Building business breakthroughs.

You can increase the earnings of any strategically important business unit by 25 percent to 50 percent a year, in almost any economic or competitive situation. Sound impossible? It's not - if you have the courage to break out of old patterns and operate in the realm of infinite possibilities.

This means opening your mind to new definitions of your business; creating a new vision and sense of purpose; and making a total, visible commitment to change. This may entail turning some sacred cows out to pasture. It also requires opening up the management and planning process to every member of your organization.

When I introduced this approach in 1993 to Banc One's consumer finance company, Banc One Financial Services, we formulated a plan to increase pre-tax earnings from $18 million in 1992 to $100 million in 1997 - more than fivefold in five years. Many people said we were crazy, that we couldn't increase this business that fast without blowing up the place or incurring unacceptable credit risks. Arrayed against us were conventional wisdom, long-cherished assumptions about how business is done, and deeply rooted fears of departing from the norm.

Yet, four years later, not only are we ahead of those original projections, we actually have increased our goals: BOFS now is projecting $225 million for the year 2000.

How did we do it? First, we fostered unconventional thinking, a new state of mind, throughout the organization. Second, we implemented a rigorous management and planning process that combines visionary thinking with the practical requirements of translating dreams into bottom-line results. I call it the Breakthrough Planning Process.

A NEW STATE OF MIND

One way to change your thinking is to change the way you talk. Special training sessions that teach a new vocabulary, first for senior management and then for all employees, have helped us transcend outmoded business approaches and behaviors. People start thinking in terms of "breaking out of the box" of "business as usual" and "turning breakdowns into breakthroughs." The killer response, "We've always done it that way," becomes, "Until now we've done it that way," followed by, "How can we do it better?"

We start visionary thinking at the top, then build and refine it at all levels. Visionary leadership is great, but which is more likely to succeed: a company with one mind doing innovative thinking, or one with a thousand minds doing innovative thinking? A company where ideas come exclusively from senior management, or one with equal participation by employees who deal with customers every day?

Teamwork is fostered in workshops led by senior managers and professional facilitators, in which employees learn to express ideas and opinions constructively and to practice the new language and behavior. For many, this is the first time they've been asked how they see themselves and their jobs and where the company should be going.

Employees must believe the changes you envision are real, not a case of "this, too, shall pass." Commitment and leadership must come from the top. When Citicorp sent me to Greece in the early 1980s, its bank there was having big problems with customer service. After some brainstorming, we moved the president's desk to the middle of the lobby, so customers could complain straight to the top. This sent an unambiguous message of change to employees and customers. And the president learned firsthand what was wrong and why - which led to a total operations overhaul, new technology that revitalized the business, and a 5,000 percent profit increase in less than five years.

The process depends on creating an environment in which people aren't afraid to ask questions and hazard wild ideas. At Citicorp's bank in Italy, when a change in Italian tax law threatened a run on banks countrywide, we asked ourselves how we could quickly inspire customer confidence. Our answer was, to bankers, shockingly counter intuitive: Take all the [TABULAR DATA OMITTED] cash out of the vaults and pile it in plain sight on tellers' counters. Not only did we keep the bank open, but we attracted new accounts from other banks. Unconventional thinking also led to the introduction of products new to Italian banking, helping us turn a $40 million annual loss into a $50 million profit.

We constantly ask ourselves, "What don't we know about what we don't know?" and "What things are impossible now that would make a real difference if we could do them?" Our rule is: No question is dumb; no question is too small. I'm forever reminding people of the little question Rosa Parks asked: "Why do I have to sit in the back of the bus?"

It's important to give permission to fail, because failure is a learning tool. Scientists have always understood this principle; it's the root of experimentation. When I was a young electronics engineer working in microchip manufacturing at General Instruments, we had a 95 percent reject rate due to printed circuits damaged in assembly. We tried many things to solve it - different scrubbing and coating solutions, time and temperature combinations - failing time after time. But ultimately we solved the problem, initiating process improvements that eventually reduced the cost of a calculator from $190 to $8.

PUTTING PROCESS INTO PRACTICE

The Breakthrough Planning Process has four steps to achieving breakthrough results:

Step 1: Discover, analyze, and summarize strategic issues. Like classic situation analysis, the discovery phase of the breakthrough process reveals the organization's strengths and weaknesses versus those of its competitors and in relation to market and economic conditions. In this step, we list scores of perceived problems or constraints, then boil them down into five key strategic issues on which the entire organization focuses its energy - five conditions that, if changed, would have the most positive impact on the business.

At BOFS, one issue was an outdated paper-based processing system that could not accommodate major growth. Another was the high cost of acquiring new customers.

Step 2: Create a shared vision and build teamwork throughout the organization. The key products of this phase - developed in a series of workshops with employees' input - are an overall vision of what the business should be like for employees and customers, and a purpose statement that moves us toward the vision. Neither deals with quantitative goals.

Ideally, the vision can be summarized and symbolized by a single dramatic image or idea. For example, when JFK wanted to give a boost to the U.S. space program in the 1960s, he didn't set a goal to launch 10 percent more rockets or to double payloads. Instead, he came up with a simple, clear vision: a man on the moon by the end of the decade.

The purpose statement broadly defines what you will do and how you will do it to benefit all stakeholders. Walt Disney had a good one for Disneyland: not just to make money from bigger, better rides, but to create a place where the whole family can have fun together and learn at the same time - and where they will pay premium prices to return again and again.

Step 3: Plan and quantify strategic initiatives for each major issue. For each of our five major strategic issues, we create five corresponding initiatives. Some relate to necessary infrastructure upgrades, such as process rationalization and automation for Bane One Financial Services. Others are business builders, and this is where creative teamwork pays off. At BOFS and other Finance One companies, such as Banc One Leasing Corp., we developed strategic alliances that today produce several hundred million dollars in loan volume with virtually no incremental marketing expense.

Only at this point do we start assigning numeric targets to close the gap between baseline earnings growth ("business as usual") and an overall goal of at least 25 percent compound annual earnings growth within two years. The product is a five-year earnings plan called the Earnings Situation Analysis (see chart, previous page), in which we estimate the profit contribution of each strategic initiative and add it to our baseline numbers to create an adjusted earnings plan for the period.

Step 4: Implement the strategic process and follow through using a project management book. We define three to eight key projects for each initiative and organize project teams. The target is for $1 invested at this stage to pay back $2 in the aggregate in the first year, reflecting the need to make the business self-funding and self-sustaining on an ongoing basis, rather than dependent on capital investment that may take years for a return. One of our biggest BOFS projects, development of a new computer system, was completed on time and on budget and funded entirely by internal business growth.

These projects are collected and detailed in a project management book that assigns and monitors accountability for quantifiable goals and deadlines. The book spells out aims and objectives, project team members, specific responsibilities for each task needed to finish each project, and a complete timetable. We use it to monitor daily, weekly, and monthly progress toward strategic initiatives, updating it regularly.

This book is the backbone of the breakthrough process. It bridges the gap from dreams and ideas to actions and realities. It reduces a huge, daunting task to manageable bites and translates the overall vision into bottom-line results.

AN ONGOING MANAGEMENT PROCESS

This process is not a one-time event. The breakthrough culture is reinforced by constant communication and strong leadership from the top. A learning organization is created, maintaining competitive advantage. Economic and competitive factors and business opportunities are constantly analyzed, and plans and projects are adjusted to accommodate them. The driving vision and purpose statement are themselves evolutionary, works in progress that are continually adapted to new input and environmental change.

Generally, strategic initiatives during years one and two focus first on building future-oriented infrastructure, then on leveraging existing business propositions for growth. After this initial learning period, the focus shifts to expanding and redefining those propositions with new lines of business and new products.

All four planning steps are repeated yearly, refining the vision, raising new strategic issues, planning new initiatives, and setting new goals (usually adjusted upward).

How is this breakthrough process unique? Certainly it borrows from other management methods and systems, such as participative management, MBO, "Vision and Values." But it's distinctive in three primary ways:

* Our definition of vision is open-ended and infinite in scope as both the starting point and the end result of the discovery process.

* We resist setting specific numeric goals and objectives until the end, rather than at the beginning, of the planning process.

* The process doesn't fizzle out over time, because it is both evolutionary and self-propelling. The project management system keeps the ball rolling from a business standpoint, and the cultural reinforcement process sustains teamwork and a "can-do" attitude.

When the process is working, the ceiling becomes the floor. There is no longer a fixed view of the business. A climate of candor, communication, and commitment keeps the day-to-day work effort dynamic, flexible, and amenable to change. Numerical results, though satisfying, are only part of the picture. The other part is the excitement we feel coming to work every day. And that's a reward that can't be measured in dollars and cents.

Donald A. Winkler is chairman and CEO of Columbus, OH-based Finance One Corp., a consumer finance, commercial finance, and indirect consumer lending business with $21 billion in assets. Finance One is a subsidiary of Banc One Corp., a $96 billion bank holding company.