part 1.1 tom peters’ excellence. always. new master/21 august 2008

NOTENOTE:: To appreciateTo appreciate this presentation this presentation [and [and

insure that it is not ainsure that it is not a messmess],], you need Microsoft you need Microsoft

fonts:fonts:

“Showcard Gothic,”“Showcard Gothic,” “Ravie,”“Ravie,” “Chiller”“Chiller”

and and “Verdana”“Verdana”

Part 1.1Part 1.1Tom Peters’ Tom Peters’

EXCELLENCEXCELLENCE. ALWAYS.E. ALWAYS.

NEW MASTER/21 August 2008NEW MASTER/21 August 2008

Slides at …Slides at …

tompeters.comtompeters.com

Ten PartsTen Parts

P1.1P1.1, P1.2, P1.3, P1.4/, P1.2, P1.3, P1.4/GenericGenericP2/LeadershipP2/LeadershipP3/TalentP3/TalentP4/“Value-added Ladder”P4/“Value-added Ladder”P5/“New” Markets P5/“New” Markets P6/“The Equations”P6/“The Equations”P7.1/ImplementationP7.1/ImplementationP7.2/ActionP7.2/ActionP8/13 “Guru Gaffes”P8/13 “Guru Gaffes”P9/Health“care”P9/Health“care”P10/“The Lists”P10/“The Lists”

Part Part 1.11.1

The “model” for my MASTER presentation has The “model” for my MASTER presentation has historically been Linear—consistent with my historically been Linear—consistent with my engineering background and perhaps my 50% or so of engineering background and perhaps my 50% or so of German genetic material. (Peters, for heaven's sake—German genetic material. (Peters, for heaven's sake—Granddad Peters, a contractor-engineer, came to the Granddad Peters, a contractor-engineer, came to the U.S. in the 1870s.) But in my oral presentations I found U.S. in the 1870s.) But in my oral presentations I found I often never got around to the punchline. So in I often never got around to the punchline. So in November 2007, preparing for a speech in Madrid, I November 2007, preparing for a speech in Madrid, I decided, “The hell with it, I’m going to organize by decided, “The hell with it, I’m going to organize by importance of the topic by my reckoning, and put first importance of the topic by my reckoning, and put first things first”—and the heck with linearity. That in turn things first”—and the heck with linearity. That in turn coincided with my decision to re-emphasize “the coincided with my decision to re-emphasize “the basics” that often go missing but which are the bedrock basics” that often go missing but which are the bedrock for getting things done in the real world. The result, for for getting things done in the real world. The result, for now, seven months later, is this now, seven months later, is this New Annotated MasterNew Annotated Master. .

All yours … All yours …

““We Have …We Have …

ThankThank you, Howard you, Howard (Starbucks)!(Starbucks)!

Starbucks, more or less for the first time, and before Starbucks, more or less for the first time, and before the Recession, began to have some significant the Recession, began to have some significant problems. The “good news,” as it were, is that Howard problems. The “good news,” as it were, is that Howard Schultz’s S’bucks has no new competition; hence we Schultz’s S’bucks has no new competition; hence we are left with only one possible cause for Starbucks’ are left with only one possible cause for Starbucks’ slump—slump—Starbucks!Starbucks!

Sports:Sports: You You beat beat

yourself!yourself!

Sure, your opponent in sports can be having a “lucky Sure, your opponent in sports can be having a “lucky day”—but mostly, when one stinks up, say, the day”—but mostly, when one stinks up, say, the presentation … one beats oneself!presentation … one beats oneself!

Principal diagnostic tool for Starbucks or you and me? Principal diagnostic tool for Starbucks or you and me? Spend $2.95, and buy a mirror.Spend $2.95, and buy a mirror.

InternalInternal organizational organizational

excellenceexcellence* *** ** = = Deepest “Blue Deepest “Blue

Ocean”Ocean”

**A “Blue ocean” is by A “Blue ocean” is by definition very profitable … definition very profitable … and will be and will be quicklyquickly copiedcopied. .

““sustainablesustainable blueblue” (Internal ” (Internal organizational excellence) is organizational excellence) is

farfar more more difficultdifficult to copy. to copy.

****Internal Internal organizational organizational excellence = excellence =

““BrandBrand insideinside””

B(I) > B(O)B(I) > B(O)

Sure, I am well aware of internally focused Sure, I am well aware of internally focused organizations. Nonetheless, I still (mostly) cast my vote organizations. Nonetheless, I still (mostly) cast my vote for XX … eXcellence in eXecution. for XX … eXcellence in eXecution.

When The “Enemy” When The “Enemy” ReallyReally Wins Wins

““Lose Your Nemesis”: Lose Your Nemesis”: ““ObsessinObsessingg about about yyour comour comppetitors, etitors, trtryyiningg to match or best their offerin to match or best their offeringgs, ss, sppendinendingg time each time each

dadayy wantin wantingg to know what the to know what theyy are doin are doingg, and/or measurin, and/or measuringg yyour comour comppananyy a aggainst them—these activities have no ainst them—these activities have no ggreat or reat or

winninwinningg outcome outcome.. Instead you are simply prohibiting your Instead you are simply prohibiting your company from finding its own way to be truly meaningful to company from finding its own way to be truly meaningful to

its clients, staff and prospects. You block your company from its clients, staff and prospects. You block your company from finding its own identity and engaging with the people who finding its own identity and engaging with the people who

pay the bills. … Your competitors have never paid your bills pay the bills. … Your competitors have never paid your bills and they never will.” and they never will.” —Howard Mann, —Howard Mann, Your Business Brickyard: Getting Your Business Brickyard: Getting

Back to the Basics to Make Your Business More Fun to Run*Back to the Basics to Make Your Business More Fun to Run*

**Mr Mann also quotes Mike McCue, former VP/Technology at Netscape:Mr Mann also quotes Mike McCue, former VP/Technology at Netscape: “At “At Netscape the competition with Microsoft was so severe, we’d Netscape the competition with Microsoft was so severe, we’d wake up in the morning thinking about how we were going to wake up in the morning thinking about how we were going to

deal with them instead of how we would build something deal with them instead of how we would build something great for our customers. great for our customers. What I realize now is that What I realize now is that yyou can ou can never, ever take never, ever take yyour eour eyye off the customer. Even in the face e off the customer. Even in the face of massive comof massive comppetition, don’t think about the cometition, don’t think about the comppetition. etition.

LiterallLiterallyy don’t think about them don’t think about them.”.”

ThankThank you , Michael you , Michael

(sorta)(sorta)

““New technology, by itself, has little economic New technology, by itself, has little economic benefit. … The economic benefits arise not from benefit. … The economic benefits arise not from

innovation itself, but from the entrepreneurs who innovation itself, but from the entrepreneurs who eventually discover ways to put innovation to eventually discover ways to put innovation to

practical use— practical use— and, most critically, and, most critically, from the organizational from the organizational changes through which changes through which

businesses reshape businesses reshape themselves to take themselves to take advantage of new advantage of new

technology.”technology.” —Marc Levinson, The Box: —Marc Levinson, The Box: How the Shipping Container Made the World Smaller and How the Shipping Container Made the World Smaller and

the World Economy Biggerthe World Economy Bigger

ThankThank you ,Lou you ,Lou

“… “… it it isis the the

game.”game.”

““If I could have chosen not to tackle the IBM culture If I could have chosen not to tackle the IBM culture head-on, I probably wouldn’t have. My bias coming in head-on, I probably wouldn’t have. My bias coming in was toward strategy, analysis and measurement. In was toward strategy, analysis and measurement. In comparison, changing the attitude and behaviors of comparison, changing the attitude and behaviors of

hundreds of thousands of people is very, very hard.hundreds of thousands of people is very, very hard.

[Yet] I came to see in my [Yet] I came to see in my time at IBM that culture time at IBM that culture

isn’t just one aspect of the isn’t just one aspect of the

game game ——it is the it is the gamegame.”.” —Lou Gerstner,—Lou Gerstner,

Who Says Elephants Can’t DanceWho Says Elephants Can’t Dance

ThankThank you ,Herb you ,Herb

““You have to You have to treat your treat your

employees like employees like customers.”customers.” —Herb Kelleher, —Herb Kelleher,

upon being asked his “secret to success”upon being asked his “secret to success”

Source: Joe Nocera, Source: Joe Nocera, NYTNYT, “Parting Words of an Airline Pioneer,” , “Parting Words of an Airline Pioneer,” on the occasion of Herb Kelleher’s retirement after 37 years on the occasion of Herb Kelleher’s retirement after 37 years at Southwest Airlines (SWA’s pilots union took out a full-pageat Southwest Airlines (SWA’s pilots union took out a full-page ad in USA Today thanking HK for all he had done; across thead in USA Today thanking HK for all he had done; across the

way in Dallas American Airlines’ pilots were picketing theway in Dallas American Airlines’ pilots were picketing the Annual Meeting)Annual Meeting)

Consistent with the idea that underscoring Brand Consistent with the idea that underscoring Brand Inside is the best way to keep the ocean deep & blue, Inside is the best way to keep the ocean deep & blue, the Sole Secret (he says) of Southwest Airlines founder the Sole Secret (he says) of Southwest Airlines founder Herb Kelleher is putting his people First—making them Herb Kelleher is putting his people First—making them his principal customers. The likes of Dave Liniger his principal customers. The likes of Dave Liniger (RE/MAX founder) and Hal Rosenbluth (superstar boss (RE/MAX founder) and Hal Rosenbluth (superstar boss of travel giant Rosenbluth International) spout and live of travel giant Rosenbluth International) spout and live this same idea, using practically the same words—e.g., this same idea, using practically the same words—e.g., Hal’s book Hal’s book Putting the Customer Second. Putting the Customer Second.

ThankThank you Ben, you Ben,

Norm, Ike and Norm, Ike and DelawareDelaware

GiveGive good good tea! tea!

““In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to

engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a

simple brown suit and a fur cap. … simple brown suit and a fur cap. … Franklin’s miracle was that armed Franklin’s miracle was that armed only with his canny personal charm and reputation as a only with his canny personal charm and reputation as a scientist and philosopher, he was able to cajole a wary scientist and philosopher, he was able to cajole a wary French government into lending the fledgling American French government into lending the fledgling American

nation an enormous fortune.nation an enormous fortune. … The enduring image of Franklin in Paris tends … The enduring image of Franklin in Paris tends to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue

affairs of state as rigorously as John Adams. affairs of state as rigorously as John Adams. When Adams joined Franklin in When Adams joined Franklin in Paris in 1779, he was scandalized by the late hours and Paris in 1779, he was scandalized by the late hours and French lifestyle his colleague had adopted, says [Stacy French lifestyle his colleague had adopted, says [Stacy

Schiff, in A Great Improvisation] Adams was clueless that Schiff, in A Great Improvisation] Adams was clueless that it was through the dropped hints and seemingly offhand it was through the dropped hints and seemingly offhand

remarks at these salons that so much of French remarks at these salons that so much of French diplomacy was conducted.diplomacy was conducted. … Like the Beatles arriving in America, Franklin … Like the Beatles arriving in America, Franklin aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could

ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …”ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …”

Source: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin TalkedSource: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin Talked the French into Forming a Crucial Alliance,” the French into Forming a Crucial Alliance,” U.S. News & World ReportU.S. News & World Report, 0707.08, 0707.08

The ragtag and victory-less Continental Army was retreating, George The ragtag and victory-less Continental Army was retreating, George Washington notwithstanding. For the Americans, finding an ally was a Washington notwithstanding. For the Americans, finding an ally was a life or death proposition. Short, fat old Benjamin Franklin was our life or death proposition. Short, fat old Benjamin Franklin was our man in Paris. Short, fat and old though he may have been, he was a man in Paris. Short, fat and old though he may have been, he was a Charmer. He won the hearts and devotion of the ladies of high society Charmer. He won the hearts and devotion of the ladies of high society with his mastery of Tea & Flattery. The Americans eked out a success with his mastery of Tea & Flattery. The Americans eked out a success at Saratoga which Franklin turned into an epic victory—and the at Saratoga which Franklin turned into an epic victory—and the besotted ladies convinced their mighty husbands to get behind the besotted ladies convinced their mighty husbands to get behind the Americans. The rest, as they say, is history.Americans. The rest, as they say, is history.

The launchpad for Gulf War I was Saudi Arabia. Despite the Saudis The launchpad for Gulf War I was Saudi Arabia. Despite the Saudis need to have Iraq’s Kuwaiti incursion reversed, the Kingdom was need to have Iraq’s Kuwaiti incursion reversed, the Kingdom was touchy about the massive American military presence on their Holy touchy about the massive American military presence on their Holy soil. Allied supreme commander Norm Schwarzkopf says, tongue only soil. Allied supreme commander Norm Schwarzkopf says, tongue only half in cheek, that his principal contribution to the war effort was half in cheek, that his principal contribution to the war effort was nightly marathon sessions sipping tea with the Crown Prince.nightly marathon sessions sipping tea with the Crown Prince.

The point: No matter how weighty the cause, “giving good The point: No matter how weighty the cause, “giving good tea”—an incredible and expensive (in terms of time) tea”—an incredible and expensive (in terms of time) investment in key relationships is typically invaluable and of investment in key relationships is typically invaluable and of decisive decisive strategicstrategic importance. Message: Master the Art of Tea importance. Message: Master the Art of Tea—metaphorically at least—and make it in to the history books. —metaphorically at least—and make it in to the history books.

““Allied commands depend Allied commands depend on mutual confidence on mutual confidence [and this confidence] [and this confidence] is gained, above all is gained, above all

through the through the develodeveloppmentment of friendshiof friendshippss.”.”

——General D.D. Eisenhower, General D.D. Eisenhower, Armchair GeneralArmchair General* (05.08)* (05.08)

*“Perhaps his most outstanding ability [at West Point] was*“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds;of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his it was a quality that would pay great dividends during his

future coalition commandfuture coalition command

Do tea. Do tea. Make friends.Make friends.

Could it be that simple?Could it be that simple?At some level, the answer is yes.At some level, the answer is yes.

You need the troops. And you need the guns. But as D-You need the troops. And you need the guns. But as D-Day approached in 1944, you mostly needed to have a Day approached in 1944, you mostly needed to have a modicum of peace among Churchill, Montgomery, modicum of peace among Churchill, Montgomery, Patton, Bradley and Roosevelt. As Schwarzkopf kept the Patton, Bradley and Roosevelt. As Schwarzkopf kept the Saudis on board through tea, Ike’s affability, for which Saudis on board through tea, Ike’s affability, for which he was often criticized or dismissed or disdained, kept he was often criticized or dismissed or disdained, kept the British and Americans from killing each other long the British and Americans from killing each other long enough to kill the Germans.enough to kill the Germans.

““eighty eighty percent of percent of success is success is

showing up.” showing up.” ——Woody AllenWoody Allen

““See How Simple What You Cannot Do Is”: The 320% Factor!See How Simple What You Cannot Do Is”: The 320% Factor!

Woody Allen/“Eighty percent of success is showing up” was the Woody Allen/“Eighty percent of success is showing up” was the topic of a recent Post. Rob (Comment, tompeters.com): “And I topic of a recent Post. Rob (Comment, tompeters.com): “And I

reckon a large part of the remaining 20% is Refusing to Go reckon a large part of the remaining 20% is Refusing to Go Away Again.”Away Again.”

Ernest Hemmingway’s Ernest Hemmingway’s The Garden of Eden:The Garden of Eden: “ … Finishing is “ … Finishing is what you have to do. If you don’t finish, nothing is worthwhat you have to do. If you don’t finish, nothing is worth

a damn.”a damn.”

“ … “ … Write the hardest story there is to write that you know. Write the hardest story there is to write that you know. Start it tomorrow. The hell with tomorrow. Go and start it now. Start it tomorrow. The hell with tomorrow. Go and start it now.

He sat down and wrote the first paragraph of the new story He sat down and wrote the first paragraph of the new story that he had always put off writing. … The very beginning was that he had always put off writing. … The very beginning was written and all he had to do was go on. That’s all, he said. See written and all he had to do was go on. That’s all, he said. See

how simple what you cannot do is?” how simple what you cannot do is?”

Message-Lesson/s:Message-Lesson/s: The The firstfirst 80% of success is showing up! 80% of success is showing up! The The secondsecond 80% is starting … now. The 80% is starting … now. The thirdthird 80% is 80% is

sticking around and refusing to leave! The sticking around and refusing to leave! The finalfinal 80% is 80% is finishing! (“See how simple what you cannot do isfinishing! (“See how simple what you cannot do is?”)?”)

Delaware was the smallest state in the Union in 1787 as Delaware was the smallest state in the Union in 1787 as the process of writing the Constitution got underway. For a the process of writing the Constitution got underway. For a number of reasons, some states, such as New Hampshire, number of reasons, some states, such as New Hampshire, were absent from the Convention, members of various were absent from the Convention, members of various delegations were away as much as present (e.g., Alexander delegations were away as much as present (e.g., Alexander Hamilton). In any event, about thirty Delegates were present Hamilton). In any event, about thirty Delegates were present and at work at any point in time.and at work at any point in time.

States could decide on the size of their delegations, and States could decide on the size of their delegations, and Delaware chose five—a very large number. Moreover, wee Delaware chose five—a very large number. Moreover, wee Delaware’s five never missed a day’s work and were in their Delaware’s five never missed a day’s work and were in their seats gavel to gavel.seats gavel to gavel.

Needless to say, wee Delaware had a wildly disproportionate Needless to say, wee Delaware had a wildly disproportionate impact on the Convention and the document itself.impact on the Convention and the document itself.

In a nutshell, Delaware’s secret: In a nutshell, Delaware’s secret: Show up!Show up!

(I like this example because it illustrates the impact of this (I like this example because it illustrates the impact of this “trivial” idea-tactic-strategy, available to all of us all of the “trivial” idea-tactic-strategy, available to all of us all of the time, in the most Monumental of affairs.) time, in the most Monumental of affairs.)

Do tea!Do tea!Make friends!Make friends!

Show up!Show up!

On the basis of such apparently humble “basics,” the On the basis of such apparently humble “basics,” the world turns—the American Revolution, Gulf War I, D-Day world turns—the American Revolution, Gulf War I, D-Day and the fate of the world, the U.S. Constitution.and the fate of the world, the U.S. Constitution.

Think about it!Think about it!

ThankThank you Rich! you Rich!

““Mapping your Mapping your competitive competitive position”*position”*

or …or …

*Rich D’Aveni/*Rich D’Aveni/HBRHBR

The The “Have “Have you …”you …”

50*50**See *See Appendix OneAppendix One

While waiting last week [early December 2007] in the Albany While waiting last week [early December 2007] in the Albany airport to board a Southwest Airlines flight to Reagan/DCA, I airport to board a Southwest Airlines flight to Reagan/DCA, I happened across the latest happened across the latest Harvard Business ReviewHarvard Business Review, on the , on the cover of which was a yellow sticker. The sticker had on it the cover of which was a yellow sticker. The sticker had on it the words “Mapping your competitive position.” It referred to a words “Mapping your competitive position.” It referred to a

feature article by my friend Rich D’Aveni. His work is uniformly feature article by my friend Rich D’Aveni. His work is uniformly good—and I have said as much publicly on several occasions good—and I have said as much publicly on several occasions dating back 15 years. I’m sure this article is good, too—though dating back 15 years. I’m sure this article is good, too—though

I didn’t read it. In fact it triggered a furious negative “Tom I didn’t read it. In fact it triggered a furious negative “Tom reaction” as my wife calls it. Of course I believe you should reaction” as my wife calls it. Of course I believe you should

worry about your “competitive position”! (I do.)worry about your “competitive position”! (I do.) But But instead of obsessing on competitive position instead of obsessing on competitive position and other abstractions, as the B-schools and and other abstractions, as the B-schools and

consultants would always have us do, I consultants would always have us do, I instead wondered about some “practical instead wondered about some “practical

stuff” which I believe is more important to stuff” which I believe is more important to the short- and long-term health of the the short- and long-term health of the enterprise, tiny or enormous. E.g. …enterprise, tiny or enormous. E.g. …

1. Have you in the1. Have you in the last last 1010 daysdays … … visitedvisited a a customer?customer?2. Have you called a 2. Have you called a customer … customer … TODAYTODAY?? * * * * * *

Want to “map” your “competitive position”? Want to “map” your “competitive position”? Start by Start by going to visit a customer … ASAP!going to visit a customer … ASAP! Or at least calling! Or at least calling! You’ll find the other 48 items on the “Have you … ?” list You’ll find the other 48 items on the “Have you … ?” list at #5.2.2. at #5.2.2.

ThankThank you you

Dr. GroopmanDr. Groopman

1818””

In In How Doctors ThinkHow Doctors Think, Harvard Med doc Jerome , Harvard Med doc Jerome Groopman tells us that the best way to get a fix on Groopman tells us that the best way to get a fix on what ails a patient is to get the patient talking openly what ails a patient is to get the patient talking openly about his-her problem.about his-her problem.

Great.Great.

But the research shows that docs, on average, leap to a But the research shows that docs, on average, leap to a conclusion and interrupt their patients after … conclusion and interrupt their patients after … 18 18 seconds.seconds.

(Docs are hardly alone. This is a disease present in (Docs are hardly alone. This is a disease present in almost all specialists and professionals. “Listening” for almost all specialists and professionals. “Listening” for a professional invariably means … talking.)a professional invariably means … talking.)

ThankThank you Dick & you Dick &

DanDan

Dick (Build!)Dick (Build!)Dan (Report on Dan (Report on what not built—what not built—

tangible v. tangible v. palpable)palpable)

ThankThank you “Great you “Great One” (and One” (and

Phil)Phil)

““You miss You miss

100100%%

of the shots of the shots you never you never

take.”take.” —Wayne—Wayne GretzkyGretzky

““RewardReward excellent failures.

PunishPunish mediocre

successes.”Phil Daniels, Sydney exec

ThankThank you Walter you Walter

Politics Politics politics politics politics politics politics politics politicspolitics politics politics politics politics politics politics politics politics politics politics politicspolitics politics politics politics politics politicspolitics politics politics politics politics politicspolitics politics politics politicspolitics politics politics

politicspolitics

??????????????

“Success doesn’t depend on the number of “Success doesn’t depend on the number of people you know; it depends on the number people you know; it depends on the number

of people you know in of people you know in hihigghh places!”places!”

oror


of people you know in of people you know in lowlow places!” places!”

All success is aAll success is aMatter of Matter of

implementation.implementation.All implementation isAll implementation isa matter of politics.a matter of politics.

ThankThank you you

HeatherHeather

10 UNASSAILABLE REASONS WOMEN RULE10 UNASSAILABLE REASONS WOMEN RULE

WomenWomen make [all] the financial decisions.WomenWomen control [all] the wealth.WomenWomen [substantially] outlive men.WomenWomen start most of the new businesses.Women’sWomen’s work force participation rates have soared worldwide.WomenWomen are closing in on “same pay for same job.”WomenWomen are penetrating senior ranks rapidly [even if the pace is slow for the corner office per se].Women’sWomen’s leadership strengths are exceptionally well aligned with new organizational effectiveness imperatives.WomenWomen are better salespersons than men.WomenWomen buy [almost] everything—commercial as well as consumer goods.

So what exactly is the point of So what exactly is the point of menmen??

Big bank CEO, summarizing to his top-management team his Big bank CEO, summarizing to his top-management team his

notes from TP’s presentation:notes from TP’s presentation: “Tom’s made a great “Tom’s made a great point; he let us know that our customer base point; he let us know that our customer base will be different and more diverse in the will be different and more diverse in the future.”future.”

Tom:Tom: “With all due respect, that’s “With all due respect, that’s notnot what what Tom said. Though I am an unabashed Tom said. Though I am an unabashed supporter of ‘diversity’ in general, what I said supporter of ‘diversity’ in general, what I said

was was ‘‘SheShe is your is your

customer—and has been for a long time and customer—and has been for a long time and will be forever.’ And ‘she’ is notably will be forever.’ And ‘she’ is notably AWOLAWOL in in this this [meeting][meeting] room roomfull of senior ‘leaders.’full of senior ‘leaders.’ ””

ThankThank you Sheik you Sheik MohammadMohammad

2424%%

Single Single greatest actgreatest act

of pure of pure imaginationimagination

dubaidubai

Thank you Thank you HorstHorst

““I [will] not accept the I [will] not accept the explanation of a recession explanation of a recession negatively affecting the negatively affecting the

[new] business. There are [new] business. There are still people traveling. We just still people traveling. We just have to get them to stay in have to get them to stay in our hotel.”our hotel.” —Horst Schulze, on his new chain, —Horst Schulze, on his new chain,

Capella, from Capella, from PrestigePrestige (06.08) “The Return of History and (06.08) “The Return of History and the End of Dreams”the End of Dreams”

ThankThank you Steve you Steve

““You You knowknow a a designdesign is is goodgood

whenwhen you you wantwant to to licklick it.” it.” —Steve Jobs—Steve Jobs

Source: Source: Design: Intelligence Made VisibleDesign: Intelligence Made Visible,, Stephen Bayley & Terence ConranStephen Bayley & Terence Conran

ThankThank you Kevin, you Kevin,

Eleanor (and Eleanor (and Steve)Steve)

Kevin Roberts’ CredoKevin Roberts’ Credo

11. Ready. Fire! Aim.. Ready. Fire! Aim.2. If it ain’t broke ... Break it!2. If it ain’t broke ... Break it!3. Hire crazies.3. Hire crazies.4. Ask dumb questions.4. Ask dumb questions.5. Pursue failure.5. Pursue failure.6. Lead, follow ... or get out of the way!6. Lead, follow ... or get out of the way!7. Spread confusion.7. Spread confusion.8. Ditch your office.8. Ditch your office.9. Read odd stuff.9. Read odd stuff.

10. Avoid moderationAvoid moderation!!

““Do one Do one thing every thing every

day that day that scares you.”scares you.”

—Eleanor Roosevelt

Stay Hungry. Stay Hungry. Stay Foolish.Stay Foolish.

Steve JobsSteve Jobs

ThankThank you Bob you Bob

Excellence1982: The Bedrock “Eight Basics”Excellence1982: The Bedrock “Eight Basics”

1. A Bias for 1. A Bias for ActionAction2. Close to the 2. Close to the CustomerCustomer3. 3. AutonomAutonomyy and and EntreEntreppreneurshireneurshipp4. Productivity Through 4. Productivity Through PeoPeopplele5. 5. Hands OnHands On, , Value-DrivenValue-Driven6. 6. Stick toStick to the Knitting the Knitting7. 7. SimSimpplele Form, Form, LeanLean Staff Staff8. Simultaneous 8. Simultaneous Loose-TightLoose-Tight Properties” Properties”

““Breakthrough” 82*Breakthrough” 82*

People! People! CustomersCustomers

! ! Action! Action! Values! Values!

**In Search of ExcellenceIn Search of Excellence

ThankThank you Siberia you Siberia

…in May!…in May!

Why in the Why in the

World did World did youyou

go to go to SiberiaSiberia??

EnterpriseEnterprise* ** (*at its best):* ** (*at its best): An An emotionalemotional, , vitalvital, , innovativeinnovative, , jojoyyfulful, , creativecreative, , entreentreppreneurialreneurial endeavor endeavor that elicits maximum that elicits maximum

concerted humanconcerted human potential in the potential in the wholeheartedwholehearted serviceservice of others of others.****Employees, Customers, Suppliers, Communities, Owners, Temporary partners**Employees, Customers, Suppliers, Communities, Owners, Temporary partners

ThankThank you Mssrs. you Mssrs.

Easterly, Yunus Easterly, Yunus and Wheeler!and Wheeler!

"Trust the "Trust the development development experts—all experts—all

seven billion of seven billion of them.”them.” —headline, —headline, Financial Times, Financial Times,

0529.08, to an article by development guru William Easterly, 0529.08, to an article by development guru William Easterly, commenting negatively on the World Bank Growth commenting negatively on the World Bank Growth

Commission’s recent report that concludes, in effect, Commission’s recent report that concludes, in effect, ““trust the World Bank experts”trust the World Bank experts”

9494%%

““The four most The four most important words in any important words in any

organizationorganization

are …are … ‘What do ‘What do you think?’you think?’ ” ”

Source: courtesy Dave Wheeler,Source: courtesy Dave Wheeler, posted at tompeters.com, source ofposted at tompeters.com, source of

original unknown (0609.08) original unknown (0609.08)

New New OpenerOpener0812.080812.08

The …The …

“Last “Last 98%”98%”

“… “… it is it is the the

game.”game.”

3030--

fold!fold!

Ken Kizer/VA 1997: Ken Kizer/VA 1997: “culture of cover-up “culture of cover-up that pervades healthcare” that pervades healthcare”

“Patient Safety Event Registry”“Patient Safety Event Registry”

… “looking for systemic solutions, … “looking for systemic solutions, not not seeking to fix blameseeking to fix blame on individuals on individuals

except in the most egregious cases. The good news except in the most egregious cases. The good news

was awas a thirtthirtyy-fold -fold increaseincrease in the number of medical in the number of medical

mistakes and adverse events that got reported.” mistakes and adverse events that got reported.” “ “National Center for Patient Safety Ann Arbor”National Center for Patient Safety Ann Arbor”

Thank you Thank you Ike , Charlie, Ben Ike , Charlie, Ben

& Norm, Gust, & Norm, Gust, George, Nelson,George, Nelson,

and Ben … and Ben …

““Allied commands depend Allied commands depend on mutual confidence on mutual confidence [and this confidence] [and this confidence] is gained, above all is gained, above all

through the through the develodeveloppmentment of friendshiof friendshippss.”.”

——General D.D. Eisenhower, General D.D. Eisenhower, Armchair General Armchair General * (05.08)* (05.08)

*“Perhaps his most outstanding ability [at West Point] was*“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds;of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his it was a quality that would pay great dividends during his

future coalition command.”future coalition command.”

George Crile (George Crile (Charlie Wilson’s WarCharlie Wilson’s War) on Charlie ) on Charlie Wilson:Wilson: “The way things normally work, if “The way things normally work, if you’re not Jewish you don’t get into the you’re not Jewish you don’t get into the

Jewish caucus, but Charlie did. And if you’re Jewish caucus, but Charlie did. And if you’re not black you don’t get into the black not black you don’t get into the black

caucus. But Charlie plays poker with the caucus. But Charlie plays poker with the black caucus; they had a game, and he’s black caucus; they had a game, and he’s

the only white guy in it. The House, like any the only white guy in it. The House, like any human institution, is moved by friendships, human institution, is moved by friendships,

and no matter what people might think and no matter what people might think about Wilson’s antics, they tend to like him about Wilson’s antics, they tend to like him

and enjoy his company.”and enjoy his company.”

GiveGive good good tea! tea!

““In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to

engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a

simple brown suit and a fur cap. … simple brown suit and a fur cap. … Franklin’s miracle was that armed Franklin’s miracle was that armed only with his canny personal charm and reputation as a only with his canny personal charm and reputation as a scientist and philosopher, he was able to cajole a wary scientist and philosopher, he was able to cajole a wary French government into lending the fledgling American French government into lending the fledgling American

nation an enormous fortune.nation an enormous fortune. … The enduring image of Franklin in Paris tends … The enduring image of Franklin in Paris tends to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue

affairs of state as rigorously as John Adams. affairs of state as rigorously as John Adams. When Adams joined Franklin in When Adams joined Franklin in Paris in 1779, he was scandalized by the late hours and Paris in 1779, he was scandalized by the late hours and French lifestyle his colleague had adopted, says [Stacy French lifestyle his colleague had adopted, says [Stacy

Schiff, in A Great Improvisation] Adams was clueless that Schiff, in A Great Improvisation] Adams was clueless that it was through the dropped hints and seemingly offhand it was through the dropped hints and seemingly offhand

remarks at these salons that so much of French remarks at these salons that so much of French diplomacy was conducted.diplomacy was conducted. … Like the Beatles arriving in America, Franklin … Like the Beatles arriving in America, Franklin aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could

ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …”ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …”

Source: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin TalkedSource: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin Talked the French into Forming a Crucial Alliance,” the French into Forming a Crucial Alliance,” U.S. News & World ReportU.S. News & World Report, 0707.08, 0707.08

George Crile George Crile (Charlie Wilson’s War)(Charlie Wilson’s War) on Gust on Gust

Avrakotos’ strategy:Avrakotos’ strategy: “He had “He had become something of a become something of a

legend with these legend with these people who manned the people who manned the

underbelly of the underbelly of the Agency [CIA].”Agency [CIA].”

The 95% Factor:The 95% Factor: “What I learned “What I learned from my years as a hostage from my years as a hostage negotiator is that we do not negotiator is that we do not have to feel powerless—and have to feel powerless—and

that that bondinbondingg is the is the antidote to the hostage antidote to the hostage

situation.”situation.” —George Kohlrieser, —George Kohlrieser, Hostage at the Hostage at the

TableTable

““I am a I am a dispenser of dispenser of

enthusiasm.”enthusiasm.”

—Ben Zander

Hard Is SoftHard Is SoftSoft Is HardSoft Is Hard

Hard Is Hard Is SoftSoft (Plans, (Plans, ##ss))

Soft Is Soft Is HardHard (people, (people, customers, values, customers, values,

relationships))relationships))

R.O.I.RR.O.I.R..

RReturn eturn OOn n

IInvestment In nvestment In

RRelationshipselationships

Relationships (of all varieties): THERE THERE ONCE WAS A TIME WHEN A ONCE WAS A TIME WHEN A

THREETHREE--MINUTEMINUTE PHONEPHONE CALLCALL WOULD HAVE AVOIDED WOULD HAVE AVOIDED

SETTING OFF THE DOWNWARD SETTING OFF THE DOWNWARD SPIRAL THAT RESULTED IN A SPIRAL THAT RESULTED IN A

COMPLETE RUPTURE.COMPLETE RUPTURE.

““Courtesies of a small Courtesies of a small and trivial character are and trivial character are

the ones which strike the ones which strike deepest in the grateful deepest in the grateful

and appreciating heart.”and appreciating heart.”

—Henry Clay

X X =XFX*=XFX*

**ExcellenceExcellence = Cross-functional Excellence = Cross-functional Excellence

The “XF-50”: 50 Ways to The “XF-50”: 50 Ways to Enhance Cross-Functional Enhance Cross-Functional Effectiveness and Deliver Effectiveness and Deliver

Speed, “Service Speed, “Service Excellence” and “Value-Excellence” and “Value-

added Customer added Customer ‘Solutions’”*‘Solutions’”*

*Entire “XF-50” List is an Appendix to the LONG version *Entire “XF-50” List is an Appendix to the LONG version of this presentation, posted at tompeters.comof this presentation, posted at tompeters.com

Never Never waste a waste a lunch!lunch!

????????

% XF % XF lunches*lunches*

*Measure!*Measure!

CIO Question:CIO Question:

% Doc % Doc lunches*lunches*

*Last 30 days*Last 30 days

George Crile (George Crile (Charlie Wilson’s WarCharlie Wilson’s War) on Charlie ) on Charlie Wilson:Wilson: “The way things normally work, if “The way things normally work, if you’re not Jewish you don’t get into the you’re not Jewish you don’t get into the

Jewish caucus, but Charlie did. And if you’re Jewish caucus, but Charlie did. And if you’re not black you don’t get into the black not black you don’t get into the black

caucus. But Charlie plays poker with the caucus. But Charlie plays poker with the black caucus; they had a game, and he’s black caucus; they had a game, and he’s

the only white guy in it. The House, like any the only white guy in it. The House, like any human institution, is moved by friendships, human institution, is moved by friendships,

and no matter what people might think and no matter what people might think about Wilson’s antics, they tend to like him about Wilson’s antics, they tend to like him

and enjoy his company.”and enjoy his company.”

??????????????


of people you know in of people you know in hihigghh places!”places!”

oror


of people you know in of people you know in lowlow places!” places!”

Loser:Loser: “He’s such a“He’s such a suck-up!” suck-up!”

Winner:Winner: “He’s such a“He’s such a suck-down.” suck-down.”

George Crile George Crile (Charlie Wilson’s War)(Charlie Wilson’s War) on Gust on Gust

Avrakotos’ strategy:Avrakotos’ strategy: “He had “He had become something of a become something of a

legend with these legend with these people who manned the people who manned the

underbelly of the underbelly of the Agency [CIA].”Agency [CIA].”

William Easterly, William Easterly, The White Man’s Burden: The White Man’s Burden: Why the West’s Effort to Aid the Rest Have Why the West’s Effort to Aid the Rest Have Done So Much Ill and so Little Good:Done So Much Ill and so Little Good: “The “The

West spent … West spent … $$2.32.3 trillion trillion on on

foreign aid over the last five decades and foreign aid over the last five decades and still has still has not not managed to get twelve-cent managed to get twelve-cent

medicines to children to prevent half of all medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion malaria deaths. The West spent $2.3 trillion and still and still notnot managed to get three dollars to managed to get three dollars to

each new mother to prevent five million each new mother to prevent five million child deaths. …child deaths. … But I and many other But I and many other

like-minded people keep trying, not to like-minded people keep trying, not to abandon aid to the poor, but to abandon aid to the poor, but to makemake

suresure it reachesit reaches themthem.” .”

Lesson:Lesson: ShowShow upup.. Lesson:Lesson: ListenListen to the to the “ “locals.”locals.”Lesson:Lesson: HearHear the the “ “locals.”locals.”Lesson:Lesson: EnEnggaaggee thethe locals.locals. Lesson:Lesson: TrTry y a lot of a lot of stuff.stuff.

““Ninety Ninety percent of percent of success is success is

showing up.” showing up.” —Woody Allen

MBWAMBWA

1818””

Source: How Doctors Think, Jerome GroopmanSource: How Doctors Think, Jerome Groopman

NothNoth--inging is “scalable”! is “scalable”!

**

Nothing is “scalable”!*Nothing is “scalable”!*

**EverEveryy replication must replication must exude the exude the pperceercepptiontion of of uniuniqquenessueness—even if it —even if it

means a half-step means a half-step backwardsbackwards. . (“It wouldn’t (“It wouldn’t

have worked if we hadn’t done have worked if we hadn’t done it it ourour way.”) way.”)

Easterly, maligned by many, is the arch-Easterly, maligned by many, is the arch-

enemy of the enemy of the Big PlanBig Plan [his [his

capital letters, not mine—for once]capital letters, not mine—for once]

sent from afar; and the vociferous fan of sent from afar; and the vociferous fan of practical activities of those he calls practical activities of those he calls

“Searchers”“Searchers” … who learn … who learn

the ins and outs of the culture, politics and the ins and outs of the culture, politics and local conditions “on the ground” in order to local conditions “on the ground” in order to use local levers and local players, and get use local levers and local players, and get

those 12-those 12-cent medicines to community members. cent medicines to community members.

Read on, “Planners” vs “Searchers” …Read on, “Planners” vs “Searchers” …

““Buy in”- Buy in”- “Ownership”-“Ownership”-

Authorial bragging Authorial bragging rights-“Born again” rights-“Born again”

Champion = Champion = OneOne LineLine ofof CodeCode!!

Life’s Little SecretLife’s Little Secret

**One line of code**One line of code**Caudill’s table in the rural**Caudill’s table in the rural library library**Hair on the woman’s arm**Hair on the woman’s arm**EJW’s scissors to the perfect**EJW’s scissors to the perfect draft draft

**They**They own it. own it.****TheyThey saved it and saved your saved it and saved your (rather uninformed) butt. (rather uninformed) butt.****YouYou must tolerate a smidgeon must tolerate a smidgeon of sub-optimization. of sub-optimization. ****YouYou must show appropriate must show appropriate humility and appreciation. humility and appreciation.****YouYou must be willing (eager) to must be willing (eager) to cover the exact same ground cover the exact same ground again and again and again. again and again and again.

““We made mistakes, of course. Most of them were We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the omissions we didn’t think of when we initially wrote the software. software. We fixed them by doing it over and over, again We fixed them by doing it over and over, again and again.and again. We do the same today. While our competitors We do the same today. While our competitors are still sucking their thumbs trying to make the design are still sucking their thumbs trying to make the design

perfect, we’re already on prototype versionperfect, we’re already on prototype version ##55..

By the time our rivals areBy the time our rivals are ready with wires and screws, we are on versionready with wires and screws, we are on version

##1010.. It gets back to It gets back to planning versus actingplanning versus acting: : We act We act from day onefrom day one; ; others plan how others plan how toto planplan——for monthsfor months.”.” —Bloomberg by —Bloomberg by

BloombergBloomberg

1/401/40

Culture of PrototypingCulture of Prototyping

“Effective prototyping may “Effective prototyping may

be be thethe most most valuablevaluable core core competencecompetence an an

innovative organization can innovative organization can hope to have.”hope to have.” —Michael Schrage

““ExperimenExperiment t

fearlessly”fearlessly”Source: BW0821.06, Type A Organization Strategies/

“How to Hit a Moving Target”—Tactic #1Tactic #1

“This is so simple it sounds stupid, but it is amazing how few oil people really

understand that you only you only find oil if you find oil if you drill wellsdrill wells.. You may

think you’re finding it when you’re drawing maps and

studying logs, but you have to drill.”

Source: The Hunters, by John Masters, Canadian O & G wildcatter

Lesson: Lesson: Talk to the “locals.”Talk to the “locals.”

Lesson: Lesson: Listen to the “locals.”Listen to the “locals.”Lesson: Lesson: Hear the “locals.”Hear the “locals.”



Lesson:Lesson: Listen to the “locals.” Listen to the “locals.”Lesson:Lesson: Hear to the “locals.” Hear to the “locals.”

Lesson:Lesson: Listen to the “locals.” Listen to the “locals.”Lesson:Lesson: Hear to the “locals.” Hear to the “locals.”

Lesson: Lesson: Respect the “locals.”Respect the “locals.”Lesson:Lesson: Empathize with the Empathize with the “locals.”“locals.”

For projects involving children For projects involving children or health or education or or health or education or

community development or community development or sustainable small-businesssustainable small-business

growth (most projects), growth (most projects),

womenwomen are by far the are by far the

most reliablemost reliable and most central and most central and most indirectly powerful and most indirectly powerful locallocal players even in the most players even in the most

chauvinist settings. chauvinist settings.

““Forget Forget ChinaChina, , IndiaIndia and the and the

InternetInternet: Economic : Economic Growth Is Driven Growth Is Driven

by by WomenWomen.”.” —Headline,

Economist, April 15, 2006, Leader, page 14

10 UNASSAILABLE REASONS WOMEN RULE10 UNASSAILABLE REASONS WOMEN RULE

WomenWomen make [all] the financial decisions.WomenWomen control [all] the wealth.WomenWomen [substantially] outlive men.WomenWomen start most of the new businesses.Women’sWomen’s work force participation rates have soared worldwide.WomenWomen are closing in on “same pay for same job.”WomenWomen are penetrating senior ranks rapidly [even if the pace is slow for the corner office per se].Women’sWomen’s leadership strengths are exceptionally well aligned with new organizational effectiveness imperatives.WomenWomen are better salespersons than men.WomenWomen buy [almost] everything—commercial as well as consumer goods.

So what exactly is the point of So what exactly is the point of menmen??

TP: TP: “How to flush

$500,000 down

the toilet in one easy

lesson!!”

< CAPEX< CAPEX> People!> People!

… … no less than no less than CathedralsCathedrals in which the full and in which the full and

awesome power of the awesome power of the Imagination and Spirit and Imagination and Spirit and native Entrepreneurial flairnative Entrepreneurial flair

of diverse individualsof diverse individuals is is unleashed in passionate unleashed in passionate pursuit of … Excellence.pursuit of … Excellence.

#1#1 cause of cause ofDis-satisfaction?Dis-satisfaction?

2 2 per Year per Year == Excellence + Excellence +

LegacyLegacy

EXCELLENCE. EXCELLENCE.

BEDROCK.BEDROCK.LEADERSHIP. LEADERSHIP.

THE 10Ps. THE 10Ps.

PURPOSEPURPOSE..PASSIONPASSION..PotentialPotential..PresencePresence..PersonalPersonal..

PERSISTENCEPERSISTENCE..PEOPLEPEOPLE..

PromotionPromotion. . PotentPotent..

PositivePositive..

““I am a … I am a … Dispenser of Dispenser of EnthusiasmEnthusiasm!”!”

—Ben Zander—Ben Zander

““You must You must bebe the change you the change you

wish to see in the wish to see in the world.”world.”

Gandhi

RelentlessRelentless:: “One of “One of

my superstitions had always been my superstitions had always been when I started to go anywhere or when I started to go anywhere or

to do anything,to do anything, notnot to to turnturn backback ,, or stop, or stop,

until the thing intended was until the thing intended was accomplished.”accomplished.” —Grant

MBWAMBWA

Kevin Roberts’ Credo

11. Ready. Fire! Aim.. Ready. Fire! Aim.2. If it ain’t broke ... Break it!2. If it ain’t broke ... Break it!3. Hire crazies.3. Hire crazies.4. Ask dumb questions.4. Ask dumb questions.5. Pursue failure.5. Pursue failure.6. Lead, follow ... or get out of the way!6. Lead, follow ... or get out of the way!7. Spread confusion.7. Spread confusion.8. Ditch your office.8. Ditch your office.9. Read odd stuff.9. Read odd stuff.

10. Avoid moderationAvoid moderation!!

““Leaders Leaders

‘‘dodo’’ people. people.

Period.”Period.” —Anon.

On NELSON: “[other] “[other] admirals more admirals more frightened of frightened of losing than losing than

anxious to win”anxious to win”

2 2 per Year/per Year/ 20 20 per Decade per Decade == Excellence Excellence

+ Legacy+ Legacy

#8A#8A

““Most managers spend a great deal of time thinking about what they Most managers spend a great deal of time thinking about what they plan to do, but relatively little time thinking about what they plan not plan to do, but relatively little time thinking about what they plan not to do.. As a result, they become so caught up … in fighting the fires of to do.. As a result, they become so caught up … in fighting the fires of

the moment that they cannot really attend to the longterm threats the moment that they cannot really attend to the longterm threats and risks facing the organization. So the first soft skill of leadership and risks facing the organization. So the first soft skill of leadership

the hard way is to cultivate the perspective of Marcus Aurelius: avoid the hard way is to cultivate the perspective of Marcus Aurelius: avoid

busyness, free up your time, stat focused on what really matters. busyness, free up your time, stat focused on what really matters. Let Let me me pput it bluntlut it bluntlyy: ever: everyy leader should routinel leader should routinelyy kee keepp a a substantial substantial pportion of his or her timeortion of his or her time——I would saI would sayy as as much as 50 much as 50 ppercentercent——unscheduledunscheduled.. … Only when you have … Only when you have

substantial ‘slop’ in your schedule—unscheduled time—will you have substantial ‘slop’ in your schedule—unscheduled time—will you have the space to reflect on what you are doing, learn from experience, the space to reflect on what you are doing, learn from experience,

and recover from your inevitable mistakes. Leaders without such free and recover from your inevitable mistakes. Leaders without such free time end up tackling issues only when there is an immediate or visible time end up tackling issues only when there is an immediate or visible problem. Managers’ typical response to my argument about free time problem. Managers’ typical response to my argument about free time

is, ‘That’s all well and good, but there are things I have to do.’ is, ‘That’s all well and good, but there are things I have to do.’ Yet Yet we waste so much time in unwe waste so much time in unpproductive activitroductive activity—y—it it

takes an enormous effort on the takes an enormous effort on the ppart of the leader to art of the leader to keekeepp free time for the trul free time for the trulyy im impportant thinortant thinggss.”.”

——Dov Frohman (& Robert HowardDov Frohman (& Robert Howard), Leadership The Hard Way: ), Leadership The Hard Way: Why Leadership Can’t Be Taught—And How You Can Learn It AnywayWhy Leadership Can’t Be Taught—And How You Can Learn It Anyway

(Chapter 5, “The Soft Skills Of Hard Leadership”) (Chapter 5, “The Soft Skills Of Hard Leadership”)

““The Discipline Of Daydreaming”:The Discipline Of Daydreaming”: “Nearly every major “Nearly every major decision of my business career was, to some degree, the decision of my business career was, to some degree, the

result of daydreaming. … To be sure, in every case I had to result of daydreaming. … To be sure, in every case I had to collect a lot of data, do detailed analysis, and make a data-collect a lot of data, do detailed analysis, and make a data-

based argument to convince superiors, colleagues and based argument to convince superiors, colleagues and

business partners. But that all came later. business partners. But that all came later. In the In the beginning, there was the daydream.beginning, there was the daydream. By By daydreaming, I mean loose, unstructured thinking with no daydreaming, I mean loose, unstructured thinking with no particular goal in mind. … In fact, I think daydreaming is a particular goal in mind. … In fact, I think daydreaming is a distinctive mode of cognition especially well suited to the distinctive mode of cognition especially well suited to the

complex, ‘fuzzy’ problems that characterize a more turbulent complex, ‘fuzzy’ problems that characterize a more turbulent business environment. … Daydreaming is an effective way of business environment. … Daydreaming is an effective way of coping with complexity. When a problem has a high degree of coping with complexity. When a problem has a high degree of complexity, the level of detail can be overwhelming. The more complexity, the level of detail can be overwhelming. The more

one focuses on the details, the more one risks being lost in one focuses on the details, the more one risks being lost in them.. … Every child knows how to daydream. But many, them.. … Every child knows how to daydream. But many,

perhaps most, lose the capacity as they grow up. …”perhaps most, lose the capacity as they grow up. …”

——Dov Frohman (& Robert Howard),Dov Frohman (& Robert Howard), Leadership The Hard Way: Leadership The Hard Way: Why Leadership Can’t Be Taught—And How You Can Learn It Anyway Why Leadership Can’t Be Taught—And How You Can Learn It Anyway

(Chapter 5, “The Soft Skills Of Hard Leadership”) (Chapter 5, “The Soft Skills Of Hard Leadership”)

Nudge.Nudge.Sway.Sway.

K.I.S.S.K.I.S.S.*Keep It Simple, Stupid*Keep It Simple, Stupid

90K in U.S.A. 90K in U.S.A. ICUsICUs on any on any given day; given day; 178178 steps/day steps/day

in ICU. in ICU.

50%50% stays result stays result

in “serious complication”in “serious complication”

Source: Atul Gawande, “The Checklist” (Source: Atul Gawande, “The Checklist” (New YorkerNew Yorker, 1210.07), 1210.07)

****Peter PronovostPeter Pronovost, Johns Hopkins, , Johns Hopkins, 20012001**Checklist, line infections**Checklist, line infections**1/3**1/3rdrd at least one error when he started at least one error when he started**Nurses/permission to stop procedure **Nurses/permission to stop procedure if doc, other not following checklistif doc, other not following checklist**In 1 year, 10-day line-infection rate:**In 1 year, 10-day line-infection rate:

11% to … 11% to … 0%0%

Source: Atul Gawande, “The Checklist” (Source: Atul Gawande, “The Checklist” (New YorkerNew Yorker, 1210.07), 1210.07)

**Docs, nurses make own **Docs, nurses make own checklists on whateverchecklists on whatever process-procedure they choose process-procedure they choose**Within **Within weeksweeks, average stay in , average stay in

ICUICU down down 50%50%Source: Atul Gawande, “The Checklist” (New Yorker, 1210.07)Source: Atul Gawande, “The Checklist” (New Yorker, 1210.07)

““Everything matters”Everything matters”

-80%-80%Source:Source: Nudge,Nudge, Richard Thaler and Cass Richard Thaler and Cass

Sunstein, etching of fly in the urinalSunstein, etching of fly in the urinal reduces “spillage” by 80%, Schiphol Airportreduces “spillage” by 80%, Schiphol Airport

#10#10

““Experiences Experiences are as distinct are as distinct

from services as from services as services are from services are from goods.”goods.” —Joe Pine & Jim Gilmore, The

Experience Economy: Work Is Theatre & Every Business a Stage

<TG<TGWWvs.vs.

>TG>TGRR

2-cent 2-cent candycandy

EndEndNew Opener 0812.08New Opener 0812.08

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The

answer seems obvious: Buy a Buy a very large one very large one and just waitand just wait.”.”

—Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

“Forbes100” from 1917 to 1987: 3939 members members

of the Class of ’17 were alive in ’87; 18 in ’87 of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly F100; 18 F100 “survivors” significantly

underunderpperformederformed the market; the market;

just just 22 (2%), (2%), GEGE & & KodakKodak, ,

outoutpperformederformed the market from the market from 1917 to 1987. 1917 to 1987.

S&P 500 from 1957 to 1997: 7474 members of the Class of ’57 were alive

in ’97; 1212 (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

GEGE

Decentralization to the point of failure to pursueDecentralization to the point of failure to pursue synergies synergiesAccountability (extreme, merciless, all levels)Accountability (extreme, merciless, all levels)ProfitabilityProfitabilityMetric madness (not portable—the Nardelli caseMetric madness (not portable—the Nardelli caseSix-sigma religion (limits innovation? 3M, Boeing?)Six-sigma religion (limits innovation? 3M, Boeing?)Execution (Bossidy) Execution (Bossidy) Truth-tellingTruth-tellingDecentralized staff except for financial integrity, risk,Decentralized staff except for financial integrity, risk, management, management development management, management developmentOperational excellenceOperational excellenceCentralized major initiatives with teeth, but not to theCentralized major initiatives with teeth, but not to the detriment of decentralization, accountability (e.g., via detriment of decentralization, accountability (e.g., via best practicesbest practicesManagement development (Deep)Management development (Deep)Succession effectiveness (Jones, Welch, Immelt) Succession effectiveness (Jones, Welch, Immelt) (universal) (universal)Up or outUp or outTargeted acquisitions Targeted acquisitions

““Mr. Foster and his McKinsey Mr. Foster and his McKinsey colleagues collected detailed colleagues collected detailed

performance data stretching back performance data stretching back 4040 years for years for 1,0001,000 U.S. companies. U.S. companies. They

found that none of the

long-term survivors managed to outperform the market. Worse, the longer companies had been in the

database, the worse they did.” —Financial —Financial

TimesTimes

$10,000,000/Day

Mission impossible?Mission impossible?

$36B/’98$36B/’98

minus minus $675M/‘$675M/‘

0707

$10,000,000/Day

““Citigroup merger a Citigroup merger a mistakemistake ” ”““sadsad story” story”

“The stockholders have “The stockholders have not not benefitedbenefited. The employees . The employees

certainly have certainly have notnot benefitedbenefited and I don’t think the customers and I don’t think the customers

have benefited because our have benefited because our franchises are franchises are weakerweaker than than

they have been.”they have been.”Source:Source: Financial TimesFinancial Times, 0404.2008 (All quotes , 0404.2008 (All quotes

courtesy courtesy John ReedJohn Reed, who crafted the Citi-, who crafted the Citi-Travelers merger in 1998 in a $166B deal)Travelers merger in 1998 in a $166B deal)

““Despite a decade of Despite a decade of banking mergers, there banking mergers, there is

no evidence that big banks are any more efficient or

profitable than their smaller rivals.” —Financial Times, 0329, on

possible Barclays-ABN Amro merger (“When it comes to asking the stock market whether

bigger banks are better, the current answer is a resounding ‘no.” —Citigroup analysis, 2006) analysis, 2006)

“Not a single company that qualified as having made a sustained transformation ignited its leap with a big

acquisition or merger. Moreover, Moreover, comparison companies—those that failed to make a comparison companies—those that failed to make a leap or, if they did, failed to sustain it—often tried to leap or, if they did, failed to sustain it—often tried to

make themselves great with amake themselves great with a big acquisition or merger. They failed to grasp the big acquisition or merger. They failed to grasp the

simple truth that while you can buysimple truth that while you can buy your way to growth, you cannot buy your way to your way to growth, you cannot buy your way to

greatness.”greatness.” —Jim Collins/—Jim Collins/TimeTime/2004/2004

“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

Dick Kovacevich: You don’t get better by

being bigger. You get worse.”

There’s “A”“A” and then

there’s “A.”“A.”

Winning the Merger Game Winning the Merger Game IsIs Possible Possible

--Lots of deals--Lots of deals--Little deals--Little deals

--Friendly deals--Friendly deals—Stay close to core competence—Stay close to core competence—Strategy is easy to understand—Strategy is easy to understand

Source: “The Mega-merger Mouse Trap”/Source: “The Mega-merger Mouse Trap”/Wall Street Wall Street Journal/Journal/02.17.2004 / David Harding & Sam Rovit, Bain & Co./re Comcast-02.17.2004 / David Harding & Sam Rovit, Bain & Co./re Comcast-

DisneyDisney

My Kind of AcquisitionMy Kind of Acquisition

GE aims at Pratt & Whitney in the turboprop market. GE aims at Pratt & Whitney in the turboprop market. GE acquires Walter Engines, an 85-year old firm from GE acquires Walter Engines, an 85-year old firm from

the Czech Republic (“earned a reputation … the Czech Republic (“earned a reputation … for building rugged propeller engines used heavilyfor building rugged propeller engines used heavily

in Eastern Europe and niche markets such as in Eastern Europe and niche markets such as agriculture and cargo planes.”)agriculture and cargo planes.”)

Bingo: Bingo: Fill a need-hole by paying top dollar for Fill a need-hole by paying top dollar for a superb, well-regarded firm of modest size a superb, well-regarded firm of modest size

that complements your main business.that complements your main business.

(Bingo, more or less: Melding of the desirable practices of a (Bingo, more or less: Melding of the desirable practices of a non-bureaucratic, independent and proud firm into a Big non-bureaucratic, independent and proud firm into a Big

Dog’s corporate culture is very hard and delicate work—the Dog’s corporate culture is very hard and delicate work—the failure rate is high; still, the practice makes sense if you are failure rate is high; still, the practice makes sense if you are

willing to work patiently with such acquired companies.)willing to work patiently with such acquired companies.)

Source: Source: Wall Street Journal, Wall Street Journal, 0703.080703.08

SpinoffsSpinoffs systematically perform better than IPOs … track

record, profits … “freed from the “freed from the confines of the parent … more confines of the parent … more entrepreneurial, more nimbleentrepreneurial, more nimble”

—Jerry Knight/ Washington Post/ 08.05

#1.1#1.1

The The lastlast word: word: There There is is nono “last “last

word.”word.”

Flat as a Pancake (Or Worse)Flat as a Pancake (Or Worse)

Wal*Mart … Wal*Mart … Dell … Intel … Dell … Intel … Yahoo … Home Yahoo … Home

Depot … Depot … Microsoft … GEMicrosoft … GE

““Data drawn from the real world Data drawn from the real world attest to a fact that is beyond attest to a fact that is beyond

our control:our control: Everything in existence tends to deteriorate.”

—Norberto Odebrecht, —Norberto Odebrecht, Education Through WorkEducation Through Work

Built to last?Built to last?

““But what if [former head of strategic planner But what if [former head of strategic planner at Royal Dutch Shell] Arie de Geus is wrong in at Royal Dutch Shell] Arie de Geus is wrong in suggesting, in The Living Company, that firms suggesting, in The Living Company, that firms

should aspire to live forever? Greatness is should aspire to live forever? Greatness is fleeting and, for corporations, it will become fleeting and, for corporations, it will become

ever more fleeting. The ultimate aim of a ever more fleeting. The ultimate aim of a business organization, an artist, an athlete or a business organization, an artist, an athlete or a

stockbroker may be to stockbroker may be to exexpplode in a lode in a dramatic frenzdramatic frenzyy of value of value creation durincreation duringg a short a short

ssppace of timeace of time,, rather than to live rather than to live forever.” forever.” —Kjell Nordstr—Kjell Nordströöm and Jonas Ridderstråle,m and Jonas Ridderstråle,

Funky BusinessFunky Business

Built to Lastvs

Built Built to to ChangeChange//Rock Rock the the

WorldWorld

““It is It is notnot the the strongest of the strongest of the

species that survives, species that survives, nornor the most the most

intelligent, but intelligent, but the the one most one most responsive responsive

to changeto change.”.” —Charles Darwin

““A pattern emphasized in the case A pattern emphasized in the case studies in this book is the degree to studies in this book is the degree to

which powerful competitors which powerful competitors not only not only resist innovative threats, but resist innovative threats, but actually resist all efforts to actually resist all efforts to

understand themunderstand them,, preferring to preferring to further their positions in older further their positions in older

products.products. This results in a surge of productivity and performance that

may take the old technology to unheard of heights. But in most cases

this is a sign of impending death.” —Jim Utterback, Mastering the Dynamics of Innovation

Forget>“Learn”Forget>“Learn”

“The problem is never how “The problem is never how to get new, innovative to get new, innovative

thoughts into your mind, thoughts into your mind,

but how to get the old ones out.” —Dee Hock—Dee Hock

C.E.O.C.E.O. to

C.D.O.C.D.O.

CChief hief DDestruction estruction

OOfficerfficer

#1.1.1#1.1.1

Q4/2006Q4/2006

+500,000+500,000

Source: Source: Barron’sBarron’s 0922.07 0922.07

Q4/2006Q4/2006

+500,000+500,000 = ? = ?


Q4/2006Q4/2006

+500,000+500,000 = =+7,700,000+7,700,000-7,200,000-7,200,000


#1.1.2#1.1.2

“… “… and, most critically, and, most critically, from the organizational from the organizational changes through which changes through which

businesses reshape businesses reshape themselves to take themselves to take advantage of new advantage of new

technology.”technology.” —Marc Levinson, The Box: —Marc Levinson, The Box:

How the Shipping Container Made the World Smaller and How the Shipping Container Made the World Smaller and the World Economy Biggerthe World Economy Bigger

““New technology, by itself, has little New technology, by itself, has little economic benefit. … The economic economic benefit. … The economic benefits arise not from innovation benefits arise not from innovation itself, but from the entrepreneurs itself, but from the entrepreneurs

who eventually discover ways to put who eventually discover ways to put innovation to practical use—and, innovation to practical use—and,

most critically, from the most critically, from the organizational changes through organizational changes through

which businesses reshape which businesses reshape themselves to take advantage of new themselves to take advantage of new

technology.”technology.” —Marc Levinson, The Box: —Marc Levinson, The Box: How the Shipping Container Made the World Smaller and How the Shipping Container Made the World Smaller and

the World Economy Biggerthe World Economy Bigger

“… “… it it isis the the

game.”game.”

#1.1.3#1.1.3

Ha:Ha: “By impressive examples and incontrovertible “By impressive examples and incontrovertible argument argument [Norman][Norman] Angel Angel [in his book, The Great Illusion][in his book, The Great Illusion] showed that showed that

given the present financial and economic given the present financial and economic interdependence of nations, the victor interdependence of nations, the victor [in a war][in a war] would suffer would suffer equally with the vanquished; equally with the vanquished; therefore war had become therefore war had become unprofitable; therefore no one would be so foolish as to unprofitable; therefore no one would be so foolish as to

start one.”start one.”

[NB: Tuchman reports that Angel’s book was published in 1910, four [NB: Tuchman reports that Angel’s book was published in 1910, four years before the Great War, translated into numerous languages, and years before the Great War, translated into numerous languages, and

studied by the highest level statesmen from the UK and all of Europe to studied by the highest level statesmen from the UK and all of Europe to Japan, with almost uniform nods of agreement.]Japan, with almost uniform nods of agreement.]

““New economic factors clearly prove the inanity of New economic factors clearly prove the inanity of aggressive wars. … aggressive wars. … Because of the interlacing of nations, Because of the interlacing of nations, war becomes every day more difficult and improbable.”war becomes every day more difficult and improbable.”

Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Commission” and senior advisor on foreign policy and the military; Commission” and senior advisor on foreign policy and the military; he believed that the Angel doctrine was as accepted in Germany as he believed that the Angel doctrine was as accepted in Germany as

in the UK.in the UK.

Master source: Master source: The Guns of August, The Guns of August, Barbara Tuchman, 1962Barbara Tuchman, 1962

Economic Growth Insulates Against International Economic Growth Insulates Against International Violence?Violence?

“The hundred years after 1900 were a “The hundred years after 1900 were a time of unparalleled progress. In real time of unparalleled progress. In real terms, it has been estimated [that] terms, it has been estimated [that] average per capita global domestic average per capita global domestic

product increased by little more thanproduct increased by little more than 50 percent between 1500 and 1870. 50 percent between 1500 and 1870. Between 1870 and 1998, however, it Between 1870 and 1998, however, it

increased by a factor of more than six increased by a factor of more than six and a half.” and a half.” —Niall Ferguson—Niall Ferguson, The War of the World, The War of the World

#1.2#1.2

L(+21) L(+21) ==

L(-21)L(-21)

Leadership(21A.D.) Leadership(21A.D.) ==

Leadership(21B.C.)Leadership(21B.C.)

“… “… Time and Time and ssppace are ace are

annihilated bannihilated byy steamsteam.. … Oh, this constant locomotion, my … Oh, this constant locomotion, my

body & everything in motion. Steamboats, Cars, & hotels all body & everything in motion. Steamboats, Cars, & hotels all crammed & crowded full the whole population seems in motion crammed & crowded full the whole population seems in motion

& in fact as I pass along with Lightening speed & cast my eye on & in fact as I pass along with Lightening speed & cast my eye on the distant objects, they all seem in a whirl nothing appearing the distant objects, they all seem in a whirl nothing appearing permanent even the trees are waltzing, the mind too goes with permanent even the trees are waltzing, the mind too goes with

all this, it speculates, theorizes, & measures all things by all this, it speculates, theorizes, & measures all things by locomotive speed, locomotive speed, where will it endwhere will it end.”.” —Asa Whitney, first to formally propose —Asa Whitney, first to formally propose

transcontinental railroad to Congress, diary entry,transcontinental railroad to Congress, diary entry, 1844 1844, from David Hayward Bain, , from David Hayward Bain, Empire Express: Building the Empire Express: Building the First Transcontinental RailroadFirst Transcontinental Railroad

““[[The railwaysThe railways]] turned the known turned the known universe upside universe upside downdown.. They made a greater and more They made a greater and more

immediate impact than any other innovation before or since. immediate impact than any other innovation before or since. … The shock was both sudden and universal … With the … The shock was both sudden and universal … With the railways came the development of modern capitalism, of railways came the development of modern capitalism, of

modern nations, the creation of new regions from the modern nations, the creation of new regions from the American Midwest, from Lake Victoria to the pampas in American Midwest, from Lake Victoria to the pampas in

Argentina.”Argentina.”

—Nicholas Faith, —Nicholas Faith, The World the Railways MadeThe World the Railways Made

The First Internet?The First Internet?

Songlines/Songlines/Bruce ChatwinBruce Chatwin

““For Real Globalization, Look at Ancient Rome”For Real Globalization, Look at Ancient Rome”

“There is nothing new about a global world. We were “There is nothing new about a global world. We were living in one 2,000 years ago. … The Roman in the street living in one 2,000 years ago. … The Roman in the street

ate bread baked with wheat grown in North Africa or ate bread baked with wheat grown in North Africa or Egypt, and fish that had been caught and dried near Egypt, and fish that had been caught and dried near

Gibraltar, He cooked with North African oil in pots and Gibraltar, He cooked with North African oil in pots and pans of cooper mined in Spain, ate off dishes fired in pans of cooper mined in Spain, ate off dishes fired in French kilns, drank wine from Spain or France. … The French kilns, drank wine from Spain or France. … The Roman of wealth dressed in garments of wool from Roman of wealth dressed in garments of wool from Miletus or linen from Egypt; his wife wore silks from Miletus or linen from Egypt; his wife wore silks from

China, adorned herself with diamonds and pearlsChina, adorned herself with diamonds and pearls from India, and made up with cosmetics from South from India, and made up with cosmetics from South

Arabia. … He lived in a house whose walls wereArabia. … He lived in a house whose walls were covered with colored marble veneer quarried in Asia covered with colored marble veneer quarried in Asia

Minor; his furniture was of Indian ebony or teakMinor; his furniture was of Indian ebony or teak inlaid with African ivory.” inlaid with African ivory.” —Peter Jones and Lionel Casson, —Peter Jones and Lionel Casson,

The SpectatorThe Spectator, 0524.08, 0524.08

#1 Exporter?#1 Exporter?

#4 Japan#4 Japan#3 USA#3 USA

#2 China#2 China

#1 #1 GermanyGermany

Reason?Reason?

Daimler?Daimler?BASF?BASF?

Siemens?Siemens?

Reason!!!Reason!!!

MittelstandMittelstand

Or …Or … Goldmann Goldmann ProduktionProduktion

ss(11/50%/$5M/”dip and coat,” expensive (11/50%/$5M/”dip and coat,” expensive

pigments vs “through coloring,” fades Bekro pigments vs “through coloring,” fades Bekro Chemie)Chemie)

BavariaBavaria: Mittelstand within Mittelstand: Mittelstand within Mittelstand

“Place to start over” post-WWII“Place to start over” post-WWII13 million13 million

66thth in EU if stand-alone in EU if stand-alone (CA #5)

4% unemployment4% unemploymentMunich government pro-businessMunich government pro-business

30 universities 30 universities (3 of 3 leading in R&D, with Baden-(3 of 3 leading in R&D, with Baden-Wuerttemberg)Wuerttemberg)

50% German patents 50% German patents (with Baden-Wuerttemberg)(with Baden-Wuerttemberg)

SMEs & Big CosSMEs & Big Cos“Hot” finance communities“Hot” finance communities

“lion’s share” of German startups“lion’s share” of German startupsMedia startups Media startups (SF: tech + media)

Source: Source: CNBC European BusinessCNBC European Business, November 2007, November 2007

City-states: Global Mittelstand?City-states: Global Mittelstand?

AthensAthensVeniceVenice

FlorenceFlorenceRomeRome

AntwerpAntwerpAmsterdamAmsterdam

LondonLondonNew YorkNew YorkSingaporeSingaporeHong KongHong KongSingaporeSingapore

Silicon Valley (California)Silicon Valley (California)Dubai (et al)Dubai (et al)

#2.1#2.1

Focus:Focus: “A recent study by “A recent study by [Stanford] Business School faculty [Stanford] Business School faculty

shows that producers whose shows that producers whose offerings or expertise are more offerings or expertise are more

clearly associated with one or two clearly associated with one or two product categories have better product categories have better

salessales than those whose goods or than those whose goods or

professional identity span multiple professional identity span multiple categories.categories. More focused producers throw More focused producers throw

off subtle hints that they know their stuff, off subtle hints that they know their stuff, which is not lost on customers. In short, says which is not lost on customers. In short, says

professor Michael Hannan, ‘The jack of all professor Michael Hannan, ‘The jack of all trades is the master of none governs consumer trades is the master of none governs consumer

choices of whose goodies to buy.’ ”choices of whose goodies to buy.’ ” —Stanford —Stanford Business, 0208Business, 0208

“No Need for Economies of Scale: Illinois Tool Revs Up Innovation by Keeping

Its 655 Units SeparateSeparate and FocusedFocused”

Source: Headline, BW, 1031.05 (“commodity” producer; R&D = 1%; Top 100 patent recipient—66th in ’04) ($12B rev in ’04; CEO David Speer: focus, lean, customer intimacy,

entrepreneurial, employee participation)

Focus: “All Strategy Is Local:“All Strategy Is Local: True competitive advantages True competitive advantages

are harder to find and maintain are harder to find and maintain

than people realize.than people realize. The The odds are best in odds are best in

titigghtlhtlyy drawn drawn markets, not bimarkets, not bigg, , sspprawlinrawlingg ones” ones”

—Title/ Bruce Greenwald & Judd Kahn/HBR09.05

#2.2#2.2

Jim’s Jim’s GroupGroup

Jim’s Mowing CanadaJim’s Mowing CanadaJim’s Mowing UKJim’s Mowing UKJim’s AntennasJim’s Antennas

Jim’s BookkeepingJim’s BookkeepingJim’s Building MaintenanceJim’s Building Maintenance

Jim’s Carpet CleaningJim’s Carpet CleaningJim’s Car CleaningJim’s Car Cleaning

Jim’s Computer ServicesJim’s Computer Services

Jim’s Dog WashJim’s Dog WashJim’s Driving SchoolJim’s Driving School

Jim’s FencingJim’s FencingJim’s FloorsJim’s Floors

Jim’s PaintingJim’s PaintingJim’s PavingJim’s Paving

Jim’s Pergolas [gazebos]Jim’s Pergolas [gazebos]Jim’s Pool CareJim’s Pool Care

Jim’s Pressure CleaningJim’s Pressure CleaningJim’s RoofingJim’s Roofing

Jim’s Security DoorsJim’s Security DoorsJim’s TreesJim’s Trees

Jim’s Window CleaningJim’s Window CleaningJim’s WindscreensJim’s Windscreens

Note: Download, free, Jim Penman’s book: What Will They Franchise Next? The Story of Jim’s Group

Jim’s GroupJim’s Group:: Jim Penman.* Jim Penman.*

1984: Jim’s Mowing. 2006: Jim’s Group. 1984: Jim’s Mowing. 2006: Jim’s Group.

2,600 franchisees2,600 franchisees (Australia, NZ, UK). (Australia, NZ, UK). Cleaning. Dog washing. Handyman. Cleaning. Dog washing. Handyman.

Fencing. Paving. Pool care. Etc.Fencing. Paving. Pool care. Etc.

“People first.” Private. Small staff. Franchisees “People first.” Private. Small staff. Franchisees can leave at will. 0-1 complaint per year is can leave at will. 0-1 complaint per year is

norm; cut bad ones quickly.norm; cut bad ones quickly.

*Ph.D. cross-cultural anthropology; mowing on the side

Source: MT/Management Today (Australia), Jan-Feb 2006

Basement Basement Systems Inc.Systems Inc.

*Basement Systems Inc.*Basement Systems Inc.*Larry Janesky*Larry Janesky**Dry Basement ScienceDry Basement Science (115,000!)(115,000!)

*1990: $0; 2003: $13M; *1990: $0; 2003: $13M; 2007: 2007:

$62,000,000$62,000,000

etc.etc.

PRSX/ PRSX/ Paragon Paragon Railcar Railcar

Salvage*Salvage**Salvaged railcars into bridges, etc.*Salvaged railcars into bridges, etc.

The Red The Red Carpet Carpet StoreStore

Joel Resnick/Flemington NJ Joel Resnick/Flemington NJ (referenced in (referenced in Fame JunkiesFame Junkies))

““gurugate”: The gurugate”: The Gurus’ fixation with Gurus’ fixation with “the wrong stuff”*“the wrong stuff”*

*Not “they,” but “us.”*Not “they,” but “us.”

Over-rated:Over-rated:

Big companies!Public companies! “Cool” industries!Stability (“Built to last”)!

Famous CEOs!


Big companies!

Public companies! “Cool” industries!Stability (“Built to last”)!

Famous CEOs!

Dick Kovacevich: You don’t get better by being bigger.

You get worse.”

#4 Japan#4 Japan#2T china#2T china#2t USA#2t USA

#1 #1 GermanyGermany


Big companies!

Public companies!

“Cool” industries!Stability (“Built to last”)!

Famous CEOs!

Family BusinessesFamily Businesses

Two-thirds of total #sTwo-thirds of total #s of companies of companiesOne-half of biggest companiesOne-half of biggest companies>One-half GDP>One-half GDP>One-half employment>One-half employment6% more profitable6% more profitable7% better ROA7% better ROAHigher income growthHigher income growthHigher revenue growthHigher revenue growthSource: John Davis, HBSSource: John Davis, HBS


Big companies!Public companies!

“Cool” industries!

Stability (“Built to last”)!Famous CEOs!

Jim’s Jim’s GroupGroup


Big companies!Public companies! “Cool” industries!

Stability (“Built to

last”)!Famous CEOs!

““Natural selection is death. ...Natural selection is death. ...

Without huge amounts Without huge amounts of death, organisms do of death, organisms do not change over time.not change over time. ... ...

Death is the mother of Death is the mother of structure. ... It took four structure. ... It took four

billion years of death ... to billion years of death ... to invent the human mind ...”invent the human mind ...” — —

The Cobra EventThe Cobra Event



Famous CEOs!

Mission impossible?Mission impossible?

$36B/’98$36B/’98

minus minus $675M/‘$675M/‘

0707

**Lived in same town all adult lifeLived in same town all adult life**First generation that’s wealthy/First generation that’s wealthy/ no parental supportno parental support**“Don’t “Don’t looklook like millionaires, don’t like millionaires, don’t dressdress like millionaires, don’t like millionaires, don’t eateat like like millionaires, don’t millionaires, don’t actact like millionaires like millionaires””*“Many of the types of businesses [they] are in could be*“Many of the types of businesses [they] are in could be classified as ‘dull-normal.’ [They] are welding contractors, classified as ‘dull-normal.’ [They] are welding contractors, auctioneers, scrap-metal dealers, lessors of portable toilets, auctioneers, scrap-metal dealers, lessors of portable toilets, dry cleaners, re-builders of diesel engines, paving dry cleaners, re-builders of diesel engines, paving contractors …” contractors …”

Source: Source: The Millionaire Next DoorThe Millionaire Next Door,, Thomas Stanley & William Danko Thomas Stanley & William Danko



Famous CEOs!

The “Fabulous Five”:The “Fabulous Five”:

**SMEs!SMEs!**Private companies!Private companies!

**“Dull” industries!“Dull” industries!**Productive churn:Productive churn: Built to Rock the Built to Rock the World! World!**Laudable CEOs!Laudable CEOs!

The The

black black swanswan

1982 1982 (-)(-) = = 200 200

Years Years (+)(+)

1982/Default Latin 1982/Default Latin

America = America = 200 200 yearsyears [Total historical [Total historical

earnings]earnings]

The Black Swan: The Impact of theThe Black Swan: The Impact of the Highly Improbable Highly Improbable, Nassim Nicholas Taleb, Nassim Nicholas Taleb

Career =Career = 11 or or 22 black black swansswans

Black Swan:Black Swan: This This is how you earn is how you earn

your payyour pay!* **!* **

*See: *See: The Black Swan: The Impact of the Highly The Black Swan: The Impact of the Highly Improbable Improbable, Nassim Nicholas Taleb, Nassim Nicholas Taleb

**WSC: **WSC: “When the seas are calm all ships alike show “When the seas are calm all ships alike show

mastership in sailing.”mastership in sailing.”

Resilience!Resilience!

Hiring: CEO, 100%Hiring: CEO, 100%TrainingTraining

StructureStructureSystems (e.g. IS/IT)Systems (e.g. IS/IT)

“Culture”“Culture”

““Character is more crucial now Character is more crucial now than ever, because in times of than ever, because in times of

great uncertainty past great uncertainty past performance is no indicator of performance is no indicator of

future performance. future performance. Experience falls away and all Experience falls away and all

you’re left with is character.” you’re left with is character.” ——David Rothkopf, founder of a firm that helps chief David Rothkopf, founder of a firm that helps chief

executives manage risksexecutives manage risks

Attributes of resilient people:Attributes of resilient people:

Inner calm (Buddhist?) Inner calm (Buddhist?) High self-knowledge (“comfortable in own skin”)High self-knowledge (“comfortable in own skin”)Breadth of experience—drove a cab, worked construction, ran Alaska tours …Breadth of experience—drove a cab, worked construction, ran Alaska tours … as well as more traditional stuff as well as more traditional stuffSense of, “Ah, my moment” (Giuliani)Sense of, “Ah, my moment” (Giuliani)Lover of modestly controlled chaos (bored amidst calm—FDR)Lover of modestly controlled chaos (bored amidst calm—FDR)Reach out effortlesslyReach out effortlesslyReach out effortlessly to a wide variety of peopleReach out effortlessly to a wide variety of peopleBizarrely energeticBizarrely energeticKnown for integrity, in the sense of “straight shooter”Known for integrity, in the sense of “straight shooter”Hires resilient people per se in key positions! (All senior leadership roles?)Hires resilient people per se in key positions! (All senior leadership roles?)Maintains sense of humorMaintains sense of humorEmpathy (“I feel your pain”)Empathy (“I feel your pain”)“Cruelty” (Must make tough decisions instantaneously, without looking back; not“Cruelty” (Must make tough decisions instantaneously, without looking back; not “confident,” but overwhelming sense of urgency to press ahead) “confident,” but overwhelming sense of urgency to press ahead)Decisive but not rigidDecisive but not rigidStrong individual, equally strong team playerStrong individual, equally strong team playerKnows herself, himselfKnows herself, himselfUnderstands the chain of command—and evades it as necessaryUnderstands the chain of command—and evades it as necessaryComfortable being challenged by thinkers, but a strong “doer” bias overallComfortable being challenged by thinkers, but a strong “doer” bias overallA person of Hope (religious or “religious-like”?)A person of Hope (religious or “religious-like”?)

Not necessarily:Not necessarily: ex-college QB, comeback rep (Why: All within the rules, with in ex-college QB, comeback rep (Why: All within the rules, with in the context of that which has been practiced) the context of that which has been practiced)Better:Better: Ocean sailboat racer; ER doc; public health doc; astronaut; combat Ocean sailboat racer; ER doc; public health doc; astronaut; combat experience as NCO; hostage negotiator; survived in hopeless circumstances experience as NCO; hostage negotiator; survived in hopeless circumstances through guile and grit; seeks “independent duty” through guile and grit; seeks “independent duty”

TestsTests: lights go out during interview, followed by fire alarm, etc; focus on per se in: lights go out during interview, followed by fire alarm, etc; focus on per se in reference checks reference checks

Attributes of resilient organizations:Attributes of resilient organizations:

Hire resilient folks at all levels and in all functions—explicit aboutHire resilient folks at all levels and in all functions—explicit about so doing so doingPromote resilience—explicit about so doingPromote resilience—explicit about so doingDecentralization!!!!!!!!! (organization structure, physical configuration,Decentralization!!!!!!!!! (organization structure, physical configuration, systems) systems)Shadow “emergency organization”Shadow “emergency organization”Redundancy!!!!!!!!!!!!!!!Redundancy!!!!!!!!!!!!!!!Culture of (1) self-starting, (2) caring and respect, (3) Execution isCulture of (1) self-starting, (2) caring and respect, (3) Execution is Priority #1, (4) Accountability-responsibility—100% of folks Priority #1, (4) Accountability-responsibility—100% of folksCulture of Resilience (as explicit “plank” of values set)Culture of Resilience (as explicit “plank” of values set)Talk it up!! Talk it up!! MBWA—e.g., great communication all the time about everythingMBWA—e.g., great communication all the time about everythingTransparency (all in the know, none in the dark)Transparency (all in the know, none in the dark)Financial paddingFinancial paddingExcellent equipmentExcellent equipmentTraining >>>>> EquipmentTraining >>>>> EquipmentAbility to get by for quite a while without IS-IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Ability to get by for quite a while without IS-IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Test in uncomfortable situationsTest in uncomfortable situationsPromote an unusually high share of mavericksPromote an unusually high share of mavericksDiversity per se!!!!!!!!!!!!!!!!!!!!Diversity per se!!!!!!!!!!!!!!!!!!!!

Exec:Exec: But you can’t let But you can’t let this run your life on a this run your life on a day-to-day basis.day-to-day basis.TP:TP: Are you sure? Are you sure?

#4.1#4.1

““Diverse groups of problem solvers—Diverse groups of problem solvers—groups of people with diverse tools—groups of people with diverse tools—

consistently outperformed groups of the consistently outperformed groups of the best and the brightest. If I formed two best and the brightest. If I formed two

groups, one random (and therefore groups, one random (and therefore diverse) and one consisting of the best diverse) and one consisting of the best individual performers, the first group individual performers, the first group

almost always did better. … almost always did better. …

DiversityDiversity trumped trumped abilityability.”.” —Scott Page, —Scott Page, The Difference: How The Difference: How

the Power of Diversity Creates Better Groups,the Power of Diversity Creates Better Groups, Firms, Schools, and Societies Diversity Firms, Schools, and Societies Diversity

Fooled by Randomness: The Hidden Role of Chance in Fooled by Randomness: The Hidden Role of Chance in Life and the Markets,Life and the Markets, Nassim Nicholas TalebNassim Nicholas Taleb

The Black Swan: The Impact of the Highly ImprobableThe Black Swan: The Impact of the Highly Improbable,, Nassim Nicholas TalebNassim Nicholas Taleb

Expert Political Judgment: How Good Is It? How Can We Expert Political Judgment: How Good Is It? How Can We knowknow?? Philip Tetlock Philip Tetlock

The Difference: How the Power of Diversity Creates The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and SocietiesBetter Groups, Firms, Schools, and Societies,, Scott PageScott Page

The Wisdom of CrowdsThe Wisdom of Crowds,, James Surowiecki James Surowiecki

Full House: The Spread of Excellence from Plato to Full House: The Spread of Excellence from Plato to DarwinDarwin,, Stephen Jay GouldStephen Jay Gould

Judgment under Uncertainty: Heuristics and BiasesJudgment under Uncertainty: Heuristics and Biases,, Daniel Kahneman, Paul Slovic, and Amos Tversky Daniel Kahneman, Paul Slovic, and Amos Tversky

A Mind of Its Own: How Your Brain Distorts and A Mind of Its Own: How Your Brain Distorts and DeceivesDeceives,, Cordelia FineCordelia Fine

Fooled by Randomness: The Hidden Role of Chance in Life and the Markets,Fooled by Randomness: The Hidden Role of Chance in Life and the Markets, Nassim Nicholas Taleb Nassim Nicholas Taleb “This “This book is about luck disguised and perceived as non-luck (that is, skills) and more book is about luck disguised and perceived as non-luck (that is, skills) and more generally randomness disguised and perceived as non-randomness. It manifests generally randomness disguised and perceived as non-randomness. It manifests itself in the shape of the lucky fool, defined as a person who benefited from a itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributed his success to some other, disproportionate share of luck but attributed his success to some other, generally precise reason.” generally precise reason.”

The Black Swan: The Impact of the Highly ImprobableThe Black Swan: The Impact of the Highly Improbable,, Nassim Nicholas TalebNassim Nicholas Taleb

Expert Political Judgment: How Good Is It? How Can We knowExpert Political Judgment: How Good Is It? How Can We know?? Philip Tetlock Philip Tetlock “A fox, the thinker who “A fox, the thinker who knows many little things, draws from an eclectic array of disciplines, and is better knows many little things, draws from an eclectic array of disciplines, and is better able to improvise in response to changing events, is more successful in able to improvise in response to changing events, is more successful in predicting the future than the hedgehog, who knows one big thing, toils devotedly predicting the future than the hedgehog, who knows one big thing, toils devotedly within one tradition, and imposes formulaic solutions on ill defined problems.” within one tradition, and imposes formulaic solutions on ill defined problems.” The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and SocietiesThe Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies,, Scott PageScott Page

“Diverse groups of problem solvers—groups of people with diverse tools—“Diverse groups of problem solvers—groups of people with diverse tools—consistently outperformed groups of the best and the brightest. If I formedconsistently outperformed groups of the best and the brightest. If I formed two groups, one random (and therefore diverse) and one consisting of the best two groups, one random (and therefore diverse) and one consisting of the best individual performers, the first group almost always did better. … Diversityindividual performers, the first group almost always did better. … Diversitytrumped ability.”trumped ability.” The Wisdom of CrowdsThe Wisdom of Crowds,, James SurowieckiJames Surowiecki

Full House: The Spread of Excellence from Plato to DarwinFull House: The Spread of Excellence from Plato to Darwin, , Stephen Jay GouldStephen Jay Gould

Judgment under Uncertainty: Heuristics and BiasesJudgment under Uncertainty: Heuristics and Biases, , Daniel Kahneman, Paul Slovic, and Amos TverskyDaniel Kahneman, Paul Slovic, and Amos Tversky

A Mind of Its Own: How Your Brain Distorts and DeceivesA Mind of Its Own: How Your Brain Distorts and Deceives, , Cordelia Fine Cordelia Fine “Your brain has some shifty “Your brain has some shifty habits that leave the truth distorted and disguised. Your brain is vainglorious. It’s habits that leave the truth distorted and disguised. Your brain is vainglorious. It’s emotional and immoral. It deludes you. It is pigheaded, secretive and weak willed. emotional and immoral. It deludes you. It is pigheaded, secretive and weak willed. Oh, and it’s also a bigot.” Oh, and it’s also a bigot.”

#4.2#4.2

Ha:Ha: “By impressive examples and incontrovertible “By impressive examples and incontrovertible argument argument [Norman][Norman] Angel Angel [in his book, The Great Illusion][in his book, The Great Illusion] showed that showed that

given the present financial and economic given the present financial and economic interdependence of nations, the victor interdependence of nations, the victor [in a war][in a war] would suffer would suffer equally with the vanquished; equally with the vanquished; therefore war had become therefore war had become unprofitable; therefore no one would be so foolish as to unprofitable; therefore no one would be so foolish as to

start one.”start one.”

[NB: Tuchman reports that Angel’s book was published in 1910, four [NB: Tuchman reports that Angel’s book was published in 1910, four years before the Great War, translated into numerous languages, and years before the Great War, translated into numerous languages, and

studied by the highest level statesmen from the UK and all of Europe to studied by the highest level statesmen from the UK and all of Europe to Japan, with almost uniform nods of agreement.]Japan, with almost uniform nods of agreement.]

““New economic factors clearly prove the inanity of New economic factors clearly prove the inanity of aggressive wars. … aggressive wars. … Because of the interlacing of nations, Because of the interlacing of nations, war becomes every day more difficult and improbable.”war becomes every day more difficult and improbable.”

Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Commission” and senior advisor on foreign policy and the military; Commission” and senior advisor on foreign policy and the military; he believed that the Angel doctrine was as accepted in Germany as he believed that the Angel doctrine was as accepted in Germany as

in the UK.in the UK.

Master source: Master source: The Guns of August, The Guns of August, Barbara Tuchman, 1962Barbara Tuchman, 1962

Economic Growth Insulates Against International Economic Growth Insulates Against International Violence?Violence?

“The hundred years after 1900 were a “The hundred years after 1900 were a time of unparalleled progress. In real time of unparalleled progress. In real terms, it has been estimated [that] terms, it has been estimated [that] average per capita global domestic average per capita global domestic

product increased by little more thanproduct increased by little more than 50 percent between 1500 and 1870. 50 percent between 1500 and 1870. Between 1870 and 1998, however, it Between 1870 and 1998, however, it

increased by a factor of more than six increased by a factor of more than six and a half.” and a half.” —Niall Ferguson—Niall Ferguson, The War of the World, The War of the World

General David Petraeus’ “White lines along the General David Petraeus’ “White lines along the road”:road”:

““Secure and serve the population.Secure and serve the population. Live among the people.Live among the people. Promote reconciliation.Promote reconciliation. Move mounted, work dismounted;Move mounted, work dismounted; situational awareness can only besituational awareness can only be achieved by operating face-to-face,achieved by operating face-to-face, not separated by ballistic glass.not separated by ballistic glass.

WalkWalk..**”” ——David Petraeus, David Petraeus, Men’s JournalMen’s Journal (06.08) (06.08)

* * “I love that last one for its simplicity.”“I love that last one for its simplicity.” —DP —DP

3K3K//5M5M

5,000 miles 5,000 miles for a 5-minute for a 5-minute

face-toface-to-face meeting -face meeting

“A body can pretend to

care, but they can’t pretend to be there.” —

Texas Bix Bender

““I call 60 CEOs I call 60 CEOs [in [in

the first week of the year]the first week of the year] to to wish them happy wish them happy

New Year. …”New Year. …”

—Hank Paulson, former CEO, Goldman —Hank Paulson, former CEO, Goldman SachsSachs

Source: Fortune, “Secrets of Greatness,” 0320.05

MBWA, Grameen Style!MBWA, Grameen Style!“Conventional banks ask their clients to come “Conventional banks ask their clients to come to their office. It’s a terrifying place for the poor to their office. It’s a terrifying place for the poor and illiterate. … and illiterate. … The entire Grameen Bank The entire Grameen Bank

system runs on the principle that people system runs on the principle that people should not come to the bank, the bank should not come to the bank, the bank

should go to the people.should go to the people. … … If any staff If any staff member is seen in the office, it should be taken member is seen in the office, it should be taken as a violation of the rules of the Grameen Bankas a violation of the rules of the Grameen Bank. .

… It is essential that [those setting up a new … It is essential that [those setting up a new village Branch] village Branch] have no office and no have no office and no pplace to lace to stastay. The reason is to make us as different as y. The reason is to make us as different as

possible from government officialspossible from government officials.” .” Source: Source: Muhammad Yunus, Banker to the Poor

#5.1#5.1

You = Your You = Your calendarcalendar***Calendars *Calendars nevernever lielie

““It’s It’s alwaalwayyss showtime.”showtime.”

—David D’Alessandro, Career Warfare

““An actor in his youth, [Pope] An actor in his youth, [Pope] John Paul was a master of John Paul was a master of grand gestures.” grand gestures.” —USA Today—USA Today

““It is necessary for the It is necessary for the President to be the nation’s President to be the nation’s

number one actor.” number one actor.” —FDR—FDR

Leader Job 1Leader Job 1

Paint Paint Portraits of Portraits of

ExcellenceExcellence!!

#5.1.1#5.1.1

““The The oneone thinthing you g you need to know about need to know about sustained individual sustained individual

success: Discover what success: Discover what you don’t like doing and you don’t like doing and

stopstop doing it.”doing it.”

—Marcus Buckingham, The One Thing You Need to Know

““I used to have a rule for myself that at any point in I used to have a rule for myself that at any point in time I wanted to have in mind time I wanted to have in mind — as it so happens, — as it so happens, also in writing, on a little card I carried around with also in writing, on a little card I carried around with me — the three big things I was trying to get done. me — the three big things I was trying to get done.

ThreeThree..

Not two. Not two. Not four. Not four. Not five.Not five.Not ten.Not ten.Three.”Three.”

— Richard Haass, — Richard Haass, The Power to PersuadeThe Power to Persuade

““Dennis, you need a … Dennis, you need a …

‘To-don’t ’‘To-don’t ’

List !”List !”

““Really Important Really Important

Stuff”:Stuff”: Roger’s Roger’s Rule ofRule of

ThreeThree!!

#5.2#5.2

The The “Have “Have you …”you …” 50 50

““Mapping your Mapping your competitive competitive position”*position”*

or …or …

*Rich D’Aveni/*Rich D’Aveni/HBRHBR

While waiting last week [early December 2007] in the Albany While waiting last week [early December 2007] in the Albany airport to board a Southwest Airlines flight to Reagan, I airport to board a Southwest Airlines flight to Reagan, I

happened across the latest happened across the latest Harvard Business ReviewHarvard Business Review, on the , on the cover of which was a yellow sticker. The sticker had on it the cover of which was a yellow sticker. The sticker had on it the words “Mapping your competitive position.” It referred to a words “Mapping your competitive position.” It referred to a

feature article by my friend Rich D’Aveni. His work is uniformly feature article by my friend Rich D’Aveni. His work is uniformly good—and I have said as much publicly on several occasions good—and I have said as much publicly on several occasions dating back 15 years. I’m sure this article is good, too—though dating back 15 years. I’m sure this article is good, too—though

I didn’t read it. In fact it triggered a furious negative “Tom I didn’t read it. In fact it triggered a furious negative “Tom reaction” as my wife calls it. Of course I believe you should reaction” as my wife calls it. Of course I believe you should

worry about your “competitive position.”worry about your “competitive position.” But instead of But instead of obsessing on competitive position and other obsessing on competitive position and other

abstractions, as the B-schools and abstractions, as the B-schools and consultants would always have us do, I consultants would always have us do, I

instead wondered about some “practical instead wondered about some “practical stuff” which I believe is more important to stuff” which I believe is more important to

the short- and long-term health of the the short- and long-term health of the enterprise, tiny or enormous.enterprise, tiny or enormous.

““Unfortunately many Unfortunately many leaders of major leaders of major

companies believe their companies believe their job is to create the job is to create the

strategy, organization strategy, organization and organization and organization

processes—remaining processes—remaining aloof from the people aloof from the people doing the work.”doing the work.” —George —George

Kohlrieser, Kohlrieser, Hostage at the Table Hostage at the Table (GK is, among other things, (GK is, among other things, a hostage negotiator with a 95% success rate)a hostage negotiator with a 95% success rate)

1. 1. Have you in the last 10 days … visited a Have you in the last 10 days … visited a customecustomer?r?2. 2. Have you called a customer … Have you called a customer … TODAYTODAY??

3. Have you in the last 60-90 days … had a seminar in which several folks from the 3. Have you in the last 60-90 days … had a seminar in which several folks from the customer’s operation (different levels, different functions, different divisions) interacted, customer’s operation (different levels, different functions, different divisions) interacted, via facilitator, with various of your folks?via facilitator, with various of your folks?

4. 4. Have you thanked a front-line employee for a Have you thanked a front-line employee for a small act of helpfulness … in the last three days?small act of helpfulness … in the last three days?5. Have you thanked a front-line employee for a small act of helpfulness … in the 5. Have you thanked a front-line employee for a small act of helpfulness … in the last three last three hourshours??6. Have you thanked a frontline employee for carrying around a great 6. Have you thanked a frontline employee for carrying around a great attitude attitude … today?… today?7. Have you in the last week recognized—publicly—one of your folks for a small act of 7. Have you in the last week recognized—publicly—one of your folks for a small act of cross-functional co-operationcross-functional co-operation??8. Have you in the last week recognized—publicly—one of “their” folks (another 8. Have you in the last week recognized—publicly—one of “their” folks (another function) for a small act of cross-functional co-operation?function) for a small act of cross-functional co-operation?9. Have you invited in the last month a leader of 9. Have you invited in the last month a leader of another functionanother function to your weekly team to your weekly team priorities meeting?priorities meeting?10. Have you personally in the last week-month called-visited an internal or external 10. Have you personally in the last week-month called-visited an internal or external customer to customer to sort out, inquire, or apologizesort out, inquire, or apologize for some little or big thing that went awry? for some little or big thing that went awry? (No reason for doing so? If true—in your mind—then you’re more out of touch than I (No reason for doing so? If true—in your mind—then you’re more out of touch than I dared imagine.)dared imagine.)

1. Have you in the 1. Have you in the last 10 days … last 10 days … visited a visited a customecustomer?r?2. Have you called 2. Have you called a customer … a customer … TODAYTODAY??

11. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines 11. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project’s next steps?concerning a project’s next steps?12. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines 12. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project’s next steps … and what specifically concerning a project’s next steps … and what specifically you can do to remove a hurdleyou can do to remove a hurdle? (“Ninety percent of ? (“Ninety percent of what we call management consists of making it difficult for people to get things done.”—Peter “His eminence” what we call management consists of making it difficult for people to get things done.”—Peter “His eminence” Drucker.)Drucker.)13. Have you celebrated in the last week a “small” (or large!) 13. Have you celebrated in the last week a “small” (or large!) milestone milestone reached? (I.e., are you a milestone reached? (I.e., are you a milestone fanatic?)fanatic?)14. Have you in the last week or month revised some estimate in the “wrong” direction and apologized for making 14. Have you in the last week or month revised some estimate in the “wrong” direction and apologized for making a lousy estimate? (Somehow you must publicly a lousy estimate? (Somehow you must publicly reward the telling of difficult truthsreward the telling of difficult truths.).)

15. 15. Have you installed in your tenure a very Have you installed in your tenure a very comprehensive customer satisfaction scheme for all comprehensive customer satisfaction scheme for all internalinternal customers? customers? (With major consequences for hitting or missing the mark.) (With major consequences for hitting or missing the mark.)

16. Have you in the last six months had a week-long, visible, very intensive 16. Have you in the last six months had a week-long, visible, very intensive visit-“tour”visit-“tour” of external customers? of external customers?17. Have you in the last 60 days called an abrupt halt to a meeting and “ordered” everyone to get out of the office, 17. Have you in the last 60 days called an abrupt halt to a meeting and “ordered” everyone to get out of the office, and “into the field” and in the and “into the field” and in the next eight hoursnext eight hours, after asking those involved, fixed (f-i-x-e-d!) a nagging “small” , after asking those involved, fixed (f-i-x-e-d!) a nagging “small” problem through practical action?problem through practical action?18. Have you in the last week had a rather thorough discussion of a “cool design thing” someone has come 18. Have you in the last week had a rather thorough discussion of a “cool design thing” someone has come across—away from your industry or function—at a Web site, in a product or its packaging? across—away from your industry or function—at a Web site, in a product or its packaging? 19. Have you in the last two weeks had an informal meeting—at least an hour long—with a frontline employee to 19. Have you in the last two weeks had an informal meeting—at least an hour long—with a frontline employee to discuss things we do right, things we do wrong, what it would take to meet your mid- to long-term aspirations?discuss things we do right, things we do wrong, what it would take to meet your mid- to long-term aspirations?20. Have you had in the last 60 days had a general meeting to discuss “things we do wrong” … that we can fix in 20. Have you had in the last 60 days had a general meeting to discuss “things we do wrong” … that we can fix in the next the next fourteen daysfourteen days??

UniCredit Group/UniCredit Group/ UniCredito Italiano* ** UniCredito Italiano* **

—3—3rdrd party measurement party measurement—Customer-initiated—Customer-initiated measurement measurement—Primary $$$$ incentives—Primary $$$$ incentives—“Factories”—“Factories”—Primary Corporate Initiative—Primary Corporate Initiative—Etc—Etc*#13*#13**TP/#1**TP/#1

The director of staff services The director of staff services at the giant financial services at the giant financial services

firm, UniCredit Group, firm, UniCredit Group, installed the most thorough installed the most thorough

internal customer satisfaction internal customer satisfaction measures scheme I have seenmeasures scheme I have seen—with exceptional rewards for —with exceptional rewards for

those who make the grade those who make the grade with their internal customers. with their internal customers.

21. Have you had in the last year a one-day, intense offsite with each (?) of your 21. Have you had in the last year a one-day, intense offsite with each (?) of your internal customers—followed by a big celebration of “things gone right”?internal customers—followed by a big celebration of “things gone right”?22. Have you in the last week pushed someone to do some family thing that you fear 22. Have you in the last week pushed someone to do some family thing that you fear might be overwhelmed by deadline pressure?might be overwhelmed by deadline pressure?23. 23. Have you learned the names of the children of everyone who reports to you?Have you learned the names of the children of everyone who reports to you? (If (If not, you have six months to fix it.)not, you have six months to fix it.)24. Have you taken in the last month an interesting-24. Have you taken in the last month an interesting-weirdweird outsider to lunch? outsider to lunch?25. Have you in the last month invited an interesting-weird outsider to sit in on an25. Have you in the last month invited an interesting-weird outsider to sit in on animportant meeting?important meeting?26. Have you in the last three days discussed something interesting, beyond your 26. Have you in the last three days discussed something interesting, beyond your industry, that you ran across in a meeting, reading, etc?industry, that you ran across in a meeting, reading, etc?27. Have you in the last 24 hours injected into a meeting “I ran across this interesting 27. Have you in the last 24 hours injected into a meeting “I ran across this interesting idea in [strange place]”?idea in [strange place]”?28. Have you in the last two weeks asked someone to report on something, anything 28. Have you in the last two weeks asked someone to report on something, anything that constitutes an act of brilliant service rendered in a “trivial” situation—restaurant, that constitutes an act of brilliant service rendered in a “trivial” situation—restaurant, car wash, etc? (And then discussed the relevance to your work.)car wash, etc? (And then discussed the relevance to your work.)

29. 29. Have you in the last 30 days examined in detail (hour Have you in the last 30 days examined in detail (hour by hour) your calendar to evaluate the degree “time by hour) your calendar to evaluate the degree “time actually spent” mirrors your “espoused priorities”? actually spent” mirrors your “espoused priorities”? (And repeated this exercise with everyone on team.)(And repeated this exercise with everyone on team.)

30. Have you in the last two months had a presentation to the group by a “weird” 30. Have you in the last two months had a presentation to the group by a “weird” outsider? outsider?

31. Have you in the last two months had a presentation to the group by a customer, 31. Have you in the last two months had a presentation to the group by a customer, internal customer, vendor featuring “working folks” 3 or 4 levels down in the vendor internal customer, vendor featuring “working folks” 3 or 4 levels down in the vendor organization? organization? 32. Have you in the last two months had a presentation to the group of a cool, 32. Have you in the last two months had a presentation to the group of a cool, beyond-our-industry ideas by two of your folks?beyond-our-industry ideas by two of your folks?33. Have you at every meeting today (and forever more) re-directed the conversation 33. Have you at every meeting today (and forever more) re-directed the conversation to the practicalities of implementation concerning some issue before the group?to the practicalities of implementation concerning some issue before the group?34. Have you at every meeting today (and forever more) had an end-of-meeting 34. Have you at every meeting today (and forever more) had an end-of-meeting discussion on “action items to be dealt with in the next 4, 48 hours? (And then made discussion on “action items to be dealt with in the next 4, 48 hours? (And then made this list public—and followed up in 48 hours.) And made sure everyone has at least this list public—and followed up in 48 hours.) And made sure everyone has at least one such item.)one such item.)35. Have you had a discussion in the last six months about what it would take to get 35. Have you had a discussion in the last six months about what it would take to get recognition in local-national poll of recognition in local-national poll of “best places to work”?“best places to work”?36. Have you in the last month approved a 36. Have you in the last month approved a cool-different training coursecool-different training course for one for one of your folks?of your folks?

37. 37. Have you in the last month Have you in the last month taught taught a front-line a front-line training course?training course?38. Have you in the last week discussed the idea of 38. Have you in the last week discussed the idea of ExcellenceExcellence? (What it means, how? (What it means, howto get there.)to get there.)39. Have you in the last week discussed the idea of 39. Have you in the last week discussed the idea of “Wow”?“Wow”? (What it means, how (What it means, howto inject it into an ongoing “routine” project.)to inject it into an ongoing “routine” project.)40. Have you in the last 45 days assessed some major process in terms of the details 40. Have you in the last 45 days assessed some major process in terms of the details of the “experience,” as well as results, it provides to its external or internal of the “experience,” as well as results, it provides to its external or internal customers?customers?

41. Have you in the last month had one of your folks attend a meeting you were supposed to go 41. Have you in the last month had one of your folks attend a meeting you were supposed to go to which gives them unusual exposure to senior folks?to which gives them unusual exposure to senior folks?42. Have you in the last 60 (30?) days sat with a trusted friend or “coach” to discuss your 42. Have you in the last 60 (30?) days sat with a trusted friend or “coach” to discuss your “management style”—and its long- and short-term impact on the group?“management style”—and its long- and short-term impact on the group?

43. 43. Have you in the Have you in the last three dayslast three days considered a professional considered a professional relationship that was a little rocky and made a call to the person relationship that was a little rocky and made a call to the person involved to discuss issues and smooth the waters? (Taking the involved to discuss issues and smooth the waters? (Taking the “blame,” fully deserved or not, for letting the thing-issue fester.)“blame,” fully deserved or not, for letting the thing-issue fester.)

44. Have you in the last … 44. Have you in the last … two hourstwo hours … stopped by someone’s (two-levels “down") office- … stopped by someone’s (two-levels “down") office-workspace for 5 minutes to ask “What do you think?” about an issue that arose at a more or workspace for 5 minutes to ask “What do you think?” about an issue that arose at a more or less just completed meeting? (And then stuck around for 10 or so minutes to listen—and less just completed meeting? (And then stuck around for 10 or so minutes to listen—and visibly taken notes.)visibly taken notes.)45. Have you … in the last day … looked around you to assess whether the diversity pretty 45. Have you … in the last day … looked around you to assess whether the diversity pretty accurately maps the diversity of the market being served? (And …) accurately maps the diversity of the market being served? (And …) 46. Have you in the last day at some meeting gone out of your way to make sure that a 46. Have you in the last day at some meeting gone out of your way to make sure that a normally reticent person was engaged in a conversation—and then thanked him or her, normally reticent person was engaged in a conversation—and then thanked him or her, perhaps privately, for their contribution?perhaps privately, for their contribution?47. Have you during your tenure instituted very public (visible) presentations of performance?47. Have you during your tenure instituted very public (visible) presentations of performance?48. Have you in the last four months had a session specifically aimed at checking on the 48. Have you in the last four months had a session specifically aimed at checking on the “corporate culture” and the degree we are true to it—with all presentations by relatively junior “corporate culture” and the degree we are true to it—with all presentations by relatively junior folks, including front-line folks? (And with a determined effort to keep the conversation folks, including front-line folks? (And with a determined effort to keep the conversation restricted to “real world” “small” cases—not theory.) restricted to “real world” “small” cases—not theory.) 49. Have you in the last six months talked about the 49. Have you in the last six months talked about the Internal Brand PromiseInternal Brand Promise??50. Have you in the last year had a full-day off site to talk about individual (and group) 50. Have you in the last year had a full-day off site to talk about individual (and group) aspirations?aspirations?

SellSell sell sell sellsell sellsell sell sell sell sell sell sell sellsell sell sell sell sell sellsell sell sell sell sell sellsell sellsell sellsell sell sell sell sell sell sell sellsell sellsell sellsell sell sell sell sell

sellsell sell sell sell sell

1818””

Presentation SkillsPresentation Skills

****Repetition IRepetition I (Practice-Give a lot of speeches!) (Practice-Give a lot of speeches!) **Repetition II (Keep selling: Button-hole anyone-everyone, **Repetition II (Keep selling: Button-hole anyone-everyone, groups of 5, groups of 500) groups of 5, groups of 500) ****Stories IStories I (Stories, stories, stories …) (Stories, stories, stories …)**Stories II (Human scale—that people can identify with and**Stories II (Human scale—that people can identify with and get inside) get inside) **Stories III (Emotional)**Stories III (Emotional)**Stories IV (Heroic—can be “small heroism,” but stories**Stories IV (Heroic—can be “small heroism,” but stories of “ordinary” folks bucking conventional wisdom) of “ordinary” folks bucking conventional wisdom)**Stories V (Actionable-doable-basis for their “small wins”)**Stories V (Actionable-doable-basis for their “small wins”)**Homework (“Content,” audience, hook to the moment)**Homework (“Content,” audience, hook to the moment)****PassionPassion (You must care!!!!!!!!!!!!!!!!!! And it must show!) (You must care!!!!!!!!!!!!!!!!!! And it must show!)**Enthusiasm! **Enthusiasm! **Energy!**Energy!**Joy! (Obviously love the subject matter, transmit your joy**Joy! (Obviously love the subject matter, transmit your joy to others) to others)**Intensity! (“Nothing in my life matters more than being here**Intensity! (“Nothing in my life matters more than being here with you”) with you”)**Integrity**Integrity**Credibility!**Credibility!

Presentation SkillsPresentation Skills

**Self-effacement I (own up to your limitations: “We are fellow**Self-effacement I (own up to your limitations: “We are fellow explorers”—I don’t have all the answers; I’m here to talk about explorers”—I don’t have all the answers; I’m here to talk about our journey together.”) our journey together.”)**Self-effacement II (I stand on the shoulders of giants—this is**Self-effacement II (I stand on the shoulders of giants—this is no solo egotrip) no solo egotrip)**Purpose (Determined to move the mountain—and imply **Purpose (Determined to move the mountain—and imply you’ll keep punching until that happens) you’ll keep punching until that happens)**Limits (Don’t try to get too much done—confusion of purpose**Limits (Don’t try to get too much done—confusion of purpose or expected path is unsatisfactory) or expected path is unsatisfactory)**Humor (If “tough love” message, must make ’em laugh if **Humor (If “tough love” message, must make ’em laugh if they are to accept) they are to accept)**Commitment (Demonstrated)**Commitment (Demonstrated)**Empathy **Empathy (!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)(!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)**Eye-contact (“I’m here for you and you alone, Dick, Jane, Jose.”)**Eye-contact (“I’m here for you and you alone, Dick, Jane, Jose.”)**“Listening” (Read **“Listening” (Read body language body language … “or else”)… “or else”)**Need I (“I **Need I (“I mustmust connect”) connect”)**Need II (“I **Need II (“I mustmust sell-convince”) sell-convince”)**Curiosity (Obvious fascination with the topic)**Curiosity (Obvious fascination with the topic)

Listen.Listen.Talk. Talk.

. “Everyone “Everyone lives by lives by selling selling

something.”something.”

– Robert Louis Stevenson

The Commerce Bank ModelThe Commerce Bank Model

“cost cutting “cost cutting is a death is a death spiral.”spiral.”

Source: Source: Fans! Not customers. How Commerce Bank Fans! Not customers. How Commerce Bank Created a Super-growth Business in a No-growth Created a Super-growth Business in a No-growth

IndustryIndustry, Vernon Hill & Bob Andelman, Vernon Hill & Bob Andelman

““Our whole Our whole story is story is growing growing

revenue.”revenue.” —Vernon Hill (Top-line driven; standard —Vernon Hill (Top-line driven; standard

is bottom-line driven by cost cutting)is bottom-line driven by cost cutting)

CCRROO*

*Chief RevenueRevenue Officer

Conrad Hilton, at a gala Conrad Hilton, at a gala celebrating his life,celebrating his life,

was asked, “What was the was asked, “What was the most important lesson most important lesson

you’ve learned in your long you’ve learned in your long and distinguished career?” and distinguished career?”

His immediate answer …His immediate answer …

““remember remember to tuck the to tuck the

shower curtain shower curtain inside the inside the bathtubbathtub.”.”

#8.1#8.1

3h = LTS*3h = LTS**Long-term success*Long-term success

HHowardoward

HHiltonilton

HHerberb

Conrad Hilton, at a gala celebrating his life,Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned was asked, “What was the most important lesson you’ve learned

in your long and distinguished career?” in your long and distinguished career?”

His immediate answer: His immediate answer: ““remember remember to tuck the to tuck the

shower curtain shower curtain inside the inside the bathtubbathtub””

3H: Howard, Hilton, Herb3H: Howard, Hilton, Herb

****Stay in touch!Stay in touch!****Sweat theSweat the details! details!****It’s the people,It’s the people, stupid! stupid!

The “6h The “6h ManifestoManifesto

” = ” = ANTKLTS*ANTKLTS*

*All you need to know for long-term success*All you need to know for long-term success

HowardHowardHiltonHiltonHerbHerbHenryHenryHRHHRHHerbHerb

Starbucks boss Howard Starbucks boss Howard Schultz visits 25 shopsSchultz visits 25 shops

a week. a week.

Conrad Hilton, at a gala celebrating his life,Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned was asked, “What was the most important lesson you’ve learned

in your long and distinguished career?” in your long and distinguished career?”

His immediate answer: His immediate answer: ““remember remember to tuck the to tuck the

shower curtain shower curtain inside the inside the bathtubbathtub””

Conrad Hilton shares his Conrad Hilton shares his foremost key to success.foremost key to success.

Herb Kelleher (Southwest Herb Kelleher (Southwest Airlines) says this is his Airlines) says this is his onlyonly success “secret.” success “secret.”

Relationships!Relationships!Relationships!Relationships!Relationships!Relationships!Relationships!Relationships!Relationships! Relationships! Relationships!Relationships!Relationships!Relationships!Relationships!Relationships!

Tom Peters, writing Tom Peters, writing under the nom de plume under the nom de plume of “Henry,” reveals his of “Henry,” reveals his

singular recipe for singular recipe for success.success.

Single Single greatest actgreatest act

of pure of pure imaginationimagination

HRH Sheik Mohammad HRH Sheik Mohammad has turned a flyspeck—has turned a flyspeck—

Dubai—in to a Dubai—in to a breathtaking displaybreathtaking display of the impossible of the impossible

made possible.made possible.

““We have a We have a ‘strategic plan.’ ‘strategic plan.’ It’s called It’s called doing doing thingsthings.”.” — Herb Kelleher

More from SWA’s More from SWA’s Mr Kelleher, action Mr Kelleher, action

fanatic.fanatic.

try it. Try it. Try it. Try try it. Try it. Try it. Try it. Try it. Try it. Try it. it. Try it. Try it. Try it. Try itTry it. . Screw it up.Screw it up. Try Try it. Try it. Try it. Try it. it. Try it. Try it. Try it. Try it. Try it.Try it. Try it. Screw it Screw it

up.up. it. Try it. Try it. try it. Try it. Try it. try it. Try it.it. Try it. Screw it up.Screw it up. Try it. Try it. Try it.Try it. Try it. Try it.

Ditto from “Henry.”Ditto from “Henry.”

6H: Howard, Hilton, Herb, Henry, HRH, Herb6H: Howard, Hilton, Herb, Henry, HRH, Herb

****Stay in touch!Stay in touch!****Sweat the details!Sweat the details!****It’s the people, stupid!It’s the people, stupid!****“Best relationships wins”!“Best relationships wins”!****Let your imagination Let your imagination go berserk! go berserk!****Do It!Do It!

2-cent 2-cent candycandy

<TG<TGWWvs.vs.

>TG>TGRR

Master of “TGR” Cont.Master of “TGR” Cont.

Granite Rock CoGranite Rock Co.. ( (Cross it outCross it out if you think we did it poorly) if you think we did it poorly)

ENDENDPart Part 1.11.1

part 1.1 tom peters’ excellence. always. new master/21 august 2008

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