Tom Peters’

Re-Imagine!Business Excellence in a Disruptive Age

Philip Morris USA/Dallas/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

“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

“A California biotechnology company has put the entire

sequence of the human genome on a single chip, allowing

researchers to conduct a single experiment on the complex

relationships between the 30,000 genes that make up a human being.” —Page 1, Financial Times/10.03.2003

2. The Destruction Imperative.

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

3 years.

Source: BW (01.28.02)

4. IS/ IT/ Web … “On the Bus” or “Off the

Bus.”

100 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

Read It Closely: “We don’t sell

insurance anymore. We sell speed.”

Peter Lewis, Progressive

Case: CRM

“The Web enables total transparency. People with

access to relevant information are beginning to challenge any type of

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

or citizen is dead.”Kjell Nordström and Jonas Ridderstråle,

Funky Business

Amen!

“The Age of the Never Satisfied

Customer”Regis McKenna

“CRM has, almost universally, failed

to live up to expectations.”

Butler Group (UK)

No! No! No! FT: “The aim [of CRM] is to make customers feel as they did in the pre-

electronic age when service was more personal.”

CGE&Y (Paul Cole): “Pleasant

Transaction” vs. “Systemic Opportunity.” “Better job

of what we do today” vs. “Re-think overall

enterprise strategy.”

Here We Go Again: Except It’s Real This Time!

Bank online: 24.3M (10.2002); 2X Y2000.

Wells Fargo: 1/3rd; 3.3M; 50% lower attrition rate; 50% higher growth in balances than off-line; more likely to cross-purchase; “happier and stay

with the bank much longer.”

Source: The Wall Street Journal/10.21.2002

5. The Heart of the Value Added Revolution: The “Solutions

Imperative.”

“While everything may

be better, it is also increasingly the same.”

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

Gerstner’s IBM: Systems Integrator of

choice. Global Services:

$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

John Deere Landscapes: “This is our

future.”

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

“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

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?

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?”

“EXACTLY HOW ARE WE

DRAMATICALLY DIFFERENT?”

“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

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

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!

Talent’s “Big Two” Rules

GREAT Finance Dept. = GREAT Football Team

DIFFERENCES Among Cello Players = DIFFERENCES

Among Hotel GMs

100% IMAGINATION!*

The Ritz Cookie LadyPPSI

*Damn it.

9. 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.

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 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)

“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

Thank You!