Tom Peters EXCELLENCE ALWAYS Hexaware Phoenix 29 September

Tom Peters’ EXCELLENCE. ALWAYS. Hexaware. Phoenix. 29 September 2006

Slides at … tompeters. com

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for Buy a very large one and just wait. ” myself? ’ The answer seems obvious: —Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

“Forbes 100” from 1917 to 1987: 39 members of the Class of ’ 17 were alive in ’ 87; 18 in ’ 87 F 100; 18 F 100 “survivors” significantly underperformed the market; 2 just (2%), GE & Kodak, outperformed the market from 1917 to 1987. S&P 500 from 1957 to 1997: ’ 97; 74 members of the Class of ’ 57 were alive in 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

Welcome to the “Club of Shattered Dreams”: Of Korea’s Top 100 companies in 1955, only 7 were still on the list in 2004. The 1997 crisis “destroyed half of Korea’s 30 largest conglomerates. ” Source: “KET Issue Report, ” Kim Jong Nyun (14. 05. 2005)

“I don’t believe in economies of You don’t get better by being bigger. You get worse. ” scale. Dick Kovacevich/Wells Fargo —

Scale? “Microsoft’s Struggle With Scale” —Headline, FT, 09. 2005 “Troubling Exits at Microsoft” —Cover Story, BW, 09. 2005 “Too Big to Move Fast? ” —Headline, BW, 09. 2005

More than $$$$ #1 R&D spending, last 25 years?

GM

“When asked to name just one big merger that had lived up to expectations, Leon Cooperman, former cochairman of Goldman Sachs’ Investment Policy Committee, I’m sure there are success stories out there, but at this moment I draw a blank. ” —Mark Sirower, The Synergy Trap answered:

“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/2004

“Almost every personal friend I have in the world works on Wall Street. You can buy and sell the same company six times and everybody makes but I’m not sure we’re actually innovating. … Our challenge is to money, take nanotechnology into the future, to do personalized medicine …” —Jeff Immelt/2005

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

kill an organization “It is generally much easier to than change it substantially. ” —Kevin Kelly, Out of Control

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

A. W. O. L. BASICS

Franchise Lost! TP: “How many of you really [600] crave a new Chevy? ”

“Ford, Ford GM and Chrysler do not just make cars expensively … they make bad cars expensively. ” —Investec analyst, International Herald, 0805. 06

Sluggish + Obese + Unimaginative + More Sluggish + More Obese + More Unimaginative + Even More Sluggish + Even More Obese + Even More Unimaginative = NISSAN + RENAULT + GM = Innovative Challenger for Toyota? ?

New Economy? ! Genentech 09, Amgen 09 > Merck 09 (70 K-3/394 B-5)

BASICS K. I. S. S.

People. Product. Clients. Execution. Enthusiasm. Excellence.

Sir Richard’s Rules: Follow your passions. Keep it simple. Get the best people to help you. Re-create yourself. Play. Source: Fortune on Branson

People. Product. Clients. Execution. Enthusiasm. Excellence. Relentlessness.

People. Product. Clients. Execution. Enthusiasm. Excellence. Relentlessness. Senility.

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

“A pattern emphasized in the case studies in this book is the degree to which powerful competitors not only resist innovative threats, but actually resist all efforts to understand them, preferring to further their positions in older 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

The Perils of Conservatism/Industry Leadership “ ‘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

EXCELLENCE. THE WORD.

Synonyms Purity Transcendence Virtue Elegance Majesty Antonyms Mediocrity

EXCELLENCE. GAMECHANGER.

Excellence 1982: The Bedrock “Eight Basics” 1. A Bias for Action 2. Close to the Customer 3. Autonomy and Entrepreneurship 4. Productivity Through People 5. Hands On, Value-Driven 6. Stick to the Knitting 7. Simple Form, Lean Staff 8. Simultaneous Loose-Tight Properties”

Ex. In*: 1982 -2002/Forbes. com DJIA: $10, 000 yields $85, 000 EI: $10, 000 yields $140, 050 *Forbes/Excellence Index /Basket of 32 publicly traded stocks

EXCELLENCE. ASPIRATION.

“Why in the world did you go to Siberia? ”

An emotional, vital, innovative, joyful, creative, entrepreneurial endeavor that elicits maximum concerted human potential in the wholehearted service of others. *** Business* ** (*at its best): **Excellence. Always. ***Employees, Customers, Suppliers, Communities, Owners, Temporary partners

“To me business isn’t about wearing suits or pleasing stockholders. It’s about being true to yourself, your ideas and focusing on the essentials. ” —Richard Branson

EXCELLENCE. DEFINED.

SET THE AGENDA. * Great Companies … (PERIOD. ) * “disturb the sleep of …

AGENDA SETTERS: “Set the Table”/ Pioneers/ Questors/ Adventurers US Steel … Ford … Toyota … Sears … GM … ITT … The Gap … Limited … Wal*Mart … Tesco … P&G … 3 M … Intel … IBM … Apple … Nokia … Cisco … Dell … MCI … Sun … Microsoft … Google … Enron … Schwab … GE … Laker … Southwest … People Express … Ogilvy … Virgin … e. Bay … Amazon … Sony … Amgen … BMW … CNN … Nike

Built to Last vs Built for Impact “But what if [former head of strategic planning at Royal Dutch Shell] Arie De Geus is wrong in suggesting, in The Living Company, that firms should aspire to live forever? Greatness is fleeting and, for corporations, it The ultimate aim of a business organization, an artist, an athlete or a stockbroker may be to explode in a dramatic frenzy of value creation during a short space of time, rather than to live forever. ” will become ever more fleeting. —Kjell Nordström and Jonas Ridderstråle, Funky Business

GM 25/50 -75: “Built to last”? ?

TP#1*: Netscape! *Where would you rather have worked for those 5 years, years Netscape or IBM-HP-Microsoft-Oracle? (Where, 25 years from now, would you rather to be able to tell someone—e. g. , grandchild—that you worked? )

NO “LAST WORD”

S&P Stability Ratings* 1985 2006 41% 24% 35% 13% 14% 73% Low Risk Average Risk High Risk *Likelihood of stable longterm earnings growth Source: Fortune (2 October 2006)

No “Last word” models. Period.

U. S. Steel Ford GM IBM Macy’s Sears Microsoft? Dell? Wal*Mart?

“Seeking Growth in Urban Areas, Wal*Mart Gets Cold Shoulder” —WSJ (09. 25. 06)

EXCELLENCE. INNOVATE. OR. DIE.

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

EVERYTHING YOU THOUGHT YOU KNEW ABOUT INNOVATION IS WRONG

What “We” Know “For Sure” About Innovation Big mergers [by & large] don’t work Scale is over-rated Strategic planning is the last refuge of scoundrels Focus groups are counter-productive “Built to last” is a chimera (stupid) Success kills “Forgetting” is impossible Re-imagine is a charming idea “Orderly innovation process” is an oxymoronic phrase (= Believed only by morons with ox-like brains) “Tipping points” are easy to identify … long after they will do you any good “Facts” aren’t All information making it to the top is filtered to the point of danger and hilarity “Success stories” are the illusions of egomaniacs (and “gurus”) If you believe the memoirs of CEOs you should be institutionalized “Herd behavior” (XYZ is “hot”) is ubiquitous … and amusing “Top teams” are “Dittoheads” CEOs have little effect on performance “Expert” prediction is rarely better than rolling the dice

The Mess Is the Message! LIMITS TO FORMAL “STRATEGY. ”

“Recently I asked three corporate executives what decisions they had made in the last year that would not have been made were it not for their corporate plans. All had difficulty identifying one such decision. Since all of the plans are marked ‘secret’ or ‘confidential, ’ I asked them how their competitors might benefit from possession of their plans. Each answered with embarrassment that their competitors would not benefit. ” —Russell Ackoff (from Henry Mintzberg, The Rise and Fall of Strategic Planning)

“We are in a brawl with no rules. ” —Paul Allaire

S. A. V.

Inno. Tacs

We become who we hang out with!

Measure “Strangeness”/Portfolio Quality Staff Consultants Vendors Out-sourcing Partners (#, Quality) Innovation Alliance Partners Customers Competitors (who we “benchmark” against) Strategic Initiatives Product Portfolio (Line. Ex v. Leap) IS/IT Projects HQ Location Lunch Mates Language Board

“The Bottleneck Is at the Top of the Bottle” “Where are you likely to find people with the least diversity of experience, the largest investment in the past, and the greatest reverence for industry dogma: At the top!” — Gary Hamel/Harvard Business Review

futuremark

“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/2003

“How do dominant companies lose their position? Two-thirds of the time, they pick the wrong competitor to worry about. ” —Don Listwin, CEO, Openwave Systems/WSJ

y it. Try it. Try ryy it. Try it. try it. Try ryy it. try it. Try Try it.

READY. FIRE! AIM. Ross Perot (vs “Aim!” /EDS vs GM/1985)

READY. FIRE! AIM.

“This is so simple it sounds stupid, but it is amazing you only find oil if you drill wells. how few oil people really understand that 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

You only find oil if you drill wells. Source: The Hunters, by John Masters, Canadian O & G wildcatter

drill.

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

do things.

“Experiment fearlessly” Source: BW 0821. 06, Type A Organization Strategies/ “How to Hit a Moving Target”—Tactic #1

“You miss 100 percent of the shots you never take. ” —Wayne Gretzky

tolerate [encourage? ] failure

“FAIL, FAIL AGAIN. FAIL BETTER. ” —Samuel Beckett

“Fail. Forward. Fast. ” High Tech CEO, Pennsylvania

“Fail faster. Succeed Sooner. ” David Kelley/IDEO

Sam’s Secret #1!

“Reward excellent failures. Punish mediocre successes. ” Phil Daniels, Sydney exec

Speed/ Tempo

“We don’t sell insurance anymore. We sell speed. ” Peter Lewis, Progressive

He who has the quickest “O. O. D. A. Loops”* wins! *Observe. Orient. Decide. Act. /Col. John Boyd

bet the farm

“[Immelt] is now identifying technologies with which GE will … systematically set out to build entirely new industries” Strategy+Business, Fall 2005 —

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

“Beware of the tyranny of making Small Changes to Small Things. Rather, make Big Changes to Big Things. ” —Roger Enrico, former Chairman, Pepsi. Co

Power Tools For Power Strategies

“[other] admirals more frightened of losing than anxious to win” On NELSON:

Conscious measurement

Innovation Index: How many of your Top 5 Strategic Initiatives/Key Projects score 8 or higher [out of 10] on a “Weird”/ “Profound”/ “Wow”/“Game- changer” Scale?

Excellence: The SE 22: ORIGINS OF SUSTAINABLE ENTREPRENEURSHIP

SE 22/Origins of Sustainable Entrepreneurship 1. Genetically disposed to Innovations that upset apple carts (3 M, Apple, Fed. Ex, 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, Fed. Ex) 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, Citi. Group, Pepsi. Co) 8. “Culturally” as well as organizationally Decentralized (GE, J&J, Omnicom) 9. Multi-entrepreneurship/Many Independent-minded Stars (GE, Pepsi. Co)

SE 22/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, not Market Share (Cisco, GE) 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. ” (3 M, J & J) 15. Find and Encourage and Promote Strong-willed/ Hyper-smart/Independent people (GE, Pepsi. Co, Microsoft) 16. Support Internal Entrepreneurs (3 M, Microsoft) 17. Ferret out Talent anywhere/“No limits” approach to retaining top talent (Virgin, GE, Pepsi. Co)

SE 22/Origins of Sustainable Entrepreneurship 18. Unmistakable Results & Accountability focus from the get-go to the grave (GE, New York Yankees, Pepsi. Co) 19. Up or Out (GE, Mc. Kinsey, big consultancies and law 20. firms and ad agencies and movie studios in general) Competitive to a fault! (GE, New York Yankees, News Corp/Fox, Pepsi. Co) 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)

“HOW THE COAST GUARD GETS IT RIGHT” —Headline, Time, 10. 31. 2005 *Autonomy *Flexibility *“Perhaps the most important distinction of the Coast Guard is that it trusts itself”

EXCELLENCE. 4/40.

4/40

De-central-iza-tion!

The True Logic* of Decentralization: 6 divisions = 6 “tries” 6 divisions = 6 DIFFERENT leaders = 6 INDEPENDENT “tries” = Max probability of “win” 6 divisions = 6 very DIFFERENT leaders = 6 very INDEPENDENT “tries” = Max probability of “far out”/” 3 sigma” “win” *“Driver”: Law of Large #s

Ex-ecu-tion!

“Execution is the job of the business leader. ” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“Execution is a process systematic of rigorously discussing hows and whats, tenaciously following through, and ensuring accountability. ” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“Never forget implementation boys. In our work it’s what I call the ‘missing 98 percent’ of the client puzzle. ” —Al Mc. Donald

Ac-counta-bil-ity!

“GE has set a standard of candor. … There is no puffery. … There isn’t an ounce of denial in the place. ” —Kevin Sharer, CEO Amgen, on the “GE mystique” (Fortune)

6: 15 A. M.

? ? ? ? Work Hard > Work Smart

EXCELLENCE. BEDROCK. LEADERSHIP.

EXCELLENCE. ENTHUSIASM. ENERGY. PASSION.

“Nothing is so contagious as enthusiasm. ” —Samuel Taylor Coleridge

“Whenever anything is being accomplished, I have learned, it is being done by a monomaniac with a mission. ” —Peter Drucker

“Most important, upped the energy level at Motorola. ” he Fortune on Ed Zander/08. 05 —

Enthusiasm Energy Exuberance Voracious Curiosity Irritability/Dis-satisfaction Relentlessness Self-reliance “Closer” (Execution) excellence

“Everyone lives by selling something. ” —Robert Louis Stevenson

EXCELLENCE. RELENTLESSNESS.

RE-LENT-LESS RE-LENT-LES -NESS

“One of my superstitions had always been when I started to go anywhere or to do anything, not to turn back , or stop, until the thing intended was accomplished. ” Grant —

EXCELLENCE. AGILITY.

“The most successful people are those who are good at Plan B. ” —James Yorke, mathematician, on chaos theory, in The New Scientist

EXCELLENCE. SHOWING UP.

“You must be the change you wish to see in the world. ” Gandhi

25

EXCELLENCE. STRETCH.

The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it. Michelangelo

Kevin Roberts’ Credo 1. Ready. Fire! Aim. 2. If it ain’t broke. . . Break it! 3. Hire crazies. 4. Ask dumb questions. 5. Pursue failure. 6. Lead, follow. . . or get out of the way! 7. Spread confusion. 8. Ditch your office. 9. Read odd stuff. 10. Avoid moderation!

nsanely great”

"Life is not a journey to the grave with the intention of arriving safely in one pretty and well preserved piece, but to skid across the line broadside, thoroughly used up, worn out, leaking oil, shouting … ‘GERONIMO!’ ” —Bill Mc. Kenna, professional motorcycle racer

EXCELLENCE. DRILL.

You only find oil if you drill wells. —The Hunters, by John Masters, Canadian O & G wildcatter

“It’s always showtime. ” —David D’Alessandro, Career Warfare

XCELLE ALWA