Starwood Leadership Forum NYC 20 June 2000

Tom Peters Seminar2000 Brand Everything : Distinct or Extinct!

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]

Brand Leadership! “A key – perhaps the key – to leadership is the effective communication of a story.” Howard Gardner Leading Minds: An Anatomy of Leadership

“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

Part I: Brand Inside Part II: Brand Outside Part III: Brand Leadership

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)

“Change the rules before somebody else does.” Ralph Seferian, VP, Oracle

The [New] G e Way DYB.com

New Game! L.A.D.T.I.R.S.* *Life-and-death-total-industry- reinvention-struggles

Reinventing The Hospitality Industry! Starwood Goes for It!

Brand Inside Brand Org: Lean, Linked & Electronic

And Now the Equivalent … White Collar Revolution!

Robert Reich 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

Good Start Starwood Preferred Guest STARS/Starwood Technology and Revenue Systems

Brand Inside Brand Talent: The Great War for Talent

Issue Y2K The Great War for Talent!

“When land was the scarce resource, nations battled over it. The same is happening now for talented people.” Stan Davis & Christopher Meyer, futureWEALTH

John Chambers “Gets it”!!

There is no “talent shortage” … if … you are a GPTW* *Great Place To Work

Part I: Brand Inside Part II: Brand Outside Part III: Brand Leadership

Brand Outside The Commodity Trap

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

“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

“When we did it ‘right’ it was still pretty ordinary.” Barry Gibbons on “Nightmare No. 1”

The Character-less Hotel Indistinguishable Rooms!/ Indistinguishable Staff!

Brand Outside Strategy 1 : Lead the Customer!

“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

Amen! “The Age of the Never Satisfied Customer” Regis McKenna

Singapore Air: $18.5K/seat for entertainment systems Peninsula NY: $17K/room on personal technology Westin (Heavenly Bed) vs. Ritz Carlton (300 count Italian sheets) vs. Four Seasons (mattress madness)

GE’s New Six Sigma Approach Old view: Out of service 9 days. 4 days are transport, which is client responsibility. New view: ALL 9 DAYS ARE OUR RESPONSIBILITY! Why? 9 days = Client’s World. Source: Steve Kerr, VP, GE

Fact: You are responsible, in my mind, for … THE TURNKEY TRAVEL EXPERIENCE … and I don’t discriminate among who provides what.

Hotel in Las Vegas MY STAY HAS BEEN LOUSY! YOUR PROBLEM: A GROTESQUE START. To wit: 1 hour, 7 minutes in an airport cab 10:30 P.M. (1:30 A.M. EDT)

Brand Outside Strategy 2 : Use E-Commerce to Re-invent the Business!

??????? $35,000,000.

Dell’s Web sales … daily

Tomorrow Today: Cisco! 90% of $14.4B (Cisco Connection ONLINE) Save $500M (service and tech support) C.Sat e >> C.Sat H Customer Engineer Chat Rooms/Collaborative Design ($1B “free” consulting)

Lessons from Earth’s Richest Human Everything [In & Out] via Internet $1B in ’99-’00 [on a cost base of $6B] $1B in ’00-’01

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

Anne Busquet/ American Express Not: “Age of the Internet” Is: “Age of Customer Control”

“Where does the Internet rank in priority? It’s No. 1, 2, 3, and 4.” Jack Welch

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)

“It’s better to be first with less than last with more. Success on the Web isn’t just about time to market, it’s also about ‘time to learning.’ ” Jeff Levy, eHatchery

Jargon Bath! Bureaucracy free … Systemically integrated … Internet intense … Knowledge based … Time and location free … “Instantly” responsive … Customer centric … Mass customization enabled.

Translation … Bureaucracy free = Flat org, no B.S. Systemically integrated = Whole supply chain tightly wired/ friction free Internet intense = Do it all via the Web Knowledge based = Open access Time and location free = Whenever, wherever “Instantly” responsive = Speed demons Customer centric = Customer calls the shots Mass customization enabled = Every product and service rapidly tailored to client requirements

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% bills 53% stock (mutual fund boom) 43% > $500K 95% financial decisions/ 29% single handed

$3.3T + $1.5T = $4.8T* * Larger than Japan!

Yeow! 1970 … 1% 2002 … 50%

OPPORTUNITY NO. 1!

Read This Book … EVEolution: The Eight Truths of Marketing to Women Faith Popcorn & Lys Marigold

The Difference Factor! “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

Weight Watchers International “Model” “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

27 March 2000: to TP from Shelley Rae Norbeck “I make 1/3 rd more money than my husband does. I have as much financial ‘pull’ in the relationship as he does. I’d say this is also true of most of my women friends. Someone should wake up, smell the coffee and kiss our asses long enough to sell us something! We have money to spend and nobody wants it!”

Psssst! Wanna see my “porn” collection?

Brand Outside Strategy 4 : Design Rules!

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 Ogha

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

Starwood W

Brand Outside Strategy 6 : 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

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

“Car designers need to create a story. Every car provides an opportunity to create an adventure. … “The Prowler makes you smile. Why? Because it’s focused. It has a plot, a reason for being, a passion.” Freeman Thomas, co-designer VW Beetle; designer Audi TT

Hmmmm(?): “Only” Words … Story Adventure Smile Focus Plot Passion

Plot Williams Sonoma = 6 [was 10] Crate & Barrel = 8 Sharper Image = 9+ Smith & Hawken = 8+ Garnet Hill = 9 L.L. Bean = 5 [was 9+] Land’s End = 7+ Colonial Williamsburg = ?

Hotel World

Hotel Hell No Fresh Air! Smoke Stink! Polyester Blankets! Lousy Technology! < 24 Hour Room Service! < 24 Hour Fitness Club! Long check-in Line! No Taxis! “Hotel Feel” [No Soul!]

“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

“The deepest human need is the... NEED TO BE APPRECIATED.” William James

Brand Outside BRAND POWER!

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

“Create a Cause, not a ‘business.’ ” Gary Hamel, Fortune (06.00), on re- inventing a company (Exemplar #1: Charles Schwab)

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.”

Brand = Special = Passion = Plot = Compelling Mythology = Cause = Connection = Caring

Rules of “Radical Marketing” Love + Respect Your Customers! Hire only Passionate Missionaries! Create a Community of Customers! Be insanely True to the Brand! Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)

Reprise: Top Opportunities Tech In & Out Women (Etc.) Brand Power = Reinvent “Hospitality Business”

Part I: Brand Inside Part II: Brand Outside Part III: Brand Leadership

Brand Leadership Passion Rules!

“Leadership is a performance. You have to be conscious of your behavior, because everybody else is.” Carly Fiorina

Brand Leadership: ENTHUSIASM RULES! “I am a dispenser of enthusiasm”/ Ben Zander

“If things seem under control, you’re just not going fast enough.” Mario Andretti