Vision

Companies who deploy a

Long Term People based
Business Excellence System

Create a sustainable
competitive advantage

© Kaizen Institute 1
Impact of Kaizen in ROCE

ROCE - RETURN ON CAPITAL EMPLOYED

EARNINGS CAPITAL ASSETS

G.Q.C.D.M.
CONTINUOUS
Sales Direct Costs Indirect Costs Financial Costs Working Capital Fixed Capital IMPROVEMENT
Better Customer Productivity Productivity Less Radical Better
EQUALS
Experience Gains Gains Stock
Financing
Stock
Reduction
Resources
Design + Utilization ROCE
Frequent & Quick
Deliveries
Materials
Efficiency
Better Added
Value Processes
IMPROVEMENT
Less
Receivables Better Use of
Kaizen in Receivables
Subcontracting Reduction Spaces
Energy Financing
Marketing & Sales
Efficiency Costs

More & Better

Resource Less
New Products
Redeployment Investment
Financing
More & Better
New Projects

© Kaizen Institute 2
Benchmark Companies that use Kaizen as a Strategic Weapon

Toyota doubled Honeywell have Porsche, starting in Danaher has grown One of the Biggest Has become one
its market share outperformed the early 1990s, used profitably by almost Companies in Europe of the World's most
in the past 10 years the S&P 500 Index by a Lean Enterprise 20% every year successful 'High
and became nº 1 car around 50% over the Strategy (End-to-End) for the past 20 years as been investing in Street' brands,
manufacturer in 2009 last 10 years as a basis of its the BPS: Bosch producing over 40%
turnaround strategy Implementing Production System of its lines in Europe
Using the Honeywell Kaizen under the since 2000
Operating System and became the most Danaher Business
(HOS) as a major profitable System name since In the last 5 years is
driver of their car company in the 1988 implementing Lean
Business world. Management in
Support Functions
with impressive
results

© Kaizen Institute 3
Case Study: Danaher - A Top Performance Conglomerate

DANAHER’S MARKET-CRUSHING PERFORMANCE

• In 2014 we generated $20 billion in revenue with 71 K associates

• United by a common culture and operating system, the DBS:
Test and Hand Tools Motion
Measurement Danaher Business System
• Which serves as our ultimate competitive advantage !
• We are ranked #149 on the Fortune 500
• During the past 20 years, our stock has outperformed the S&P 500
Test and Hand Tools Motion Product Medical Environmental Index by nearly 1.900 percent
Measurement Identification Technologies

© Kaizen Institute 4
Case Study: Danaher - A Top Performance Conglomerate

TSR CAGR 2000 - 2010

25%

Ruthlessly 10.0%
20
managing
efficiency through
DBS
15
0.9%
10.8%
10 2.3% -7.1% -1.6% -0.2%
6.6% Net M&A effect: 2.9%

Free Cash Flow Organic Growth Inorganic Growth* Cash used for M&A* Margin Change Multiple Change Financial Leverage TSR

BUSINESS GROWTH LONG-TERM PROSPECTS

*M&A activities net of divestitures TSR CAGR: Total Shareholder Return, Compound Annual Growth Rate | M&A: Mergers and Acquisitions

© Kaizen Institute 5