Strategic + Process Approach Business Performance Management

4Q-2012

Innovation Growth

Ajay Koul

Sponsorship

Roadmap

1 Define Scope

& Objective

2 Assemble

Core team

3 Detail data

needs

4 Research

& Analyze 5 Share results

& discuss

implications 6

Conduct &

Prioritize

SWOT

7 Develop Vision

& Ambition

8 Key Actions &

Hypotheses 9

Hypotheses

Testing &

Finalization

10 Management

Approval

11 Roll-out &

Execute

12 Monitor &

Align

Business Performance Management (BPM) A simple, disciplined method for improving business performance –

growth, profitability, productivity, customer retention.

Objectives

Gaps filled: Marketing, Training, Support

-5 pts. LCR, 1-Page Web, Quick Start

+10 pts Cust. Sat. of CCP, -1 pt. Warranty

EU Geographic Team BPM

Efficiency, Effectiveness

Drives BPM

Efficiency, Effectiveness

XXXX BPM

Profitability

Channel BPM

Penetration, Expansion

2011: Progress in Most BPMs. 2012: Project Management Rigor for Deeper Impact.

1

2

3

BPM: 2011 Results

Improve Sales Time Spend

Increase Sales Effectiveness

Redefine the Drives Organization

Improve Customer Retention Drivers

Optimize Geographic Coverage

Execute Service Strategy

Move xxxx and yyyy to zzzz

Move aaaa to bbbb

Reinvigorate the Industry Channel

Increase Market Penetration

Recommendations Results

4

Exit the Business

Expand Access via New Channels

+30% Sales $/HC ($2M $2.7M)

+11 pts CFT, +12 pts Pre-Sales

+15 pts Target Segment focus

Exec. Mgmnt. Approve to exit the business

Divestiture actions

CDM resources, ACE 2.0

e-Distrib. resource, e-Distrib. targets

Web Info packets, SKUs

CLICK for more details of

some BPM Outcomes

Process Overview

(examples from the various BPMs)

Planning and Prioritization

in progress

being scheduled

not selected

BPM

Projects

Pe

rfo

rma

nc

e

Ga

p (

Cu

r.

vs

Urg

en

cy

Imp

ort

an

ce

1 Elect. South 10 10 10

2 Motors 9 9 9

3 OEM-N 7 7 9

4 Channel -2 8 7 8

5 S&S post-sales 7 8 8

6 Automotive 7 5 7

7 F&B 8 8 7

8 C-Sat/Quality 5 5 6

9 CPB 2 2 6

10 SI 2 2 4

12 BIC 4 3 3

11 S&S pre-sales 4 3 3

13 OEM & EU 2 3 3

BPM Prioritization 2011

Elect.

South

OEM-N

Channel -2

S&S

post-sales

F&BAutomotive

Motors

CPB

SI

Cust.Sat

Quality

S&S

pre-sales

BIC

OEM

& EU

0

2

4

6

8

10

0 2 4 6 8 10

Urgency

Imp

ort

an

ce

Back

Define Scope & Objective

Back

Define Objective

Improved profitability of the

xxxxxx Business

Scope Outline

Identification of

Levers for Analysis

Cost Levers

• Raw Materials

• MBC, SFC

• FX

Revenue Levers

• Current offer including

market forecast

• Future product

introductions

• Price changes

Analysis Pathway

Identify Data and Info needs

•Operational issues

•Market for xxxxxx

•Customer expectations

•Alignment to corporate goals

Analysis

•Prepare pro-forma financial

statement with scenarios

•Prepare of balance sheet with

effects, e.g., footprint changes.

Output

•Recommend: invest, divest

Detail the Data Needs

Excel file can be

opened in non-

slide-show mode

Back

Research & Analyze (Example 1) Anatomy of Sales Time-Spend

Back

11%

56%

33%

41%

33%

26%

27%

47%

27%

Sales Survey: Simulation Tool & Usage:

1. Identification of business levers

2. Correlation of Effort vs. Outcome

3. Simulation of potential trade-offs

4. Selection of change actions

Pre

Sa

les

(Av

g.

= 5

6%

)

Pro

po

sal/

Qu

ote

s

(Av

g.

= 8

%)

Po

st

Sale

s

(Av

g.

= 3

6%

)

Cu

st.

Fa

cin

g

(Av

g.

= 3

2%

)

Te

ch

nic

al

Su

pp

ort

(Av

g.

= 1

7%

)

Co

mm

erc

ial

Su

pp

ort

(Av

g.

= 1

3%

)

Tra

ve

l (C

us

t.)

(Av

g.

= 2

1%

)

Oth

er

(Av

g.

= 1

8%

)

Ta

rge

t S

eg

me

nts

(Av

g.

= 5

1%

)

No

n T

arg

et

Se

gm

en

ts

(Av

g.

= 4

9%

)

Bob 0.75 5% 0.20 0.35 0.10 0.05 0.35 0.15 36% 64%

Peter 0.50 10% 0.40 0.30 0.20 0.20 0.10 0.20 57% 43%

Paul 0.55 10% 0.35 0.45 0.25 0.10 0.15 0.05 44% 56%

Pat 0.59 10% 0.31 0.30 0.10 0.10 0.15 0.35 51% 49%

Nick 0.75 5% 0.20 0.30 0.15 0.15 0.20 0.20 40% 60%

Lee 0.15 5% 0.80 0.10 0.30 0.25 0.30 0.05 89% 11%

Jason 0.45 5% 0.50 0.40 0.10 0.10 0.20 0.20 56% 44%

Dave 0.79 5% 0.16 0.35 0.15 0.15 0.20 0.15 31% 69%

Charlie 0.50 15% 0.35 0.30 0.15 0.10 0.20 0.25 54% 46%

Steve

Total Time =

100%

Total Time =

100%

Total Time =

100%

Key:

≥ 20 pts better than Average

80% - 120% of Average

≤ 20 pts worse than Average

No Data

Next

Research & Analyze (Example 2) North East Customer Retention (All Products)

Increase Customer Retention for all products 26% Customers (All Products) lost in 2011 vs. 2010

970

GM: 51%

995

GM: 51%

1,377

GM: 51% 1,015

GM: 50%

313

GM: 45%

277

GM: 49%211

GM: 51%

-338

GM: 54%

-297

GM:50%-362

GM: 60%

2008 2009 2010 2011

Existing Gained Lost

$32K/Cust.

$7K/Cust.

$31K/Cust.

$6K/Cust.

$8K/Cust.

$40K/Cust.

$5K/Cust.

$10K/Cust.

$44K/Cust.

$4K/Cust.

Back

Next

Research & Analyze (Example 3) BDS Deployment against PAM and # of Customers

Optimize PAM Coverage

Nick R.

PAM: $33M

# Cust.: 134

Charles B.

PAM: $44M

# Cust.: 151

David M.

PAM: $10M

# Cust.: 54

Jason R.

PAM: $20M

# Cust.: 131

Bob H.

PAM: $11M

# Cust.: 101

Paul K.

PAM: $20M

# Cust.: 131

Patrick H.

PAM: $19.2M

# Cust.: 103

Peter D.

PAM: $20M

# Cust.: 161

Lee D.

PAM: $20M

# Cust.: 132

Steve F.

PAM: $11M

# Cust.: 83

Color represents = BDS Region

Back

Next

Research & Analyze (Example 4) Project Pricing

Toyota Huntsville 42% CCO - GM Life Span

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Time

$$

$ A

mo

un

t

Net Sales

CCO-GM$

Net Sales,

4,450,474

CCO-GM$,

1,849,707

Nissan 20% CCO-GM life span

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2007 2009 2010 2011

Net Sales

CCO - GM$

Net Sales,

5,727,099

CCO - GM$,

1,164,991

Volkswagen - 7.6% CCO-GM% Life Span

$(2,000,000)

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

2009 2010 2011

Net Sales

CCO-GM$

Net Sales,

$24,126,562

CCO-GM$,

$1,828,410

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Total

Toyota Huntsville – 42% CCO-GM lifespan Nissan 20% - CCO-GM lifespan

VW – 7.6 % CCO-GM lifespan

Evidence Downstream projects fetch improved margins.

Propose

Life Cycle Pricing Approach for improved Win/Loss outcomes

Back

Research & Analyze (Example 5) Current Operational Model (Mfg. footprint unchanged)

Real

Appreciation

(CAGR of 3yrs)

Offer &

Segment

Expansion

Price

increase in

2012

No Yes 10%

Yes Yes 10%

Yes Yes 3%

Yes No 3%

EBITDA Comparison-20%

-15%

-10%

-5%

0%

5%

2011F 2012E 2013E 2014E 2015E

2.4%

-1.2%

-6.1%

-14.4%

Scenario Analysis

2011F EBITDA: ($4,189)M

-16.0%

Back

Conduct & Prioritize SWOT

Leverage Strengths

Exploit Opportunities

1. Solution Capability e.g., OEM, WWW

2. Tech. & App. Competency in custom drives

3. Access to the Buildings Market

4. Global Presence

5. Presence in all key market segments

Reduce Weaknesses

Mitigate Threats

1. High Attrition Rate of Customers

2. Services and Warranty Process

3. Under-utilization of Distributor Channel

4. Lack of Comprehensive Training in Drives

5. Low Utilization of OEM Sales for Drives

1. Mechanical Market

2. Process OEM, e.g., WWW, O&G, MMM

3. Energy Mgmnt., e.g., pumps/fans, retro-mkt

4. Custom Engineered Applications

5. Municipal Jobs

1. Competitors Established in Mech. Channel

2. Drives Moving from Div. 15 to Div. 16

3. Advanced Harmonics Mitigation Tech.

4. Low Cost Niche Players

5. 90% Less Power Loss with Silicon Carbide

SWOT Elements Basis for Developing Our Business Options

Back

Develop Ambition

Ambition 2009 A 2010 F 2011 F 2012 2013 2014 2015

1 Revenue (IDSDS, IDVSD) $62.2M $71M $75M $87M $105M $128M $150M

2 Overall EBIT (IDSDS, IDVSD) -5.2% 7.5% 10% 11.5% 13.0% 14.0% 15%

3 Enclosed Offer GM 30% 30% 31% 34% 38% 40% 45%

4 ACE Partners (xx prod lines) $26.6M $29.9M $33M $37M $42M $49M $57M

5 Partners seg 1 & 2 $3M / $4M $3M / $3M $6.5M $8.5M $13M $17M $23M

6 Core Channel $29.2M $32.8M $34M $37M $40M $44M $49M

7 Addnl. channel partners 0 0 2 4 5 5 5

8 OTD Performance ~80% 93% 99% 99% 99% 99%

9 Lost calls 15.6% 12.9% 10% 7% 4% 2% <1%

# Warranty Cost 3.4% 2.6% 2.3% 2.0% 1.7% 1.5% 1.2%

FIN

AN

CIA

LC

HA

NN

EL

EF

FIC

IEN

CY

Assumptions:

• Product availability at 98% beyond 2011

• Investments are made, primarily in headcount

• Buildings Business will need to invest in support functions Back

Create Strategic & Tactical Actions

Back

Collaboration via < Web Portal > for Deliverables

Individual Folders for each workshop for participants to collaborate

Please visit quickr for more details

Back

• Redefine the Organization and Improve Time Spend:

Improve gaps in Front Office (PAE coverage, Time Spend), Back Office (Marketing)

Progress/Action/Outcome: • Coverage optimized via PAE deployment.

• Added competencies via new positions in Marketing, Training, Support

• Time-spend survey in 4Q12

• Develop/Execute Talent Management Strategy:

Increase competence and optimize training

Progress/Action/Outcome: Competency assessment compilation in 4Q12

• Develop/Execute Channel Strategy:

Leverage ACE Partners for Drives growth.

Progress/Action/Outcome: • Promotions, increased training hours.

• YE Financial report due 2nd half of Jan.

• Drive Customer Loyalty for Retention. Develop/Execute Service & Support Strategy:

Increase (a) PSG Support, (b) Warranty, (c) Web, (d) Field Services, (e) Training

Progress/Action/Outcome: • +5 pts. PSG Lost Call Rate (12.1%7.1%); 5700 extra cust. capacity

• -1 pt. Warranty Cost (3.4%2.4%), $750K approx. savings

• Drastic improvement in info access via One-Entry-Page approach

• New quick-start guide (global Drives team accepted for all drives)

• +10 pts Customer Satisfaction of CCP Report quality (65% 75%)

• Redefine/Renew Product Roadmap:

Optimize enclosed drives features-cost-value. Improve offer gap-filling/launch process.

Actions & Outcomes post-BPM Fact-based Strategic Actions 4Q11 (and progress 4Q12)

Back

Nine more BPMs

for

Strategy, Process and Growth.

(Details available separately)

End of the Document