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Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage by Colin Price, Scott Keller

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4

Assess

How Ready Are We to Go There?

When Pierre Beaudoin took over the aerospace division at Bombardier in 2001, he knew he was in for a bumpy ride. Heading up the third-largest civil aircraft manufacturer in the world put him in a good position, but times were hard: 9/11 had sent shockwaves through the industry, and demand had taken a sharp downturn.

Decisive action was needed, so Beaudoin quickly put new performance objectives in place. Foremost among these was the lifting of the aerospace division's EBIT (earnings before interest and taxes) margin from 2 percent or 3 percent to 8 percent, an improvement that would deliver C$500 million to the bottom line. On the health side, the objectives were equally ambitious. Aware that its culture was focused on engineering (sometimes for its own sake) and that there were deep divisions between different functions, the aerospace division sought to improve its health within its existing execution-edge archetype so as to deliver continuous improvement for the benefit of the customer.

After assessing its capabilities, the division concluded that developing lean manufacturing skills would be the key to achieving its aspirations. But Beaudoin knew that a successful transformation would require more than skill building—it called for a deeper shift in mindsets as well. Instead of letting the engineers get straight to work on improving the hardware and systems, he insisted that the organization should take the time to understand what was happening ...

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