The Breakthrough Leadership Process Breaking Through For Success

2. The Breakthrough Leadership Process Breaking Through For Success The driving force behind dramatic success in business is a management approach and culture that foster extraordinary results throughout the organization. It’s called the Breakthrough Leadership Process. Breakthrough Leadership consists of three parts: • Breakthrough Thinking • Breakthrough Planning • Breakthrough Achievement • To understand the Breakthrough Leadership Process, picture a sailboat. A business is a lot like a sailboat. It is a self-contained entity afloat on a sea of infinite possibilities, whose captain and crew must evaluate and leverage their environment. The crew must function as a team, and move the sailboat toward a chosen destination. The sailboat needs three things to function: • Direction • Stability • Power Power Direction Stability

3. On a sailboat, direction is provided by the rudder, the steering mechanism, which allows us to set and maintain a specific course. In a business, direction requires something much more motivating. Direction requires a vision, the dream of a destiny or a way of doing business that sets us apart from our competitors, and makes our company absolutely the best. A vision is something that fires our imagination, and empowers us. A vision gives us energy and courage. A vision makes us unique, and brings meaning to our work. What is that sense of direction that has made Disney World so successful — to make billions of dollars in profits? Is that what really motivates all the people who work there? No. Walt Disney's idea was that parents and children should have a place where they could have fun and learn together. The fulfillment of that vision is why people keep going back to Disney World, and paying premium pricesto do so. Breakthrough Thinking The World of Infinite Possibilities • Vision Direction

4. Breakthrough Thinking The World of Infinite Possibilities • Vision • Purpose A vision is all about direction — it provides a clear picture of where we want to be, without dictating how to get there. So, how do you get your people to act on the vision? You need something more specific and action-oriented A purpose statement takes the vision and communicates it in terms of an action or series of actions, with a specific intention, that achieves a desired result. Give it a try by writing your own purpose statement: “To…(action), “In such a way…(intention), “So that…(desired result). Purpose gives us the navigation chart between point A, the corporation’s vision statement, and point B, the shared vision held by its people. Direction

5. The real power of a vision is when it is shared — so it is crucial to get employees involved through constant communication and full participation in the process. No matter what your job in an organization, everyone has a role in achieving the vision. People are most successful when they are inspired by a shared vision that they have been actively involved in creating. • This means instilling a culture where employees are able to ask power questions that lead to breakthroughs in thinking — the answers to which open up a world of infinite possibilities... Breakthrough Thinking The World of Infinite Possibilities • Vision • Purpose • Shared Vision Direction

6. Breakthrough Thinking The World of Infinite Possibilities • Vision • Purpose • Shared Vision • Power Questions By asking power questions, we identify the real strategic issues — the things we need to change in order to realize the new vision for the business. For example, an entry level employee at a major U.S. bank once asked a very simple, yet powerful question: “Where do the loan applicants go that the branch banks turn down?” The answer was that these rejected applicants — half of those who walked in the door — were going to finance companies which accepted less-than-perfect credit applications. Yet this bank had a finance company within the same organization; it was turning people down at its retail branches that it could very well have referred to its own finance company arm. Only problem was, no one ever asked the question. This internal referral program now generates half of all retail volume for this bank’s finance company — all because someone bothered to ask the power question — and someone listened. This is just one example of how the asking of a power question about a customer need generated a customer driven objective, and breakthrough results. Direction

7. To help us ask power questions, there is a special set of language tools — key phrases that are used every day — to change the way people think and act. CVS to BVSChange the Current View of the Situation to a Better View of the Situation.The current view: “New competitors are coming into our market.”The better view: “We will go into their markets, and kick their butts!” But to AndThe old language: “Joe is a hard worker, buthe doesn't have the skills we need in the next decade.”The new language: “Joe is a hard worker, and with the right training he will be a major contributor to our future success.” Up 'til NowWhen someone says, “We don't do it that way.”Our comeback is, “Up 'til now, we don't do it that way.” Failure is a stepping stone to success.This is crucial. People must be given permission to fail, otherwise they will never take personal or reasonable business risks to achieve breakthroughs. To reinforce this, we also say,“People don't fail. Events fail.” Thomas Edison had over 6,000 events fail before he made a light bulb that worked. Even major breakdowns are not all bad, because we turn them into breakthroughs. Breakdowns into Breakthroughs — this is the ultimate CVS to BVS. Breakthrough Thinking The World of Infinite Possibilities • Vision • Purpose • Shared Vision • Power Questions • Language Tools Direction

8. Breakthrough Thinking The World of Infinite Possibilities • Vision • Purpose • Shared Vision • Power Questions • Language Tools So, we have direction (the rudder) to keep us on course. With Breakthrough Thinking, we have created a vision, and are fearless enough to face any condition or obstacle on the way. Knowing our destination enables us to identify and navigate the conditions we have to face. There are powerful tides and currents…and there’s the weather, which can change suddenly and drive us off course. For instance: • Competitive activity • Market trends • Technological developments • Regulatory constraints These are the external issues that need to be dealt with as the voyage is planned and embarked upon. There are also internal issues as we move from a place of “business as usual” to a highly successful organization. Direction

9. Breakthrough Planning Infinite Possibilities to Finite Goals • Strategic Issues • Strategic Initiatives • Goals In the quest to attain our vision, the world can be a turbulent place. On a sailboat, the keel provides the stability needed to keep the boat from drifting off course or tipping over. Our stability comes from Breakthrough Planning, the process we use to identify strategic issues and create the strategic initiatives that will turn infinite possibilities into finite goals. Goals — whether defined as earnings targets, market share, or whatever — are interim things. They give us the fuel to keep on moving toward the ultimate destination — the revenue that is needed for product or employee development, or the profits that are needed to keep on attracting investment capital. Achieving these goals gives the organization the stability of continued resources. How do we set and then go about achieving our goals? Direction Stability

10. Breakthrough Planning Infinite Possibilities to Finite Goals • Strategic Issues • Strategic Initiatives • Goals • Earnings Situation Analysis • Goal: ~25% over baseline • Business-as-usual (BAU) • Strategic Initiatives • Extraordinary Results We look at what impedes us from achieving optimal growth and profitability. These are external constraints, such as economic trends and competitors, and internal constraints, such as our own skills or technology. We summarize and distill these constraints into five strategic issues. We also determine our basic business proposition — the value that we provide to a defined customer set, and the way in which we provide it. We do a straight-line projection of business-as-usual and contrast that with the desired growth trajectory of a core business. There is no reason we should not aim for a minimum of 25% growth per year. We then define strategic initiatives that are based on the strategic issues, i.e. Develop Marketing Alliances. We identify specific high-impact projects involved in each initiative that must be undertaken in order to close the gap. Then we quantify the financial objectives of each, as well as determine the risks and opportunities. The impact of the initiatives is totaled up in the Earnings Situation Analysis. Direction Stability

11. Breakthrough Achievement • People • Projects • $2 for every $1? • Do it in a year? • How much stress? • Describe in 2 pages? Power for a sailboat comes from the sails; the sails capture the wind that moves the boat toward its destination. In the Breakthrough Leadership Process, the sails represent Breakthrough Achievement — the people who work together…and the projects they achieve. People are responsible for harnessing this power — by breaking down the strategic initiatives into specific projects with timetables, quantified objectives and accountability for the results. These become our project plans. Trying to take on too much at once is cost prohibitive and unfocused. We must aim to minimize action to be successful. Therefore, we are guided by certain criteria in deciding which projects to do first and which to put on hold. Project plans must be described in two pages and answer questions such as: Will this project generate $2 for every $1 spent? Can it be completed within a year? We also look at how our resources need to be allocated in order to prevent taxing the organization. In this way our huge financial objectives are attainable because of the aggregated effect of hundreds of people accomplishing manageable tasks. Power Direction Stability

12. Breakthrough Achievement • People • Projects • Family Meetings To keep the vision alive and the power flowing, we have family meetings, where open communication releases energy and encourages innovative solutions. Family meetings tap into a huge pool of ideas and experiences from employees at all levels of the organization. They are successful because we create an atmosphere of candor, commitment and mutual trust. We ask people to look forward, not backward. Don’t just tell us what went wrong yesterday, suggest what we can do tomorrow to make it right. And we ask people to “speak for yourself, not for the anonymous ‘we.’” The only thing you can be sure of is what you think, or what you have seen. Only when each of us tells his or her own truth, will we really know what “we” think. An important output is the making of commitments for the completion of specific action items by agreed upon dates. In this way, we are able to minimize action and maximize ideas! Power Direction Stability

13. As you can see, we use the sails to catch the power of the wind. We take advantage of the keel to give us the stability we need. And we use the rudder to move powerfully and reliably through the world of infinite possibilities in the direction that will contribute to the greatest success for our customers and ourselves. And when we put it all together, we are able to achieve extraordinary breakthrough results. However, Breakthrough Leadership is an ongoing process. Just like on a sailboat, we must continually monitor and adjust our course in order to ensure the best possible results. The rewards waiting for us on distant shores are worth the voyage. This is the Breakthrough Leadership Process — Welcome aboard! The Breakthrough Leadership Process