The Pinnacle of Excellence

Practice Management Institute 2001

CommonwealthTom Peters/06.14.2001

“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

“We are entering an era of no limits, with nothing to brake the cascade of human intelligence

unleashed by the Information Age. The Web essentially allows all the brains on earth to communicate and share insights in real time, around the globe, all the time.”

Jeffrey Young, Cisco Unauthorized

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Forces @ Work I

The Destruction Imperative!

The [New] Ge Way

DYB.com

Forbes100 from 1917 to 1987: 39 members of the Class of ’17 were alive in ’87; 18 are in ’87 F100; the 18 F100 “survivors” underperformed the market by

20%; just 2 (2%), GE & Kodak, outperformed the market from 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

Brand Inside

Brand Org: Lean, Linked &

Electronic

108 X 5vs.

8 X 1= 540 vs. 8 (-98.5%)

White Collar

Revolution!

Automation+

75% of what we do: 40 “expert” decision rules!

Brand Inside

Brand Work: The Professional Service

Firm Model

11 September 2000

09.11.2000: HP bids

$18,000,000,000for

PricewaterhouseCoopersConsulting business!

[“These days, building the best server isn’t enough. That’s the

price of entry.”

Ann Livermore, Hewlett-Packard]

HP … Sun … GE … IBM … UPS … UTC …

General Mills … Springs … Anheuser-Busch …

Carpet One … Etc. … Etc.

“ ‘Architecture’ is becoming a commodity, traded on

priceline.com. Winners will move up the value chain and become ‘Turnkey Facilities Management’ providers.”

SMPS Exec

Brand Inside

Brand Talent: The Great War for Talent

“We have transitioned from an asset-based strategy

to a talent-based strategy.”

Jeff Skilling, CEO, Enron

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 (05.17.00)

33 Division Titles. 26 League Pennants. 14

World Series: Earl Weaver—0. Tom Kelly—0. Jim Leyland—0.

Walter Alston—1AB. Tony LaRussa—132 games, 6 seasons. Tommy

Lasorda—P,26 games. Sparky Anderson—1 season.

Goal of the Year No. 1*: Find-Develop-Mentor

ONE Extraordinary Person.

*CEO, large professional services firm

“Talented people are less likely to wait their turn. We used to

view young people as trainees; now they are authorities. Arguably

this is the first time the older generation can – and must – leverage the younger generation very early in their careers.”

Ed Michaels, War for Talent (05.17.00)

Enron

COO: Louise Kitchen, F, 29; created

EnronOnline as “Skunk Works”

“AS LEADERS, WOMEN RULE: New Studies find that female managers

outshine their male counterparts in almost

every measure”Title, Special Report, Business Week, 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

“Investors are looking more and more for a relationship with their

financial advisers. They want someone they can trust, someone who listens. In my experience, in general, women may be better at these relationship-building skills

than are men.”

Hardwick Simmons, CEO, Prudential Securities

“Women speak and hear a language of connection and intimacy, and men

speak and hear a language of status and independence. Men communicate to obtain information, establish their

status, and show independence. Women communicate to create

relationships, encourage interaction, and exchange feelings.”

Judy Rosener, America’s Competitive Secret

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Quality Not Enough!

“While everything may be better, it is also increasingly the

same.”Paul Goldberger on retail, “The Sameness

of Things,” The New York Times

What’s Special?

“Customers will try ‘low cost providers’ because the

Majors have not given them any clear reason not to.”

Leading Insurance Industry

Analyst (10-98)

“We make over three new product announcements a

day. Can you remember them?

Our customers can’t!”Carly Fiorina

“The ‘surplus society’ has a surplus of

similar companies, employing

similar people, with similar educational backgrounds, working in

similar jobs, coming up with similar

ideas, producing similar things, with

similar prices and similar quality.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

Brand Outside

Strategy 1:Use E-Commerce to

Re-invent Everything!

Cisco!

90% of $20B (=$50M/day)Annual savings in service

and support from customer self-management: $550M

Secret Cisco: Community!

C.Sat e >> C.Sat H

Customer Engineer Chat Rooms/Collaborative

Design ($1B “free” consulting) (45,000 customer problems a week solved via

customer collaboration)

Welcome to

D.I.Y. Nation!“Changes in business processes will emphasize self service. Your costs as

a business go down and

perceived service goes up because customers are conducting it

themselves.” Ray Lane, Oracle

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

“The Age of the

Never Satisfied Customer”

Regis McKenna

WebWorld = Everything

Web as a way to run your business’ innardsWeb as connector for your entire supply-demand chain Web as “spider’s web” which re-conceives the industry

Web/B2B as ultimate wake-up call to “commodity producers”

Web as the scourge of slack, inefficiency, sloth, bureaucracy, poor customer data

Web as an Encompassing Way of LifeWeb = Everything (P.D. to after-sales)

Web forces you to focus on what you do bestWeb as entrée, at any size, to World’s Best at Everything

as next door neighbor

Brand Outside

Strategy 2:

Women Rule!

?????????

Home Furnishings … 94%Vacations … 92%

Houses … 91%Consumer Electronics … 51%

Cars … 60% (90%)All consumer purchases … 83%

Bank Account … 89%Health Care … 80%

????

80%

Riding Lawnmowers

2/3rds working women/50+% working wives > 50%

80% checks61% bills

53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

Women … 50+%(!!!) of Web users; 6 of 10 new users; 83% of wired women are primary decision makers for family

healthcare, finances, education.

Source: Business Week; Jupiter Communications

FemaleThink/ Popcorn

“Men and women don’t think the same way, don’t communicate the same

way, don’t buy for the same reasons.”

“He simply wants the transaction to take place. She’s interested in creating a relationship. Every place women go,

they make connections.”

Women and Financial Advisors

Women want … a plan, to be listened to, to be taken seriously, to read about it, to think about it.

Women do not want … an in-your-face sales pitch

Source: Kathleen Boyle, Wheat Boyle Butcher Singer

“Women Beat Men at Art of Investing”

Source: Miami Herald, reporting on a study by Profs. Terrance Odean and Brad Barber, UC Davis (Cause: Guys are “in and out” of

stocks more often; women choose carefully and hold on for the long term)

Value Line: Top State* Investment Clubs 2000

8 … All male19 … Coed

22 … All FEMALE

* VT & Maine not included; D.C. included

Investment Club Returns

Women-only clubs 1997 … 17.9%Mixed … 17.3%

Men-only … 15.6%

Source: National Assoc. Investors

JBQ: Stop Treating Women Investors Like Idiots!

“Why all this focus on women and our lack of investment guts? A far greater problem, it seems to

me, is trigger-happy speculation, mostly by men. The kind of guys whose family savings went south

with the dot-coms. Imagine a list of their money mistakes: Shoot from the hip. Overtrade their

accounts. Believe they’re smarter than the market. Think with their mouse rather than their brain.

Praise their own genius when stocks go up. Hide their mistakes from their wives.”

Source: Newsweek 01.08.01

Read This Book …

EVEolution: The Eight Truths of Marketing to Women

Faith Popcorn & Lys Marigold

EVEolution: Truth No. 1

Connecting Your Female Consumers to Each

Other Connects Them to Your Brand

“Women don’t buy

brands. They join them.”

Faith Popcorn, EVEolution

STATEMENT OF PHILOSOPHY: I am a businessperson. An analyst. A pragmatist. The enormous social good of increased women’s

power is clear to me; but it is not my bailiwick. My “game” is haranguing business leaders

about my fact-based conviction that women’s increasing power – leadership skills

and purchasing power – is the strongest and most dynamic force at work in the American

economy today. Dare I say it as a long-time Palo Altan … THIS IS EVEN BIGGER THAN THE

INTERNET!

Tom Peters

“Honey, are you sure you have

the kind of money it takes to

be looking at a car like this?”

Brand Outside

Strategy 3:

It’s the Experience!

“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

“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

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%”“Experience” applies to

all work!

Brand Outside

Strategy 3A:

A Case in Point: The Four Seasons

“Practice Management”

“Lessons” from the Four

Seasons Boston

Why I Stay at the Four Seasons Boston

Comfort. (“It’s

good to be home.”)

Why I Stay at the Four Seasons Boston

The doorman. (Recognizes me.)

“The two most powerful things I know

in existence: a kind word and a

thoughtful gesture.”Ken Langone, CEO, Invemed Associates

Why I Stay at the Four Seasons Boston

The access to technology is

excellent. (I’ve trained them in this!)

Why I Stay at the Four Seasons Boston

The bottle of Chalone chardonnay they leave

for me. (They “remember.”)

Why I Stay at the Four Seasons Boston

The fact that the GM always puts his desk

chair in my room when I’m in town.

Why I Stay at the Four Seasons Boston

The fact that I feel okay arriving in shorts and a baseball cap. (Even

though they serve princes & sheiks.)

Why I Stay at the Four Seasons Boston

The clientele.

Why I Stay at the Four Seasons Boston

No hairs in the bathtub. (Operational

excellence.)

Why I Stay at the Four Seasons Boston

Responsiveness. (Operational

excellence.)

Why I Stay at the Four Seasons Boston

The Brand. (I trust Izzy.)

Why I Stay at the Four Seasons Boston

Trust.

Why I Stay at the Four Seasons Boston

The windows open. (Okay, call it an idiosyncrasy.)

Why I stay at the Four Seasons Boston

The view is great. (I am

sensitive to my surroundings … even in the midst of a one-night stand.)

Why I Stay at the Four Seasons Boston: Payback!

It ain’t free.

Brand Outside

Strategy 4:

BRAND POWER!

“WHO ARE YOU [these days] ?”

TP to Client

Brand = You Must Care!

“Success means never letting the competition

define you. Instead you have to define yourself based on a point of view you care deeply

about.” Tom Chappell, Tom’s of Maine

“WHO ARE WE?”

WHAT’S OUR

STORY?

“EXACTLY HOW ARE WE

DRAMATICALLY DIFFERENT?”

1st Law Mktg Physics: OVERT BENEFIT (Focus: 1 or 2 > 3 or 4/“One Great Thing.”

Source #1: Personal Passion)

2ND Law: REAL REASON TO BELIEVE (Stand & Deliver!)

3RD Law: DRAMATIC DIFFERENCE (Execs Don’t Get It: See the next slide.)

Source: Jump Start Your Business Brain, Doug Hall

“ WHY DOES IT MATTER TO

THE CLIENT?”

“EXACTLY HOW DO I PASSIONATELY CONVEY THAT

DIFFERENCE TO THE CLIENT ”

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Brand Leadership

Passion Rules!

#49

I. Personal Stuff …

Dare to Care!

“LEADERS CARE!” … “The true definition of leadership

is service.” … “genuinely care” … “Leaders CARE!” … “Leadership is service.” …

“LEADERS SERVE.”

Real!

“Leaders are living individuals whom employees can smell, feel,

touch their presence” [the elevator test] … “Leaders love their work. Their passion is infectious.” … “If you love what you do, it shows.

You can’t fake love and succeed.”

“It was much later that I realized Dad’s secret. He gained respect by giving it. He

talked and listened to the fourth-grade kids in Spring Valley who shined shoes the same way he talked and listened to a

bishop or a college president. He was seriously interested in who you were and what you had to say.”

Sara Lawrence-Lightfoot, Respect

II. Tactics …

“Leaders have a kid alive in them.” … “Leadership

is the PROCESS of ENGAGING PEOPLE in

CREATING a LEGACY of EXCELLENCE.” …

Priority #1

“To Don’t ” List

“Create a Cause, not a ‘business.’

”Gary Hamel, Fortune (06.00), on re-inventing a

company (Exemplar #1: Charles Schwab)

Ben Zander: “I am a dispenser of

enthusiasm.”

“Let’s make a dent in the universe.”

Steve Jobs