30. Learning Organization Principal Learning Organizations never “arrive,” but are always “becoming”.

32. Marlar’s Six Questions • Why Are We Here? • How Are We Doing? Really!! • Why Am I Here? • How Am I Doing? Really!! • Are We Committed to Excellence? • Can I Trust You?

33. 谢谢, 谢谢非常

34. Reference Information • Email: jlmarlar@sbcglobal.net • Blue Bridge International • Student & Professional Exchange & Development • www.bluebridgeint.com