Transcript Tom Peters’ Re-Imagine! Business Excellence in a Disruptive Age Ericsson/Plano TX/01.20.2004 Slides at … tompeters.com.

Tom Peters’
Re-Imagine!
Business Excellence
in a Disruptive Age
Ericsson/Plano TX/01.20.2004
Slides at …
tompeters.com
“Uncertainty is the only
thing to be sure of.” —Anthony Muh,
head of investment in Asia, Citigroup Asset Management
“If you don’t like change,
you’re going to like
irrelevance even less.” —General Eric
Shinseki, Chief of Staff,
U. S. Army
1. All Bets
Are Off.
“September 11 amounts to
World War III—the third
great totalitarian challenge
to open societies in the last
100 years.” —Thomas
Friedman/NYT/01.08.2004
“The World Must
Learn to Live with
a Wide-awake
China”
—Headline/FT/11.03
1990-2003: Exports 8X
($380B); 6% global exports
2003 vs. 3.9% 2000; 16% of
Total Global Growth in 2002.
Source: “China Takes Off”, David Hale & Lyric Hughes Hale/Foreign
Affairs/Nov-Dec2003
397,000,000 fixed phone
lines =
90X since 1989.
Source: “China Takes Off”, David Hale & Lyric Hughes Hale/Foreign
Affairs/Nov-Dec2003
2003: China-Hong Kong leading
producer in 8 of 12 key consumer
electronic product areas (>50%:
DVDs, digital cameras; >33.33%:
DVD-ROM drives, personal
desktop and notebook computers;
>25% mobile phones, color TVs,
PDAs, car stereos).
Source: “China Takes Off”, David Hale & Lyric Hughes
Hale/Foreign Affairs/Nov-Dec2003
“14 MILLION
service jobs are in
danger of being
shipped overseas” —
The Dobbs Report/USN&WR/11.03/re new UCB
study
“There is no job
that is America’s
God-given right
anymore.”
—Carly Fiorina/ HP/
01.08.2004
--79% of U.S. jobs in “structurally changed
professions” (“permanently eliminated jobs”)
(40K of 160K U.S. IBM)
--“As we trade we release more labor from the
service sector because our highly skilled and
highly paid workers lose their competitive
advantage. So we go to the next big thing. We
specialize in innovation. We develop new
products and start new industries.” (Erica
Groshen, labor economist, Fed of NY)
Source: CNN/Money/01.07.2004
“One Singaporean worker
costs as much as …
3 … in Malaysia
8 … in Thailand
13 … in China
18 … in India.”
Source: The Straits Times/08.18.03
Solution: Re-brand
Singapore … from the
“place that works” to
the “place that’s cool”
(and works, too)
“A California biotechnology
company has put the entire
sequence of the human genome
on a single chip, allowing
researchers to readily conduct
single experiments on the
complex relationships between
the 30,000 genes that make up a
human being in.” —Page 1, Financial
Times/10.03.2003
“There will be more
confusion in the
business world in the next
decade than in any decade in
history. And the current pace of
change will only accelerate.”
Steve Case
2. The
Destruction
Imperative.
Forbes100 from 1917 to 1987: 39
members of the Class of ’17 were alive
in ’87; 18 in ’87 F100; 18 F100
“survivors” underperformed the market
by 20%; just 2 (2%), GE & Kodak,
outperformed the market 1917 to 1987.
S&P 500 from 1957 to 1997: 74 members of the Class of ’57 were
alive in ’97; 12 (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
“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
“Far from being a
source of comfort,
bigness became a code
for inflexibility.”
—John Micklethwait
& Adrian Wooldridge, The Company
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
The [New] Ge Way
DYB.com
No Wiggle Room!
“Incrementalism
is innovation’s
worst enemy.”
Nicholas Negroponte
Just Say No …
“I don’t intend to be
known as the ‘King of
the Tinkerers.’ ”
CEO, large financial services company
3. The White
Collar Revolution
& the Death of
Bureaucracy.
Steel: 75 million tons in ’82 to
102 million tons in ’02.
289,000 steelworkers in ’82 to
74,000 steelworkers in ’02.
Source: Fortune/11.24.03
E.g. …
Jeff Immelt: 75% of “admin, back
room, finance” “digitalized” in
years.
Source: BW (01.28.02)
“Organizations will still be
critically important in the world,
but as ‘organizers,’ not
‘employers’!” — Charles Handy
Ford: “Vehicle
brand
owner” (“design, engineer, and
market, but not actually make”)
Source: The Company, John Micklethwait & Adrian Wooldridge
4. IS/ IT/
Web … “On the
Bus” or “Off the
Bus.”
square feet
“Our entire facility is digital. No paper, no film, no
medical records. Nothing. And it’s all integrated—from the lab to
X-ray to records to physician order entry. Patients don’t have to
wait for anything. The information from the physician’s office is
in registration and vice versa. The referring physician is
immediately sent an email telling him his patient has shown up.
… It’s wireless in-house. We have 800 notebook computers that
are wireless. Physicians can walk around with a computer that’s
pre-programmed. If the physician wants, we’ll go out and wire
their house so they can sit on the couch and connect to the
network. They can review a chart from 100 miles away.” —David
Veillette, CEO, Indiana Heart Hospital (HealthLeaders/12.2002)
“Dawn Meyerreicks, CTO of the Defense Information Systems Agency, made
one of the most fateful military calls of the 21st century. After 9/11 … her office
quickly leased all the available transponders covering Central Asia. The
implications should change everything about U.S. military thinking in the
years ahead.
“The U.S. Air Force had kicked off its fight against the Taliban with an
ineffective bombing campaign, and Washington was anguishing over whether
to send in a few Army divisions. Donald Rumsfeld told Gen. Tommy Franks to
give the initiative to 250 Special Forces already on the ground. They used
satellite phones, Predator surveillance drones, and GPS- and laser-based
targeting systems to make the air strikes brutally effective.
“In effect, they ‘Napsterized’ the battlefield by cutting out the middlemen
(much of the military’s command and control) and working directly with the
real players. … The data came in so fast that HQ revised operating procedures
to allow intelligence analysts and attack planners to work directly together.
Their favorite tool, incidentally, was instant messaging over a secure
network.”—Ned Desmond/“Broadband’s New Killer App”/Business 2.0/
OCT2002
“The mechanical speed of
combat vehicles has not
increased since Rommel’s day,
so the difference is all in the
operational speed, faster
communications and faster
decisions.” —Edward Luttwak, on the
unprecedented pace of the move toward Baghdad
Read It Closely: “We
don’t sell
We
sell speed.”
insurance anymore.
Peter Lewis, Progressive
“Ebusiness is about rebuilding
the organization from the
ground up. Most companies today
are not built to exploit the Internet.
Their business processes, their
approvals, their hierarchies, the
number of people they employ … all of
that is wrong for running an
ebusiness.”
Ray Lane, Kleiner Perkins
5. The Heart of the Value
Added Revolution:
The “Solutions
Imperative.”
“While everything may
it is also
increasingly
the same.”
be better,
Paul Goldberger on retail, “The Sameness of Things,”
The New York Times
“The ‘surplus society’ has a surplus of
similar companies, employing
similar people, with similar
educational backgrounds, coming up
with similar ideas, producing
similar things, with similar prices
and similar quality.”
Kjell Nordström and Jonas Ridderstråle, Funky Business
“Companies have defined
so much ‘best practice’
that they are now more or
less identical.”
Jesper Kunde, Unique Now ... or Never
“We make over three new
product announcements a
day. Can you remember
them? Our
customers
can’t!”
Carly Fiorina
09.11.2000: HP bids
$18,000,000,000
for
PricewaterhouseCoopers
consulting business!
“These days, building
the best server isn’t
enough. That’s the
price of entry.”
Ann Livermore, Hewlett-Packard
Systems
Integrator of
choice. Global Services:
Gerstner’s IBM:
$35B. Pledge/’99: Business
Partner Charter. 72 strategic partners,
aim for 200. Drop many in-house
programs/products. (BW/12.01).
“You are headed
for commodity
hell if you don’t
have services.”
—Lou
Gerstner, on IBM’s coming revolution (1997)
“Customer Satisfaction” to
“Customer Success”
“We’re getting better at [Six
Sigma] every day. But we really
need to think about the customer’s
profitability. Are customers’
bottom lines really benefiting from
what we provide them?”
Bob Nardelli, GE Power Systems
Keep In Mind:
Customer
Satisfaction
versus
Customer
Success
Nardelli’s goal ($50B to $100B by 2005):
“… move Home Depot beyond selling
‘goods’ to selling ‘home services.’ …
He wants to capture home
improvement dollars wherever and
however they are spent.”
E.g.: “house calls” (At-Home Service: $10B by ’05?) …
“pros shops” (Pro Set) … “home project management”
(Project Management System … “a deeper selling
relationship”).
Source: USA Today/06.14.2002
E.g. …
UTC/Otis + Carrier:
boxes to “integrated
building systems”
Units of
“Coolth”
Leased AC:
“UPS wants to take over the
sweet spot in the endless loop
of goods, information and
capital that all the packages
[it moves] represent.”
ecompany.com/06.01 (E.g., UPS Logistics
manages the logistics of 4.5M Ford vehicles,
from 21 mfg. sites to 6,000 NA dealers)
“UPS used to be a
trucking company with
technology. Now it’s a
technology company
with trucks.”
—Forbes, upon naming UPS
“Company of the Year” in Y2000
And the Winners Are …
Televisions –12%
Cable TV service +5%
Toys -10%
Child care +5%
Photo equipment -7%
Photographer’s fees +3%
Sports Equipment -2%
Admission to sporting event +3%
New car -2%
Car repair +3%
Dishes & flatware -1%
Eating out +2%
Gardening supplies -0.1%
Gardening services +2%
Source: WSJ/05.16.03
IBM/Q3/10.15.03/Rev: +5%
Services/Consulting: +11%
Software: +5%
Hardware: -5%
PCs: -2%
Technology/Chips: -33%
6. A World of
Scintillating
“Experiences.”
“Experiences are as
distinct from services
as services are from
goods.”
Joseph Pine & James Gilmore, The Experience Economy:
Work Is Theatre & Every Business a Stage
“Club Med
is more
than just a ‘resort’; it’s a
means of rediscovering
oneself, of inventing an
entirely new ‘me.’ ”
Source: Jean-Marie Dru, Disruption
“The [Starbucks] Fix” Is on …
“We have identified a ‘third
place.’ And I really believe that
sets us apart. The third place is
that place that’s not work or
home. It’s the place our
customers come for refuge.”
Nancy Orsolini, District Manager
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
WHAT CAN BROWN DO FOR YOU?
The “Experience Ladder”
Experiences
Services
Goods
Raw Materials
1940: Cake from flour, sugar (raw
materials economy): $1.00
1955: Cake from Cake mix (goods
economy): $2.00
1970: Bakery-made cake (service
economy): $10.00
1990: Party @ Chuck E. Cheese
(experience economy) $100.00
Message:
“Experience” is the
“Last 80%”
P.S.: “Experience” applies to all work!
1940: Cake from flour, sugar (raw materials
economy): $1.00
1955: Cake from Cake mix (goods economy):
$2.00
1970: Bakery-made cake (service
economy):
$10.00
1990: Party @ Chuck E. Cheese
(experience economy)
$100.00
“I see us as being in
the art business. Art,
entertainment and mobile
sculpture, which,
coincidentally, also
happens to provide
transportation.”
Bob Lutz:
Source: NYT 10.19.01
It’s All About EXPERIENCES: “Trapper” to
“Wildlife Damage-control Professional”
Trapper: <$20 per beaver pelt.
WDCP: $150/“problem beaver”;
$750-$1,000 for flood-control
piping … so that beavers
can stay.
Source: WSJ/05.21.2002
Duet … Whirlpool … “washing machine” to
“fabric care system” … white goods: “a sea of
undifferentiated boxes” … $400 to $1,300 …
“the Ferrari of washing machines” …
consumer: “They are our little mechanical
buddies. They have personality. When they are
running efficiently, our lives are running
efficiently. They are part of my family.” …
“machine as aesthetic showpiece” … “laundry
room” to “family studio” / “designer laundry
room” (complements Sub-Zero refrigerator and
home-theater center)
Source: New York Times Magazine/01.11.2004
7. “It” all adds up
to … THE
BRAND.
“WHO ARE
WE?”
“WHAT’S
OUR
STORY?”
“We are in the twilight of a society based on data. As
information and intelligence become the domain of
computers, society will place more value on the one
human ability that cannot be automated: emotion.
Imagination, myth, ritual - the language of emotion will affect everything from our purchasing decisions
Companies will
thrive on the basis of their stories
and myths. Companies will need to understand
to how we work with others.
that their products are less important than
their stories.”
Rolf Jensen, Copenhagen Institute for Future Studies
“EXACTLY
HOW ARE WE
DRAMATICALLY
DIFFERENT?”
“A great company
is defined by the
fact that it
is not compared
to its peers.”
Phil Purcell, Morgan Stanley
8. Boss Job One:
The Talent
Obsession.
“When land was the scarce
resource, nations battled
over it. The same is
happening now for
talented people.”
Stan Davis & Christopher Meyer, futureWEALTH
Age of Agriculture
Industrial Age
Age of Information Intensification
Age of Creation Intensification
Source: Murikami Teruyasu, Nomura Research Institute
Brand =
Talent.
Model
25/8/53
Sports Franchise GM*
*48 = $500M
“The leaders of Great
Groups love talent and know
where to find it. They revel in
the talent of others.”
Warren Bennis & Patricia Ward Biederman,
Organizing Genius
Les Wexner: From
sweaters to people!
From “1, 2 or you’re out” [JW]
to …
“Best Talent in each
industry segment to build
best proprietary
intangibles” [EM]
Source: Ed Michaels, War for Talent
The Cracked Ones Let in the Light
“Our business needs a massive
transfusion of talent, and talent, I
believe, is most likely to be found
among non-conformists,
dissenters and rebels.”
David Ogilvy
“AS LEADERS, WOMEN
RULE: New Studies find
that female managers
outshine their male
counterparts in almost
every measure”
Title, Special Report, BusinessWeek, 11.20.00
“TAKE THIS QUICK QUIZ: Who manages more things
at once? Who puts more effort into their appearance?
Who usually takes care of the details? Who finds it
easier to meet new people? Who asks more
questions in a conversation? Who is a better
listener? Who has more interest in communication
skills? Who is more inclined to get involved?
Who encourages harmony and agreement? Who
has better intuition? Who works with a longer ‘to do’
list? Who enjoys a recap to the day’s events?
Who is better at keeping in touch with others?”
Source: Selling Is a Woman’s Game: 15 Powerful Reasons Why
Women Can Outsell Men, Nicki Joy & Susan Kane-Benson
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
9. THINK WEIRD
… the HVA/ High Value
Added Bedrock.
The
High Standard
Deviation
Enterprise.
THINK WEIRD:
Saviors-in-Waiting
Disgruntled Customers
Off-the-Scope Competitors
Rogue Employees
Fringe Suppliers
Wayne Burkan, Wide Angle Vision: Beat the Competition by Focusing on
Fringe Competitors, Lost Customers, and Rogue Employees
CUSTOMERS: “Futuredefining customers may
account for only 2% to 3%
of your total, but they
represent a crucial
window on the future.”
Adrian Slywotzky, Mercer Consultants
“Generally, disruptive technologies
underperform established
established products in
mainstream markets. But they have
other features that a few fringe
(and generally new) customers
value.”
Clayton Christensen, The Innovator’s Dilemma
Primary Obstacles to “Marketing-driven Change”
1. Fear of “cannibalism.”
2. “Excessive cult of the
consumer”/ “customer driven”/
“slavery to demographics, market
research and focus groups.”
3.Creating “sustainable
advantage.”
Source: John-Marie Dru, Disruption
“Chivalry is dead. The new code of conduct is
an active strategy of disrupting the status quo
to create an unsustainable series of competitive
advantages. This is not an age of defensive
castles, moats and armor. It is rather an age of
cunning, speed and surprise. It may be hard for
some to hang up the chain mail of ‘sustainable
advantage’ after so many battles. But
hypercompetition, a state in which sustainable
advantages are no longer possible, is now the
only level of competition.”
Rich D’Aveni, Hypercompetition: Managing the Dynamics of
Strategic Maneuvering
COMPETITORS: “The
best swordsman
in the world doesn’t need to fear
the second best swordsman in the
world; no, the person for him to be afraid of is
some ignorant antagonist who has never had a
sword in his hand before; he doesn’t do the
thing he ought to do, and so the expert isn’t
prepared for him; he does the thing he ought not
to do and often it catches the expert out and
ends him on the spot.”
Mark Twain
“To grow, companies need
to break out of a vicious
cycle of competitive
benchmarking, imitation and
pursuit.” —W. Chan Kim & Renee Mauborgne,
“”Think for Yourself —Stop Copying a Rival,” Financial
Times/08.11.03
“The short road to
ruin is to emulate
the methods of your
adversary.”
— Winston Churchill
Employees: “Are there
enough weird
people in the lab these
days?”
V. Chmn., pharmaceutical house, to a lab director (06.01)
10. Leading in Totally
Screwed Up Times:
The Passion Imperative.
“Ninety percent of what
we call ‘management’
consists of making it
difficult for people to get
things done.” – P.D.
“I don’t
know.”
Quests!
The Kotler Doctrine:
1965-1980: R.A.F.
(Ready.Aim.Fire.)
1980-1995: R.F.A.
(Ready.Fire!Aim.)
1995-????: F.F.F.
(Fire!Fire!Fire!)
“We have a
‘strategic’ plan.
It’s called doing
things.”
— Herb Kelleher
“If Microsoft is good at anything, it’s
avoiding the trap of worrying about
criticism. Microsoft fails constantly.
They’re eviscerated in public for lousy
products. Yet they persist, through
version after version, until they get
something good enough. Then they
leverage the power they’ve gained in
other markets to enforce their standard.”
Seth Godin, Zooming
“If it works,
it’s obsolete.”
—Marshall McLuhan
“I’m not comfortable
unless
I’m uncomfortable.”
—Jay
Chiat
“If things seem
under control,
you’re just not
going
fast enough.”
Mario Andretti
DG to TP: “Sam
is not afraid
to fail.”
“Reward
excellent
failures. Punish
mediocre successes.”
Phil Daniels, Sydney exec (and, de facto, Jack)
Audie Murphy was the most
decorated soldier in WW2.
He won every medal we had
to offer, plus 5 presented by
Belgium and France. There
was one common medal he
never won …
… the Good
Conduct medal.
“You can’t behave in a
calm, rational manner.
You’ve got to be out there
on the lunatic fringe.” — Jack
Welch, on GE’s quality program
“In Tom’s world it’s always
better to try a swan dive and
deliver a colossal belly flop
than to step timidly off the
board while holding your
nose.”—Fast Company /October2003
Successful Businesses’ Dozen Truths: TP’s 30-Year Perspective
1. Insanely Great & Quirky Talent.
2. Disrespect for Tradition.
3. Totally Passionate (to the Point of Irrationality) Belief in What
We Are Here to Do.
4. Utter Disbelief at the Bullshit that Marks “Normal Industry Behavior.”
5. A Maniacal Bias for Execution … and Utter Contempt
for Those Who Don’t “Get It.”
6. Speed Demons.
7. Up or Out. (Meritocracy Is Thy Name. Sycophancy Is Thy Scourge.)
8. Passionate Hatred of Bureaucracy.
9. Willingness to Lead the Customer … and Take the Heat Associated
Therewith. (Mantra: Satan Invented Focus Groups to Derail True
Believers.)
10. “Reward Excellent Failures. Punish Mediocre Successes.”
11. Courage to Stand Alone on One’s Record of Accomplishment
Against All the Forces of Conventional Wisdom.
12. A Crystal Clear Understanding of Brand Power.
Thank You