The Volvo Way is the most important factor for our competitiveness

1. The Volvo Way is the most important factor for our competitiveness Britta Börjeson Volvo OD coordinator

2. Historic reminder of our company culture • Company philosophy (1995) • The Volvo Way (1999) • The Volvo Way (2004)

3. 1995 CORPORATE PROJECT“STRATEGY OF CHANGE” Focus: • Ability to Change Purpose:• Establish a high level of knowledge about change • Develop a change acceleration process that will support the Volvo Group transformation to a world class company The challenge: Develop the organization working simultaneously with: - the best way of running the existing operations - continuously improve and change the operations

4. The OD concept is established Strategic focusing, co-worker involvement and breakthrough results! OD makes the company more maneuverable.

5. Business environment • Business plan • ’The Volvo Way’ OD starts in the strategy process … Strategic focusing FORMULATED LEADERS

6. Towards the Operative Vision ? ? ? ? ? ? Operative Vision ? Strategy Today 2-3-4 years

7. Strategic Focus - the most important step to take right now towards the Operative Vision, and where the contribution from everyone is critical Performance Next SF Why? Operative Vision Next SF Strategic Focus Time

8. Business environment • Strategy • ’The Volvo Way’ … creating structure, energy and commitment … Strategic focusing STRATEGIC DIALOGUE FORMULATED LEADERS Creating structure, energy and commitment

9. Follow-up seminars Follow-up seminars Why and what: How does OD work • Business environment • Strategy • ’The Volvo Way’ Strategic focus and reasoning Leader & Co-worker Seminars How: 6 12 0 Months

10. Communication  Depth in the Organization Reach out Involvement Feed back Agility

11. The strategic dialogue at Volvo Bus - Mexico Volvo Aero - Sweden

12. The strategic dialogue at Volvo Aero “Through the open and straight forward dialogue that characterizes our OD seminars, we are provided with a natural opportunity to muster our resources around a key area, namely increased productivity, which is our Strategic Focus. Thomas Ellström, Director Production, Components, Volvo Aero

13. … delivering results and change … • Business environment • Strategy • ’The Volvo Way’ Strategic focusing STRATEGIC DIALOGUE FORMULATED LEADERS Creating structure, energy and commitment WORK STRUCTURE Delivering results and change

14. Follow-up seminars Follow-up seminars Why and what: How does OD work • Business environment • Strategy • ’The Volvo Way’ Strategic focus and reasoning Leader & Co-worker Seminars How: 6 12 0 Months Supported by Management, Coaches and Internal consultants

15. The team’s goal and measurement ACTION PLAN Agenda OD team meeting 1. Why are we here? 2. Goals and measurements 3. Follow up actions 4. New action items 5. Reflection tram24 2006-10-54 tram24 2006-10-54 tram24 2006-10-54 tram24 2006-10-54 tram24 tram24mkkk 2006-10-54 tram24 tram24 2006-10-54 tram24 tram24 2006-10-54 How the team works at Volvo Aero Team’s improvement area Tim Nylander, OD team leader,and Annika Drechsel, OD coach, after the OD meeting “It’s my job to act as a pilot and make sure that everyone has the same objective.” says Tim Nylander, when he describes his role as an OD team leader at engine service. The team meets every two weeks and he describes the lively discussions and suggestions they produce. “One of them was that we should modify our tools ourselves. As a result, we will save about SEK 34,000 in one year.”

16. The OD team at work at Volvo Logistics By actively chasing documentation from customers, the Customs Department at Volvo Logistics Inbound saved more than SEK 3.5 million last year. The group’s OD work focused on helping customers understand the importance of returning customs declarations and other documents as quickly as possible. “If we don’t have them in time for the report we are charged a fee based on the invoice value of the goods.” In the OD work, they have initiated an extensive information campaign aimed at customers. It also helped save working hours, chasing lost and delayed documents. “Both we and our customers are saving large sums of money as a result”

17. Volvo Wheel Loaders, Arvika, 2000-2004 Eliminate disturbances in all processes No of loaders per employee Faults per loader Delivery time Assembly Volume LogisticsPurchasingProduction

18. Strong “partners” Complexity TPM Lean Six Sigma 5 S Pareto Scatter Ishikawa Affinity Measurement & Goal Action plan Time

19. Business environment • Strategy • ’The Volvo Way’ … sharing knowledge … Strategic focusing STRATEGIC DIALOGUE FORMULATED LEADERS Sharing knowledge Creating structure, energy and commitment ON THE JOB LEARNING WORK STRUCTURE Delivering results and change

20. Working with OD is a source of inspiration, according to the Customs Department at Inbound. The OD team’s learning at Volvo Logistics In addition to supplying customers with more information, the department has also learnt more about its customers’ situation. “We have also learnt from one another and now have a far better understanding of one another’s situation. It is, for example, important for us to know why certain documents get stuck in the pipeline.”

21. Reflection from Volvo Wheel Loaders, Arvika • "OD is a long-term, structured way of working, which involves all Co-workers. It gives better conditions for good manoeuvrability of a large organisation.By this way of working, we create an understanding for why we want to make changes. This brings motivation among all Co-workers and a willingness to help.In the OD process our Leadership is exposed, for existing as well as potential leaders. It helps us create and maintain our company culture, (The Volvo Way).All leaders create their own Operative Vision. It is a local translation of the company´s strategic direction. The change work of the whole organisation is aligned in the same direction." Bengt Lundström, Manufacturing, Volvo Haulers & Loaders

22. Customer focus • Clear objectives • Business environment • Strategy • ’The Volvo Way’ … building the Volvo Way ! Strategic focusing STRATEGIC DIALOGUE FORMULATED LEADERS Strategic focusing, co-worker involvement and breakthrough results! OD makes the company more maneuverable. • Energy, passion and respect for the individual • Open dialogue Sharing knowledge Creating structure, energy and commitment • Company spirit • Leadership • Utilize common strength ON THE JOB LEARNING WORK STRUCTURE Delivering results and change • Teamwork • Continual improvements • Feedback and Follow-up • Quantify, measure & deliver

23. Customer Built in Quality Just in time Continuous improvement Teamwork: goal oriented / cross functional The Volvo Way OD connects to VPS … … and offers more …

24. Culture Strategy Structure OD makes the connections

25. From the foreword to The Volvo Way The Volvo Way shows what we stand for and want to achieve. The content and ideas are rooted in our history and dialogue within our company. It is a direction for developing our operations toward profitable growth and a recipe for success in which we strongly believe. It is based on the conviction that every individual has the capability and the desire to improve our operations and, by so doing, also develop professionally.