© 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

41
© 1999 Donald A. Winkle Breakthrough Leadership Don Winkler February, 1999

Transcript of © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

Page 1: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

Breakthrough Leadership

Don WinklerFebruary, 1999

Page 2: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

2

BUSINESS• Every business can be made successful• Make no absolute assumptions about the business we’re in

LEADERSHIP• Act as if you haven’t got authority• Insist on open, honest communications

CHANGE• Think bigger and ask the better question• Don’t wait until failure occurs to bring about change

Initial Assumptions

maximize stakeholder benefit

to Phase I:

Vision Purpose Shared Vision

Breakthrough Leadership

Page 3: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

3

BREAKTHROUGH LEADERSHIP

The process has three phases. The phases have two things in common:

• First, two opposite values are simultaneously at work:— A hard-headed fact-based realism. You’ve got to know what the realities are

in terms of market trends, customer needs, resource constraints, and so on.

— Openness to fresh perspectives, free of bias, unrestrained by conventional

wisdom. You’ve got to operate in the realm of infinite possibilities.

• Second, everyone who gets involved has to have the skills to think this way, to

use the opposing values and keep the creative process working.

So, we train the team in:

— out-of the box thinking

— change management

— and communication

Page 4: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

4

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Phase III:

Breakthrough Achievement

Project Book

implementation

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

Page 5: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

5

PHASE I: BREAKTHROUGH THINKING

Page 6: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

6

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Phase III:

Breakthrough Achievement

Project Book

implementation

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

PHASE I: BREAKTHROUGH THINKING IS THEDISCOVERY PHASE, WHERE SENIOR LEADERS OF THEBUSINESS QUESTION THE EXISTING BUSINESSPROPOSITION AND LOOK AT WHAT IMPEDES US FROMACHIEVING OPTIMAL GROWTH AND PROFITABILITY —THE INTERNAL AND EXTERNAL CONSTRAINTS THATKEEP US IN OUR BOX. THESE COULD BE OUR SKILLLEVEL, TECHNOLOGY BASE, COMPETITORS, ECONOMICTRENDS, ETC.

OUT OF THIS COMES:• THE VISION — A CUSTOMER-DRIVEN PICTURE OF

WHAT THE COMPANY IS TO BECOME, AND

• A PURPOSE — A STATEMENT OF THE ACTIONS NEEDED TO ACHIEVE THE DESIRED VISION.

WE SHARE THE VISION WITH EMPLOYEES, IN ORDER TOGET THEIR BUY-IN AND FULL PARTICIPATION IN THEPROCESS.

Page 7: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

7

PHASE I: BREAKTHROUGH THINKING

• The task in Phase I is discovery: Finding out our starting point before we chart our

future.

• 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 own skills or technology.

• We feed these through the filter of realities and possibilities, and keep on prodding

each other to ask the questions, the asking of which leads to breakthroughs in our

thinking, which can lead to breakthrough results.

• And after two or three days of communicating our concerns, our fears, our ideas,

our hopes for the future, after challenging each other and working together as a

team, we produce two brief statements, on a single piece of paper, defining our

vision and purpose.

Page 8: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

8

Phase I:Breakthrough Thinking

Vision Purpose Shared Visiondirection

to

Phase II:

Strategic Issues

Breakthrough Leadership: A journey from the ordinary to the extraordinary

•Vision•Purpose•Shared Vision

possibilities

realities

from

Initial Assumptions

EXTERNAL CONSTRAINTS INTERNALin

dustr

y

compe

titor

scu

stomer

s

deal

ers

distr

ibut

ors

bran

ches

sales

forc

esta

ff

finan

cial

techn

olog

ywor

k flo

w

work s

urfa

ceyo

urse

lf

Page 9: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

9

EXAMPLE: BOFS VISION AND PURPOSE STATEMENTS

Below are the vision and purpose statements of Banc One Financial Services, Inc.

They have been upgraded since the company started to apply the Breakthrough Process

in 1993 and will continue to evolve in the future.

Page 10: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

10

Banc One Financial Services 1996 Business Direction

We will blanket the nation with our convenient financial services networks. We will work with passion and integrity to respond immediately to customer needs. We are committed to learning and development. Working together is our hallmark. We are the supplier of choice and the employer of choice. We are frequently imitated and rarely equaled. We are the people of Banc One.

We are dedicated to becoming the number one personal financial services company in the nation. We will work together in a way that provides valuable, personalized financial solutions to our customers, respect and rewards to our employees and generous returns to our shareholders.

VISION

PURPOSE

Page 11: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

11

PHASE II: BREAKTHROUGH PLANNING — STRATEGIC ISSUES

Page 12: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

12

Phase III:

Breakthrough Achievement

Project Book

implementation

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

PHASE II: IN THE BREAKTHROUGH PLANNING PROCESS, SENIOR LEADERS — SOMETIMES WITH THE HELP OF OUTSIDE CONSULTANTS — SUMMARIZE AND DISTILL THE CONSTRAINTS INTO FIVE STRATEGIC ISSUES. WE ALSO DETERMINE OUR BASIC BUSINESS PROPOSITION — THE VALUE WE PROVIDE TO A DEFINED CUSTOMER SET, AND THE WAY IN WHICH WE PROVIDE IT.

FROM THE STRATEGIC ISSUES, WE DEFINE THE STRATEGIC INITIATIVES THAT WILL TURN INFINITE POSSIBILITIES INTO FINITE GOALS. ACHIEVING THESE GOALS GIVES THE ORGANIZATION THE STABILITY OF CONTINUED RESOURCES.

Page 13: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

13

PHASE II: BREAKTHROUGH PLANNING — STRATEGIC ISSUES

• The output of this phase is a summary of all these constraints boiled down to five

strategic issues.

• We also emerge with a definition of our fundamental business proposition — the

value that we provide to a defined customer set, and the way we provide it.

This may be subject to change, but it is often one of our strong points, a point of

leverage that we can build on.

Page 14: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

14

Phase II:Breakthrough Planning

Strategic Issuesstability

to

Earnings Situation

Analysis

Breakthrough Leadership: A journey from the ordinary to the extraordinary

possibilities

realities

from

Vision

Purpose

Shared Vision

•Business Proposition•5 Strategic Issues•Strategic Initiatives

BUSINESS STRATEGIC ISSUESPROPOSITION #4#2#1 #3 #5

Page 15: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

15

EXAMPLE: BANC ONE FINANCIAL SERVICES

For example, the business proposition of Banc One Financial Services was well

established in 1993:

• Mail unsecured installment loan promotions to homeowners• Drive them into the branches, where we close the loans and upsell them to equity

loans.

Here is a page from the operating plan we wrote that year — a very profitable business,

but we were not positioned to grow.

Page 16: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

16

FINANCE ONE 1994-1995 OPERATING PLAN

Current PositionUntil now, the company has focused on:

• returns alone• achieved ROA = 3.7%• $24 million pre-tax income• annual receivable growth rates of 20.6%

LARGE MARKETNOT POSITIONED FOR GROWTH…

Page 17: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

17

EXAMPLE: BOFS FIVE STRATEGIC ISSUES

All the things that stopped us from growing added up to this:

• From an infrastructure standpoint, we didn’t have the people, the technology,

or the risk management capability to handle more growth

• From a marketing standpoint, we had no strategic alliances, we were

dependent on a branch system that was concentrated in three midwestern

states, and we had only two products.

So here is how we wrote up the five strategic issues in our strategic plan for 1993

to 1997.

Page 18: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

18

BOFS STRATEGIC ISSUES

• Infrastructure

• Asset Quality

• Marketing Alliances

• Marketing: Geographic Expansion

• Marketing: Product Expansion

Page 19: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

19

PHASE II CONTINUED: EARNINGS SITUATION ANALYSIS

As a result of the analysis we did in the discovery phase, and the brainstorming we did in

the team-building and vision-building phase, we know we have a business of strategic

importance to the Corporation.

If it wasn’t important, we wouldn’t have come this far in the process.

Page 20: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

20

Phase III:

Breakthrough Achievement

The Project Book

implementation

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

A SECOND IMPORTANT COMPONENT OF BREAKTHROUGH PLANNING IS THE DEVELOPMENT OF THE EARNINGS SITUATION ANALYSIS. WE DO A STRAIGHT-LINE PROJECTION OF BUSINESS-AS-USUAL AND CONTRAST THAT WITH THE DESIRED GROWTH TRAJECTORY OF A CORE BUSINESS. WE AIM TO ACHIEVE COMPOUND ANNUAL EARNINGS GROWTH OF 25% TO 50%.

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.

EARNINGS SITUATION ANALYSIS:GOAL = 25% OVER BASELINE- BUSINESS-AS-USUAL (BAU)+ STRATEGIC INITIATIVES= EXTRAORDINARY RESULTS

Page 21: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

21

PHASE II CONTINUED: EARNINGS SITUATION ANALYSIS

• We do a straight-line projection of business-as-usual and contrast that with the

desired 25-50% growth trajectory of a core strategic business. That results in a

very large gap.

• We then define strategic initiatives that are based on the strategic issues raised in

Phase I.

• 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 one.

• The impact of the initiatives is totalled up in what we call the Earnings Situation

Analysis.

Page 22: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

22

Phase II:Breakthrough Planning

Earnings Situation Analysisstrategic planning

to

Phase III:

Project Book

Breakthrough Leadership: A journey from the ordinary to the extraordinary

possibilities

realities

from

Strategic Issues

•Earnings Situation Analysis

STRATEGIC INITIATIVES#1 #2 #3 #4 #5

Page 23: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

23

EXAMPLE: BOFS EARNINGS SITUATION ANALYSIS

This is the Earnings Situation Analysis for Banc One Financial Services.

Compare the top line — the earnings from the baseline business growing at about 10% a

year — with the bottom line — adjusted pretax income as a result of the strategic

initiatives.

We nearly doubled the baseline level in 1995, and will have increased it six-fold by the

year 2000.

Page 24: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

24

BOFS 1996 Strategic PlanEarnings Situation Analysis

NET INCOME BEFORE TAX Actual Actual FYF($ in Millions) 1993 1994 1995 1996 1997 1998 1999 2000Base Business 5-Year Plan: $21.1 $23.8 $29.1 $33.6 $36.9 $40.6 $44.6 $49.1 Effect of Strategic Initiatives ---- ---- 7.5 13.5 20.3 21.6 22.2 22.9 NIE Savings ---- 1.4 1.5 5.6 5 4.7 4.5 4.2Adjusted Base Business 21.1 25.2 38.1 52.7 62.2 66.9 71.3 76.21996 Strategic Plan Goals 24.7 29.5 49.5 65.1 100.2 133.1 159.9 184.1GAP -3.6 -4.3 -11.4 -12.4 -38.0 -66.2 -88.6 -107.9

INCREMENTAL EFFECT OF STRATEGIC INITIATIVES1. Analyze Market Opportunities 2.7 4.1 9.2 17.6 35.9 60.9 91.7 130.52. Expand Strategic Alliances ---- -0.4 4.5 2.5 7.1 11.5 16.0 21.43. Accomplish Significant Employee Development ---- ---- ---- -0.3 -0.3 -0.3 -0.3 -0.44. Renew the Infrastructure -1.6 -1.5 -0.9 -1.1 -1.3 -1.6 -3.0 -2.15. Marry the Customer ---- ---- ---- -0.4 -0.5 -0.5 -0.5 -0.66. Build Total Quality Excellence 2.5 2.8 0.1 -0.8 -0.7 -0.6 -0.4 -0.2TOTAL EFFECT ON GAP 3.6 5.0 12.9 17.5 40.2 69.4 103.5 148.6 GAP -3.6 -4.3 -11.4 -12.4 -38.0 -66.2 -88.6 -107.9VARIANCE FROM GAP 0.0 0.7 1.5 5.1 2.2 3.2 14.9 40.7 1996 Strategic Plan Goals 24.7 29.5 49.5 65.1 100.2 133.1 159.9 184.1ADJUSTED PRE-TAX INCOME $24.7 $30.2 $51.0 $70.2 $102.4 $136.3 $174.8 $224.8

5-YEAR PLAN

Page 25: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

25

PHASE III: BREAKTHROUGH ACHIEVEMENT — PROJECT BOOK

Page 26: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

26

Phase III:

Breakthrough Achievement

Project Book

implementation

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

PHASE III: DURING THE BREAKTHROUGH ACHIEVEMENT PHASE, THE CIRCLE OF INVOLVEMENT REACHES OUT TO ALL MANAGERS AND A LARGER NUMBER OF EMPLOYEES, AS PROJECT TEAMS ARE FORMED. THESE TEAMS WORK TOGETHER TO BREAK DOWN THE PROJECTS INTO SPECIFIC TASKS WITH TIMETABLES, QUANTIFIABLE OBJECTIVES AND ACCOUNTABILITY FOR THE RESULTS. THESE BECOME OUR PROJECT PLANS.

TRYING TO TAKE ON TOO MUCH AT ONCE IS COST PROHIBITIVE AND UNFOCUSED, SO WE 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 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.

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Page 27: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

27

PHASE III: BREAKTHROUGH ACHIEVEMENT — PROJECT BOOK

The daunting task of growing a line of business by 25 - 50% a year is thus restated in

achievable bites.

The aggregate effect of concentrating energy on crucial projects — and compelling

everyone to continually ask questions and make improvements — is breakthrough results

for the business.

Not all projects succeed. But the ones that do succeed invariably exceed expectations and

more than make up the difference.

The output of this phase is a Project Book.

Page 28: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

28

Phase III:Breakthrough Achievement

Project Bookimplementation

TO A STRONG,

VITAL BUSINESS

Breakthrough Leadership: A journey from the ordinary to the extraordinary

possibilities

realities

from

Earnings Situation

Analysis

•Project Book

STRATEGIC INITIATIVES#1 #2 #3 #4 #5

Page 29: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

29

EXAMPLE: BOFS PROJECT

The following pages take us from the broad strategic initiatives to a specific project. The

example below is from the BOFS operating plan.

We start with the category called “Analyze Market Opportunities”.

Page 30: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

30

Summary of Strategic Initiatives

Pre-Tax/

Profit Rev./ NIE

FTE Capital Revenue NIE (Investment) NIE 1997 1998 1999 2000 1996-2000

Analyze Market Opportunities 143 $1,450 $49,197 $26,597 $17,575 1.85:1 $35,910 $60,880 $91,739 $130,517 1.17:1

Expand Strategic Alliances 20 $519 $10,851 $5,358 $2,543 2.03:1 $7,078 $11,454 $15,984 $21,387 1.68:1

Accomplish Significant Employee Development 0 $75 $0 $322 -$322 NA -$275 -$300 -$325 -$350 NA

Renew the Infrastructure 15 $162 $0 $1,125 -$1,125 NA -$1,387 -$1,558 -$2,957 -$2,152 NA

Marry the Customer--- --- --- $415 -$415 NA -$453 -$488 -$528 -$568 NA

Build Total Quality Excellence 8 $192 $775 $876 -$844 0.88:1 -$672 -$577 -$366 -$189 NA

TOTAL 186 $2,398 $60,823 $34,693 $17,412 1.74:1 $40,201 $69,411 $103,547 $148,645 1.52:1

1996Profit (Investment)

($ in Thousands)

* Calculation of profit (investment) includes provision (not shown)

Page 31: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

31

EXAMPLE: BOFS PROJECT — BRICKLESS BRANCHING

We use the following criteria for selecting projects:• Will they return $2 for every $1 invested?• Can they be completed in one year?• How much stress will they put on the organization?• Can they be described in 2 pages?

Eight key projects are listed below. For purposes of this example, we will use “Brickless

Branch Origination and Servicing” as we expected it to generate $5 million in profit in

1996 — nearly $10 million in revenue less just under $5 million in NIE.

Page 32: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

32

Initiative: Analyze Market Opportunities

Pre-Tax/

Profit NIE

FTE Capital Revenue NIE (Investment) Rev/NIE 1997 1998 1999 2000 1996-2000

Texas Reclaim Awareness 24 $185 $4,370 $2,162 $2,208 2.02:1 $1,643 $2,453 $3,753 $5,929 1.23:1

Wholesale Enhancement 4 $93 $4,183 $1,133 $2,617 3.69:1 $3,925 $5,888 $8,832 $13,248 2.41:1

Correspondent Banking 15 $132 $9,417 $2,318 $6,299 4.06:1 $8,900 $13,098 $15,296 $15,947 1.44:1Brickless Branch-Origination & Servicing 30 $302 $9,946 $4,761 $4,958 2.09:1 $8,427 $12,295 $18,424 $31,204 1.42:1Identify Candidates & Implement Acquisitions --- --- --- --- --- NA -$452 $2,001 $7,969 $11,204 1:40:01

SecuritizationImplement Home Improvement Contract Prog. 4 $36 $118 $70 $18 1.69:1 $244 $781 $1,775 $3,421 0.95:1

Branch Expansion 61 $600 $20,003 $8,997 $7,645 2.23:1 $12,271 $23,097 $33,908 $47,386 0.85:1

Other Initiatives 5 $102 $1,140 $414 $572 2.75:1 $952 $1,267 $1,782 $2,178 2.07:1

Additional NIE Re-Deployment 0 $0 $0 $6,742 -$6,742 NA $0 $0 $0 $0 0

TOTAL 143 $1,450 $49,177 $26,597 $17,575 1.85:1 $35,910 $60,880 $91,739 $130,517 1.17:1

1996

Profit (Investment)

TO BE DETERMINED

($ in Thousands)

* Calculation of profit (investment) includes provision (not shown)

Page 33: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

33

EXAMPLE: BOFS BREAKTHROUGH PROCESS

The following exhibits are from our 1996-97 operating plan.

Page 34: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

34

Banc One Financial Services

Brickless Originations and Servicing

Page 35: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

35

BOFS Branch and Brickless Combination

Primary GoalThrough brickless markets, we will service customers not currently using the branch network

Secondary GoalThe brickless branch allows us to prospect in non-branch marketplaces to build critical mass for branch placement

The Objective“Offer multiple products, to multiple customer groups in multiple ways.”

Page 36: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

36

BOFS Brickless IntroductionSelecting the Best Opportunity

1996 Brickless Branch Market Opportunity

Page 37: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

37

BOFS Brickless Introductionwith Expanded Initiatives

Key Indicators($ in Thousands)

1995FYF

1996 Planw/Expanded

Initiatives 1997 1998

Volume $0 $136,624 $362,812 $536,961

# of FTE 0 30 65 91

Total Revenue $0 $9,946 $26,219 $42,212

Total NIE $0 $4,761 $8,826 $13,945

Pre-Tax Income $0 $4,958 $13,385 $25,680

Revenue/NIE Ratio 2.09:1 2.97:1 3.02:1

Page 38: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

38

EXAMPLE: BOFS BREAKTHROUGH PROCESS

• As you can see, we do a return-on-investment analysis of every project. Some are

infrastructure investments that pay off a year or two down the road. Others are

quick kills that produce results almost immediately.

• In the aggregate, we demand $2 back in year one for every dollar we invest. This

chart shows that the revenue to be generated by BOFS’ expanded initiatives in

1996 is more than two-and-a-quarter times the cost.

• If the sense of vision and purpose is the heart of our process, the project system in

the nerve center. This is our early-warning system for performance variances. If

someone falls behind schedule or misses a target, w e know about it instantly and

take action to get the plan back on track.

Page 39: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

39

BOFS Investment Return

($ in Millions)

1995 Pre-Tax Income $51.0

Incremental 1996 Expenses over 1995 ($30.1)

1996 Revenue Generated by Additional Expenses $68.5

Incremental Provision ($19.2)

1996 Pre-Tax Income with Expanded Initiatives $70.2

Revenue/Expense Ratio 2.28:1

Page 40: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

40

SUMMARY: THE BREAKTHROUGH LEADERSHIP PROCESS

So, this is our process. Highly subjective, yet highly structured. Highly realistic, yet

highly imaginative. Pretty simple, but it takes dedication, persistence and strong

leadership from the top to implement it.

Breakthrough Leadership … a journey from the ordinary to the extraordinary.

Page 41: © 1999 Donald A. Winkler Breakthrough Leadership Don Winkler February, 1999.

© 1999 Donald A. Winkler

41

Phase III:

Breakthrough Achievement

Project Book

implementation

Phase I:

Breakthrough Thinking

Vision Purpose Shared Vision

direction

Phase II:

Breakthrough Planning

Strategic Issues Earnings Situation Analysis

stability strategic planning

Breakthrough Leadership: A journey from the ordinary to the extraordinary

training

players

possibilities

realities

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants

• Out-of-the-box Thinking• Change Management• Communication

• Executive Committee• Key Line/Staff

Managers• Finance/Operations/

Marketing Experts• Employees• Outside Consultants