Slides at … tompeters

1. Tom Peters’ “Base Case”:Re-Imagine!Business Excellence in a Disruptive AgeBaseCase/05October2005

2. Slides at …tompeters.com

3. Context.

4. 3,000,000,000

5. THREEBILLIONNEW CAPITALISTS—Clyde Prestowitz

6. 26m

7. 43h

8. 3,000,000,000

9. “A focus on cost-cutting and efficiency has helped many organizations weather the downturn, but this approach will ultimately render them obsolete.Only the constant pursuit of innovation can ensure long-term success.”—Daniel Muzyka, Dean, Sauder School of Business, Univ of British Columbia (FT/09.17.04)

10. “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”—Charles Darwin

11. No!

12. “Not a single company that qualified as having made a sustained transformation ignited its leap with a big acquisition or merger.Moreover, comparison companies—those that failed to make a leap or, if they did, failed to sustain it—often tried to make themselves great with a big acquisition or merger. They failed to grasp the simple truth that while you can buy your way to growth, you cannot buy your way to greatness.”—Jim Collins/Time/11.29.04

13. “I don’t believe in economies of scale.You don’t get better by being bigger. You get worse.”—Dick Kovacevich/Wells Fargo/Forbes08.2004 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%; J.P. Morgan Chase, 0.9%)

14. 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

15. “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 very large one and just wait.”—Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

16. Yes!

17. “To grow, companies need to break out of a vicious cycle of competitive benchmarking and imitation.”—W. Chan Kim & Renée Mauborgne, “Think for Yourself —Stop Copying a Rival,” Financial Times/08.11.03

18. Innovation!NOTImitation

19. “Value innovation is about making the competition irrelevant by creating uncontested market space. We argue that beating the competition within the confines of the existing industry is not the way to create profitable growth.” —Chan Kim & Renée Mauborgne (INSEAD), from Blue Ocean Strategy (The Times/London/01.20.2005)

20. “Acquisitions are about buying market share.Our challenge is to create markets.There is a big difference.”—Peter Job, CEO, Reuters

21. GH/TP:“Get better”vs“Get different”

22. The SE22:Origins of Sustainable Entrepreneurship.

23. SE22/Origins of Sustainable Entrepreneurship 1. Genetically disposed to Innovations that upset apple carts (3M, Apple, FedEx, Virgin, BMW, Sony, Nike, Schwab, Starbucks, Oracle, Sun, Fox, Stanford University, MIT) 2. Perpetually determined to outdo oneself, even to the detriment of today’s $$$ winners(Apple, Cirque du Soleil, Nokia, FedEx) 3. Treat History as the Enemy(GE) 4. Love the Great Leap/Enjoy the Hunt(Apple, Oracle, Intel, Nokia, Sony) 5. Use “Strategic Thrust Overlays” to Attack Monster Problems(Sysco, GSK, GE, Microsoft) 6. Establish a “Be on the COOL Team” Ethos.(Most PSFs, Microsoft) 7. Encourage Vigorous Dissent/Genetically “Noisy”(Intel, Apple, Microsoft, CitiGroup, PepsiCo) 8. “Culturally” as well as organizationally Decentralized(GE, J&J, Omnicom, Virgin) 9. Multi-entrepreneurship/Many Independent-minded Stars (GE,PepsiCo, J & J)

24. HP’s Big “Duh”!Decentralize ($90B)Undo “Matrix”AccountabilitySource: “HP Says Goodbye To Drama”/BW/09.05/re Mark Hurd’s first 5 months

25. SE22/Origins of Sustainable Entrepreneurship 10. Keep decentralizing—tireless in pursuit of wiping out Centralizing Tendencies(J&J, Virgin) 11. Scour the world for Ingenious Alliance Partners—especially exciting start-ups(Pfizer) 12. Acquire for Innovation & Talent, not Market Share (Cisco, GE, Omnicom) 13. Don’t overdo “pursuit of synergy”(GE, J&J, Time Warner) 14. Execution/Action Bias: Just do it … don’t obsess on how it “fits the business model.” (3M, J & J) 15. Find and Encourage and Promote Strong-willed/Hyper- smart/Independent people(GE, PepsiCo, Microsoft) 16. Support Internal Entrepreneurs/Intrapreneurs (3M, Microsoft) 17. Ferret out Talent … anywhere and everywhere/“No limits” approach to retaining top talent(Nike, Virgin, GE, PepsiCo)

26. SE22/Origins of Sustainable Entrepreneurship 18. Unmistakable Results & Accountability focus from the get-go to the grave(GE, New York Yankees, PepsiCo) 19. Up or Out(GE, McKinsey, big consultancies and law firms and ad agencies and movie studios in general) 20. Competitive to a fault!(GE, New York Yankees, News Corp/Fox, PepsiCo) 21. “Bi-polar” Top Team, with “Unglued” Innovator #1, powerful Control Freak #2(Oracle, Virgin) (Watch out when #2 is missing: Enron) 22. Masters of Loose-Tight/Hard-nosed about a very few Core Values, Open-minded about everything else(Virgin, Horatio Nelson)

27. Bang!

28. No Wiggle Room!“Incrementalism is innovation’s worst enemy.”Nicholas Negroponte

29. “Beware of the tyranny of making SmallChanges to SmallThings. Rather, make BigChanges to BigThings.”—Roger Enrico, former Chairman, PepsiCo

30. IS/IT:PowerTools forPowerStrategies!—TP

31. “Rewardexcellent failures.Punishmediocre successes.”Phil Daniels, Sydney exec

32. Up! Up!

33. And the “M” Stands for … ?Gerstner’s IBM:“Systems Integrator of choice.” (BW)IBM Global Services:$55B

34. “Big Brown’s New Bag: UPS Aims to Be theTraffic Manager for Corporate America”—Headline/BW/07.19.2004

35. “[Closing/selling Boeings 8,000-person facility in Wichita] was an important decision in moving forward with Boeing’s long-term strategy of becoming a large-scale integrator.”—The Wichita Eagle/06.16.2005

36. Answer: PSF![Professional Service Firm]Department Headto …Managing Partner, HR [IS, R&D,etc.] Inc.

37. Experience Ladder/P&G-TPSolutionsServicesGoodsRaw Materials

38. Up! Up! Up!

39. “Experiencesare as distinct from services as services are from goods.”Joe Pine & Jim Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage

40. 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

41. 2/503Q04

42. “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

43. “With its carefully conceived mix of colors and textures, aromas and music, Starbucksis more indicative of our era than the iMac. It is to the Age of Aesthetics what McDonald’s was to the Age of Convenience or Ford was to the Age of Mass Production—the touchstone success story, the exemplar of all that is good and bad about the aesthetic imperative. … ‘Every Starbucks store is carefully designed to enhance the quality of everything the customers see, touch, hear, smell or taste,’ writes CEO Howard Schultz.”—Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

44. Experience Ladder/P&G-TPAwesome ExperiencesSolutionsServicesGoodsRaw Materials

45. Sales per Square Foot/GroceryAlbertson’s: $384Wal*Mart: $415Whole Foods: $798

46. Up! Up! Up! Up!

47. DREAM:“A dream is a complete moment in the life of a client. Important experiences that tempt the client to commit substantial resources. The essence of the desires of the consumer. The opportunity to help clients become what they want to be.”—Gian Luigi Longinotti-Buitoni

48. Planetary Rainmaker-in-Chief!“Palmisano’s strategy is to expand tech’s borders by pushing users—and entire industries—toward radically different business models.The payoff for IBM would be access to an ocean of revenue—Palmisano estimates it at $500 billion a year—that technology companies have never been able to touch.”—Fortune

49. “By making the Global Delivery Model both legitimate and mainstream, we have brought the battle to our territory. That is, after all, the purpose of strategy. We have become the leaders, and incumbents [IBM, Accenture] are followers, forever playing catch-up. … However, creating a new business innovation is not enough for rules to be changed. The innovation must impact clients, competitors, investors, and society. We have seen all this in spades. Clients have embraced the model and are demanding it in even greater measure. The acuteness of their circumstance, coupled with the capability and value of our solution, has made the choice not a choice. Competitors have been dragged kicking and screaming to replicate what we do. They face trauma and disruption, but the game has changed forever.Investors have grasped that this is not a passing fancy, but a potential restructuring of the way the world operates and how value will be created in the future.”—Narayana Murthy, chairman’s letter, Infosys Annual Report 2003

50. Experience Ladder/P&G-TPDreams Come TrueAwesome ExperiencesSolutionsServicesGoodsRaw Materials