Tom Peters’

EXCELLENCE. ALWAYS.

XAlways/Austin/07 September 2006

Slides* at …

tompeters.com

*also “ LONG ”

That’s a

Big

Number ….

THREE BILLION NEW CAPITALISTS

—Clyde Prestowitz

“

There is no job that is America’s God-given right anymore.”

—Carly Fiorina/HP/January2004

“Deutsche Bank Moves Half of Its Back office Jobs to India”/ headline/FT/0327

(500 of 900 Research)

EXCELLENCE.

MANDATE.

“

If you don’t like change, you’re going to like irrelevance even less.”

—General Eric Shinseki, Chief of Staff. U. S. Army

“It is not of the species that survives, the strongest nor to change.” the most intelligent, but the one most responsive —Charles Darwin

“Forbes100” from 1917 to 1987 : 39 members of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly underperformed the market; just 2 (2%), GE & Kodak , outperformed the market from 1917 to 1987.

S&P 500 from 1957 to 1997 : ’97; 12 74 members of the Class of ’57 were alive in (2.4%) of 500 outperformed the market from 1957 to 1997.

Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market

“It is generally much easier to kill an organization than change it substantially.”

—Kevin Kelly, Out of Control

(Practical)

Implication?

“Go for it!”

(Why not — alternative is slow death, at best)

C.E.O.

to

C.D.O.

“The Silicon Valley of today is built less atop the spires of earlier triumphs than upon the rubble of earlier debacles.

”

—Newsweek/Paul Saffo

TP#1*:

Netscape!

*Where would you rather have worked for those 5 years, Netscape or IBM-HP-Microsoft-Oracle? (Where, 25 years from now, would you rather to be able to tell someone—e.g., grandchild—that you worked?)

“Wealth in this new regime flows directly from innovation, not optimization. That is, wealth is not gained by perfecting the known, imperfectly seizing the unknown.”

—Kevin Kelly,

but by

New Rules for the New Economy

New Economy?!

Sergey + Larry > Harvard/ 370

EXCELLENCE. STARTERS.

HORRORS.

Franchise Lost!

TP:

“ How many of you

[600]

really

crave

a new Chevy?”

“Ford, GM and Chrysler do not just make cars expensively … they make bad cars expensively.”

—Investec analyst, International Herald, 0805.06

Sluggish + Sluggish + More Sluggish Obese + Obese + Unimaginative + + More More Obese More Unimaginative + + Even Even More Even More Unimaginative =

NISSAN + RENAULT + GM

= Innovative Challenger for Toyota????

Oh, Great …

Ford: Airplane guy.

GM: CFO.

Small cars HQ: LA.

Big cars HQ: Dallas.

Corporate HQ: Atlanta.

CEO: Roger Enrico Meg Whitman.

or Lou Gerstner or COO: Bob Nardelli.

Chairman: George Steinbrenner or Jack Welch or Ross Perot.

Vice chairman & CFO: Warren Buffett.

Chief Marketing Officer: Brenda Barnes.

Chief Branding Officer: Phil Knight (or Howard Schultz ). Chief Innovation Officer: Steve Jobs or Jeff Immelt.

Chief/Supply Chain: Raid Wal*Mart or CostCo or Dell.

Chief/Dealer Relations: Carl Sewell.

EXCELLENCE. STARTERS.

BASICS.

Did one of ’em ever turn to the other and say: forth Alice, age 17 “Wow, I wonder what unimaginable new tools, otherwise not possible, will be brought for my daughter , because of this deal?”

People.

Product.

Clients.

Execution.

Enthusiasm.

Excellence.

People.

Product.

Clients.

Execution.

Enthusiasm.

Excellence.

Relentless.

People.

Product.

Clients.

Execution.

Enthusiasm.

Excellence.

Relentless.

Senility.

Forget>“Learn”

“The problem is never how to get new, innovative thoughts into your mind,

but how to get the old ones out.”

—Dee Hock

EXCELLENCE. THE WORD.

Synonyms Purity Transcendence Virtue Elegance Majesty Antonyms

Mediocrity

EXCELLENCE. GAMECHANGER.

Excellence1982: The Bedrock “Eight Basics” 1. A Bias for Action 2. Close to the Properties” Customer 3. Autonomy and Entrepreneurship 4. Productivity Through 6. Stick to the Knitting People 5. Hands On, Value-Driven 7. Simple Form, Lean Staff 8. Simultaneous Loose-Tight

ExIn*: 1982-2002/Forbes.com

DJIA EI : : $10,000 yields $85,000 $10,000 yields $140,050 *Forbes/ Excellence Index /Basket of 32 publicly traded stocks

EXCELLENCE. ALWAYS.

“Why in the world did you go to Siberia?”

Business* ** (*at its best):

An emotional, vital, innovative, joyful, creative, entrepreneurial endeavor that elicits maximum concerted human potential in the wholehearted service of others

.

*** ** Excellence. Always.

***Employees, Customers, Suppliers, Communities, Owners, Temporary partners

EXCELLENCE. VALUE ADDED.

UP THE LADDER.

EXCELLENCE. SOLVE IT.

“Big Brown’s New Bag: UPS

Aims to Be the

Traffic Manager for Corporate America ”

—Headline/ BW

EXCELLENCE.

SOLVE IT.

NO OPTION.

PSF. (PSF++)

“ ‘Disintermediation’ is overrated. Those who fear disintermediation should in fact be afraid of irrelevance —disintermediation is just another way of saying that …

you’ve become irrelevant to your customers.”

—John Battelle/ Point/Advertising Age /07.05

Department Head to …

Managing Partner, IS Inc.

[HR, R&D, etc.]

Up, Up, Up, Up

the Value-added Ladder.

The Value-added Ladder/ Opportunity-seeking Gamechanging Solutions Services Goods Raw Materials

EXCELLENCE. EXPERIENCE IT.

“Experiences

are as distinct from services as services are from goods.”

—Joe Pine & Jim Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage

Experience: “Rebel Lifestyle!”

“What we sell is the ability for a 43 year-old accountant to dress in black leather, ride through small towns and have people be afraid of him.”

Harley exec, quoted in Results-Based Leadership

The Value-added Ladder/ Memorable Connection

Spellbinding Experiences

Gamechanging Solutions Services Goods Raw Materials

$ 415 /SqFt/Wal*Mart $ 798 /SqFt/Whole Foods

Summary: WallopWal*Mart16* *Or: Why it’s so absurdly easy to beat a GIANT Company

The Small*Mart Revolution: How Local Businesses Are Beating Local Competition —Michael Shuman

EXCELLENCE. DREAM IT.

Furniture vs. Dreams “We do not sell ‘furniture’ at Domain.

We sell dreams

.

This is accomplished by addressing the half-formed needs in our customers’ heads. By uncovering these needs, we, in essence, fill in the blanks.

convert ‘needs’ into ‘dreams.’ Sales are the inevitable result.” We — Judy George, Domain Home Fashions

The Value-added Ladder/Emotion Dreams Come True Spellbinding Experiences Gamechanging Solutions Services Goods Raw Materials

Big Blue

EXCELLENCE. LOVE IT.

Kevin Roberts:

Lovemarks

!

Top 10 “Tattoo Brands”* Harley .… 18.9% Disney .... 14.8

Coke …. 7.7

Google .... 6.6

Pepsi .... 6.1

Rolex …. 5.6

Nike …. 4.6

Adidas …. 3.1

Absolut …. 2.6

Nintendo …. 1.5

* BRANDsense: Build Powerful Brands through Touch, Taste, Smell, Sight, and Sound , Martin Lindstrom

Lovemark

Dreams Come True Spellbinding Experiences Gamechanging Solutions

Services Goods Raw Materials

EXCELLENCE.

NEW VALUE EQUATION.

NEW “C-levels”.

C O* *Chief e X perience Officer

C *Chief Dream Merchant

C O*

*Chief

Lovemar

k Officer

C O*

*Chief

Storytelling

Officer

C O * *Chief

Design

Officer

C O*

*Chief

freaks acquisition

Officer

C O*

*Chief

quest-meister

C *Chief

WOW

Officer O*

C O* *Chief

Revenue

Officer

EXCELLENCE. EVERYWHERE.

Spain Portugal Italy Ireland Singapore Taiwan Thailand Malaysia Singapore Philippines UAE Oman Chile Romania New Zealand Australia

Better By Design: A National Strategy NZ =

Design Excellence

EXCELLENCE.

CENTURY 21.

EMPIRES OF THE MIND.

RICHARD FLORIDA.

JUAN ENRIQUEZ.

“Human creativity is the ultimate economic resource.”

—Richard Florida, The Rise of the Creative Class

“THE FUTURE BELONGS TO … SMALL POPULATIONS … WHO BUILD EMPIRES OF THE MIND

… AND WHO IGNORE THE TEMPTATION OF —OR DO NOT HAVE THE OPTION OF —EXPLOITING NATURAL RESOURCES.” Source: Juan Enriquez/ As the Future Catches You

U.S. Historical Strength: Invest in Creativity

*Foster new industries *Free & open society *Investment higher ed, R & D, culture *Immigrants

Source: Richard Florida, The Rise of the Creative Class

CI/Top10 Metro*:

Austin, SF, Seattle, Boston, Raleigh Durham, Portland, Minneapolis, Washington Baltimore, Sacramento, Denver

CI/Bottom10: Detroit, Norfolk, Cleveland, Milwaukee, Grand Rapids, Memphis, Jacksonville, Greensboro, New Orleans, Buffalo, Louisville *> 1M/49 total Source: Richard Florida, The Rise of the Creative Class

“The global talent pool and the high-end, high margin creative industries that used to be the sole province of the U.S., and a critical source of its prosperity, have begun to disperse around the globe. A host of countries — Ireland, Finland, Canada, Australia, New Zealand, among them —are investing in higher education, cultivating creative people, and churning out stellar products, from Nokia phones to the Lord of the Rings movies.. Many of these countries have learned from past U.S. success and are shoring up efforts to attract foreign talent —including Americans. … The United States may well be the Goliath of the twentieth century global economy, but it will take just half a dozen twenty-first-century Davids to begin to wear it down.

To stay innovative, America must continue to attract the world’s sharpest minds. And to do that, it needs to invest in the further development of its creative sector. Because wherever creativity goes —and, by extension, wherever talent goes— innovation and economic growth are sure to follow .”

—“America’s Looming Creativity Crisis”/Richard Florida/ HBR /10.04

EXCELLENCE. INNOVATE. OR. DIE.

“A focus on cost-cutting and efficiency has helped many organizations weather the downturn, but this approach will ultimately render them obsolete.

Only the constant pursuit of innovation can ensure long-term success.” —Daniel Muzyka, Dean, Sauder School of Business, Univ of British Columbia ( FT /09.17.04)

More than $$$$ #1 R&D spending, last 25 years?

“I don’t believe in economies of scale.

You don’t get better by being bigger. You get worse

.” —Dick Kovacevich/Wells Fargo/ Forbe s/08.04 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%; J.P. Morgan Chase, 0.9%)

Scale?

“Microsoft’s Struggle With Scale” —Headline, FT, 09.2005

“Troubling Exits at Microsoft” —Cover Story, BW, 09.2005

“ Too Big to Move Fast?” —Headline, BW, 09.2005

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The answer seems obvious:

Buy a very large one and just wait

.”

—Paul Ormerod, Why Most Things Fail:

Evolution, Extinction and Economics

The Perils of Conservatism/ Industry Leadership “ ‘Good management’ was the most powerful reason [leading firms] failed to stay atop their industries.

Precisely because these firms listened to their customers, invested aggressively in technologies that would provide their customers more and better products of the sort they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership.” —Clayton Christensen, The Innovator’s Dilemma

InnoTacs

We become who we hang out with!

“ The Bottleneck Is at the Top of the Bottle”

“Where are you likely to find people with the least diversity of experience, the largest investment in the past, and the greatest reverence for industry dogma:

At the top!”

— Gary Hamel/ Harvard Business Review

Measure “Strangeness”/Portfolio Quality Staff Consultants Vendors Out-sourcing Partners Competitors Customers Product Portfolio IS/IT Projects HQ Location Lunch Mates Language (#, Quality) Innovation Alliance Partners (who we “benchmark” against) Strategic Initiatives (LineEx v. Leap) Board

try it

“Experiment fearlessly”

Source: BW0821.06, Type A Organization Strategies/ “How to Hit a Moving Target”— Tactic #1

tolerate [encourage?] failure

Sam’s Secret

#1!

bet the farm

“[Immelt] is now identifying technologies with which GE will …

systematically set out to build entirely new industries” — Strategy+Business , Fall 2005

EXCELLENCE. 4/40.

De-cent ral-iz a-tion!

Ex-e cu-tion!

Ac-count a-bil-ity!

6:15A.M.

EXCELLENCE. ACTION.

ROOTS.

GRANT

“One of my superstitions had always been when I started to go anywhere or to do anything,

not to turn back

, or stop, until the thing intended was accomplished.”

—Grant

NELSON

On NELSON:

“[other] admirals more frightened of losing than anxious to win”

BOYD

He who has the quickest “O.O.D.A. Loops”* wins!

*Observe. Orient. Decide. Act. /Col. John Boyd

BOSSIDY

“

Execution is the job business leader .” of the

—Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“ Execution is a

systematic process

of rigorously discussing hows and whats, tenaciously following through, and ensuring accountability.” —Larry Bossidy & Ram Charan/ The Discipline Execution: of Getting Things Done

PEROT

READY.

FIRE!

AIM.

Ross Perot (vs “ Aim! Aim! Aim!” /EDS vs GM/1985)

MASTERS

“ This is so simple it sounds stupid, but it is amazing how few oil people really understand that

you only find oil if you drill wells.

You may think you’re finding it when you’re drawing maps and studying logs, but you have to drill.” Source: The Hunters , by John Masters, Canadian O & G wildcatter

HERB

“We have a ‘strategic plan.’ It’s called doing things.”

— Herb Kelleher

EXCELLENCE. BEDROCK.

TALENT.

Brand = Talent.

DD $21M

A review of Jack and Suzy Welch’s Winning claims there are but two key differentiators that set GE “culture” apart from the herd: First:

Separating financial forecasting and performance measurement.

Performance measurement based, as it usually is, on budgeting leads to an epidemic of gaming the system. GE’s performance measurement is divorced from budgeting —and instead reflects how you do relative to your past performance and relative to competitors’ performance; i.e., it’s about how you actually do in the context of what happened in the real world, not as compared to a gamed-abstract plan developed last year. Second: Putting HR on a par with finance and marketing.

Our Mission

To develop and manage talent; to apply that talent, throughout the world, for the benefit of clients; to do so in partnership; to do so with profit.

WPP

“The role of the Director is to create a space where the actor or actress can become more than they’ve ever been before, more than they’ve dreamed of being.” —Robert Altman, Oscar acceptance

C O*

*Chief

quest-meister

EXCELLENCE. INDIVIDUAL.

BRAND YOU.

“ If there is nothing very special about your work, no matter how hard you apply yourself you won’t get noticed, and that increasingly means you won’t get paid much either.”

—Michael Goldhaber, Wired

Distinct

… … or

Extinct

EXCELLENCE AWOL: THE NEW ECONOMY AND THE SCHOOLS FIASCO

“My wife and I went to a [kindergarten] parent-teacher conference and were informed that our budding refrigerator artist, Christopher, would be receiving a grade of Unsatisfactory in art. We were shocked. How could any child—let alone our child—receive a poor grade in art at such a young age?

His teacher informed us that he had refused to color within the lines, which was a state requirement for demonstrating ‘grade-level motor skills.’ ” —Jordan Ayan, AHA!

Ye gads:

“ Thomas Stanley has not only found no correlation between success in school and an ability to accumulate wealth, he’s actually found a negative correlation.

‘ It seems that school-related evaluations are poor predictors of economic success,’ Stanley concluded. What did predict success was a willingness to take risks. Yet the success-failure standards of most schools penalized risk takers. Most educational systems reward those who play it safe. As a result, those who do well in school find it hard to take risks later on.”

—Richard Farson & Ralph Keyes, Whoever Makes the Most Mistakes Wins

15 “Leading” Biz Schools Design /Core:

0

Design/Elective: 1 Creativity /Core:

0

Creativity/Elective: 4 Innovation /Core:

0

Innovation/Elective: 6 Source: DMI /Summer 2002/Research by Thomas Lockwood

EXCELLENCE. BEDROCK.

PURPOSE.

“I never, ever thought of myself as a businessman. I was interested in creating things I would be proud of.”

— Richard Branson

“People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for , trust.” —Howard Schultz, Starbucks

EXCELLENCE.

ENTHUSIASM.

ENERGY. PASSION.

RELENTLESSNESS.

“

Nothing is so contagious as enthusiasm.”

—Samuel Taylor Coleridge

“

It is no use saying ‘We are doing our best.’ You have got to succeed in doing what is necessary.”

—WSC

EXCELLENCE. AGILITY.

“The most successful people are those who are good at plan B.” —James Yorke, mathematician, on chaos theory in The New Scientist

EXCELLENCE. SHOWING UP.

MBWA

“

You must be the change you wish to see in the world.”

Gandhi

“

The First step in a ‘dramatic’ ‘organizational change program’ is obvious— dramatic personal change!”

—RG

EXCELLENCE. STRETCH.

The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.

Michelangelo

Kevin Roberts’ Credo 1 . Ready. Fire! Aim.

2. If it ain’t broke ... Break it!

3. Hire crazies.

4. Ask dumb questions.

5. Pursue failure.

6. Lead, follow ... or get out of the way!

7. Spread confusion.

8. Ditch your office.

9. Read odd stuff.

10. Avoid moderation!

EX

CELLE ALW

AYS

.