LEAN og Jotuns Pingvinkultur Den 38. Røroskonferansen Februar 2012

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1 LEAN og Jotuns Pingvinkultur Den 38. Røroskonferansen Februar 2012 Wenche Heggem Group Vice President - Technical 1

2 Agenda LEAN and Jotun s Penguin Culture What s the story? Jotun Strategy Corporate culture Lean concept in Jotun Key success factors 2

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4 Overall direction Satisfactory development NOK mill Net Sales EBIT Consolidated 4

5 Overall direction Facts and figures (2010) Consolidated sales NOK 12,000 million Total sales NOK 13,500 million EBITA margin 12,4 % (100 %) 9 largest paint company in the world 41 factories located on all continents 70 companies in 40 countries 7,800 employees Head office in Sandefjord, Norway 2 divisions managed from Dubai 5

6 Overall direction Ownership - financials Share capital injected 1926 No further capital injection Gleditsch family 54 % (59 % of votes) Orkla 42,5 % (38 % of votes) Shareholder relationship Careful dividend policy No debt ROCE 26,4 % 6

7 Overall direction : High Momentum! High expectations High investments RM challenge - Profitable growth Hire, train and retain Penguins More long term market investments Technical & Supply Chain focus efficiency Contious improvements and LEAN If done More valuable Jotun! 7

8 The importance of company culture Results Strategy People and leadership Values 8

9 Strategy Strategy - executive summary The strategic plan is based on the present portfolio of business Coatings Powder Dekorative Paints Organic growth Existing markets New markets 9

10 Strategy Main strategic direction - Organic growth existing markets Strengthening position in already established operations Focus on the core segments Focus on efficiency Profitable growth 10

11 Strategy Main strategic direction - Organic growth new markets Grow organically into new areas and markets Greenfield approach Based on successful export Invest early Jotun Dubai Companies at different stages in life cycle of companies Mature "Young Jotun Libya Jotun Turkey Ensure that we have sufficient number of new operations in pipeline.. 11

12 Leadership in Jotun People in Jotun Ethnic diversity Indians, Chinese and Norwegian. 80 nationalities Loyalty Global 85 % outside Norway Hire young people and make them penguins Extensive competence and leadership development programs Penguinizing 12

13 Overall direction Why is leadership important in Jotun? Many small entities local empowerment Multi-local structure Lots of encouraged informal structures Target is to develop a leadership development atmosphere We develop leaders who develop people who develop business 13

14 Business Principles Concept/format - Overall guidelines Realistic Motivating statements rather than sanction based rules Readable and understandable Easy to communicate Short Simple language No formalised ethical committee Management responsibility One area which is treated differently than the others - Anti corruption - Academies - Change agents 14

15 The Penguin Spirit Jotun Protects Property Loyalty Care Respect Boldness 15

16 The Penguin Spirit 16

17 The Penguin Spirit The Penguin Spirit A never ending process not a project Looking at what we are not what we want to be Success has given and will give Jotun a competitive advantage Basis for good leadership..and for everything else. Have fun! 17

18 PREPARING FOR THE FUTURE After about five years of solid growth, Jotun must adopt a new mindset to reflect our increasingly international company and manage the risk and rewards of operating in a complex global economy. Odd Gleditsch d.y. 18

19 Lean in Jotun Annual report 2007 To remain consistent with Jotun s commitment to continuous improvement, this company has embraced Lean principles. The success of any Lean organisation relies on every employee taking the initiative to solve problems and improve efficiency in a way that provides value for customers and prosperity for the organisation. Momentum 19

20 Jotun have embraced LEAN principles in our commitment to the continuous improvement strategy. We must adopt a new mindset combining our strategy and penguin spirit with a culture of discipline in processes and scientific problem solving. Lean the Jotun way Enthusiastic Penguins having fun making improvements every day! 20

21 How to do the improvements? Change starts with results!... and PEOPLE are creating the results! 21

22 Backbone of Lean Respect people Continuous improvement People come to work every day to do a good job, and should be treated there after. Everybody are improvement agents. Leaders must take active part in the improvement work to make a successful conversion to Lean and do improvements in all areas every day. 22

23 Respect Value differences in people Be honest and fair Build diverse teams with respect for culture and gender Follow laws and regulations Treat others the way they expect to be treated 23

24 Boldness Take initiatives to create the future Initiate and nurture change Communicate openly, honestly and with integrity Be proactive Address difficulties constructively 24

25 Lean ground rules 1 Stamina 2 Openness 3 Change 4 Holistic Firmness and willingness to do the necessary although it will take time (4-5 years). Requires STAMINA Information is open and free to everybody; actions, economic numbers and improvements achieved. Small improvements all the time. Time is required, so is resources. Every day priorities are needed to make the implementation possible. Holistic view is required in the whole supply chain. Everybody is treated as equal contributors to enable the synergy of the organisation. 25

26 Jotun Operations System - from basic attitudes to value creation Contribution to value creation Revenue Cost Capital Continuous improvement Organizational development Management by objectives Fact based improvement Documented and stable processes Right amount of right product at right time Operational precision at all levels Deviation handling Right quality from each stage of the process Product safety / Consumer confidence Right basic attitudes Health, Safety and Environment Order and cleanliness Development and participation 26

27 Leadership three models Old Dictator ship style Do it my way 1980 s Empowerment style Do it your way Lean Style Follow me.and let s figure this out together 27

28 Lean leadership Lead the organization as if you have no power. 28

29 Leadership from 5 Who s - to 5 Why s Don t just jump to conclusions or solutions- Try first size up the situation and ask Why Focus on the work and problem at handavoiding finger pointing seeking for who to blame. 30

30 What makes a successful lean transformation? 31

31 The first conclusion is that The only lean things that stick are those done by the organization themselves! It can not be done by outsiders 32

32 The second conclusion is that Lean can only really be learnt by doing, not by training in a classroom 33

33 The third conclusion is that There are many layers of lean. There is always much more to learn and do. 34

34 Kaikaku. The Ten Commandments from Hirano Throw out the traditional concept of development methods. Think on how the new method will work; not on how it will not work. Don t accept excuses. Totally deny the status quo. Don t seek perfection. A 50% implementation rate is fine as long as it is done on the spot. Correct mistakes the moment they are found. Don t spend money on Kaikaku Problems give you a chance to use your brains. Ask why five times. Ten person s ideas are better than one persons knowledge. Kaikaku knows no limits 35

35 Change starts with results!...in a systematic, planned and measurable way. 36

36 Key success factors: LEAN and Penguin culture The penguin spirit Penguin spirit and LEAN goes well together Leadership / People / Culture People oriented, family culture with respect for differences Strategy, simple and clear Accountability -empowerment Biggest change Infinite opportunities for improvement More discipline and more scientific problem solving approach 37

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