TOM PETERS’ LESSONS IN LEADERSHIP2000 3 FEBRUARY SACRAMENTO

TOM PETERS’ LESSONS IN

LEADERSHIP2000

3 FEBRUARY SACRAMENTO

ALL SLIDES ARE AVAILABLE AT

tompeters.com

Brand Inside

PSF 2:Brand Work!

Seminar Y2K

Brand Everything:Distinct or Extinct

Microsoft = R.O.W.

Microsoft > GM + Ford + Boeing + Lockheed Martin + Deere + Caterpillar + USX + Weyerhaeuser + Union Pacific + Kodak + Sears + Marriott + Safeway + KelloggSource: Business Week data through 5-99

Microsoft = R.O.W. (II)

Microsoft > GM + Ford + Boeing + Lockheed

Martin + Deere + Caterpillar + USX + Weyerhaeuser + Union Pacific + Kodak + Sears + Marriott + Safeway + Kellogg +

McDonald’s + Bank One + General Mills + American Airlines + United Airlines + + Delta Air Lines + US Airways + Quaker Oats

Source: Yastrow Marketing (through 11-23-99)

No Wiggle Room!

“Incrementalism is innovation’s worst

enemy.” Nicholas Negroponte

Just Say No …

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

Tinkerers.’ ”CEO, large financial services company

(New York, 5-99)

Forces at Work

The Destruction Imperative!

Forget > Learn

“The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.”

Dee Hock

“It is generally much easier to kill an

organization than change it

substantially.” Kevin Kelly, Out of Control

64/24

Q: What do you do when you are a big,

dopey company and out of ideas?

A: You merge with another big,

dopey company that doesn’t

have any ideas either.

R: An incredibly big, incredibly dopey company

… going nowhere.

“Talent” and a $2T enterprise??????

“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

“I feel betrayed. I bought stock in a company that was going to change the world. I didn’t buy a big, fat, stupid conglomerate. And now

I’ve got one.”Alan Towers, consultant, quoted in Business Week

[BW: “The irony is that AOL Time Warner is a vertically integrated conglomerate. Not exactly the sort of nimble

competitor that will thrive in cyberspace.”]

“Gatesian wealth is created when you build something new. Get on a rocket and ride it to the moon.

… Viacom-CBS doesn’t look much like that kind of rocket.”

Kevin Maney, USA Today

“Acquisitions are about buying market share. Our challenge is to create markets. There is a big difference.”

Peter Job, CEO, Reuters

“We chose not to do a discounted cash flow analysis of their future earnings. We wanted their talent and we wanted their intellectual property.”

Art Reidel, CEO, Pharsight

“Our ideal acquisition is a small startup that has a great technology product on the drawing board that is going to come out in six to twelve months. We buy the engineers and the next generation product. …” John Chambers, Cisco

Dept. Head = Sports GM

Dept. Head = V.C.

Silicon Valley Success Secrets

“Pursuit of risk”: 4 of 20 in V.C. portfolio go bust; 6 lose money; 6

do okay; 3 do well; 1 hits the jackpot

Source: The Economist

“R & D”

Intel’s venture fund: 275 investments, $3.5B

Source: Fast Company (12-99)

EcoNets/Internet Zaibatsus

“The model is about partial acquisitions and ownerships that then form a whole. Each part has to have value separately, be able to raise capital separately, and

motivate employees separately. Corporations of the past never had that.”

Flip Filipowski, divine interVentures (Red Herring)

“The brick and mortars will die, no matter what. … So you have to take

your best employees and best businesses and spin them off and just own 40 percent of everything

that’s left. Do that and you survive.”


DYB.com*

*DestroyYourBusiness.com (GE)

C.E.O. to

C.D.O.

“It used to be that the big

ate the small. Now the fast eat the slow.”Geoff Yang, IVP/(Institutional

Venture Partners)

[E.g.: Craig Venter/Celera Genomics]

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

TTTTTurbulent Times!

Top 3 Americans > 48 poorest nations

Source: Newsweek 12-99

“ALL OF THESE ‘CONVERSATIONS’ TODAY ABOUT ‘THE WEB’ WILL APPEAR SO BLOODY DAMN SILLY AND PEDESTRIAN TEN … FIVE? … THREE? … YEARS FROM NOW.”

— Tom Peters (11-99)

P.S.: Read Ray Kurzweil’s The Age of Spiritual Machines: When Computers Exceed Human Intelligence

BW: “human brain has only a short time left as the smartest thing on earth”/ “subjugate

humanity by 2050”

Health Forum Journal: “In one generation or less, every element of health care, every assumption, will be changed or gone.”

Dr. George Poste, SKB: 500 molecular targets in ’95 to 70,000 in ’99/ 35 compounds

per year to 2M

“Medicine looks likely to change more in the next 20 years than it has in the last

200.”

British Medical Journal (11-11-99)

Wired [Feb 2000]

“Cyborg 1.0: Kevin Warwick Outlines His Plan

to Become One with His Computer”

Mags

Advertising AgeBusiness 2.0

Fast CompanyRed Herring

Scientific American Wired

Brand Inside

PSF 1:Brand Org!

108 X 5vs.

8 X 1*

* 540 vs. 8

ERP, ECM, Web, Etc.

IT’S THE GIANT SUCKING SOUND

OF SLACK BEING EXTRACTED FROM

THE GLOBAL ECONOMY!

Cemex and FDX!

CCC InformationServices!

FDX and Cisco!

“Assetless Company”

J.B.

“Don’t own nothin’ if you can help it. If you can, rent your shoes.”

F.G.

RR on Sara Lee

“The most profitable businesses in the future will act as knowledge brokers, linking insights into what’s available

with insights into the customer’s individual needs

and preferences.”

“We want to be the air traffic controllers

of electrons.”Bob Nardelli,

GE Power Systems

[And: Enron!]

The “&-!!+#$% in the middle”*

Jim Clark on Healtheon

* ’twixt docs, patients and providers; $250B in waste (?); source: Michael Lewis,

The New New Thing

Hewitt & HMO e-bids!

[ Words to Live By …

“Hierarchy is an organization with its face

toward the CEO and its ass toward the customer.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business]

PSF 1.0

Professional Service Firm Conversion Kit /

Release 1.0

Credo

“WORK WORTH

PAYING FOR”

Why are there no books on how to create

a “Cool, Rocking, WOW-producing

Finance Department”?

PSF 1.0

Department Head

to …

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

“support function” / “cost center” / “bureaucratic

drag”

or …

“Rock Stars of the ‘Age of Talent’ ”

“Real” PSF …–Think Inc. (Mindset = Step No.1!)–Clients rule! / Engage Clients in deep

dialog/ “Join us in an Adventure” / Fire duds!

–Work = WOW Projects (100%!)–Embrace the Politics of

Implementation!–Practice serial monogamy! –Master “the economics”! (WWPF!)

“Real” PSF …–WE HELP PEOPLE!–Co-habit with the Client!–Create a Culture of Urgency!–Love thy Support Staff!–You need a Methodology! / Obsess on R&D!–BECOME A “CONNOISSEUR

OF TALENT”!

Real PSF …

WE OWN THIS PLACE!THIS IS COOL STUFF!WE ARE THE WORLD!

The “7Ps” of PSF 1.0

Projects!Passion!

Provocation!Partnership!

Politics!Professionalism!

Performance!

C.I.O. to

C.E.F.R.N.S.*

*Chief Evangelist For

Really Neat Stuff

Brand Defined

DistinctionExcellence

Emotional “Signature”Trustworthiness

ConsistencyShorthand

Brand Inside

PSF 2:Brand Work!

“Reward excellent failures. Punish

mediocre successes.”

Phil Daniels, Sydney exec

But Does It Matter ????

“On time, on budget … who cares?”

anon. seminar participant (4/99)

“You really got to me. So many of our information technology projects take on a life of their own, and I know they’ll never end up as more than ‘mediocre successes.’ ”

CEO, F100 financial services company (10-98)

WOW Project Anatomy

I. Create!II. Sell!

III. Implement! IV. Exit!

I. Create!

Reframe! THERE ARE NO “SMALL” PROJECTS!

Observe & Record!!Head for the trenches!

You gotta love it!

Measure: WOW!, Beauty, Raving Fans, Impact!

Build a no-baloney Business PlanCreate community. Now!

Obsess on … the End User. Now!

Reframers’ Rules:

Rule 1: Never accept an assignment as given!

Rule 2: You’re never so powerful as when you are “powerless”!Rule 3: Every “small” project contains the entire enterprise

DNA!

Measures

–WOW!–Beauty!–Raving Fans!–Impact!

E.g.: WOW Scale

1. … Dull as dishwater.

5. … Gets the job done.

7. … “Good work!”.

10. … A serious “Braggable”!

Kaiser: 4.15.29

Liberty Ship

2 years

240 days

9 hours

4 days, 15 hours, 29 minutes

[Just Say “No” to …

S-t-r-e-t-c-h]

“Every project we take on starts with a question:

How can we do what’s never been done

before?”Stuart Hornery, CEO, Lend Lease

WOW Project “Acid Test”

Can you explain it - with zest -

to your 14-year-old?

G: How’d that herring bone pattern for the hearth come out?

T: Great! But the tile guy’d like to get his hands on you; it was a royal pain.G: But it looks good, right?

T: Fabulous.G: That’s what matters. I tell my guys, “It may be a lot of work, but think about it this way:

Would you bring your kid back, 10 years from now, to see the job?”

II. Sell!

Master “The Pitch”!Build Buzz. Consciously.

Network maniacally!Preach to the choir!

Forget your enemies. [Surround and marginalize!]Money kills!

SELL, SELL, SELL!

III. Implement!

- Live, eat, sleep … Quick Prototype!-Play!

- Keep on recruiting! (Sell!)- Obsess on the End User Community!

(Sell!)- Become a Milestone Maniac! / a Timeline Tyrant! / a List Freak! / find Ms. Last 2%!

- Appoint a Marketing Director!- Keep the WOW! front and center!

Culture of Prototyping

“Effective prototyping may be the most valuable core

competence an innovative organization can hope to

have.”

Michael Schrage

“You can’t be a serious innovator unless and until you are ready,

willing and able to seriously play. ‘Serious play’ is not an oxymoron;

it is the essence of innovation.”

Michael Schrage, Serious Play

“Two of my colleagues are guitar players. We talked about broken guitars, and I did remember

Jimi Hendrix breaking guitars on stage. “There is a guitar shop near our office in Santa

Monica. We got a bunch of broken chunks of guitars and piled them all up and started to look

at the colors. …”

Frank Gehry, on the Seattle rock museum commissioned by Paul Allen

“I view models and prototypes as the

battleground for thoughts and behaviors.”

Michael Schrage

Think about It!?

Innovation = Reaction to the Prototype

Michael Schrage

Prototyper’s LawsDefine a small, practical test of something on a

page or less of text. Now.

Gather “found” materials … on the [very] cheap.

Find a/one partner-“customer” who’ll provide a test site.

Set a very tight deadline of about 5 days for the next concrete step.

Conduct the test! Debrief A.S.A.P.

Set the next test date. Now. [No more than 5 days hence.]

Secret No. 1: Go horizontal: Find a (one!) “line” ally in “the Boonies”

Secret No. 2: “Powerless” allies are Cool!

Secret No. 3: Passion Rules!Secret No. 4: Become a Prototyping

Maniac! Secret No. 5: Embrace Politics /

“Community Organizing”!

K2K

Fact: Skunking/ Starting a Skunkworks is a tactic

available to a junior supervisor … or even an independent contributor.

Reference:

Rules for Radicals, Saul Alinsky

IV. Exit!

“Sell out!” / Embrace “The Suits”!Recruit a passionate Ms./Mr.

Follow-up!Seed your freaks into the

mainstream!Celebrate!

Exit!

SOOOO … HOW MANY OF YOUR COLLEAGUES ARE

“BACK HOME” AT WORK ON NO-BALONEY …

WOW* PROJECTS!

* WOW = Will be remembered fondly/

bragged about 5+ years from now

Epitaph from Hell …

Joe T. Jones

1942 - 2000

HE WOULDA DONE SOME

REALLY COOL STUFF

BUT …

HIS BOSS WOULDN’T LET HIM!

Characteristics of the “Also Rans”

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

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

The greatest dangerfor most of us

is not that our aim istoo high

and we miss it,but that it is

too lowand we reach it.

Michelangelo

T.T.D.: Now!– List all projects– Carefully describe a “WOW Outcome” for you

and the Client– Score (!) all projects on WOW, Beauty, Impact,

Raving Fan-hood– Pick one project with a high combined score– Draft a one-page New Description that

emphasizes WOW, Beauty, etc.– Circulate and edit … for three days – Reduce to 5 bullet points

[We are not trying to “WOW you up.”

We think you are/have WOW.

We are trying to give you permission to be WOW.]

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

3) Press foot firmly on the throat of mediocrity.

Source: Mercedes ad

Seminar Y2K

MESSAGE: THE WORK MATTERS!*

*Sorry, Scott!

Brand Inside

PSF 3:Brand You!

“The fundamental unit of the new economy is not the corporation, but the individual. Tasks aren’t assigned and controlled through a stable chain of command but are carried out autonomously by

independent contractors - e-lancers - who join together in fluid and temporary networks to sell goods and services. When the job is done, the network dissolves and its members become independent again, circulating through the economy, seeking the next assignment.”

Thomas Malone and Robert Laubacher

DISTINCT … OR EXTINCT!

“If there is nothing very special about your work, no matter how hard you apply yourself, you won’t get noticed and that increasingly means you won’t get paid much, either.”

Michael Goldhaber, Wired

“If one quarter can’t make the journey, that’s the way it

has to be.”

Carly Fiorina (1-00/Forbes)

Personal “Brand Equity” Eval– I am known for [2 to 3 things]– My current Project is challenging me …– New things I’ve learned in the last 90 days

include …– My public “recognition program”

consists of …– Additions to my Rolodex include …

–My resume is discernibly different from last year’s at this time …

They “Get it”?!– stone mason– electrician– plumber– tiler– cabinet maker– contractor– blacksmith– well driller– blaster– sheep shearer– etc.

Icon Woman …

–Totally turned on by her work!–“It” matters / a WOW Project!–“It” is … COOL!–“It” is … BEAUTIFUL!–She is … in your face!–She is an … adventurer!–She is … CEO of her own life!

Icon Woman …

- She is … at least … a little funky!–Her curiosity is … insatiable!–She thinks screwups are …

as normal as breathing!–She hangs out with some …

seriously rad Dudes!–She is not God. She is not Bionic

Woman. She is … determined to make a damned difference!

“Well-behaved women rarely make history.”

— Anita Borg, Institute for Women and Technology

Icon Woman Meets the Web …– submits resume on the Web– recruited on the Web– hired on the Web– trained on the Web– creates and conducts projects with

virtual teams on the Web– manages project and client

follow-up on the Web– manages career/reputation-building

on the Web

“The Brand Called URL”/Nathan Shedroff, Vivid Studios

“24 X 7 storefront devoted exclusively to

The Brand Called You.”

HAVING SAID ALL THAT ...

“It was much later that I realized Dad’s secret. He gained respect by giving it. He talked and listened to the fourth-

grade kids in Spring Valley who shined shoes the same way he talked and listened to a bishop or a college

president. He was seriously interested in who you were and what you had to

say.”

Sara Lawrence-Lightfoot, Respect

Assignment

Construct a 1/8-page or 1/4-page ad for

Brand You … for the Yellow Pages

[ How About It?

Replace your current evaluation process with

Yellow Pages ads.]

Bill Parcells’ World/ Brand You World!

BLAME NOBODY!EXPECT NOTHING!DO SOMETHING!

NY Post (9/99)

“Everything can be taken from man but one thing: the last of human freedoms - to choose

one’s own attitude in any set of circumstances, to choose

one’s own way.”Victor Frankl, Auschwitz survivor

Seminar Y2K

Message: Distinct … or

Extinct!

There comes a time in everyone’s

life when they realize they work for

a dead guy.FreeAgent.com [ad]

Brand Inside

PSF 4:Brand Talent!

Issue Y2K

The Great War for Talent!

“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

Alan Kay on PARC’s Bob Taylor

“He was a connoisseur of

talent.”

A Connoisseur of Talent …

– Spends time on Talent!– Becomes a student of Talent! – Puts Talent “on the agenda”!– Practices D.I.Y.– Uses Plain English! (If you want “sunny” …

ask for “sunny”!)– Creates Workspaces that foster energy,

entrepreneurship and creativity!– Recruits from oddball places! /

Recruits Oddballs!

“Recruiting college students is a job for marketing, not

HR.”Jeff Daniel, collegehire.com

“Talent” and Work Space:A Grossly Neglected Connection!

“Imagine working for a company that not only understood that the best ten hours of your day

are spent at work - but did everything in its power to make them energizing, rewarding and

productive as possible. Imagine coming to work each day in a building that greeted every

person as a creative, entrepreneurial, exciting person.”

Rosemary Kirkby, Lend Lease, proposal for headquarters of MLC

“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

Axiom: Never hire anyone without an aberration in their

background. (Find the One Ton Cookie Man!)

A Connoisseur of Talent …– Recruits M.I. (Gardner: Logical-mathematical,

linguistic, artistic, musical, bodily-kinesthetic, intrapersonal-self, interpersonal-others)

– Recruits arts!– Becomes de facto C.D.O. (Chief Diversity Officer)– Turns the pay scale upside down! / Pays Talent!– Rewards & Promotes all on Talent

Development Skills!– Spouts the Gospel of Renewal! (R.D.A./ R.I.P.)

“Every school I visited was participating in the systematic suppression of creative genius.”

“From cradle to grave the pressure is on: BE NORMAL!”

Gordon MacKenzie

“Where do good new ideas come from? ...

That’s simple! From differences. Creativity comes from unlikely juxtapositions. The best way to

maximize differences is to mix ages, cultures and disciplines.”

Nicholas Negroponte

R.D.A.

Rate: 15%?, 25%?

Therefore: Formal “Investment

Strategy”/R.I.P.

R.I.P.

IS IT ... WOW!?

R.I.P.10 … Major job change [new area of

concentration]; major offsite educational investment; extensive

sabbatical [oddball learning experience of > 2 months];

exceptional community project [presidency of fundraising drive, run

for school board].

R.I.P.

5 ... Extensive course work in oddball area of passionate interest; major off-

the-job activity [community involvement, learn to play the cello,

study Chinese].

1 … Company training, as directed.

R.I.P.

Use by yourself.Use with your mates.

Use [quantitatively?] as a measure of departmental/

P.S.F. renewal.

Use in formal eval process.

R.I.P.

The Southern Co. meeting!

Training Y2K

Anytime, anywhere!

Whatever!

Concocted by the employee [“Training Account”]

Attributes of Those Who “Made” the 10th Grade History Book

–Committed!–Determined to make a difference!–Focused!–Passionate! –Irrational about their life’s project!–Ahead of their time / Paradigm

busters!–Impatient! / Action Obsessed

Attributes of Those Who “Made” the 10th Grade

History Book –Made lots of people mad!

–Flouted the chain of command!

–Creative / Quirky / Peculiar! / Rebels! / Irreverent!

–Masters of improv / Thrive on chaos / Exploit chaos!

Attributes of Those Who “Made” the 10th Grade History Book

–Forgiveness > Permission

–Bone honest!

–Flawed as the dickens!

– “In touch” with their followers’ aspirations

–Damn good at what they do!

Just Say “No” to “Grout”!

Participant: “Don’t you need ‘grout’ between the tiles?”

TP: “No!” [med staff, NFL Special Teams,waiters,

PFCs, cymbals player, bit parts, waiters]

“Conformity is the enemy of freedom

and the jailer of growth.”

J.F.K.

TP’s Ideal Job:

Head of Housekeeping!

“You say you don’t want emotional, volatile and unpredictable, just

imaginative. Sorry, they come in a package. I can give you a dedicated,

loyal, honest, realistic knowledgeable package, but the imagination bit will

be rather limited.”

Patricia Pitcher, The Drama of Leadership

“The boundaries for acceptable weirdness have

dramatically expanded.”

Michael Schrage

Yes!

Director of Bringing in the Really Cool People

[ All You Need to Know?

Chief Evangelist For Really Neat Stuff

Director Of Bringing In The Really Cool People]

Talent War Y2K!

–All out!/ Time consuming!–Never ending!/ Unwinnable!–Includes everybody!/ Everybody’s

game! (“We’re all in sales.”)–Expensive!–Cool!/ WOW!/ Fun!/ Creative!–Strategic!/ Core competence!

Talent = Brand

Brand Outside=

Brand Inside

Brand Outside

Context:

No “Commodities”!

In the Beginning …

“The audit has become a commodity.”

Big 5 audit partner to TP

Quality Not Enough!

“Quality as defined by few defects is becoming the price of entry for automotive marketers rather than

a competitive advantage.”

J.D. Power

Quality Not Enough!

“While everything may be better, it is also increasingly

the same.”

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

What’s Special?

“Customers will try ‘low cost providers’ because the Majors have not given them any clear

reason not to.”

Leading Insurance Industry

Analyst (10-98)

“We make over three new product announcements a

day. Can you remember them?

Our customers can’t!”Carly Fiorina

“The ‘surplus society’ has a surplus of similar companies, employing similar

people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

The “10X/10X Phenomenon”

10 Times Better/

10 Times Less Different

TP’s Campaign Y2K

Just say [shout]

“No!” to the “inevitable

commoditization” of anything.

“When we did it ‘right’ it was still pretty

ordinary.”

Barry Gibbons on

“Nightmare No. 1”

Pretzel Crumb-less-ness Plus …

“The Ritz Carlton Experience enlivens the senses, instills

well-being and fulfills even the unexpressed wishes and needs of

the guest.”

from the Ritz Carlton Credo

“We want to create

waves of lust for our product.”

Andy Grove (on the Pentium Processor)

“You do not merely want to be the best of the best. You

want to be considered the only ones who do

what you do.”

Jerry Garcia

Lust Hierarchy

Satisfy … Conform to Requirements … Exceed

Expectations …Delight! … WOW! … Lust! …

ONLY ONES WHO DO WHAT WE DO!

What Jerry Should Have Said???

“You do not merely want to be the best of the best, you want to be considered in conformance with

requirements.”

Context: “No” to “inevitable commoditization”

S1: Lead the Customer!S2: Master E-Commerce!

S3: Women Rule! (and the elderly)

S4: Design Rules! (too)

S5: It’s the Experience!Bottom Line: Glorious Age of the

BRAND!






BRAND!

Brand Outside

Strategy 1:

Lead the Customer!

“The customer is a rear view mirror, not a guide to the future.”

George Colony, Forrester Research

“If you worship at the throne of the voice of the customer, you’ll get only

incremental advances.”Joseph Morone, President, Bentley College

Early Customer Rejection

Post-Its [12 years!]Chrysler Minivans

VCRsFax machines

FedExCNN

Heart-assist pumpsEtc.

Source: Fortune

Good = Bad/ 1 of 30,000

“We are crazy. We should do something when people say it is

‘crazy.’ If people say something is ‘good’, it

means someone else is already doing it.”

Hajime Mitarai, Canon

“Wealth in this new regime flows directly from innovation, not

optimization. That is, wealth is not gained by perfecting the known,

but by imperfectly seizing the unknown.”

Kevin Kelly, New Rules for the New Economy

Benchmarking, Perils of …

“The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before;

he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; he does the thing he ought not to do and often it catches the expert out and ends

him on the spot.”

Mark Twain

“Lead” customers!

K2K redux!

Amen!

“The Age of the Never Satisfied

Customer”Regis McKenna






BRAND!

Brand Outside

Strategy 2:Master

E-Commerce!

$30,000,000. = ???

Dell’s Web sales … daily

350,000 = ?????

New items going on sale at eBay …

daily (12-99)

2X = 100 days (Internet traffic)

2X = 9 months (network capacity)

Source: Red Herring (1-00)

Tomorrow Today: Cisco!

$7B of $10BSave $500M (service and tech

support)

C.Sat e >> C.Sat HCustomer Engineer Chat Rooms ($1B?)

And Larry?

Business 2.0: “20 Industries About To Be Fossilized by The Net” (3-99)

Travel Agents ($2B now, $30B in 2003); Apparel (1-21); Autos (4-213);

Home Electronics (1-21); Paper and Office Supplies (1-65); Food (<1-54); Utilities (7-170); Computing (20-400);

Newspapers ($5B of $19B classifieds)

“Banking is

necessary. Banks are not.”

Dick Kovacevich, Norwest/ Wells

Cherry PickingVertical Markets

Plasticsnet.com: $370B; sellers pay $5K to $8K for

“storefront”; 5% to 10% cut

Hook: community services (database, catalogs, forums,

industry job bank, etc.)

W.W. Grainger*

2X phone/fax

*$220B “MRO” market (per Business 2.0/02-00)

B2B

1999 – 2004: 50X

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

T

Consumer [Health Care] Sovereignty!* E.g.:

“Empowered consumers influenced by medical advertising and educated by

information on the Internet are driving demand for new vision correction

options.”

Start Up (10-99)

* “Take your White Coat and … ”

Welcome to

D.I.Y. Nation!“Changes in business processes will emphasize self service. Your costs as

a business go down and

perceived service goes up because customers are conducting it

themselves.” Ray Lane, Oracle

Shop in your Underwear

Source: SM’d logo for www.ae.comae = American Eagle Outfitters

Psych 101: Strongest Force on Earth?

My need to be in perceived control of

my universe!

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

Patricia Seybold’s “Basics”:The E-Customer Bill of Rights

Don’t waste my time!Remember who I am!

Make it easy for me to order and procure service!

Customize your products and services for me!

Source: customers.com

“Welcome back, Tommy!”

“In the network economy, the Website becomes the company’s primary interface to the customer.

The user interface becomes the marketing materials, store front,

store interior, sales staff and post-sales support all rolled into one.”

Jakob Nielsen, Designing Web Usability

Read This. No: INGEST This!

Jakob NielsenDesigning Web Usability:

The Practice of Simplicity*

*www.useit.com

“Most companies would do more business on the Internet if they

fired their entire marketing department and replaced it with

people who could produce interactive content that actually made it easier for users to buy.”

Jakob Nielsen, Nielsen Norman Group

Red Herring (01/00)

75% of online shoppers don’t complete their

purchase!

Nielsen/Designing Web Usability

All Web projects are customer-interface projects! Simplicity rules!

Make it easy for customers to perform useful tasks!

Less “cool,” more useful!Speed rules!

“Where does the Internet rank in priority?

It’s No. 1, 2, 3, and 4.” Jack Welch

Change … Or Die!

“Most of the brick and mortars look at the Internet as an add-on business … until they get a major scare. Then they either

change or die. … You have to put all your heart and soul in that direction, the way

Charles Schwab and Dell did.”


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

technologies … they still face a massive competitive disadvantage precisely

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

bogged down in internal political debates. Insurgents have no such

inhibitions.”

Philip Evans & Thomas Wurster, Blown to Bits

“ … if they set up a completely independent organization and let that organization attack the

parent.”

Clayton Christensen, The Innovator’s Dilemma

There are 2 Kinds of …

Defense*

vs.

Offense**

*Fend off upstarts.**Reinvent our marketspace!

Web Strategy: GE Power Systems

“Launch and Learn”(4 sites in 30 days)

Goodhome.com






BRAND!

Brand Outside

Strategy 3:

Women Rule!

?????????

Home Furnishings … 94%Vacations … 92%

Houses … 91%Bank Account … 89%

Health Care … 75%Etc.

48% working wives > 50%80% checks

61% bills53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

Women … 49% of Web users; 6 of 10 new users; 83% of wired women are primary decision makers for family healthcare,

finances, education.

Source: Business Week (11-99)

$3.3T + $1.5T = $4.8T*

* Larger than Japan!

Most Under-reported story!

9M*/20M+/$4T [> Germany]

* 400K in ’72; 132% since ’92;source: NFWBO, Cognetics

New golfers … 37%Basketball … 13.5M

1 in 27 (’70) … 1 in 3 (’96)

1874?

1874 … Jock Strap1977 … Jogbra

1977 ... 25K

1996 … 42M

Yeow!

1970 … 1%

2000 … 50%

OPPORTUNITY

NO. 1!*

[* No shit!]

Carol Gilligan/ In a Different Voice

Men: Get away from authority, familyWomen: Connect

Men: Self-orientedWomen: Other-oriented

Men: RightsWomen: Responsibilities

FemaleThink/ Popcorn

“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.”

“Men seem like loose cannons. Men always move faster through a store’s

aisles. Men spend less time looking. They usually don’t like asking where things are.

You’ll see a man move impatiently through a store to the section he wants,

pick something up, and then, almost abruptly he’s ready to buy. … For a

man, ignoring the price tag is almost a sign of virility.”

Paco Underhill, Why We Buy* [*Buy this book!]

Women and Financial Advisors

Women want … a plan, to be listened to, to be taken seriously, to read about it, to think about it.

Women do not want … an in-your-face sales pitch

Source: Kathleen Boyle, Wheat Boyle Butcher Singer

Women and Healthcare

Women are … more dissatisfied, frustrated by the way they are treated

and spoken down to by physicians, seek more information, are more pressed for time … and make 75% of health care decisions and control 2/3 of health care $

$$$ [and constitute 2/3 of health care employees].

Source: Patricia Braus, Marketing Healthcare to Women

Marketing to Women: Help Them Save Time!

80% … work86% … cook

58% … run errands with kids38% … take child to school

21% … go to the gym21% … take outside classes

How Many Gigs You Got, Man?

“Hard to believe … Different criteria”

“Every research study we’ve done indicates that women really care about the relationship with their

vendor.”

Robin Sternbergh/ IBM

Not!!

“Year of the Woman”

Enterprise Reinvention!

RecruitingHiring/Rewarding/ Promoting

Structure Processes

MeasurementStrategyCulture Vision

Leadership

THE BRAND ITSELF!

“What kind of car does Mommy want?”

“I didn’t know [company] were giving

company cars to secretaries.”

Source: UK financial services CEO, 12/99

Not a Morality Play!

“It is critical that we all understand that IBM is not marketing to women

entrepreneurs because it is the thing to do, or even the right thing to do.

We are marketing to women entrepreneurs because it is a huge

opportunity.”

Cherie Piebes

Speaking of Enormous

[Missed] [Huge] Opportunities ...

74/55

“At each stage of their lives, the needs and desires of the baby

boomers have become the dominant concerns of American business and popular culture. If you can anticipate

the movement of the baby-boom generation’s life-span migration, you

can see the future.”Ken Dychtwald, Age Wave

Aging/“Elderly”

2X growth rate$$$$$$$$$$$$

“I’m in charge!”“Experiences” vs. Products

Design revolution!

Good source: Ken Dychtwald, Age Wave

Priorities: Aging/“Elderly”

Experiences … Convenience … Comfort

… Access … Respect!

“Any student who combines an expertise in gerontology with, say, an M.B.A. or law degree will

have a license to print money.”

Newsweek






BRAND!

Brand Outside

Strategy 4:

Design Rules!

And Tomorrow …

“Fifteen years ago companies competed on price. Now It’s

quality. Tomorrow it’s design.”Robert Hayes

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 (10/98)

Drop-dead Charm!

“The new Beetle fails at most categories. The only

thing it doesn’t fail in is drop-dead charm.”

Jerry Hirshberg, Nissan Design International

Object of Desire!

“Every now and then, a design comes along that radically changes the way we think about a particular object. Case in

point: the iMac. Suddenly, a computer is no longer an anonymous box. It is a

sculpture, an object of desire, something that you look at.”

Katherine McCoy, Michael McCoy, Illinois Institute of Technology

Design as Soul

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

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

meaning of design. Design is the fundamental soul of a

man-made creation.”Steve Jobs

Check Out the Language:

“Tomorrow it’s design …”“Design is the only thing …”

“Design is … religion ...”“Drop-dead charm …”“Object of desire …”

“Fundamental soul …”

The I.D. [International Design] Forty*

Airstream … Alfred A. Knopf … Apple Computer … Amazon.com …

Bloomberg … Caterpillar … CNN … Disney … FedEx … Gillette … IBM … Martha Stewart … New Balance …

Nickelodeon … Patagonia … The New York Yankees … 3M … Etc.

* List No. 1, 1999

Unconventional [Design] Messages

Not about ... “Lumpy Objects”!

Not about ... $79,000 objects

One-sixth Second per Item!

“During the 30 minutes you spend on an average trip to the supermarket,

about 30,000 products vie to win your attention and ultimately to make you

believe in their promise.”

Thomas Hine, The Total Package

[ Design Moments!

Shopping cart =

2X heavy items

Source: Wall Street Journal (11-24-99) ]

Message:Services are Not Intangible!

You “give off” hundreds of design cues … daily!

YOU ARE A DESIGNER!

Graceful language!

Susan Sargent Designs:

PLEASE COMPLAIN!Thanks for your order!

We dearly want everything to go p-e-r-f-e-c-t-l-y!

If the order was late. Or wrong.Or if any of the goods are damaged in the

slightest.Or if you’re just having a lousy day and

want to unload on someone …

Call our Customer Care Hotline!

Beauty Contest!

1. Pick one form/ document: invoice, airbill, sick leave policy, returns claim

form.2. Rate it on a 1 to 10 scale

(1 = Awful; 10 = Scintillating) on three dimensions: Beauty, Grace, Clarity.

3. Repeat … every 15 days.

WEB Words: TP

NO CLUTTER!

No Clutter! CNNSI.com developed an increasingly common

problem. In the midst of adding material, its design went bad. CNNSI became so packed with links, new sections and graphics that it actually became hard to find something as basic as the

score of last night’s ballgame. Then it got worse. The team tried to make new graphic elements

eye-catching enough to stand out from the site’s clutter. But the surfers ignored them, thinking

they were ads.”Business Week [9-99]

“When you click on Yahoo! today you get the same

simple, nearly graphics-free home page you would have seen had you clicked three

years ago.”Fortune, on Zod Nazem,

Yahoo! CTO

[ EVP,S.O.U.B. ]

Huge Opportunities [That Damn Few Are Pursuing!]

Women!The rapidly aging population!

Design!






BRAND!

Brand Outside

Strategy 5:

It’s the Experience!

“Experiences are as distinct from services as services are from

goods.”Joseph Pine & James Gilmore, The

Experience Economy: Work Is Theater & Every Business a Stage

“The [Starbucks] Fix” Is on …

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

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

customers come for refuge.”Nancy Orsolini, District Manager

Safe, On Time and …

“We defined personality as a market niche. We seek to

amuse, to surprise, to entertain.”

Herb Kelleher, Main Man, LUV Airlines

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

Mantra: “Any good can be ing-ed”

the driving experiencethe pumping experience

the sitting experiencethe reading experiencethe washing experiencethe cooking experience

Joseph Pine & James Gilmore, The Experience Economy: Work Is Theater & Every Business a Stage

“This is the end of the pure product era. For instance, car

makers are beginning to understand that the car is a

platform for delivering services that drive the customer

experience.”Carly Fiorina, HP @ Comdex ’99

Marketing Aesthetics

“managing aesthetics experiences” … “aesthetics strategy” … “marketing of sensory experiences that contribute

to the organization’s or brand’s identity” … “mapping strategic vision

to sensory stimuli”

Source: Marketing Aesthetics, Bernd Schmitt & Alexander Simonson

Look + Feel + Taste + Touch + Sound + Smell +

Texture + Color + Typeface + Etc. = EXPERIENCE*

* Bernd Schmitt & Alexander Simonson, Marketing Aesthetics






BRAND!

Brand Outside

BRAND POWER!

Brand Defined

DistinctionExcellence

Emotional “Signature”Trustworthiness

ConsistencyShorthand

Brand It! Now, More Than Ever!

“The increasing difficulty in differentiating between products and

the speed with which competitors take

up innovations will assist in the rise and rise of the brand.”

Gillian Law and Nick Grant, Management [New Zealand]

No Room for Brands?

NikeSaturnCNN

America OnlineCharles Schwab

StarbucksThe Gap

IntelEtc.

Brand = Trust!

“Most buyers do not have a clue whether anybody else makes a better microprocessor, but ‘Intel Inside’ has become a ‘trust mark’ - a trademark that consumers put their faith in.”

The Economist

“Branding is not a problem if you have the right mentality. You go to your team and

you pin up a $200 Swiss Army Watch. Competing in the ridiculously crowded

sub-$200 watch market, they made it into a brand name, named after the most

irrelevant and useless thing in history [the Swiss Army]. And you say, ‘Gang, if they

can do it, we can do it.’ ”

Barry Gibbons

“Salt is salt is salt. Right? Not when it

comes in a blue box with a picture of a little girl carrying an umbrella. Morton International continues to dominate the U.S. salt market even though it charges more for a product that is demonstrably

the same as many other products on the shelf.”

Tom Asaker, Humanfactor Marketing

Calling the Corporate Shrink!

“Organizational Psychotherapy”/

WHO WE ARE!

Brand = You Must Care!

“Success means never letting the competition define you. Instead you have to define

yourself based on a point of view you care deeply about.”

Tom Chappell, Tom’s of Maine

Scott Bedbury/ Nike, Starbucks

“A Great Brand taps into emotions. Emotions drive most, if not all, of our decisions. A brand reaches out with a powerful connecting experience. It’s an

emotional connecting point that transcends the product.

“A Great Brand is a story that’s never completely told. A brand is a metaphorical story that

connects with something very deep - a fundamental appreciation of mythology. Stories

create the emotional context people need to locate themselves in a larger experience.”

“Consumers don’t simply buy products, they buy attitudes as well. When confronted with proliferation and

diversity, choices become increasingly informed by belief. [Consumers] want to

know who is behind the products that they buy. They want to know the

company. They want to know what you think.”

Jesper Kunde, Corporate Religion

“Corporate Religion is a completely new way of thinking about companies. Today, the product is still the main communication

highway in the company. When companies make the shift to selling solutions, brands and attitudes … communicating the company’s

attitudes and values becomes the decisive parameter for success. It

demands that you find out who you are as a company.”

Jesper Kunde, Corporate Religion

“In the funky village, real competition no longer revolves

around marketshare. We are competing for attention –

mindshare and heartshare.”Kjell Nordstrom and Jonas Ridderstrale,

Funky Business

“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

The Ten Rules of Radical Marketing

CEO must “own” the marketing function!Hyper-lean Mktg. Dept. (No filters!)

CEO hangs out with customers!Love + Respect your customers!

Just Say No … to market research!Hire only passionate missionaries!

Create a Community of users-customers!Emphasize one-to-one marketing tools!

Celebrate craziness!Be insanely True to the Brand!

Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)

Brand Leadership

Lead Out Loud!

Message Bran[d]son:

Live the Brand!

ENTHUSIASM RULES!

“I am a dispenser of enthusiasm.”/ Ben

Zander

“If you want to be persuasive, you have to generate a high level of energy. It’s energy that makes you visible, that gives you

presence. I call it ‘performance energy,’ and it’s the basis of dynamic leadership.

There is nothing artificial about it. Performance energy is an authentic part of who you are. You

just have to access it.”

Martha Burgess, Theater Techniques for Business People

Ann Richards’ Dogma

Show up!

Know your message!

PUT YOURSELF AT RISK!

(Personal) Accountability?!

WHERE WERE YOU DURING THE GREAT ENTERPRISE

REVOLUTION OF Y2K?

How sweet it is!

“If you ask me what I have come to do in this world, I

who am an artist, I will reply, I am here to live my

life out loud.”Emile Zola

“I’d rather regret the things I have done than the things I have not.”

Lucille Ball

“If things seem under control, you’re just

not going fast enough.”

Mario Andretti

THE END

Documents

TOM PETERS’ LESSONS IN LEADERSHIP2000 3 FEBRUARY SACRAMENTO