Slide 1: Business Excellence in a Disruptive Age Avaya/05October2005 Re-Imagine! Tom Peters’
Slide 2: Slides at … tompeters.com
Slide 3: Context.
Slide 4: ,000,000,000
Slide 5: THREE BILLION NEW CAPITALISTS —Clyde Prestowitz
Slide 6: 26m
Slide 7: 43h
Slide 8: ,000,000,000
Slide 9: “A focus on cost-cutting and efficiency has helped many organizations weather the downturn, but this approach will ultimately Only the constant pursuit of innovation can ensure long-term success.” —Daniel render them obsolete. Muzyka, Dean, Sauder School of Business, Univ of British Columbia (FT/09.17.04)
Slide 10: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” —Charles Darwin
Slide 11: No!
Slide 12: comparison companies—those that failed to make a leap or, if they did, failed to sustain it—often tried to make themselves great with a big acquisition or merger. They failed to grasp the simple truth that while you can buy your way to growth, you cannot buy your way to greatness.” —Jim Collins/Time/11.29.04 “Not a single company that qualified as having made a sustained transformation ignited its leap with a big acquisition or merger. Moreover,
Slide 13: economies of scale. You don’t get better by being bigger. You get worse.” —Dick Kovacevich/ Wells Fargo/Forbes08.2004 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%; J.P. Morgan Chase, 0.9%) “I don’t believe in
Slide 14: 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
Slide 15: “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
Slide 16: Yes!
Slide 17: “To grow, companies need to break out of a vicious cycle of competitive benchmarking and imitation.” “Think for Yourself —Stop Copying a Rival,” Financial Times/08.11.03 —W. Chan Kim & René Mauborgne,
Slide 18: Innovation! NOT Imitation
Slide 19: is about making the competition irrelevant by creating uncontested market space. We argue that beating the competition within the confines of the existing industry is not the way to create profitable growth.” —Chan Kim & Renée Mauborgne (INSEAD), from Blue Ocean Strategy (The Times/London/01.20.2005) “Value innovation
Slide 20: “Acquisitions are about buying Our challenge is to create markets. market share. There is a big difference.” —Peter Job, CEO, Reuters
Slide 21: GH/TP: “Get better” vs “Get different”
Slide 22: The SE22: Origins of Sustainable Entrepreneurship.
Slide 23: SE22/Origins of Sustainable Entrepreneurship 1. Genetically disposed to Innovations that upset apple carts (3M, Apple, FedEx, Virgin, BMW, Sony, Nike, Schwab, Starbucks, Oracle, Sun, Fox, Stanford University, MIT) 2. Perpetually determined to outdo oneself, even to the detriment of today’s $$$ winners (Apple, Cirque du Soleil, Nokia, FedEx) 3. Treat History as the Enemy (GE) 4. Love the Great Leap/Enjoy the Hunt (Apple, Oracle, Intel, Nokia, Sony) 5. Use “Strategic Thrust Overlays” to Attack Monster Problems (Sysco, GSK, GE, Microsoft) 6. Establish a “Be on the COOL Team” Ethos. (Most PSFs, Microsoft) 7. Encourage Vigorous Dissent/Genetically “Noisy” (Intel, Apple, Microsoft, CitiGroup, PepsiCo) 8. “Culturally” as well as organizationally Decentralized Omnicom, Virgin) (GE, J&J, 9. Multi-entrepreneurship/Many Independent-minded Stars (GE, PepsiCo, J & J)
Slide 24: HP’s Big “Duh”! Decentralize ($90B) Undo “Matrix” Accountability Source: “HP Says Goodbye To Drama”/ BW/09.05/re Mark Hurd’s first 5 months
Slide 25: SE22/Origins of Sustainable Entrepreneurship 10. Keep decentralizing—tireless in pursuit of wiping out Centralizing Tendencies (J&J, Virgin) 11. Scour the world for Ingenious Alliance Partners—especially exciting start-ups (Pfizer) 12. Acquire for Innovation & Talent, not Market Share (Cisco, GE, Omnicom) 13. Don’t overdo “pursuit of synergy” (GE, J&J, Time Warner) 14. Execution/Action Bias: Just do it … don’t obsess on how it “fits the business model.” (3M, J & J) 15. Find and Encourage and Promote Strong-willed/Hypersmart/Independent people (GE, PepsiCo, Microsoft) 16. Support Internal Entrepreneurs/Intrapreneurs (3M, Microsoft) 17. Ferret out Talent … anywhere and everywhere/“No limits” approach to retaining top talent (Nike, Virgin, GE, PepsiCo)
Slide 26: SE22/Origins of Sustainable Entrepreneurship 18. Unmistakable Results & Accountability focus from the get-go to the grave (GE, New York Yankees, PepsiCo) 19. Up or Out Corp/Fox, PepsiCo) (GE, McKinsey, big consultancies and law firms and ad agencies and movie studios in general) 20. Competitive to a fault! (GE, New York Yankees, News 21. “Bi-polar” Top Team, with “Unglued” Innovator #1, powerful Control Freak #2 (Oracle, Virgin) (Watch out when #2 is missing: Enron) 22. Masters of Loose-Tight/Hard-nosed about a very few Core Values, Open-minded about everything else (Virgin, Horatio Nelson)
Slide 27: Bang!
Slide 28: No Wiggle Room! “Incrementalism is innovation’s worst enemy.” Nicholas Negroponte
Slide 29: “Beware of the tyranny of making Small Changes to Small Things. Rather, make Things.” Big Changes to Big —Roger Enrico, former Chairman, PepsiCo
Slide 30: IS/IT: Power Tools for Power Strategies! —TP
Slide 31: Punish excellent failures. mediocre successes.” Phil Daniels, Sydney exec “Reward
Slide 32: Up! Up!
Slide 33: And the “M” Stands for … ? Gerstner’s IBM: “Systems Integrator of choice.” (BW) IBM Global Services: $55B
Slide 34: “Big Brown’s New Bag: UPS Traffic Manager for Corporate America” Aims to Be the —Headline/BW/07.19.2004
Slide 35: “[Closing/selling Boeings 8,000person facility in Wichita] was an important decision in moving forward with Boeing’s longterm strategy of becoming a large-scale integrator.” —The Wichita Eagle/06.16.2005
Slide 36: Answer: PSF! [Professional Service Firm] Department Head to … Managing Partner, HR [IS, R&D,etc.] Inc.
Slide 37: Experience Ladder/P&G-TP Solutions Services Goods Raw Materials
Slide 38: Up! Up! Up!
Slide 39: “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
Slide 40: 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
Slide 41: 2/503 Q04
Slide 42: “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
Slide 43: “With its carefully conceived mix of colors and textures, aromas and music, Starbucks is more indicative of our era than the iMac. It is to the Age of Aesthetics what McDonald’s was to the Age of Convenience or Ford was to the Age of Mass Production—the touchstone success story, the exemplar of all that is good and bad about the aesthetic imperative. … ‘Every Starbucks store is carefully designed to enhance the quality of everything the customers see, touch, hear, smell or taste,’ writes CEO Howard Schultz.” —Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
Slide 44: Experience Ladder/P&G-TP Awesome Experiences Solutions Services Goods Raw Materials
Slide 45: Sales per Square Foot/Grocery Albertson’s: $384 Wal*Mart: $415 Whole Foods: $798
Slide 46: Up! Up! Up! Up!
Slide 47: DREAM: “A dream is a complete moment in the life of a client. Important experiences that tempt the client to commit substantial resources. The essence of the desires of the consumer. The opportunity to help clients become what they want to be.” —Gian Luigi Longinotti-Buitoni
Slide 48: Planetary Rainmaker-in-Chief “[Sam] Palmisano’s strategy is to expand tech’s borders by pushing users—and entire industries— toward radically different business models. The payoff for IBM would be access to an ocean of revenue—Palmisano estimates it at $500 billion a year—that technology companies have never been able to touch.” —Fortune/06.14.04
Slide 49: Experience Ladder/P&G-TP Dreams Come True Awesome Experiences Solutions Services Goods Raw Materials
Slide 50: Dream Merchants! IBM, UPS …
Slide 51: One company’s answer: CXO*
Slide 52: CDM*
Slide 53: CRO* *Chief Revenue Officer
Slide 54: “Analysts said we don’t care about revenue, just give us the bottom line. They preferred cost cutting, as long as they could see two or three years of EPS growth. I preached revenue and the analysts’ eyes would glaze over. Now revenue is ‘in’ because so many got caught, and earnings went to hell. They said, ‘Oh my gosh, you need revenues to grow earnings over time.’ Well, Duh!” —Dick Kovacevich, Wells Fargo (in ABA Banking Journal)
Slide 55: Bedrock!
Slide 56: “Human creativity is the ultimate economic resource.” —Richard Florida, The Rise of the Creative Class
Slide 57: Brand = Talent.
Slide 58: “Leaders ‘do’ people. P-e-r-i-o-d.” —Anon.
Slide 59: sweaters to … Les Wexner: From people!
Slide 60: Did We Say “Talent Matters”? “The top software developers are more productive than average software developers not by a factor of 10X or 100X, or even 1,000X, but 10,000X.” —Nathan Myhrvold, former Chief Scientist, Microsoft
Slide 61: “We believe companies can increase their market cap 50 percent in 3 years. Steve Macadam at Georgia- changed 20 of his 40 box plant managers to put more talented, higher paid managers in charge. He increased Pacific profitability from $25 million to $80 million in 2 years.” Ed Michaels, War for Talent
Slide 62: 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
Slide 63: DD$21M
Slide 64: Bosses.
Slide 65: comfortable unless I’m uncomfortable.” —Jay “I’m not Chiat
Slide 66: “If things seem under control, you’re just not going fast enough.” —Mario Andretti
Slide 67: “If it works, it’s obsolete.” —Marshall McLuhan
Slide 68: Offense!
Slide 69: Nelson’s secret: “[Other] admirals more frightened of losing than anxious to win”
Slide 70: Action!
Slide 71: “We have a ‘strategic’ plan. It’s called doing things.” — Herb Kelleher
Slide 72: Lunacy!
Slide 73: Kevin Roberts’ Credo 1. Ready. Fire! Aim. 2. 3. 4. 5. 6. 7. 8. 9. If it ain’t broke ... Break it! Hire crazies. Ask dumb questions. Pursue failure. Lead, follow ... or get out of the way! Spread confusion. Ditch your office. Read odd stuff. 10. Avoid moderation!
Slide 74: “You can’t behave in a calm, rational manner. You’ve got to be out there on the lunatic fringe.” — Jack Welch
Slide 75: Step #1.
Slide 76: “The First step in a ‘dramatic’ ‘organizational change program’ is obvious —dramatic personal change!” —RG
Slide 77: “You must the change you wish to see in the world.” —Gandhi be