TOM PETERS’ LESSONS IN LEADERSHIP2000 1 FEBRUARY ALBUQUERQUE

TOM PETERS’ LESSONS IN

LEADERSHIP2000

1 FEBRUARY ALBUQUERQUE

ALL SLIDES ARE AVAILABLE AT

tompeters.com

Seminar Y2K

Brand Everything:Distinct or Extinct

Microsoft = R.O.W.

Microsoft > GM + Ford + Boeing + Lockheed Martin + Deere + Caterpillar + USX + Weyerhauser + Union Pacific + Kodak + Sears + Marriott + Safeway + KelloggSource: Business Week data through 5-99

Microsoft = R.O.W. (II)

Microsoft > GM + Ford + Boeing + Lockheed

Martin + Deere + Caterpillar + USX + Weyerhauser + Union Pacific + Kodak + Sears + Marriott + Safeway + Kellogg +

McDonald’s + Bank One + General Mills + American Airlines + United Airlines + + Delta Air Lines + US Airways + Quaker Oats

Source: Yastrow Marketing (through 11-23-99)

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

(New York, 5-99)

Forces at Work

The Destruction Imperative!

Forget > Learn

“The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.”

Dee Hock

“It is generally much easier to kill an

organization than change it

substantially.” Kevin Kelly, Out of Control

Q: What do you do when you are a big,

dopey company and out of ideas?

A: You merge with another big,

dopey company that doesn’t

have any ideas either.

R: An incredibly big, incredibly dopey company

… going nowhere.

“When asked to name just one big merger that had lived up to

expectations, Leon Cooperman, former co-chairman of Goldman

Sachs’ Investment Policy Committee, answered: ‘I’m sure there are success stories out there, but at this moment I

draw a blank.’ ”Mark Sirower, The Synergy Trap

“I feel betrayed. I bought stock in a company that was going to change the world. I didn’t buy a big, fat, stupid conglomerate. And now

I’ve got one.”Alan Towers, consultant, quoted in Business Week

[BW: “The irony is that AOL Time Warner is a vertically integrated conglomerate. Not exactly the sort of nimble

competitor that will thrive in cyberspace.”]

“Acquisitions are about buying market share. Our challenge is to create markets. There is a big difference.”

— Peter Job, CEO, Reuters

“We chose not to do a discounted cash flow analysis of their future earnings. We wanted their talent and we wanted their intellectual property.”

Art Reidel, CEO, Pharsight

“Our ideal acquisition is a small startup that has a great technology product on the drawing board that is going to come out in six to twelve months. We buy the engineers and the next generation product. …”

- John Chambers, Cisco Systems

Dept. Head = Sports GM

Dept. Head = V.C.

Silicon Valley Success Secrets

“Pursuit of risk”: 4 of 20 in V.C. portfolio go bust; 6 lose money; 6

do okay; 3 do well; 1 hits the jackpot

Source: The Economist

“R & D”

Intel’s venture fund: 275 investments, $3.5B

Source: Fast Company (12-99)

EcoNets/Internet Zaibatsus

“The model is about partial acquisitions and ownerships that then form a whole. Each part has to have value separately, be able to raise capital separately, and

motivate employees separately. Corporations of the past never had that.”

Flip Filipowski, divine interVentures (Red Herring)

“The brick and mortars will die, no matter what. … So you have to take

your best employees and best businesses and spin them off and just own 40 percent of everything

that’s left. Do that and you survive.”


DYB.com*

*DestroyYourBusiness.com (GE)

“It used to be that the big

ate the small. Now the fast eat the slow.”Geoff Yang, IVP/ (Institutional

Venture Partners)

[E.g.: Craig Venter/Celera Genomics]

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

“But what if [former head of strategic planner at Royal Dutch Shell] Arie de Geus is wrong in

suggesting, in The Living Company, that firms should aspire to live forever? Greatness is

fleeting and, for corporations, it will become ever more fleeting. The ultimate aim of a

business organization, an artist, an athlete or a stockbroker may be to explode in a dramatic

frenzy of value creation during a short space of time, rather than to live forever.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

“ALL OF THESE ‘CONVERSATIONS’ TODAY ABOUT ‘THE WEB’ WILL APPEAR SO BLOODY DAMN SILLY AND PEDESTRIAN TEN … FIVE? … THREE? … YEARS FROM NOW.”

Tom Peters (11-99)

P.S.: Read Ray Kurzweil’s The Age of Spiritual Machines: When Computers Exceed Human Intelligence

BW: “human brain has only a short time left as the smartest thing on earth”/ “subjugate

humanity by 2050”

Health Forum Journal: “In one generation or less, every element of health care, every

assumption, will be changed or gone.”/ “We are not aging gracefully.”

Dr. George Poste, SKB: 500 molecular targets in ’95 to 70,000 in ’99/

35 compounds per year to2M

Wired [Feb 2000]

“Cyborg 1.0: Kevin Warwick Outlines His Plan

to Become One with His Computer”

“Medicine looks likely to change more in the next 20 years than it has in the last

200.”

British Medical Journal (11-11-99)

[ TTTTTurbulent Times!

Top 3 Americans > 48 poorest nations

Source: Newsweek 12-99]

Brand Inside

PSF 1:Brand Org!

108 X 5vs.

8 X 1*

* 540 vs. 8

ERP, ECM, Web, Etc.

IT’S THE GIANT SUCKING SOUND

OF SLACK BEING EXTRACTED FROM

THE GLOBAL ECONOMY!

“The coefficient of friction associated with the grunge

of business is amazing!”

Michael Schrage

Cemex and FDX!

CCC Information Services!

“Assetless Company”

J.B.

RR on Sara Lee

“The most profitable businesses in the future will act as knowledge brokers, linking insights into what’s available

with insights into the customer’s individual needs

and preferences.”

“We want to be the air traffic controllers

of electrons.”Bob Nardelli,

GE Power Systems

The “&-!!+#$% in the middle”*

Jim Clark on Healtheon

* ’twixt docs, patients and providers; $250B in waste; source: Michael Lewis,

The New New Thing

“Don’t own nothin’ if you can help it. If you can, rent your shoes.”

F.G.

R&D Outsourcing/ Big Pharma

3:1+ (70% now; 5% in 5 years)

1:2+ (5% now; 20% in 5 years)

Source: IN VIVO

PSF 1.0

Professional Service Firm Conversion Kit /

Release 1.0

White Collar Revolution(Finally!!)

90% … in 10 years!PSFs ….. All!

Brand Yous … All!WOW Projects … All!

PSF 1.0

Department Head

to …

Managing Partner, HR [IS, etc.] Inc.

Credo

“WORK WORTH

PAYING FOR”

“support function” / “cost center” / “bureaucratic

drag”

or …

“Rock Stars of the ‘Age of Talent’ ”

Why are there no books on how to create

a “Cool, Rocking, WOW-producing

Finance Department”?

“Real” PSF …–Think Inc. (Mindset = Step No.1!)–Clients rule! –Engage Clients in deep dialog/ “Join

us in an Adventure”/ Fire duds!–Work = WOW Projects (100%)–Practice serial monogamy –Think impact!/ Embrace politics!–Master “the economics”!

“Real” PSF …– WE HELP PEOPLE!

– Co-habit with the Client!

– Create a Culture of Urgency!

– Love thy Support Staff!

– You need a Methodology!

– Obsess on R&D!

– BECOME A “CONNOISSEUR OF TALENT”!

Real PSF …

WE OWN THIS PLACE!THIS IS COOL STUFF!

WE ARE THE WORLD!*

*Why no books on “Cool Finance Depts.”?

The “7Ps” of PSF 1.0

Projects!Passion!

Provocation!Partnership!

Politics!Professionalism!

Performance!

C.I.O. to

C.E.F.R.N.S.*

*Chief Evangelist For

Really Neat Stuff

[ Words to Live By …

“Hierarchy is an organization with its face

toward the CEO and its ass toward the customer.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business]

Brand Inside

PSF 2:Brand Work!

“Reward excellent failures. Punish

mediocre successes.”

Phil Daniels, Sydney exec

But Does It Matter????

“On time, on budget … who cares?”

anon. seminar participant (4/99)

“You really got to me. So many of our information technology projects take on a life of their own, and I know they’ll never end up as more than ‘mediocre successes.’ ”

CEO, F100 financial services company (10-98)

WOW Project Anatomy

I. Create!II. Sell!

III. Implement! IV. Exit!

I. Create!

Reframe! THERE ARE NO “SMALL” PROJECTS!

Observe & Record!!Head for the trenches!

You gotta love it!

Measure: WOW!, Beauty, Raving Fans, Impact!

Build a no-baloney Business PlanCreate community. Now!

Obsess on … the End User. Now!

Reframers’ Rules:

Rule 1: Never accept an assignment as given!

Rule 2: You’re never so powerful as when you are “powerless”!Rule 3: Every “small” project contains the entire enterprise

DNA!

Measures

–WOW!–Beauty!–Raving Fans!–Impact!

E.g.: WOW Scale

1. … Dull as dishwater.

5. … Gets the job done.

7. … “Good work!”.

10. … A serious “Braggable”!

Kaiser: 4.15.29

Liberty Ship

2 years

240 days

9 hours

4 days, 15 hours, 29 minutes

“Every project we take on starts with a question:

How can we do what’s never been done

before?”Stuart Hornery, CEO, Lend Lease

WOW Project “Acid Test”

Can you explain it - with zest -

to your 14-year-old?

The “Alumni Meeting” Test!

II. Sell!

Master “The Pitch”!Build Buzz. Consciously.

Network maniacally!Preach to the choir!

Forget your enemies. [Surround and marginalize!]Money kills!

SELL, SELL, SELL!

III. Implement!

- Live, eat, sleep … Quick Prototype-Play!

- Keep on recruiting! (Sell!)- Obsess on the End User Community! (Sell!)

- Become a Milestone Maniac! / a Timeline Tyrant! / a List Freak! / find Ms. Last 2%!

- Appoint a Marketing Director!- Keep the “WOW” front and center!

Culture of Prototyping

“Effective prototyping may be the most valuable core

competence an innovative organization can hope to

have.”

Michael Schrage

“You can’t be a serious innovator unless and until you are ready,

willing and able to seriously play. ‘Serious play’ is not an oxymoron;

it is the essence of innovation.”

Michael Schrage, Serious Play

“I view models and prototypes as the

battleground for thoughts and behaviors.”

Michael Schrage

Think about It!?

Innovation = Reaction to the Prototype

Michael Schrage

Prototyper’s Laws

Define a small, practical test of something on a page or less of text. Now.

Gather “found” materials … on the [very] cheap.Find a/one partner-“customer” who’ll provide a

test site.Set a very tight deadline of about 5 days for the

next concrete step.Conduct the test! Debrief A.S.A.P.

Set the next test date. Now. [No more than 5 days hence.]

Secret No. 1: Go horizontal: Find a (one!) “line” ally in “the Boonies”

Secret No. 2: “Powerless” allies are Cool!

Secret No. 3: Passion Rules!Secret No. 4: Become a Prototyping

Maniac! Secret No. 5: Embrace Politics /

“Community Organizing”!

IV. Exit!

“Sell out!” / Embrace “The Suits”!Recruit a passionate

Ms./Mr. Follow-up!Seed your freaks into the

mainstream!Celebrate!

Exit!

SOOOO … HOW MANY OF YOUR COLLEAGUES ARE

“BACK HOME” AT WORK ON NO-BALONEY …

WOW* PROJECTS!

* WOW = Will be remembered fondly/

bragged about 5+ years from now

Epitaph from Hell …

Joe T. Jones

1942 - 2000

HE WOULDA DONE SOME

REALLY COOL STUFF

BUT …

HIS BOSS WOULDN’T LET HIM!

T.T.D.: Now!– List all your projects.– Carefully describe a “WOW Outcome” for you

and the Client.– Score (!) all projects on WOW, Beauty, Impact,

Raving Fan-hood.– Pick one project with a high combined score.– Draft a one-page New Description that

emphasizes WOW, Beauty, etc.– Circulate and edit … for three days. – Reduce to 5 bullet points.

The greatest dangerfor most of us

is not that our aim istoo high

and we miss it,but that it is

too lowand we reach it.

Michelangelo

Characteristics of the “Also Rans”

–“minimize risk”–“respect the chain of command”–“support the boss”–“make budget”

Source: Fortune on “most admired global corporations”

[We are not trying to “WOW you up.”

We think you are/have WOW.

We are trying to give you permission to be WOW.]

Seminar Y2K

MESSAGE: THE WORK MATTERS!

1) Turn ignition key.2) Shift into drive.

3) Press foot firmly on the throat of mediocrity.

Source: Mercedes ad

Brand Inside

PSF 3:Brand You!

“The fundamental unit of the new economy is not the corporation, but the individual. Tasks aren’t assigned and controlled through a stable chain of command but are carried out autonomously by

independent contractors - e-lancers - who join together in fluid and temporary networks to sell goods and services. When the job is done, the network dissolves and its members become independent again, circulating through the economy, seeking the next assignment.”

Thomas Malone and Robert Laubacher

DISTINCT … OR EXTINCT!

“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

“If one quarter can’t make the journey, that’s the way it

has to be.”

Carly Fiorina (1-00/Forbes)

Personal “Brand Equity” Eval

– My current Project is challenging me …– New things I’ve learned in the last 90 days

include …– My public “recognition program”

consists of …– I am known for …– Additions to my Rolodex include …– My resume is discernibly different from last

year’s at this time …

Icon Woman …–Totally turned on by her work!

–“It” matters / a WOW Project!

–“It” is … COOL!

–“It” is … BEAUTIFUL!

–She is … in your face!

–She is an … adventurer!

–She is … CEO of her own life!

Icon Woman …

– She is … at least … a little funky!– Her curiosity is … insatiable!– She thinks screwups are …

as normal as breathing!– She hangs out with some …

seriously rad Dudes!– She is not God. She is not Bionic

Woman. She is … determined to make a damned difference!

“Well-behaved women rarely make history.” Anita Borg,Institute for Women and Technology

Icon Woman Meets the Web …– submits resume on the Web– recruited on the Web– hired on the Web– trained on the Web– creates and conducts projects with

virtual teams on the Web– manages project and client

follow-up on the Web– manages career/reputation-building

on the Web

“The Brand Called URL”/Nathan Shedroff, Vivid Studios

“24 X 7 storefront devoted exclusively to The Brand Called You.”

NS

“Personal publicity represents the next big paradigm shift on the Web.”

Jerry Yang, Yahoo!

R.D.A.Rate: 15%?, 25%?

Formal “Investment Strategy”/

R.I.P.

R.I.P.

IS IT ... WOW!?

“There is an internal and an external pressure to keep doing the same thing. People liked it.

You got rewarded. So do it again! The same only different. So it

becomes something you have to fight.”

Michael Crichton

R.I.P.10 … Major job change [new area of

concentration]; major offsite educational investment; extensive

sabbatical [oddball learning experience of > 2 months];

exceptional community project [presidency of fundraising drive, run

for school board].

R.I.P.

5 ... Extensive course work in oddball area of passionate interest; major off-

the-job activity [community involvement, learn to play the cello,

study Chinese].

1 … Company training, as directed.

R.I.P./Practical Step No. 1

Go some place totally different for vacation!

R.I.P.

Use by yourself.Use with your mates.

Use [quantitatively?] as a measure of departmental/

P.S.F. renewal.

Use in formal eval process.

[ Training Y2K

Anytime, anywhere!

Whatever!

Concocted by the employee/

“Training Account”]

Assignment!

Construct a 1/8-page or 1/4-page ad for

Brand You … for the Yellow Pages

[ How About It?

Replace your current evaluation process with

Yellow Pages ads.]

Bill Parcells’ World/ Brand You World!

BLAME NOBODY!EXPECT NOTHING!DO SOMETHING!

Source: NY Post

It’s Attitude, Baby!

9-10, 4.23

10-1, 1.28

Seminar Y2K

Message:

Distinct … or Extinct!

“Everything can be taken from man but one thing: the last of human freedoms - to choose

one’s own attitude in any set of circumstances, to choose

one’s own way.”Victor Frankl, Auschwitz survivor

2 folks in Hartford …

MY ONLY GOAL - AS YOUR BOSS - IS TO HELP YOU DECIDE WHAT TO MAKE OF

YOUR LIFE!

There comes a time in everyone’s life when they realize

they work for a dead guy.

FreeAgent.com [ad]

Brand Inside

PSF 4:Brand Talent!

Issue Y2K

The Great War for Talent!

“Develop people quickly and effectively” … 5%

“Truly know who our strongest and weakest performers are” … 17%

Source: War for Talent research/ McKinsey & Co.

“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

Alan Kay on PARC’s Bob Taylor

“He was a connoisseur of

talent.”

A Connoisseur of Talent …

– Spends time on Talent!

– Becomes a student of Talent! – Puts Talent “on the agenda”!– Practices D.I.Y.– Uses Plain English! (If you want “sunny” … ask

for “sunny”!)– Creates Workspaces that foster energy,

entrepreneurship and creativity!– Recruits from oddball places! /

Recruits Oddballs!

“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

Axiom: Never hire anyone without an aberration in their

background. (Find the One Ton Cookie Man!)

A Connoisseur of Talent …– Recruits M.I. (Gardner: Logical-mathematical,

linguistic, artistic, musical, bodily-kinesthetic, intrapersonal-self, intrapersonal-others)

–Recruits arts!– Becomes de facto C.D.O. (Chief Diversity Officer)– Turns the pay scale upside down! / Pays Talent!– Rewards & Promotes all on Talent

Development Skills!– Spouts the Gospel of Renewal! (R.D.A./ R.I.P.)

“Every school I visited was participating in the systematic suppression of creative genius.”

Gordon MacKenzie

“Where do good new ideas come from? ...

That’s simple! From differences. Creativity comes from unlikely juxtapositions. The best way to

maximize differences is to mix ages, cultures and disciplines.”

Nicholas Negroponte

Attributes of Those Who “Made” the 10th Grade History Book

–Committed!–Determined to make a difference!–Focused!–Passionate! –Irrational about their life’s project!–Ahead of their time/ Paradigm

busters!–Impatient/ Action Obsessed!

Attributes of Those Who “Made” the

10th Grade History Book –Made lots of people mad!–Flouted the chain of command!–Creative / Quirky / Peculiar!–Rebels!–Irreverent!–Masters of improv / Thrive on chaos/

Exploit chaos!

Attributes of Those Who “Made” the 10th Grade History Book

–Forgiveness > Permission

–Bone honest!

–Flawed as the dickens!

– “In touch” with their followers’ aspirations

–Damn good at what they do!

“Conformity is the enemy of freedom

and the jailer of growth.”

J.F.K.

Just Say “No” to “Grout”!

Participant: “Don’t you need ‘grout’ between the tiles?”

TP: “No!” [med staff, NFL Special Teams,waiters,

PFCs, cymbals player, bit parts, waiters]

[ TP’s Ideal Job:

Head of Housekeeping!]

“The boundaries for acceptable weirdness have

dramatically expanded.”

Michael Schrage

Yes!

Director of Bringing in the Really Cool People

[ All You Need to Know?

Chief Evangelist For Really Neat Stuff

Director Of Bringing In The Really Cool People]

Talent War Y2K!

–All out!/ Time consuming!–Never ending!/ Unwinnable!–Includes everybody!/ Everybody’s

game! (“We’re all in sales.”)–Expensive!–Cool!/ WOW!/ Fun!/ Creative!–Strategic!/ Core competence!

Talent = Brand

Brand Outside=

Brand Inside

“Emotional values are replacing physical attributes as the fundamental

market influence.”

“Only with a strong spirit at its foundation can a company achieve

strong market position.”

Jesper Kunde, Corporate Religion

PSF Y2K Final Exam– Are you working with awesome/freaky peers?– Are you working with cool/pioneering Clients?– Are you a “player”?– Are you pushing the envelope and putting yourself at risk on

every project?– Are you doing WOW work? – Are you having fun?– Are a lotta “theys” mad at you?– Will you look back on “all this” as “the time of your life”?

Brand Outside

Context:

No “Commodities”!

In the Beginning …

“The audit has become a commodity.”

Big 5 audit partner to TP

Quality Not Enough!

“Quality as defined by few defects is becoming the price of entry for automotive marketers rather than

a competitive advantage.”

J.D. Power

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, HP

“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, similar warranties and

similar quality.”


The “10X/10X” Phenomenon

10 Times Better/

10 Times Less Different

TP’s Campaign Y2K

Just say [shout]

“No!” to the “inevitable

commoditization” of anything.

“When we did it ‘right’ it was still pretty

ordinary.”Barry Gibbons on

“Nightmare No. 1”

Pretzel Crumb-less-ness Plus …

“The Ritz Carlton Experience enlivens the senses, instills

well-being and fulfills even the unexpressed wishes and needs

of the guest.”

from the Ritz Carlton Credo

“We want to create waves of lust for our product.”

Andy Grove (on the Pentium Processor)

“You do not merely want to be the best of the best. You want to be considered the only ones who do what

you do.”

Jerry Garcia

Lust Hierarchy

Satisfy … Conform to Requirements … Exceed

Expectations …Delight! … WOW! … Lust! …

ONLY ONES WHO DO WHAT WE DO!

New Customer Offering at Virgin Must Be:

… of the best quality… innovative

… provide good value for money… challenge existing alternatives

… add a sense of fun or cheekiness

Source: Kjell Nordstrom and Jonas Ridderstrale, Funky Business

“customer satisfaction” to

“customer success”

Source: GE Power Systems

“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

Context: “No” to “inevitable commoditization”

S1: Lead the Customer!S2: Master E-Commerce!

S3: Women Rule! (and the elderly)

S4: Design Rules! (too)

S5: It’s the Experience!Bottom Line: Glorious Age of the

BRAND!

Brand Outside

Strategy 1:

Lead the Customer!

“The customer is a rear view mirror, not a guide to the future.”George Colony, Forrester Research

“If you worship at the throne of the voice of the customer, you’ll get only

incremental advances.”Joseph Morone, President, Bentley College

Early Customer Rejection

Post-Its [12 years!]Chrysler Minivans

VCRsFax machines

FedExCNN

Heart-assist pumpsEtc.

Source: Fortune

Good = Bad/ 1 of 30,000

“We are crazy. We should do something when people say it is

‘crazy.’ If people say something is ‘good’, it

means someone else is already doing it.”

Hajime Mitarai, Canon

“Wealth in this new regime flows directly from innovation, not

optimization. That is, wealth is not gained by perfecting the known,

but by imperfectly seizing the unknown.”

Kevin Kelly, New Rules for the New Economy

“The numbers [declining market share] don’t lie. Detroit’s single

biggest failure has been its unwillingness to innovate. It is less

risky to simply develop a new version of an existing product than to pioneer

a new category.”

Alex Taylor (Fortune)

[ Again:

BRAND OUT = BRAND IN

HIRE DULL … GET DULL!]

Benchmarking, Perils of …

“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

Lead customers!

K2K redux!

Amen!

“The Age of the Never Satisfied

Customer”Regis McKenna






BRAND!

Brand Outside

Strategy 2:Master

E-Commerce!

$30,000,000. = ???

Dell’s Web sales … daily

350,000 = ?????

New items going on sale at eBay …

daily (12-99)

2X = 100 days (Internet traffic)

2X = 9 months (network capacity)

Source: Red Herring (1-00)

Tomorrow Today: Cisco!

$7B of $10BSave $500M (service and tech

support)

C.Sat e >> C.Sat HCustomer Engineer Chat

Rooms ($1B?)

And Larry?

Business 2.0: “20 Industries About To Be Fossilized by The Net” (3-99)

Travel Agents ($2B now, $30B in 2003); Apparel (1-21); Autos (4-213);

Home Electronics (1-21); Paper and Office Supplies (1-65); Food (<1-54); Utilities (7-170); Computing (20-400);

Newspapers ($5B of $19B classifieds)

Cherry PickingVertical Markets

Plasticsnet.com: $370B; sellers pay $5K to $8K for

“storefront”; 5% to 10% cut

Hook: community services (database, catalogs, forums, industry job bank,

etc.)

W.W. Grainger*

2X phone/fax

*$220B “MRO” market (per Business 2.0/02-00)

B2B

1999 – 2004: 50X

2004: $7.4Source: GartnerGroup (per Reuters 1-26-00)

T

Consumer [Health Care] Sovereignty!* E.g.:

“Empowered consumers influenced by medical advertising and educated by

information on the Internet are driving demand for new vision correction

options.”

Start Up (10-99)

* “Take your White Coat and … ”

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

“Autoweb. Take the Wheel.” Advertising Age

Shop in your Underwear

Source: SM’d logo for www.ae.comae = American Eagle Outfitters

Psych 101: Strongest Force on Earth?

My need to be in perceived control of my

universe!

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

“IT enables total transparency. People with

access to relevant information are beginning to challenge any type of

authority. The stupid, loyal and humble customer, patient, employee

or citizen is dead.”


Patricia Seybold’s “Basics”:The E-Customer Bill of Rights

Don’t waste my time!Remember who I am!

Make it easy for me to order and procure service!

Customize your products and services for me!

Source: customers.com

“Welcome back, Tommy!”

“In the network economy, the Website becomes the company’s primary interface to the customer.

The user interface becomes the marketing materials, store front,

store interior, sales staff and post-sales support all rolled into one.”

Jakob Nielsen, Designing Web Usability

Read This. No: INGEST This!

Jakob NielsenDesigning Web Usability:

The Practice of Simplicity*

*www.useit.com

“Most companies would do more business on the Internet if they

fired their entire marketing department and replaced it with

people who could produce interactive content that actually made it easier for users to buy.”

Jakob Nielsen, Nielsen Norman Group

Red Herring (01/00)

75% of online shoppers don’t complete their

purchase!

Nielsen/Designing Web Usability

All Web projects are customer-interface projects! Simplicity rules!

Make it easy for customers to perform useful tasks!

Less “cool,” more useful!Speed rules!

Link … madly!

Nielsen/ Continued

Must work … on a small screen!Must work … w/o graphics loading!

“Scannability” rules! [Users pick out key words.]

Navigation page: No scrolling!

Remember: 25% to 50% “successful use”

“When you click on Yahoo! today you get the same

simple, nearly graphics-free home page you would have seen had you clicked three

years ago.”Fortune, on Zod Nazem,

Yahoo! CTO

“Where does the Internet rank in priority?

It’s No. 1, 2, 3, and 4.” Jack Welch

Web Strategy: GE Power Systems

“Launch and Learn”/4 sites in 30 days

Goodhome.com / 10 weeks!

Change … Or Die!

“Most of the brick and mortars look at the Internet as an add-on business … until they get a major scare. Then they either

change or die. … You have to put all your heart and soul in that direction, the way

Charles Schwab and Dell did.”


“I have this chance for … changing the world.”

Marco Boerries, Sun, re StarOffice (Business 2.0, 2-00)

There are 2 Kinds of …

Defense*

vs.

Offense**

*Fend off upstarts.**Reinvent our marketspace!

Mags

Advertising AgeBusiness 2.0

Fast CompanyRed Herring

Scientific American Wired






BRAND!

Brand Outside

Strategy 3:

Women Rule!

?????????

Home Furnishings … 94%Vacations … 92%

Houses … 91%Bank Account … 89%

Health Care … 75%Etc.

48% working wives > 50%80% checks

61% bills53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

Women … 49% of Web users; 6 of 10 new users; 83% of wired women are primary decision makers for family healthcare,

finances, education.

Source: Business Week (11-99)

$3.3T + $1.5T = $4.8T*

* Larger than Japan!

Most Under-reported story!

9M*/20M+/$4T [> Germany]

* 400K in ’72; 132% since ’92;source: NFWBO, Cognetics

New golfers … 37%Basketball … 13.5M

1 in 27 (’70) … 1 in 3 (’96)

1874 … Jock Strap1977 … Jogbra

1977 ... 25K

1996 … 42M

Yikes? Ho-hum?

1970 … 1%

2000 … 50%

OPPORTUNITY

NO. 1!*

[* No shit!]

Carol Gilligan/ In a Different Voice

Men: Get away from authority, familyWomen: Connect

Men: Self-orientedWomen: Other-oriented

Men: RightsWomen: Responsibilities

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.”

“Men seem like loose cannons. Men always move faster through a store’s

aisles. Men spend less time looking. They usually don’t like asking where things are.

You’ll see a man move impatiently through a store to the section he wants,

pick something up, and then, almost abruptly he’s ready to buy. … For a man,

ignoring the price tag is almost a sign of virility.”

Paco Underhill, Why We Buy* [*Buy this book!]

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 and Healthcare

Women are … more dissatisfied, frustrated by the way they are treated

and spoken down to by physicians, seek more information, are more pressed for time … and make 75% of health care decisions and control 2/3 of health care $

$$$ [and constitute 2/3 of health care employees].

Source: Patricia Braus, Marketing Healthcare to Women

Marketing to Women: Help Them Save Time!

80% … work86% … cook

58% … run errands with kids38% … take child to school

21% … go to the gym21% … take outside classes

How Many Gigs You Got, Man?

“Hard to believe … Different criteria … ”

“Every research study we’ve done indicates that women really care about the relationship with their

vendor.”

Robin Sternberg/ IBM

[“The Net hasn’t lived up to its hype. It’s a distant, cold, alien,

threatening world called ‘cyberspace.’ The challenge is to

make the Net into something intimate, warm, friendly, useful,

personal.”Carly Fiorina, CEO, HP @ Comdex ’99]

Not!!

“Year of the Woman”

Enterprise Reinvention!

RecruitingHiring/Rewarding/ Promoting

Structure Processes

MeasurementStrategyCulture Vision

Leadership

THE BRAND ITSELF!

“What kind of car does Mommy want?”

“I didn’t know [company] were giving

company cars to secretaries.”

Source: UK financial services CEO, 12/99

Not a Morality Play!

“It is critical that we all understand that IBM is not marketing to women

entrepreneurs because it is the thing to do, or even the right thing to do.

We are marketing to women entrepreneurs because it is a huge

opportunity.”

Cherie Piebes

Top 25 Cos. For Executive Women/Working Woman/1Y2K

Avon … Chas. Schwab … Scholastic … Fannie Mae … Dayton Hudson … Knight Ridder … Pitney Bowes …

Advantica … Gap … Nordstrom … Sallie Mae … Gannett … Golden West … Aetna … Mattel … IBM … SBC Comm. …

Merck … State Street Corp. … Sara Lee … Prudential … Baxter … P&G …

WellPoint … Xerox

Speaking of Enormous

[Missed] [Huge] Opportunities ...

74M/ Front Edge:55

“At each stage of their lives, the needs and desires of the baby boomers have

become the dominant concerns of American business and popular culture. If

you can anticipate the movement of the baby-boom generation’s life-span migration, you can see the future.”

Ken Dychtwald, Age Wave

Aging/“Elderly”

2X growth rate$$$$$$$$$$$$

“I’m in charge!”“Experiences” vs. Products

Design revolution!

Good source: Ken Dychtwald, Age Wave

Priorities: Aging/“Elderly”

Experiences … Convenience … Comfort … Access … Respect!






BRAND!

Brand Outside

Strategy 4:

Design Rules!

And Tomorrow …

“Fifteen years ago companies competed on price. Now It’s

quality. Tomorrow it’s design.”Robert Hayes

All Equal Except …

“At Sony we assume that all products of our competitors have basically the same

technology, price, performance and

features. Design is the only thing that differentiates one product

from another in the marketplace.”

Norio Ohga

“Design is treated like a

religion at BMW.”

Fortune (10/98)

Drop-dead Charm!

“The new Beetle fails at most categories. The only

thing it doesn’t fail in is drop-dead charm.”

Jerry Hirshberg, Nissan Design International

Object of Desire!“Every now and then, a design comes

along that radically changes the way we think about a particular object. Case in

point: the iMac. Suddenly, a computer is no longer an anonymous box. It is a

sculpture, an object of desire, something that you look at.”

Katherine McCoy, Michael McCoy, Illinois Institute of Technology

[ Design as Soul

“We don’t have a good language to talk about this kind of thing. In most people’s

vocabularies, design means veneer. … But to me, nothing could be further from the

meaning of design. Design is the fundamental soul of a man-made creation

that ends up expressing itself in successive outer layers of the product or

service.”Steve Jobs]

Check Out the Language:

“Tomorrow it’s design …”“Design is the only thing …”

“Design is … religion ...”“Drop-dead charm …”“Object of desire …”

“Soul …”

The I.D. [International Design] Forty*

Airstream … Alfred A. Knopf … Apple Computer … Amazon.com …

Bloomberg … Caterpillar … CNN … Disney … FedEx … Gillette … IBM … Martha Stewart … New Balance …

Nickelodeon … Patagonia … The New York Yankees … 3M … Etc.

* List No. 1, 1999

Unconventional [Design] Messages

Not about ... “Lumpy Objects”!

Not about ... $79,000 objects

One-sixth Second per Item!

“During the 30 minutes you spend on an average trip to the supermarket,

about 30,000 products vie to win your attention and ultimately to make you

believe in their promise.”

Thomas Hine, The Total Package

[ Design Moments!

Shopping cart =

2X heavy items

Source: Wall Street Journal (11-24-99) ]

“Car designers need to create a story. Every car provides an

opportunity to create an adventure. …“The Prowler makes you smile. Why? Because it’s focused. It has a plot, a

reason for being, a passion.”

Freeman Thomas, co-designer VW Beetle; designer Audi TT

Hmmmm(?): “Only” Words …

StoryAdventure

Smile FocusPlot

Passion

Message:Services are Not Intangible!

You “give off” hundreds of design cues … daily!

YOU ARE A DESIGNER!

Graceful language!

Susan Sargent Designs:

PLEASE COMPLAIN!Thanks for your order!

We dearly want everything to go p-e-r-f-e-c-t-l-y!

If the order was late. Or wrong.Or if any of the goods are damaged in the

slightest.Or if you’re just having a lousy day and

want to unload on someone …

Call our Customer Care Hotline!

Beauty Contest!

1. Pick one form/ document: invoice, airbill, sick leave policy, returns claim

form.2. Rate it on a 1 to 10 scale

(1 = Awful; 10 = Scintillating) on three dimensions: Beauty, Grace, Clarity.

3. Repeat … every 15 days.

WEB Words: TP

NO CLUTTER!

No Clutter! CNNSI.com developed an increasingly common

problem. In the midst of adding material, its design went bad. CNNSI became so packed with links, new sections and graphics that it actually became hard

to find something as basic as the score of last night’s ballgame. Then it got worse. The team tried

to make new graphic elements eye-catching enough to stand out from the site’s clutter. But the surfers

ignored them, thinking they were ads.”Business Week [9-99]

Huge Opportunities [ That Damn Few Are Pursuing! ]

Women!The rapidly aging population!

Design!






BRAND!

Brand Outside

Strategy 5:

It’s the Experience!

“Experiences are as distinct from services as

services are from goods.”Joseph Pine & James Gilmore, The

Experience Economy: Work Is Theater & Every Business a Stage

“What’s the plot?”

Freeman Thomas, designer

“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

Safe, On Time and …

“We defined personality as a market niche. We seek to

amuse, to surprise, to entertain.”

Herb Kelleher, Main Man, LUV Airlines

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

Mantra: “Any good can be ing-ed”

the driving experiencethe pumping experience

the sitting experiencethe reading experiencethe washing experiencethe cooking experience

Joseph Pine & James Gilmore, The Experience Economy: Work Is Theater & Every Business a Stage

“Cars are not simply to get you from place to place. They ought to be entertainment. We are sort of in

the entertainment business.”

J Mays, Ford

“This is the end of the pure product era. For instance, car

makers are beginning to understand that the car is a

platform for delivering services that drive the customer

experience.”Carly Fiorina, HP @ Comdex ’99

[Experiencing:#1 Oxymoron:

Respect … from an Airline!

I can cope with delays. I cannot cope with lies … especially Sins of

Omission.

IT IS DISRESPECTFUL TO ME AS A HUMAN BEING!!]

Marketing Aesthetics

“managing aesthetics experiences” … “aesthetics strategy” … “marketing of

sensory experiences that contribute to the organization’s or brand’s identity” … “mapping strategic vision to sensory

stimuli”

Source: Marketing Aesthetics, Bernd Schmitt & Alexander Simonson

Look + Feel + Taste + Touch + Sound + Smell +

Texture + Color + Typeface + Etc. = EXPERIENCE*

* Bernd Schmitt & Alexander Simonson, Marketing Aesthetics






BRAND!

Brand Outside

BRAND POWER!

Brand?

DistinctionExcellence

Emotional “Signature”Trustworthiness

ConsistencyShorthand

Brand It! Now, More Than Ever!

“The increasing difficulty in differentiating between products and

the speed with which competitors take

up innovations will assist in the rise and rise of the brand.”

Gillian Law and Nick Grant, Management [New Zealand]

No Room for Brands?

NikeSaturnCNN

America OnlineCharles Schwab

StarbucksThe Gap

IntelEtc.

Brand = Trust!

“Most buyers do not have a clue whether anybody else makes a better microprocessor, but ‘Intel Inside’ has become a ‘trust mark’ - a trademark that consumers put their faith in.”

The Economist

“Branding is not a problem if you have the right mentality. You go to your team and

you pin up a $200 Swiss Army Watch. Competing in the ridiculously crowded

sub-$200 watch market, they made it into a brand name, named after the most

irrelevant and useless thing in history [the Swiss Army]. And you say, ‘Gang, if they

can do it, we can do it.’ ”

Barry Gibbons

“Salt is salt is salt. Right? Not when it

comes in a blue box with a picture of a little girl carrying an umbrella. Morton International continues to dominate the U.S. salt market even though it charges more for a product that is demonstrably the same as many other products on the

shelf.”

Tom Asaker, Humanfactor Marketing

Calling the Corporate Shrink!

“Organizational Psychotherapy”/

WHO WE ARE!

Scott Bedbury/ Nike, Starbucks

“A Great Brand taps into emotions. Emotions drive most, if not all, of our decisions. A brand reaches out with a powerful connecting experience. It’s

an emotional connecting point that transcends the product.

“A Great Brand is a story that’s never completely told. A brand is a metaphorical story that’s evolving all the

time. This connects with something very deep - a fundamental appreciation of mythology. Stories

create the emotional context people need to locate themselves in a larger experience.”

“Consumers don’t simply buy products, they buy attitudes as well. When confronted with proliferation and

diversity, choices become increasingly informed by belief. [Consumers] want to

know who is behind the products that they buy. They want to know the

company. They want to know what you think.”


“Corporate Religion is a completely new way of thinking about companies. Today, the product is still the main communication

highway in the company. When companies make the shift to selling solutions, brands and attitudes … communicating the company’s

attitudes and values becomes the decisive parameter for success. It

demands that you find out who you are as a company.”


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

[“Dare to be different. Make people notice. The world is

brimming with new competitors and look-alike products. How do

you stand out?”

James Daly, Editor, Business 2.0]

Brand = Special = Passion =

Connection = Caring*

* (Way) beyond “market research”

“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

to how we work with others. Companies will thrive on the basis of their stories and

myths. Companies will need to understand that their products are less important than their stories.”

Rolf Jensen, Copenhagen Institute for Future Studies

“In the funky village, real competition no longer revolves

around marketshare. We are competing for attention –

mindshare and heartshare.”Kjell Nordstrom and Jonas Ridderstrale,

Funky Business

The Ten Rules of Radical Marketing

CEO must “own” the marketing function!Hyper-lean Mktg. Dept. (No filters!)

CEO hangs out with customers!Love + Respect your customers!

Just Say No … to market research!Hire only passionate missionaries!

Create a Community of users-customers!Emphasize one-to-one marketing tools!

Celebrate craziness!Be insanely True to the Brand!

Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)

P.S.: All this applies to the Finance Department*

*Now: Finance Inc.

T.T.D. #1: “How can I know what I

think until I see what I say”*

Exercise : Write copy for a bookmark! (Etc.)

*Graham Wallas, The Art of Thought

Brand Leadership

Lead Out Loud!

Live the Brand!

ENTHUSIASM RULES!*

“I am a dispenser of enthusiasm.”

Ben Zander*TP on Bob Nardelli/GE Power Systems

“Astonish me!” S.D.

“Build something great!” H.Y.

“Immortal!” D.O.

“Leadership is a performance. You have to be

conscious of your behavior, because everybody else is.”

Carly Fiorina

“If you want to be persuasive, you have to generate a high level of energy. It’s energy that makes you visible, that gives you

presence. I call it ‘performance energy,’ and it’s the basis of dynamic leadership.

There is nothing artificial about it. Performance energy is an authentic part of who you are. You

just have to access it.”

Martha Burgess, Theater Techniques for Business People

Ann R.’s Gospel– Show up!– Know your message!

–Put yourself at risk!

BE ASHAMED TO DIE UNTIL YOU HAVE

WON SOME VICTORY FOR HUMANITY!

Horace Mann, founder, Antioch College

“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

“If you ask me what I have come to do in this world, I

who am an artist, I will reply, I am here to live my

life out loud.”Emile Zola

“I’d rather regret the things I have done than the things I have not.”

Lucille Ball

“If things seem under control, you’re just

not going fast enough.”

Mario Andretti

THE END

TOM PETERS’ LESSONS IN LEADERSHIP2000 1 FEBRUARY ALBUQUERQUE

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Transcript of TOM PETERS’ LESSONS IN LEADERSHIP2000 1 FEBRUARY ALBUQUERQUE