Tom Peters’ Seminar2002

We Are In A Brawl With No

Rules!BNP Paribas/05.30.2002

All Slides Available at …

tompeters.com

Note: Lavender text in this file is a link.

CONTEXT

Confusion Reigns.

“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

Way to Go, Jerry et al.: 2002 write

downs from recent acquisitions …

$1,000,000,000,

000**$1 trillion (Source: Harper’s Index 04.2002)

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

Cooperman, former cochairman 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

Business …

On The Ropes: ($5T)

… Dot-Com Mania … Enron … Andersen … Merrill Lynch …

AOL Time Warner … Bernie E.

Wall Street Credibility: 0

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

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

W.I.W.?

20 of 26(7 of top 10*)

*P&G: Declining domestic sales in 20 of 26 categories; 7 of top 10

categories. (The “billion-dollar” problem.)

Source: Advertising Age 01.21.2002/BofA Securities

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

“They [consumer goods company] have acquired a bunch of products, which is what everyone is doing. But what’s the point, the

message, the story line, the Big Idea that makes ‘it’ all hang together?”—Exec,

major consumer goods company

“Acquisitions are about buying market share.

Our challenge is to create markets. There is a big difference.”

Peter Job, CEO, Reuters

“Active mutators in placid times tend to die off. They

are selected against. Reluctant mutators in

quickly changing times are also selected against.”

Carl Sagan & Ann Druyan, Shadows of Forgotten Ancestors

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

Jim & Tom. Joined at the

hip. Not.

Built to Last v. Built to Flip

“The problem with Built to Last is that it’s a romantic notion. Large companies are

incapable of ongoing innovation, of ongoing flexibility.”

“Increasingly, successful businesses will be ephemeral. They will be built to yield

something of value – and once that value has been exhausted, they will vanish.”

Fast Company (03-00)

“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 Nordström and Jonas Ridderstråle, Funky Business

“The difficulties … arise from the inherent conflict between the need to control existing operations and the need to create the kind of environment that will permit new ideas to flourish—and old ones to die a

timely death. … We believe that most corporations will find it impossible to

match or outperform the market without abandoning the assumption of continuity. … The current apocalypse—the transition from a state of continuity to state of discontinuity—has the same suddenness [as the trauma that beset civilization in

1000 A.D.]”

Richard Foster & Sarah Kaplan, “Creative Destruction” (The McKinsey Quarterly)

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

E.g. …

Jeff Immelt: 75% of “admin, back room, finance” “digitalized” in

3 years.

Source: BW (01.28.02)

IBM’s Project

eLiza!** “Self-bootstrapping”/ “Artilects”

“Unless mankind redesigns itself by changing our DNA through altering our genetic

makeup, computer-generated robots will take

over the world.” —Stephen

Hawking, in the German magazine Focus

100 square feet

Autobytel: $400.

Wal*Mart: 13%.Source: BW(05.13.2002)

“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

RESPONSE

The Heart of the Value Added Revolution:

The “Solutions Imperative.”

Base Case: The Sameness Trap

“While everything may

be better, it is also increasingly the same.”

Paul Goldberger on retail, “The Sameness of Things,” The New York Times

“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 Nordström and Jonas Ridderstråle, Funky Business

“Customers will try ‘low cost

providers’ … because the Majors have not

given them any clear reason not to.”

Leading Insurance Industry Analyst

SWA > American +

Continental + Delta + Northwest + United + USAirways.

Source: Boston Globe (12.22.2001)

Getting Beyond Lip Service!

“No longer are we only an insurance provider. Today, we also offer our customers the products and services that help them achieve their dreams, whether it’s financial

security, buying a car, paying for home repairs, or even taking a dream

vacation.”—Martin Feinstein, CEO, Farmers Group

The Big Day!

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

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).

“We want to be the air traffic

controllers of electrons.”

Bob Nardelli, GE Power Systems

Was: Bunch of Guys Who Make Circuit Breakers Division.

Is: GE Industrial Systems.

“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)

Omnicom: 57% (of

$6B) from marketing services

The …

Solutions25.

1. It’s the (OUR!) organization, stupid!2. Friction free! 3. No STOVEPIPES!4. “Stovepiping” is a F.O.—Firing Offense.5. ALL on the web! (ALL = ALL.)6. Open access!6. Project Managers rule! (E.g.: Control the purse strings and evals.)7. VALUE-ADDED RULES! (Services Rule.) (Experiences Rule.) (Brand Rules.)8. SOLUTIONS RULE! (We sell SOLUTIONS. Period. We sell PRODUCTIVITY & PROFITABILITY. Period.)9. Solutions = “Our ‘culture.’ ”10. Partner with B.I.C. (Best-In-Class). Period.

12. All functions contribute equally—IS, HR, Finance, Purchasing, Engineering, Logistics, Sales, Etc.13. Project Management can come from any function.14. WE ARE ALL IN SALES. PERIOD.15. We all invest in “wiring” the customer organization.16. WE ALL “LIVE THE BRAND.” (Brand = Solutions. That MAKE MONEY FOR OUR CUSTOMER- PARTNER.)17. We use the word “PARTNER” until we all want to barf!18. We NEVER BLAME other parts of our organization for screw-ups.19. WE AIM TO REINVENT THIS INDUSTRY!20. We hate the word-idea “COMMODITY.”

21. We believe in “High tech, High touch.”22. We are DREAMERS.23. We deliver . (PROFITS.) (CUSTOMER SUCCESS.)24. If we play the “SOLUTIONS GAME” brilliantly, no one can touch us!25. Our TEAM needs 100% I.C.s (Imaginative Contributors). This is the ULTIMATE “All Hands” affair!

“In an era when terrorists use satellite phones and encrypted email, US gatekeepers stand

armed against them with pencils and paperwork, and archaic computer systems that don’t

talk to each other.”Boston Globe (09.30.2001)

“Once devised in Riyadh, the tasking order took hours to get to the Navy’s six aircraft carriers—because the

Navy had failed years earlier to procure the proper communications gear that would have connected the

Navy with its Air Force counterparts. … To compensate for the lack of communications capability, the Navy was forced to fly a daily cargo mission from

the Persian Gulf and Red Sea to Riyadh in order to pick up a computer printout of the air mission tasking

order, then fly back to the carriers, run photocopy machines at full tilt, and distribute the documents to the air wing squadrons that were planning the next

strike.” –Bill Owens, Lifting the Fog of War

Innovation & Speed’s “New Basics”*

1. XFTs are the “culture.”2. Project-centric. 3. Open “talent market.”4. “Cause-based” projects. 5. Ubiquitous “open systems” IS—at home & throughout supply chain. Web based.6. F-L-A-T.

*Innovation, Speed, CRM, “Experience”/ “Solution” demand this

PSF Unbound+: 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

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

“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

“Guinness as a brand is all about community.

It’s about bringing people together and sharing

stories.”—Ralph Ardill, Imagination, in re Guinness Storehouse

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): $10.001990: Party @ Chuck E. Cheese

(experience economy) $100.00

Bob Lutz: “I see us as being in the art business. Art,

entertainment and mobile sculpture, which,

coincidentally, also happens to provide transportation.”

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

It all adds up to …

THE BRAND.

The Heart of Branding …

“WHO ARE WE?”

“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

“WHAT’S OUR

STORY?”

“Most companies tend to equate branding with the company’s marketing. Design a new marketing

campaign and, voilà, you’re on course. They are wrong. The task is much bigger. It is about fulfilling our potential … not about a new logo, no matter how

clever. WHAT IS MY MISSION IN LIFE? WHAT DO I WANT TO CONVEY TO PEOPLE? HOW DO

I MAKE SURE THAT WHAT I HAVE TO OFFER THE WORLD IS ACTUALLY UNIQUE? The brand has to give of itself, the company has to give of itself, the management has to give of itself. To

put it bluntly, it is a matter of whether – or not – you want to be … UNIQUE … NOW.”

Jesper Kunde, A Unique Moment

“Apple opposes, IBM solves, Nike exhorts,

Virgin enlightens, Sony dreams, Benetton

protests. … Brands are not nouns but verbs.”

Source: Jean-Marie Dru, Disruption

“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.)

Source: Jump Start Your Business Brain, Doug Hall

“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

“A great company is defined by the

fact that it is not compared

to its peers.”Phil Purcell, Morgan Stanley

“EXACTLY HOW DO I PASSIONATELY CONVEY THAT

DRAMATIC DIFFERENCE TO THE

CLIENT ?”

THE WORK

Redefining the Work Itself I:

The WOW Project.

“Reward excellent failures. Punish

mediocre successes.”

Phil Daniels, Sydney exec

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

THE TALENT

Brand = Talent.*

*Duh.

“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

Model 25/8/53

Sports Franchise GM

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

Message: Some people are better than other

people. Some people are a helluva lot better than other

people.

“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

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

“Are there enough weird people in

the lab these days?”V. Chmn., pharmaceutical house, to a lab director (06.01)

“The A students work

for the B students. The

C students run the

business. The D students dedicate the buildings.” —Assertion to Kinko’s founder

Paul Orfalea from his Mom (Fortune/05.13.02)

BOTTOM LINE: LEADING IN

TOTALLY SCREWED- UP TIMES

The Basic Premise.

1. Leadership Is a …

Mutual Discovery Process.

“I don’t know.”

2. Leaders Try … Not to Screw Things

Up

“Ninety percent of what we call ‘management’ consists of making it

difficult for people to get things done.” —P.D.

The Leadership

Types.

3. Great Leaders on Snorting

Steeds Are Important – but

Great Talent Developers (Type I

Leadership) are the Bedrock of Organizations that Perform Over

the Long Haul.

Whoops: Jack didn’t have a vision!

4. But Then Again, There Are Times When This “Cult of Personality”

(Type II Leadership) Stuff Actually Works!

“A leader is a dealer in hope.”

Napoleon

(+TP’s writing room pics)

5. The Leader Is Rarely/Never the Best Performer.

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.

The Leadership

Dance.

6. Leaders …

SHOW UP!

Rudy!

7. Leaders … LOVE the

MESS!

“I’m not comfortable unless

I’m uncomfortable.”—Jay Chiat

8. Leaders

DO!

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!)

9. Leaders

Re-do.

“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

10. BUT … Leaders

Know When to Wait.

Tex Schramm: The

“too hard” box!

11. Leaders

KNOW They Can Make a Difference!

“It is no use saying ‘We are doing our best.’ You have got to succeed in doing

what is necessary.” —WSC

12. Leaders

FOCUS!

“To Don’t ” List

Danger: S.I.O. (Strategic

Initiative Overload)

JackWorld/1@T: (1) Neutron Jack. (Banish bureaucracy.) (2) “1, 2 or out” Jack. (Lead or leave.) (3)

“Workout” Jack. (Empowerment,

GE style.) (4) 6-Sigma Jack. (5)

Internet Jack. (Throughout)

TALENT JACK!

If It Ain’t Broke … Break It.

13. Leaders …FORGET!/

Leaders … DESTROY!

Cortez!

Leaders “dump the ones who brung ’em” —Nokia, HP, 3M, PerkinElmer, Corning, etc.

14. BUT … Leaders

Have to Deliver, So They Worry About “Throwing the Baby Out with the

Bathwater.”

“Damned If You Do, Damned If You Don’t, Just Plain

Damned.”Subtitle in the chapter, “Own Up to the Great Paradox: Success

Is the Product of Deep Grooves/ Deep Grooves Destroy Adaptivity,” Liberation Management (1992)

“Organize” for … performance & customer satisfaction.

“Disorganize” for … renewal & innovation.

15. Leaders Make [Lotsa] Mistakes

– and MAKE NO BONES ABOUT IT!

Sam’s

Secret #1!

Talent.

16. When It Comes to

TALENT … Leaders Always Swing

for the Fences!

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)

Passion.

17. Leaders …

Out Their

PASSION!

G.H.: “Create a ‘cause,’ not a ‘business.’ ”

BZ: “I am a … Dispenser of Enthusiasm!”

The “Job” of Leading.

18. Leadership Is a …

Performance.

“It is necessary for the President to be the

nation’s No. 1 actor.”

FDR

19. Leaders …

Have a GREAT STORY!

“A key – perhaps the key – to leadership is the effective

communication of a story.”

Howard Gardner Leading Minds: An Anatomy of Leadership

Leaders don’t just make products and make decisions.

Leaders make meaning. – John Seeley Brown

Introspection.

20. Leaders …

Enjoy Leading.

“Warren, I know you want to ‘be’

president. But do you want to ‘do’

president?”

21. Leaders … Take Breaks.

Zombie!Zombie!Zombie!Zombie!

The End Game.

22. Leaders ???

:

“Leadership is the PROCESS of

ENGAGING PEOPLE in CREATING a LEGACY

of EXCELLENCE.”

“Hire smart – go bonkers – have grace – make mistakes – love technology – start all

over again.”

“LEADERS NEED TO BE THE ROCK OF

GIBRALTAR ON ROLLER BLADES”

Thank You!