Distinct or … ExtinctTom Peters Seminar2000

United Technologies Research Center

East Hartford26 June 2000

Pentium III 800MHz: $42,893.00/#Hermes Scarf: $1,964.29

Saving Private Ryan on DVD: $874.75Mercedes-Benz: $18.98Hot-rolled steel: $0.19

Source: Fortune (3.20.00)

An Age of Passion:1 Year = 1.5 Wal*Marts

03.27.99: $167B03.27.00: $555B

P.S.: Wal*Mart = #8 in 2000

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)

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Forces @ Work I

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

Headlines 06.15.00: Your Call!

Bell Atlantic-GTE

vs.

Lucent

“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

Pentium III 800MHz: $42,893.00/#

Cisco Engineer: $19,000.00Hermes Scarf: $1,964.29

Saving Private Ryan on DVD: $874.75Mercedes-Benz: $18.98Hot-rolled steel: $0.19

Source: Fortune (3.20.00)

Enron (per Gary Hamel/Fortune/06.00)

Design an open market for ideasOffer an open market for capital

Open up the market for talentMake like a cell: Divide and divide (“We haven’t been able to start new

businesses within existing businesses”)Pay your innovators well

– really well

Expected “Batting Average”?

Intel’s venture fund: 275 investments, $8B

Source: Fast Company , eCompany

C.E.O. to

C.D.O.

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

Paradox Redux

Atlanta: +113,600 = #1 metro area

Layoffs [major]: BellSouth, Lockheed, Coca-Cola

Brand Inside

Brand Org: Lean, Linked,

Electronic & Malleable

108 X 5vs.

8 X 1*

* 540 vs. 8

The Pincer 5

“Destructive” entrepreneurs/ Global Competition

“White Collar Robots”

THE INTERNET! [E.g.: GM + Ford + DaimlerChrysler]

Global Outsourcing [E.g.: India, Mexico]

Speed!!

RR on “Assetless” [J.B.] 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.”

The “&-!!+#$% in the middle”*

Jim Clark on Healtheon/WebMD

* ’twixt docs, patients, insurers and providers; $275B of $400B in waste; source: Michael

Lewis, The New New Thing

[ Incidentally …

CEO Jeff ArnoldAge: 30

First Start-up: Age 24]

“This is the Age of Ageism: The real innovator’s dilemma isn’t ‘disruptive technologies;’ it’s

the relentless rise of the quasi-adolescents who wield them.”

Michael Schrage

“A good plant engineer in a paper may create $100,000 to $300,000 in value per year. … An outstanding software product developer may

create a product worth $1,000,000 to $300,000,000. … 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)

“We want to be the air traffic controllers

of electrons.”Bob Nardelli,

GE Power Systems

So does Enron![et al.]

“The e-conomy is one of re-intermediation, where new

technologies make it possible to radically increase complexity and

efficiency with the introduction of new marketplaces. In these markets, value

chains constantly reorganize as the demands of the consumer and

business change.”Thomas Koulopoulos, Delphi Group

Brand Inside

Brand Work!

So what will be the Basic Building

Block of the New Org?

Why are there no books on how to create

a “Cool, Rocking, WOW-producing

Finance Department”?

New OrleansApril 2000:

Jazz Festival + NAPM

Welcome to the Y2K New Orleans Jazz

and Real Cool Purchasing Dudes

Festival!

You are the Rock Stars

of the B2B Age!

Message: You are Re-invention Evangelists!

PSF 1.0

Department Head

to …

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

Enter …

The WOW Project!*

*The Project50

“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)

“Every project we take on starts with a question:

How can we do what’s never been done

before?”Stuart Hornery, CEO, Lend Lease

Implementation: A 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

Think about It!?

Innovation = Reaction to the Prototype

Michael Schrage

All-Time Prototype Champ

THE SPREAD SHEET!

The new metabolism!

He who has the quickest O.O.D.A. Loops* wins!

*Observe. Orient. Decide. Act. / Col. John Boyd

Characteristics of the “Also Rans”

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

Source: Fortune on “most admired global corporations” (10/26/98)

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

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

3) Press foot firmly on the throat of mediocrity.

Source: Mercedes ad

Brand Inside

Brand You: Distinct …

or Extinct

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)

“We believe companies can increase their market cap 50 percent in 3 years.

Steve Macadam at Georgia Pacific changed 20 of his 40 box plant

managers to put more talented, higher paid managers in charge. He

increased profitability from $25 million to $80 million in 2 years.”

Ed Michaels, War for Talent (05.17.00)

Seminar Y2K/Brand Inside

Message: Distinct … or

Extinct!

Brand Inside

Brand Talent: The Great War for Talent

Issue Y2K

The Great War for Talent!

“When land was the scarce resource, nations battled

over it. The same is happening now for talented people.”

Stan Davis & Christopher Meyer, futureWEALTH

“The market’s being divided up right now. We’re in a

tough competition [with the U.S. and the U.K.] for

the best brains.”Gerhard Schroeder, on Germany’s new

tech immigration policy[Frankfurter Allgemeine/06.02.00]

Winner Take All!

From “1, 2 or 3” [JW] to “Best talent in each industry segment

to build better models and proprietary

intangibles” [EM]Ed Michaels, War for Talent (05.17.00)

Home Depot Goes Long!

7 new growth initiatives ($20B to $100B in 5-7 years

Arthur Blank: BEST PERSON IN THE WORLD TO HEAD EACH

INITIATIVE

E.g.: COO of IKEA to head international expansion

Ed Michaels, War for Talent (05.17.00)

“The Silent Battlefield”

50% of middle mgrs. In big corps. report “moderate to high” chance they’ll change

companies within 3 years

More loyalty to geography than companies

Most companies: don’t know how many 25-40 year olds they’re losing, have no special

retention programs

Ed Michaels, War for Talent (05.17.00)

Talent war, Web-speed!

Every resume or employment question that comes to Lucent via

the Web gets answered in 30 minutes or less. [24/7.]

Red Herring [06.00], on Lucent Director of

Recruitment Jim Baughman

“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

Why PWC [Etc.]?

“We acquire and manage large stables of ‘Talent’

better.”

PWC Exec

Alan Kay on PARC’s Bob Taylor

“He was a connoisseur of

talent.”

“Top performing companies are two to four times more likely than the rest to pay what it

takes to prevent losing top performers.”

Ed Michaels, War for Talent (05.17.00)

“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

H.R. to H.E.D. ???

HumanEnablement Department

“Firms will not ‘manage the careers’ of their employees. They

will provide opportunities to enable the employee to develop

identity and adaptability and

thus be in charge of his or her own career.”

Tim Hall et al., “The New Protean Career Contract”

“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

“He grew his hair long, played guitar in a rock band, chased

girls, got into trouble. At age 17 he was flogged by his house

master, who described him as ‘the most difficult boy I’ve ever

had to deal with.’ ”

Solution?

Slip Ritalin into his food …

Or …

Elect Him Prime Minister

Tony Blair*

*talk/May 2000

Axiom: Never hire anyone without an aberration in their

background. (Find the One Ton Cookie Man!)

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 War Y2K!

–Brand You within Brand Us!–Encompassing!/ Cultural! (KEWLNESS: mine v. yours)

–Substantive!/ “The best Projects win!” [Cairo 12-99]

–Basis of Brand!/ WHO WE ARE!

Talent = Brand

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Forces @ Work II

The Commodity Trap

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

“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, coming up with similar ideas, producing similar things, with similar prices and similar quality.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

“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

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

“These days, you can’t succeed as a company if you’re consumer led –

because in a world so full of so much constant change, consumers can’t

anticipate the next big thing.

Companies should be idea-led and consumer-

informed.”Doug Atkin, partner,Merkley Newman Harty

“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

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

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

Amen!

“The Age of the Never Satisfied

Customer”Regis McKenna

Brand Outside

Strategy 2:

Use E-Commerce

to Re-invent the Business!

?????

$35,000,000.

Dell’s Web sales … daily

Tomorrow Today: Cisco!

90% of $14.4B(Cisco Connection ONLINE)

Save $500M(service and tech support)

C.Sat e >> C.Sat HCustomer Engineer

Chat Rooms/Collaborative Design ($1B “free” consulting)

And Larry?

Lessons from Earth’s Richest Human

Everything [In & Out] via Internet

$1B in ’99-’00[on a cost base of $6B]

$1B in ’00-’01

Service Call Center

$300.00 per transaction to $1.50

Savings: $550,000,000.00

Source: Ralph Seferian, VP, Oracle

B2B

1999 – 2004: 50X

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

T

GM/Ford/DaimlerChrysler (02-27)

Covisint$240B (+$500B)

I.P.O.

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

The Supply Side …

The Age of the ChoiceboardThe War of the Choiceboards

Source: Adrian Slywotzky, HBR 1-2/2000 [<1%]

“Even if executives of established businesses grasp the impact of new

technologies … they still face a massive competitive disadvantage precisely

because they are incumbents. … They do complex financial calculations and get

bogged down in internal political debates. Insurgents have no such

inhibitions.”

Philip Evans & Thomas Wurster, Blown to Bits

Jargon Bath!

Bureaucracy free …Systemically integrated …

Internet intense …Knowledge based …

Time and location free …“Instantly” responsive …

Customer centric …Mass customization enabled.

Translation …

Bureaucracy free = Flat org, no B.S.Systemically integrated = Whole supply chain

tightly wired/ friction freeInternet intense = Do it all via the Web

Knowledge based = Open accessTime and location free = Whenever, wherever

“Instantly” responsive = Speed demonsCustomer centric = Customer calls the shotsMass customization enabled = Every product

and service rapidly tailored to client requirements

Brand Outside

Strategy 3:

Design Rules!

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 Ogha

“Design is treated like a religion at BMW.”

Fortune (10/98)

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.”Steve Jobs

Lady Sensor, Mach3, and …

$70M on developing the CrossAction toothbrush

23 patents, including 6 for the packaging

Source: www.ecompany.com [06.00]

“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 Focus

PlotPassion

Design =

SIMPLICITY … HONESTY … ACCESSIBILITY …

ENJOYMENTJonathan Ive (iMac)

Design =

“There are three basic principles behind any well-

designed product: truth, humanity, and

simplicity.”Sohrab Vossoughi,

Ziba Design

Brand Outside

Strategy 4:

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

“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

“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

Brand Outside

BRAND POWER!

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]

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

“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.”

Jesper Kunde, Corporate Religion

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Brand Leadership

Passion Rules!

Brand Leadership!

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

communication of a story.”

Howard Gardner Leading Minds: An Anatomy of Leadership

“The challenge for IBM, AT&T and other mainstream companies is to re-instill a sense of adventure in

recruits.”

Burke Stinson, AT&T

“Create a Cause, not a ‘business.’ ”

Gary Hamel, Fortune (06.00), on re-inventing a company (Exemplar #1:

Charles Schwab)

“Leadership is a performance. You have to be

conscious of your behavior, because everybody else is.”

Carly Fiorina

Brand Leadership:ENTHUSIASM RULES!

“I am a dispenser of enthusiasm”/ Ben

Zander

Ann Richards’ Dogma

Show up!

Know your message!

PUT YOURSELF AT RISK EVERY DAY!

“If things seem under control, you’re just

not going fast enough.”

Mario Andretti