Tom Peters’

Re-Imagine!Business Excellence in a Disruptive Age

Ericsson/Plano TX/01.20.2004

Slides at …

tompeters.com

“Uncertainty is the only thing to be sure of.” —Anthony Muh,

head of investment in Asia, Citigroup Asset Management

“If you don’t like change, you’re going to like

irrelevance even less.” —General Eric Shinseki, Chief of Staff,

U. S. Army

1. All Bets Are Off.

“September 11 amounts to World War III—the third

great totalitarian challenge to open societies in the last

100 years.” —Thomas Friedman/NYT/01.08.2004

“The World Must Learn to Live with

a Wide-awake China” —Headline/FT/11.03

1990-2003: Exports 8X ($380B); 6% global exports 2003 vs. 3.9% 2000; 16% of

Total Global Growth in 2002.

Source: “China Takes Off”, David Hale & Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003

397,000,000 fixed phone

lines = 90X since 1989.

Source: “China Takes Off”, David Hale & Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003

2003: China-Hong Kong leading producer in 8 of 12 key consumer electronic product areas (>50%: DVDs, digital cameras; >33.33%:

DVD-ROM drives, personal desktop and notebook computers; >25% mobile phones, color TVs,

PDAs, car stereos).Source: “China Takes Off”, David Hale & Lyric Hughes

Hale/Foreign Affairs/Nov-Dec2003

“14 MILLION service jobs are in

danger of being shipped overseas” —

The Dobbs Report/USN&WR/11.03/re new UCB

study

“There is no job that is America’s God-given right

anymore.” —Carly Fiorina/ HP/

01.08.2004

--79% of U.S. jobs in “structurally changed professions” (“permanently eliminated jobs”)(40K of 160K U.S. IBM)

--“As we trade we release more labor from the service sector because our highly skilled and highly paid workers lose their competitive advantage. So we go to the next big thing. We specialize in innovation. We develop new products and start new industries.” (Erica Groshen, labor economist, Fed of NY)

Source: CNN/Money/01.07.2004

“One Singaporean worker costs as much as …

3 … in Malaysia 8 … in Thailand 13 … in China 18 … in India.”

Source: The Straits Times/08.18.03

Solution: Re-brand Singapore … from the “place that works” to

the “place that’s cool” (and works, too)

“A California biotechnology company has put the entire

sequence of the human genome on a single chip, allowing

researchers to readily conduct single experiments on the

complex relationships between the 30,000 genes that make up a

human being in.” —Page 1, Financial Times/10.03.2003

“There will be more

confusion in the business world in the next decade than in any decade in history. And the current pace of

change will only accelerate.”Steve Case

2. The Destruction Imperative.

Forbes100 from 1917 to 1987: 39 members of the Class of ’17 were alive

in ’87; 18 in ’87 F100; 18 F100 “survivors” underperformed the market

by 20%; just 2 (2%), GE & Kodak, outperformed the market 1917 to 1987.

S&P 500 from 1957 to 1997: 74 members of the Class of ’57 were

alive in ’97; 12 (2.4%) of 500 outperformed the market from 1957 to 1997.

Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market

“Good management was the most powerful reason [leading firms] failed to stay atop their industries. Precisely because these firms

listened to their customers, invested aggressively in technologies that would provide their customers more

and better products of the sort they wanted, and because they carefully studied market trends and

systematically allocated investment capital to innovations that promised the best returns, they lost

their positions of leadership.”

Clayton Christensen, The Innovator’s Dilemma

“Far from being a source of comfort,

bigness became a code for inflexibility.” —John

Micklethwait & Adrian Wooldridge, The Company

Forget>“Learn”

“The problem is never how to get new, innovative

thoughts into your mind,

but how to get the old ones out.”

Dee Hock

The [New] Ge Way

DYB.com

No Wiggle Room!

“Incrementalism is innovation’s worst enemy.”

Nicholas Negroponte

Just Say No …

“I don’t intend to be known as the ‘King of

the Tinkerers.’ ”CEO, large financial services company

3. The White Collar Revolution

& the Death of Bureaucracy.

Steel: 75 million tons in ’82 to 102 million tons in ’02.

289,000 steelworkers in ’82 to 74,000 steelworkers in ’02.

Source: Fortune/11.24.03

E.g. …

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

3 years.

Source: BW (01.28.02)

“Organizations will still be critically important in the world,

but as ‘organizers,’ not ‘employers’!” — Charles Handy

Ford: “Vehicle brand owner” (“design, engineer, and

market, but not actually make”)

Source: The Company, John Micklethwait & Adrian Wooldridge

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

Bus.”

100 square feet

“Our entire facility is digital. No paper, no film, no medical records. Nothing. And it’s all integrated—from the lab to X-ray to records to physician order entry. Patients don’t have to wait for anything. The information from the physician’s office is

in registration and vice versa. The referring physician is immediately sent an email telling him his patient has shown up. … It’s wireless in-house. We have 800 notebook computers that are wireless. Physicians can walk around with a computer that’s

pre-programmed. If the physician wants, we’ll go out and wire their house so they can sit on the couch and connect to the

network. They can review a chart from 100 miles away.” —David Veillette, CEO, Indiana Heart Hospital (HealthLeaders/12.2002)

“Dawn Meyerreicks, CTO of the Defense Information Systems Agency, made one of the most fateful military calls of the 21st century. After 9/11 … her office

quickly leased all the available transponders covering Central Asia. The implications should change everything about U.S. military thinking in the

years ahead.

“The U.S. Air Force had kicked off its fight against the Taliban with an ineffective bombing campaign, and Washington was anguishing over whether to send in a few Army divisions. Donald Rumsfeld told Gen. Tommy Franks to

give the initiative to 250 Special Forces already on the ground. They used satellite phones, Predator surveillance drones, and GPS- and laser-based

targeting systems to make the air strikes brutally effective.

“In effect, they ‘Napsterized’ the battlefield by cutting out the middlemen (much of the military’s command and control) and working directly with the

real players. … The data came in so fast that HQ revised operating procedures to allow intelligence analysts and attack planners to work directly

together. Their favorite tool, incidentally, was instant messaging over a secure network.”—Ned Desmond/“Broadband’s New Killer App”/Business

2.0/ OCT2002

“The mechanical speed of combat vehicles has not

increased since Rommel’s day, so the difference is all in the

operational speed, faster communications and faster

decisions.” —Edward Luttwak, on the unprecedented pace of the move toward Baghdad

Read It Closely: “We don’t sell

insurance anymore. We sell speed.”

Peter Lewis, Progressive

“Ebusiness is about rebuilding the organization from the

ground up. Most companies today are not built to exploit the Internet.

Their business processes, their approvals, their hierarchies, the

number of people they employ … all of that is wrong for running an

ebusiness.”

Ray Lane, Kleiner Perkins

5. The Heart of the Value

Added Revolution: The “Solutions

Imperative.”

“While everything may

be better, it is also increasingly the same.”

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

“The ‘surplus society’ has a surplus of

similar companies, employing

similar people, with similar educational backgrounds, coming up

with similar ideas, producing

similar things, with similar prices

and similar quality.”

Kjell Nordström and Jonas Ridderstråle, Funky Business

“Companies have defined so much ‘best practice’

that they are now more or less identical.”

Jesper Kunde, Unique Now ... or Never

“We make over three new product announcements a

day. Can you remember

them? Our customers can’t!”Carly Fiorina

09.11.2000: HP bids

$18,000,000,000for

PricewaterhouseCoopersconsulting business!

“These days, building the best server isn’t enough. That’s the

price of entry.”Ann Livermore, Hewlett-Packard

Gerstner’s IBM: Systems Integrator of

choice. Global Services:

$35B. Pledge/’99: Business Partner Charter. 72 strategic partners,

aim for 200. Drop many in-house

programs/products. (BW/12.01).

“You are headed for commodity

hell if you don’t have services.” —

Lou Gerstner, on IBM’s coming revolution (1997)

“Customer Satisfaction” to “Customer Success”

“We’re getting better at [Six Sigma] every day. But we really

need to think about the customer’s profitability. Are customers’

bottom lines really benefiting from what we provide them?”

Bob Nardelli, GE Power Systems

Keep In Mind: Customer

Satisfaction versus

Customer

Success

Nardelli’s goal ($50B to $100B by 2005):

“… move Home Depot beyond selling ‘goods’ to selling ‘home services.’ …

He wants to capture home improvement dollars wherever and

however they are spent.” E.g.: “house calls” (At-Home Service: $10B by ’05?) … “pros shops” (Pro Set) … “home project management”

(Project Management System … “a deeper selling relationship”).

Source: USA Today/06.14.2002

E.g. …

UTC/Otis + Carrier: boxes to “integrated building systems”

Leased AC: Units of “Coolth”

“UPS wants to take over the sweet spot in the endless loop

of goods, information and capital that all the packages

[it moves] represent.”ecompany.com/06.01 (E.g., UPS Logistics

manages the logistics of 4.5M Ford vehicles, from 21 mfg. sites to 6,000 NA dealers)

“UPS used to be a trucking company with technology. Now it’s a technology company

with trucks.” —Forbes, upon naming UPS

“Company of the Year” in Y2000

And the Winners Are …

Televisions –12%Cable TV service +5%

Toys -10%Child care +5%

Photo equipment -7%Photographer’s fees +3%

Sports Equipment -2%Admission to sporting event +3%

New car -2%Car repair +3%

Dishes & flatware -1%Eating out +2%

Gardening supplies -0.1%Gardening services +2%

Source: WSJ/05.16.03

IBM/Q3/10.15.03/Rev: +5%

Services/Consulting: +11%Software: +5%Hardware: -5%

PCs: -2%Technology/Chips: -33%

6. A World of Scintillating

“Experiences.”

“Experiences are as distinct from services as services are from

goods.”Joseph Pine & James Gilmore, The Experience Economy:

Work Is Theatre & Every Business a Stage

“Club Med is more than just a ‘resort’; it’s a means of rediscovering oneself, of inventing an

entirely new ‘me.’ ”

Source: Jean-Marie Dru, Disruption

“The [Starbucks] Fix” Is on …

“We have identified a ‘third place.’ And I really believe that sets us apart. The third place is

that place that’s not work or home. It’s the place our

customers come for refuge.”Nancy Orsolini, District Manager

Experience: “Rebel Lifestyle!”

“What we sell is the ability for a 43-year-old accountant to dress in black leather, ride

through small towns and have people be afraid of him.”

Harley exec, quoted in Results-Based Leadership

WHAT CAN BROWN DO FOR YOU?

The “Experience Ladder”

Experiences Services

Goods Raw Materials

1940: Cake from flour, sugar (raw materials economy): $1.00

1955: Cake from Cake mix (goods economy): $2.00

1970: Bakery-made cake (service economy): $10.00

1990: Party @ Chuck E. Cheese (experience economy) $100.00

Message:

“Experience” is the

“Last 80%”

P.S.: “Experience” applies to all work!

1940: Cake from flour, sugar (raw materials economy): $1.00

1955: Cake from Cake mix (goods economy): $2.00

1970: Bakery-made cake (service

economy): $10.001990: Party @ Chuck E. Cheese

(experience economy) $100.00

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

entertainment and mobile sculpture, which,

coincidentally, also happens to provide transportation.”

Source: NYT 10.19.01

It’s All About EXPERIENCES: “Trapper” to “Wildlife Damage-control Professional”

Trapper: <$20 per beaver pelt.

WDCP: $150/“problem beaver”; $750-$1,000 for flood-control

piping … so that beavers can stay.

Source: WSJ/05.21.2002

Duet … Whirlpool … “washing machine” to “fabric care system” … white goods: “a sea of

undifferentiated boxes” … $400 to $1,300 … “the Ferrari of washing machines” …

consumer: “They are our little mechanical buddies. They have personality. When they are

running efficiently, our lives are running efficiently. They are part of my family.” …

“machine as aesthetic showpiece” … “laundry room” to “family studio” / “designer laundry

room” (complements Sub-Zero refrigerator and home-theater center)

Source: New York Times Magazine/01.11.2004

7. “It” all adds up

to … THE BRAND.

“WHO ARE WE?”

“WHAT’S OUR

STORY?”

“We are in the twilight of a society based on data. As information and intelligence become the domain of computers, society will place more value on the one human ability that cannot be automated: emotion.

Imagination, myth, ritual - the language of emotion - will affect everything from our purchasing decisions

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

that their products are less important than their stories.”

Rolf Jensen, Copenhagen Institute for Future Studies

“EXACTLY HOW ARE WE

DRAMATICALLY DIFFERENT?”

“A great company is defined by the

fact that it is not compared

to its peers.”Phil Purcell, Morgan Stanley

8. Boss Job One:

The Talent Obsession.

“When land was the scarce resource, nations battled

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

Stan Davis & Christopher Meyer, futureWEALTH

Age of AgricultureIndustrial Age

Age of Information IntensificationAge of Creation Intensification

Source: Murikami Teruyasu, Nomura Research Institute

Brand = Talent.

Model 25/8/53

Sports Franchise GM*

*48 = $500M

“The leaders of Great Groups love talent and know where to find it. They revel in

the talent of others.”Warren Bennis & Patricia Ward Biederman,

Organizing Genius

Les Wexner: From sweaters to people!

From “1, 2 or you’re out” [JW] to …

“Best Talent in each industry segment to build

best proprietary intangibles” [EM]

Source: Ed Michaels, War for Talent

The Cracked Ones Let in the Light

“Our business needs a massive transfusion of talent, and talent, I believe, is most likely to be found

among non-conformists, dissenters and rebels.”

David Ogilvy

“AS LEADERS, WOMEN RULE: New Studies find that female managers

outshine their male counterparts in almost

every measure”Title, Special Report, BusinessWeek, 11.20.00

“TAKE THIS QUICK QUIZ: Who manages more things at once? Who puts more effort into their appearance? Who usually takes care of the details? Who finds it

easier to meet new people? Who asks more questions in a conversation? Who is a better

listener? Who has more interest in communication skills? Who is more inclined to get involved?

Who encourages harmony and agreement? Who has better intuition? Who works with a longer ‘to do’ list? Who enjoys a recap to the day’s events? Who is

better at keeping in touch with others?”

Source: Selling Is a Woman’s Game: 15 Powerful Reasons Why Women Can Outsell Men, Nicki Joy & Susan Kane-Benson

Our Mission

To develop and manage talent;to apply that talent,

throughout the world, for the benefit of clients;to do so in partnership;

to do so with profit.

WPP

9. THINK WEIRD … the HVA/ High Value

Added Bedrock.

THINK WEIRD: The High Standard

Deviation Enterprise.

Saviors-in-Waiting

Disgruntled CustomersOff-the-Scope Competitors

Rogue EmployeesFringe Suppliers

Wayne Burkan, Wide Angle Vision: Beat the Competition by Focusing on Fringe Competitors, Lost Customers, and Rogue Employees

CUSTOMERS: “Future-defining customers may

account for only 2% to 3% of your total, but they represent a crucial

window on the future.”Adrian Slywotzky, Mercer Consultants

“Generally, disruptive technologies underperform established

established products in mainstream markets. But they have

other features that a few fringe (and generally new) customers

value.”

Clayton Christensen, The Innovator’s Dilemma

Primary Obstacles to “Marketing-driven Change”

1. Fear of “cannibalism.”2. “Excessive cult of the consumer”/ “customer driven”/ “slavery to demographics, market research and focus groups.”3.Creating “sustainable advantage.” Source: John-Marie Dru, Disruption

“Chivalry is dead. The new code of conduct is an active strategy of disrupting the status quo

to create an unsustainable series of competitive advantages. This is not an age of defensive

castles, moats and armor. It is rather an age of cunning, speed and surprise. It may be hard for some to hang up the chain mail of ‘sustainable

advantage’ after so many battles. But hypercompetition, a state in which sustainable advantages are no longer possible, is now the

only level of competition.”

Rich D’Aveni, Hypercompetition: Managing the Dynamics of Strategic Maneuvering

COMPETITORS: “The best swordsman in the world doesn’t need to fear

the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a

sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t

prepared for him; he does the thing he ought not to do and often it catches the expert out and

ends him on the spot.”

Mark Twain

“To grow, companies need to break out of a vicious

cycle of competitive benchmarking, imitation and

pursuit.” —W. Chan Kim & Renee Mauborgne,

“”Think for Yourself —Stop Copying a Rival,” Financial Times/08.11.03

“The short road to ruin is to emulate

the methods of your adversary.” —

Winston Churchill

Employees: “Are there enough weird

people in the lab these days?”

V. Chmn., pharmaceutical house, to a lab director (06.01)

10. Leading in Totally Screwed Up Times:

The Passion Imperative.

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

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

“I don’t know.”

Quests!

The Kotler Doctrine:

1965-1980: R.A.F.(Ready.Aim.Fire.)

1980-1995: R.F.A.(Ready.Fire!Aim.)

1995-????: F.F.F.(Fire!Fire!Fire!)

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

“If Microsoft is good at anything, it’s avoiding the trap of worrying about criticism. Microsoft fails constantly.

They’re eviscerated in public for lousy

products. Yet they persist, through version after version, until they get

something good enough. Then they leverage the power they’ve gained in

other markets to enforce their standard.”Seth Godin, Zooming

“If it works, it’s

obsolete.”

—Marshall McLuhan

“I’m not comfortable unless

I’m uncomfortable.”—Jay Chiat

“If things seem under control, you’re just not

going fast enough.”

Mario Andretti

DG to TP: “Sam is not afraid

to fail.”

“Reward excellent

failures. Punish mediocre successes.”

Phil Daniels, Sydney exec (and, de facto, Jack)

Audie Murphy was the most decorated soldier in WW2.

He won every medal we had to offer, plus 5 presented by Belgium and France. There was one common medal he

never won …

… the Good Conduct medal.

“You can’t behave in a calm, rational manner.

You’ve got to be out there on the lunatic fringe.” — Jack

Welch, on GE’s quality program

“In Tom’s world it’s always better to try a swan dive and deliver a colossal belly flop than to step timidly off the board while holding your

nose.”—Fast Company /October2003

Successful Businesses’ Dozen Truths: TP’s 30-Year Perspective

1. Insanely Great & Quirky Talent.2. Disrespect for Tradition.3. Totally Passionate (to the Point of Irrationality) Belief in What We Are Here to Do.4. Utter Disbelief at the Bullshit that Marks “Normal Industry Behavior.”5. A Maniacal Bias for Execution … and Utter Contempt for Those Who Don’t “Get It.”6. Speed Demons.7. Up or Out. (Meritocracy Is Thy Name. Sycophancy Is Thy Scourge.)8. Passionate Hatred of Bureaucracy.9. Willingness to Lead the Customer … and Take the Heat Associated Therewith. (Mantra: Satan Invented Focus Groups to Derail True Believers.)10. “Reward Excellent Failures. Punish Mediocre Successes.” 11. Courage to Stand Alone on One’s Record of Accomplishment Against All the Forces of Conventional Wisdom.12. A Crystal Clear Understanding of Brand Power.

Thank You!