1. A division of a major electronics company was preparing to be spun off as a public company. In the past, the parent corporation provided investment funds. In the future as an independent company it must be profitable and generate cash to have money to invest.

Managers are mostly engineers and scientists who have devoted their careers to technology and product excellence. In the future they will have to focus on profitability and motivate their employees to take actions to improve financial results.

2.  A semiconductor company had spent 8 years as an R&D organization developing a new technology. As soon as they had a commercially viable product, shareholders began demanding profit and cash flow in the same year.

Most of the managers were research scientists who disliked the idea of commercialization. They had to move quickly away from the R&D that they liked to building a profitable business. They did not know how to do this nor did they want to do it.

3.  A defense company’s major market was shrinking dramatically. The expectation was that this would continue for the foreseeable future. Only companies with financial strength would survive the shakeout taking place.

Managers first had to understand and believe the seriousness of their situation, and the urgency to change their ways of doing business. They had to do a better job using fewer resources. They had to get buy-in from their employees to cut costs and improve productivity.

4.  Shareholders of an aerospace company were demanding much better financial results than they had in the past, when they were willing to base performance on technical achievement.

For years, managers and professional staff were hired, trained, and rewarded for developing the "best" products, regardless of cost or investment required. All employees needed to factor profit and cash flow into their business decisions, creating a new way of operating.

5. An insurance company’s customers began demanding more products, more flexibility, and faster response to customer needs than in the past. Competitors that could respond more quickly were taking away business.

In the company’s new mode of operation, line managers needed to understand the financial needs of their company and how their decisions would affect financial results in order to make on-the-spot decisions about customer service, promotion, pricing, personnel, and facilities.

6.  Many companies realized that they needed to manage their balance sheets more aggressively if they were to increase return on investment and cash flow. To achieve this, they introduced RONA (return on net assets) and EVA (economic value added) as primary financial measures of performance throughout the companies.

Managers needed to know how RONA and EVA were measured, why these measures were chosen, and what they should do to increase them.