Tom Peters’ EXCELLENCE. ALWAYS. 13 Axioms. Grupo Modelo/28 May 2008

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Excellence1982: The Bedrock “Eight Basics” Excellence1982: 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” Properties”

“Breakthrough” 82* People! People!Customers!Action!Values! *In Search of Excellence

Slides* at … tompeters.com* *Also long version

#1/13

Buy a very large one and just wait.” “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

39 members of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly underperformed the market; just 2 (2%), GE & Kodak, outperformed the market from 1917 to “Forbes100” from 1917 to 1987 : 39 members of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly underperformed the market; just 2 (2%), GE & Kodak, outperformed the market from 1917 to 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 Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market

“Mr. Foster and his McKinsey colleagues collected detailed performance data stretching back 40 years for 1,000 U.S. companies. —Financial Times “Mr. Foster and his McKinsey colleagues collected detailed performance data stretching back 40 years for 1,000 U.S. companies. They found that none of the long-term survivors managed to outperform the market. Worse, the longer companies had been in the database, the worse they did.” —Financial Times

“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

“Citigroup merger a mistake ” “ sad story” “The stockholders have not benefited. The employees certainly have not benefited and I don’t think the customers have benefited because our franchises are weaker than they have been.” Source: Financial Times, (All quotes courtesy John Reed, who crafted the Citi- Travelers merger in 1998 in a $166B deal)

Mission impossible? $36B/’98 minus $675M/‘07

$10,000,000/Day

Dick Kovacevich: You don’t get better by being bigger. You get worse.”

“Data drawn from the real world attest to a fact that is beyond our control: —Norberto Odebrecht, Education Through Work “Data drawn from the real world attest to a fact that is beyond our control: Everything in existence tends to deteriorate.” —Norberto Odebrecht, Education Through Work

“A” “A.” There’s “A” and then there’s “A.”

Winning the Merger Game Is Possible --Lots of deals --Little deals --Friendly deals —Stay close to core competence —Strategy is easy to understand Source: “The Mega-merger Mouse Trap”/Wall Street Journal/ / David Harding & Sam Rovit, Bain & Co./re Comcast-Disney

Spinoffs “freed from the confines of the parent … more entrepreneurial, more nimble Spinoffs systematically perform better than IPOs … track record, profits … “freed from the confines of the parent … more entrepreneurial, more nimble” —Jerry Knight/ Washington Post/ 08.05

#2

#1 Exporter?

#4 Japan #3 USA #2 China #1 Germany

Reason!!! Mittelstand

Or … Goldmann Produktions (11/50%/$5M/”dip and coat,” expensive pigments vs “through coloring,” fades Bekro Chemie)

The Red Carpet Store Joel Resnick/Flemington NJ (referenced in Fame Junkies)

#3

The black swan

1982 (-) = 200 Years (+)

1982/Default Latin America = 200 years [Total historical earnings] The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb

Career = 1 or 2 black swans

“Character is more crucial now than ever, because in times of great uncertainty past performance is no indicator of future performance. Experience falls away and all you’re left with is character.” —David Rothkopf, founder of a firm that helps chief executives manage risks executives manage risks

#4

25

#4A

“Mapping your competitive position” or …

1. Have you in the last 10 days … visited a customer? 2. Have you called a customer … TODAY?

#5

Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned in your long and distinguished career?” His immediate answer: “ remember to tuck the shower curtain inside the bathtub”

#5A

2-cent candy

TGR TGR

#6

1/40

try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Screw it up. Try it. Try it. Try it. Try it. Try it. Try it. Screw it up. it. Try it. Try it. try it. Try it. Screw it up. Try it. Try it. Try it.

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

“We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version # 5. By the time our rivals are ready with wires and screws, we are on version ready with wires and screws, we are on version # 10. It gets back to planning versus acting: We act from day one; others plan how to plan— for months.” —Bloomberg by Bloomberg # 10. It gets back to planning versus acting: We act from day one; others plan how to plan— for months.” —Bloomberg by Bloomberg

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

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

#6a

4/40

De-cent- ral-iz- a-tion!

Enemy #1 I.C.D. Note 1: Inherent/Inevitable/ Immutable Centralist Drift Note 2: Jim Burke’s 1-word vocabulary: “No.”

Ex-e- cu-tion!

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

“Execution = Deepest “Blue Ocean”

Ac-count- a-bil-ity!

CF: 30% (no salesfolk) MH: 80% (salesfolk)

6:15A.M.

#7

TP: TP: “How to flush $500,000 down the toilet in one easy lesson!!”

People! People!

Brand = Talent.

“You have to treat your employees like customers.” —Herb Kelleher, upon being asked his “secret to success” Source: Joe Nocera, NYT, “Parting Words of an Airline Pioneer,” on the occasion of Herb Kelleher’s retirement after 37 years at Southwest Airlines (SWA’s pilots union took out a full-page ad in USA Today thanking HK for all he had done; across the ad in USA Today thanking HK for all he had done; across the way in Dallas American Airlines’ pilots were picketing the way in Dallas American Airlines’ pilots were picketing the Annual Meeting) Annual Meeting)

“People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, trust.” “People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, trust.” — Howard Schultz, Starbucks (IBD/09.05)

Organizations exist to serve. Period. Leaders live to serve. Period. Passionate servant leaders, determined to create a legacy of earthshaking transformation in their domain create/must necessarily create organizations which are … no less than Cathedrals in which the full and awesome power of the Imagination and Spirit and native Entrepreneurial flair of diverse individuals is unleashed … In passionate pursuit of jointly perceived soaring purpose and personal and community and client service Excellence.

#7A

Hire very good people!

20 40 $25$80 2 “We believe companies can increase their market cap 50 percent in 3 years. Steve Macadam at Georgia- Pacific … changed 20 of his 40 box plant managers to put more talented, higher paid managers in charge. He increased profitability from $25 million to $80 million in 2 years.” —Ed Michaels, War for Talent

#7b

EMPHASIZE THE “SOFT SKILLS.”

#7c

2/year = legacy.

#7d

#1 cause of Dis-satisfaction?

#7e

“Leaders ‘SERVE’ people. Period.” “Leaders ‘SERVE’ people. Period.” —inspired by Robert Greenleaf

“No matter what the situation, [the excellent manager’s] first response is always to think about the individual concerned and how things can be arranged to help that individual experience success.” —Marcus Buckingham, The One Thing You Need to Know

#7f

“Every child is born an artist. The trick is to remain an artist.” —Picasso

#8

We are the company we keep we keep

The “Hang Out Axiom”: At its core, every (!!!) relationship-partnership decision (employee, vendor, customer, etc) is a strategic decision about: “Innovate, ‘Yes’ or ‘No’ ”

“Normal” = “o for 800”

#9

24%

dubai

Single greatest act of pure imagination

#10

Hard Is Soft Soft Is Hard

Hard Is Soft (Plans, # s ) Soft Is Hard (people, customers, values, relationships))

R.O.I.R.

R eturn O n I nvestment In R elationships

“Allied commands depend on mutual confidence [and this confidence] is gained, above all through the development of friendships.” of friendships.” —General D.D. Eisenhower, Armchair General* (05.08) *“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his future coalition command it was a quality that would pay great dividends during his future coalition command

18’ Source: How Doctors Think, Jerome Groopman Source: How Doctors Think, Jerome Groopman

Q/Systems Salesperson: “I make the sale, and then the company screws up the engineering or delivery or one of a dozen things. Any suggestions? A/TP: “Spend less time with your customers!”

#10a

THERE ONCE WAS A TIME WHEN A THREE-MINUTE PHONE CALL WOULD HAVE AVOIDED SETTING OFF THE DOWNWARD SPIRAL THAT RESULTED IN A COMPLETE RUPTURE. Relationships (of all varieties) : THERE ONCE WAS A TIME WHEN A THREE-MINUTE PHONE CALL WOULD HAVE AVOIDED SETTING OFF THE DOWNWARD SPIRAL THAT RESULTED IN A COMPLETE RUPTURE.

THE PROBLEM IS RARELY/NEVER THE PROBLEM. THE RESPONSE TO THE PROBLEM INVARIABLY ENDS UP BEING THE REAL PROBLEM THE PROBLEM IS RARELY/NEVER THE PROBLEM. THE RESPONSE TO THE PROBLEM INVARIABLY ENDS UP BEING THE REAL PROBLEM.

#10b

“I screwed up.”* *The virtuous “circle of blame “I screwed up.”* *The virtuous “circle of blame

Showing up! Listening!Volunteering!Nice!

#11

“Forget China, India and the Internet : Economic Growth Is Driven by Women.” “Forget China, India and the Internet : Economic Growth Is Driven by Women.” —Headline, Economist, April 15, 2006, Leader, page 14

“Women are the majority market” —Fara Warner/The Power of the Purse

“Goldman Sachs in Tokyo has developed an index of 115 companies poised to benefit from women’s increased purchasing power; over the past decade the value of shares in Goldman’s basket has risen by 96%, against the Tokyo stockmarket’s rise of 13%.” of 13%.” —Economist, April 15

The Perfect Answer Jill and Jack buy slacks in black…

10 UNASSAILABLE REASONS WOMEN RULE Women Women Women make [all] the financial decisions. Women control [all] the wealth. Women Women [substantially] outlive men. Women Women start most of the new businesses. Women’s Women’s work force participation rates have soared worldwide. Women Women are closing in on “same pay for same job.” Women Women are penetrating senior ranks rapidly [even if the pace is slow for the corner office per se]. Women’s Women’s leadership strengths are exceptionally well aligned with new organizational effectiveness imperatives. Women Women are better salespersons than men. Women Women buy [almost] everything—commercial as well as consumer goods. So what exactly is the point of men?

#11a

7/13

!!!!!!!!!!!!!!!!! “People turning 50 today have more than half of their adult life ahead of them.” “People turning 50 today have more than half of their adult life ahead of them.” —Bill Novelli, 50+: Igniting a Revolution to Reinvent America

We are the Aussies & Kiwis & Americans & Canadians. We are the Western Europeans & Japanese. We are the fastest growing, the biggest, the wealthiest, the boldest, the most (yes) ambitious, the most experimental & exploratory, the most different, the most indulgent, the most difficult & demanding, the most service & experience obsessed, the most vigorous, (the least vigorous,) the most health conscious, the most female, the most profoundly important commercial market in the history of the world—and we will be the Center of your universe for the next twenty- five years. We have arrived!

#12

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 *“Radically Thrilling”

“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 *“Insanely great”

Hypothesis: DESIGN is the principal difference between love and hate!* *Not “like” and “dislike”

#13

“Excellence can be obtained if you:... care more than others think... care more than others think is wise;... risk more than others think is wise;... risk more than others think is safe;... dream more than others think is safe;... dream more than others think is practical;... expect more than others think is practical;... expect more than others think is possible.” is possible.” Source: Anon. tompeters.com by K.Sriram, November 27, :17 AM)