Tom Peters’ Seminar2002

We Are In A Brawl With No

Rules!GSK/Crete/04.17.2002

All Slides Available at …

tompeters.comNote: Lavender text in this file is a link.

CONTEXT

The Destruction

Imperative I: A Pitiable Story

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

Jim & Tom. Joined at the

hip. Not.

The Destruction Imperative II:

Death by “Same Same”

“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, working in

similar jobs, coming up with similar

ideas, producing similar things, with

similar prices and similar quality.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

20 of 267 of top 10*

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

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

Source: Advertising Age 01.21.2002/BofA Securities

Primary Obstacles to “Marketing-driven Change”

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

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

series of competitive advantages. This is not an age of defensive castles, moats and

armor. It is rather an age of cunning, speed and surprise. It may be hard for some to hang up the

chain mail of ‘sustainable advantage’ after so many battles. But hypercompetition, a state in which sustainable advantages are no longer

possible, is now the only level of competition.”

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

Axiom (Hypothesis): We have been screwed by Benchmarking … Best Practice … C.I./Kaizen.

Axiom (Hypothesis): We need Masters of Discontinuity/

Masters of Ambiguity … in discontinuous/ambiguous

times.

“Companies have defined so much

‘best practice’ that they are now more or

less identical.”Jesper Kunde, A Unique Moment

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

Dell’s OptiPlex Facility

Big Job: 6 to 8 hours.(80,000 per day)

Parts Inventory: 100 square feet.

“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

Read It Closely: “We don’t sell

insurance anymore. We sell speed.”

Peter Lewis, Progressive

RESPONSE

The “PSF Solution”:

The Professional Service Firm Model.

Answer: PSF![Professional Service Firm]

Department Head

to …

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

“Typically in a mortgage company or financial services company, ‘risk

management’ is an overhead, not a revenue

center. We’ve become more than that.

We pay for ourselves, and we actually make money for the company.”—Frank Eichorn,

Director of Credit Risk Data Management Group, Wells Fargo Home Mortgage (Source: sas.com)

The Big Day!

09.11.2000: HP bids

$18,000,000,000for

PricewaterhouseCoopersconsulting business!

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

price of entry.”

Ann Livermore, Hewlett-Packard

Gerstner’s IBM: Systems Integrator of

choice. Global Services:

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

aim for 200. Drop many in-house

programs/products. (BW/12.01).

“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)

“We want to be the air traffic

controllers of electrons.”

Bob Nardelli, GE Power Systems

New Springs = Turnkey

Flexible sourcing.Collections.Packaging.

Merchandising.Promotion.

Systems & Site mgt.

Omnicom: 57% (of

$6B) from marketing services

“VISIONS OF A BRAND-NAME OFFICE EMPIRE. Sam Zell is not a man plagued by self doubt. Mr. Zell controls public

companies that own nearly 700 office buildings in the United States. … Now Mr. Zell says he will

transform the real estate market by turning those REITs into national brands. … Mr. Zell

believes [clients] will start to view those offices as something more than a commodity chosen chiefly by price and location.” –New York Times

(12.16.2001)

The …

Solutions25.

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

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

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

PSF Unbound+: It’s the

EXPERIENCE.

“Experiences are as distinct from services as services are from

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

Work Is Theatre & Every Business a Stage

Experience: “Rebel Lifestyle!”

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

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

Harley exec, quoted in Results-Based Leadership

“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

The “Soul” of “Experiences”:

Design Mindfulness.

Design’s place in the universe.

“We don’t have a good language to talk about this kind of thing. In most people’s

vocabularies, design means veneer. … But to me, nothing could be further from the

meaning of design. Design is the fundamental soul

of a man-made creation.”

Steve Jobs

All Equal Except …

“At Sony we assume that all products of our competitors have basically the same

technology, price, performance and

features. Design is the only thing that differentiates one product from another in the

marketplace.”Norio Ohga

“Design is treated like a religion at

BMW.”Fortune

“The good 10 percent of product design comes out of big-idea companies that don’t believe in talking to the customer. They're

run by passionate maniacs who make everybody’s life miserable until they get what they want.”

Bran Ferren, Applied Minds/Wired 1-2001

Bottom Line.

Design “is” … WHAT & WHY I LOVE.

LOVE.

Ziplocs

Design “is” … WHY I

GET MAD. MAD.

Design is never neutral.

Hypothesis: DESIGN is the principal difference between love and

hate!

THE BASE CASE: I am a design fanatic. Though not “artistic,” I love “cool stuff.” But it goes [much]

further, far beyond the personal. Design has become a professional obsession. I SIMPLY BELIEVE THAT

DESIGN PER SE IS THE PRINCIPAL REASON FOR EMOTIONAL ATTACHMENT [or

detachment] RELATIVE TO A PRODUCT OR SERVICE OR EXPERIENCE. Design, as I see it, is

arguably the #1 DETERMINANT of whether a product-service-experience stands out … or doesn’t.

Furthermore, it’s another “one of those things” that damn few companies put – consistently – on the

front burner.

Message (?????): Men cannot design for women’s

needs.

Message: Design is the wellspring of branding. Great

design takes guts and is “soul deep.”

It all adds up to …

THE BRAND.

The Heart of Branding …

“WHO ARE WE?”

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

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

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

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

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

Jesper Kunde, A Unique Moment

“WHAT’S OUR

STORY?”

“Apple opposes, IBM solves, Nike exhorts,

Virgin enlightens, Sony dreams, Benetton

protests. … Brands are not nouns but verbs.”

Source: Jean-Marie Dru, Disruption

“EXACTLY HOW ARE WE

DRAMATICALLY DIFFERENT?”

1st Law Mktg Physics: OVERT BENEFIT (Focus: 1 or 2 > 3 or 4/“One Great Thing.” Source #1: Personal Passion)

2ND Law: REAL REASON TO BELIEVE (Stand & Deliver!)

3RD Law: DRAMATIC DIFFERENCE (Execs Don’t Get It:

See the next slide.)

Source: Jump Start Your Business Brain, Doug Hall

2 Questions:

“How likely are you to purchase this new product or service?” (95% to 100% weighting by execs)

“How unique is this new product or service?” (0% to 5%*)

*No exceptions in 20 years – Doug Hall, Jump Start Your Business Brain

THE WORK

Redefining the Work Itself I:

The WOW Project.

“Reward excellent failures. Punish

mediocre successes.”

Phil Daniels, Sydney exec

Characteristics of the “Also rans”*

“Minimize risk”“Respect the chain of

command”“Support the boss”

“Make budget”

*Fortune, article on “Most Admired Global Corporations”

THE TALENT

Brand = Talent.*

*Duh.

From “1, 2 or you’re out” [JW] to …

“Best Talent in each industry segment to build

best proprietary intangibles” [EM]

Source: Ed Michaels, War for Talent (05.17.00)

“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

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

outshine their male counterparts in almost

every measure”Title, Special Report, Business Week, 11.20.00

Women’s Strengths Match New Economy Imperatives: Link [rather than rank] workers;

favor interactive-collaborative leadership style [empowerment beats top-down decision making]; sustain fruitful collaborations; comfortable with sharing information; see redistribution of power

as victory, not surrender; favor multi-dimensional feedback; value technical & interpersonal skills, individual & group contributions equally; readily accept ambiguity; honor intuition as well as pure

“rationality”; inherently flexible; appreciate cultural diversity.

Source: Judy B. Rosener, America’s Competitive Secret

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

Employees: “Are there enough weird

people in the lab these days?”

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

Deviants, Inc. “Deviance tells the story of every mass

market ever created. What starts out weird and dangerous

becomes America’s next big corporate payday. So are you looking for the next mass market idea? It’s out there … way

out there.”

Source: Ryan Matthews & Watts Wacker, Fast Company (03.02)

“A great idea always comes from one person’s mind,

someone who is, by definition, local. If you place 10 people in

Brussels to conceive a European [ad/marketing]

campaign, you’ll get nothing.”

Source: Jean-Marie Dru, Disruption

MantraM3

Talent = Brand

TRENDS WORTH

TRILLIONS

Trends II: Speaking of …

Women.*

*Duh II.

Women & the Marketspace.

?????????

Home Furnishings … 94%Vacations … 92% (Adventure Travel … 70%/ $55B

travel equipment)

Houses … 91%Consumer Electronics … 51%

Cars … 60% (90%)All consumer purchases … 83%

Bank Account … 89%Health Care … 80%

$4.8T > Japan

9M/27.5M/$3.6T > Germany

Yeow!

1970 … 1%

2002 … 50%

OPPORTUNITY

NO. 1!

Read This Book …

EVEolution: The Eight Truths of Marketing to Women

Faith Popcorn & Lys Marigold

FP/LM: “Men and women don’t think the same way, don’t communicate the

same way, don’t buy for the same reasons.

“He simply wants the transaction to take place. She’s interested in

creating a relationship. Every place women go, they make

connections.”

EVEolution: Truth No. 1

Connecting Your Female Consumers to Each

Other Connects Them to Your Brand

“The ‘Connection Proclivity’ in women starts early. When asked,

‘How was school today?’ a girl usually tells her mother every

detail of what happened, while a boy might grunt, ‘Fine.’ ”

EVEolution

“Women don’t buy

brands. They join them.”

EVEolution

What If …

“What if ExxonMobil or Shell dipped into their credit card database to help commuting women

interview and make a choice of car pool partners?”

“What if American Express made a concerted effort to connect up female empty-nesters

through on-line and off-line programs, geared to help women re-enter the workforce with today’s

skills?”

EVEolution

STATEMENT OF PHILOSOPHY: I am a businessperson. An analyst. A pragmatist. The enormous social good of increased women’s

power is clear to me; but it is not my bailiwick. My “game” is haranguing business leaders

about my fact-based conviction that women’s increasing power – leadership skills

and purchasing power – is the strongest and most dynamic force at work in the American

economy today. Dare I say it as a long-time Palo Alto resident … THIS IS EVEN BIGGER THAN

THE INTERNET!

Tom Peters

Psssst! Wanna see my “porn” collection?

Ad from Furniture /Today (04.01):“MEET WITH THE EXPERTS!: How

Retailing’s Most Successful Stay that Way”

Presenting Experts: M = 16;

F = ?? (94% = 272)

0

“Customer is King”: 4,440

“Customer is Queen”: 29

Source: Steve Farber/Google search/04.2002

Trends II: Boomer Bonanza.”*

*Duh III.

“ ‘Age Power’ will rule the 21st century, and we are woefully

unprepared.”Ken Dychtwald, Age Power: How the 21st Century Will Be Ruled by the New Old

Subject: Marketers & Stupidity

“It’s 18-44, stupid!”

Subject: Marketers & Stupidity

Or is it: “18-44 is stupid,

stupid!”

2000-2010 Stats

18-44: -1%

55+: +21%(55-64: +47%)

“NOT ACTING THEIR AGE: As Baby Boomers

Zoom into Retirement, Will America Ever Be the

Same?”USN&WR Cover/06.01

Aging/“Elderly”

$$$$$$$$$$$$“I’m in charge!”

50+

$7T wealth (70%)/$2T annual income50% all discretionary spending

79% own homes/40M credit card users41% new cars/48% luxury

$610B healthcare spending/74% prescription drugs

5% of advertising targets

Ken Dychtwald, Age Power: How the 21st Century Will Be Ruled by the New Old

“Advertisers pay more to reach the kid because they think that once someone hits

middle age he’s too set in his ways to be

susceptible to advertising. … In fact this notion of impressionable kids and hidebound geezers is little more

than a fairy tale, a Madison Avenue gloss on Hollywood’s cult of

youth.”—James Surowiecki (The New Yorker/04.01.2002)

BOTTOM LINE: LEADING IN

TOTALLY SCREWED- UP TIMES

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

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

going fast enough.”

Mario Andretti

Thank You!

HealthCare21

HealthCare21: 21 Ideas for Century211. Hospitals kill people. (And many of those they don’t kill, they wound.) (And they deny it.) (ERRORS RULE!) And: Hustling ambulances kill pedestrians—and don’t save patients.2. Doctors are spoiled brats—who don’t like measurements. Or any form of “interference.” Docs are also cover-up artists. The REAL Hippocratic Oath: “DON’T RAT ON A FELLOW DOC”. 3. Most prescription drugs don’t work—for a PARTICULAR patient. Current drugs = Blunderbusses.4. Think … WELLNESS. Think … PREVENTION.5. THERE IS LITTLE “SCIENCE” IN “MEDICINE.” (See state to state variations … country to country variations … the general lack of agreed-upon treatments.)6. You could save thousands of lives (think Schindler)—if you just outlawed handwritten prescriptions.7. “Detailers” will disappear … when GenX docs arrive.

HealthCare21 (Cont.) 8. IS/IT in hospitals is sub-primitive (despite enormous expenditures). 9. Systemic IS/IT is worse—links between docs, insurers, providers, patients.10. ELECTRONIC MEDICAL RECORDS …TO UNIFORM STANDARDS. (NOW.) (PLEASE.) 11. THE WEB WILL LIBERATE. (Info = Power.) (BELIEVE IT.) 12. 80M BOOMERS RULE. ($$$$$. Desire for c-o-m-p-l-e-t-e CONTROL. NOW. “LEADERSHIP” OF AGING PROCESS.)13. “Drug Discovery” processes at Big Pharma are … hopelessly over-complicated. (???: Bye-Bye … Big Pharma.)14. 90% of the “healthcare fix”: HARVEST THE LOW-HANGING FRUIT. “They” are … NOT … the Enemy. “I have seen the enemy … and it am me.” Damn it.

HealthCare21 (Cont.)15. The number of U.S. un-insured is the nation’s #1 disgrace. That said, insured “consumers” are spoiled brats. They/we/me act as if healthcare were a free good … and believe that an incipient hangnail calls for at least a CAT scan … or two. ANSWER: MAKE US FEEL THE PAIN.16. Genetic engineering & biotech change … EVERYTHING. (Within 15 years.)17. New Medical Devices change … EVERYTHING. (Within 15 years.)18. IS/IT changes … EVERYTHING. (Within 10 years.)19. New Docs change … EVERYTHING. (Within 10 years.)20. New Patients change … EVERYTHING. (Within 5 years.)

* *

HealthCare21 (Cont.)

21. ALL THIS = ENORMOUS OPPORTUNITY. The

Opportunity of Several Lifetimes. (For the Bold & Brave.) H’Care WILL be … TOTALLY … re-invented in the next two decades. (And, hey, it is our largest “industry.”)