tom peters’ re-imagine! business excellence in a disruptive age 22october2004/part 1

Tom Peters’

Re-Imagine!Business Excellence in a Disruptive Age

22October2004/Part 1

Contents: The Chapter Heading Slides follow.

Summer 2004: Not Your

Father’s World!

Biases.

Purpose.

I. NEW BUSINESS.

NEW CONTEXT.

1. Re-imagine Everything: All Bets Are Off.

Jobs Technology

Globalization War, Warfighting

& Security

2. Re-imagine Permanence:

The Destruction Mandate.

2A. Re-imagine Tomorrow’s

Organizations:

Itinerant Potential Machines.

2B. Yo, Jim Collins . Or:

Tom’s Case for …

Technicolor!

II. NEW BUSINESS. NEW TECH.

3. Re-imagine IS/ IT/ the Web:No Room for

Wimps!

3A. Re-imagine IS/ IT/ the Web:

Direct!

4. Re-imagine Jobs: The White

Collar Bloodbath.

III. NEW BUSINESS. NEW

VALUE PROPOSITION.

5. Re-imagine the Organization: The

Professional Service Firm (“PSF”) Imperative.

6. Re-imagine Business’

Basic Value Proposition: PSFs Unbound/ The

“Solutions Imperative.”

6A. Re-imagine Organizational Barriers: The

Solutions25.**NO MORE “SILOS.” NO MORE

“STOVEPIPES.”

IV. NEW BUSINESS. NEW

BRAND.

7. Re-imagine Enterprise as

Theater I: A World of Scintillating “Experiences.”

Theater II: Embracing the

“Dream Business.”

9. Re-imagine the “Soul” of Enterprise:

Design Rules!

9A. Re-imagine the Infrastructure of

Enterprise: Design = “Beautiful” Systems.

10. Re-imagine the Fundamental Selling Proposition: “It” all

adds up to …

THE BRAND.

10A. Re-imagine 2004: “Excellence” Found!

V. NEW BUSINESS.

NEW MARKETS.

11. Re-imagine the Customer I: Trends Worth

Trillion$$$ …

Women Roar.

12. Re-imagine the Customer II: Trends Worth

Trillion$$$ … Boomer Bonanza/ Godzilla

Geezer.

VI. NEW BUSINESS. NEW

13. Re-imagine Work: The

WOW Project. (Or Bust.)

14. Re-imagine Implementation I: The F4 Recipe.*

*Find a Fellow Freak Far away

14A. Re-imagine Implementation II: Getting to WOW

Through Mastery of …

The Sales25.

14B. Re-imagine Implementation III:

Getting Things Done … The Power & Implementation34.

15. Re-imagine Boss Work I: Start a WOW Projects Epidemic!

Emphasize … Demos, Heroes, Stories!

15A. Re-imagine Boss Work II: Send Them on

Quests!

VII. NEW BUSINESS. NEW

16. Re-imagine the Individual: Welcome

to a Brand You World … Distinct or

Extinct

17. Re-imagine

Excellence I: The Talent

Obsession.

17A. ADDENDA to Re-imagine Excellence: Tom Peters’

Talent50

17B. Re-imagine Excellence II: Meet the

New Boss … Women Rule!

VIII. NEW BUSINESS. NEW

BEDROCK.

18. Re-imagine Education.*

*Or perish

New Work. New World. New Education. The

Three Must Meet.

19. Re-imagine Healthcare

Healthcare Tsunami

HealthCare21

HealthCare2

IX. NEW BUSINESS. (NEW) BRAND INSIDE RULES

20. Re-imagine the Roots of Innovation: THINK WEIRD … the

High Value Added Bedrock.

X. NEW BUSINESS. NEW LEADERSHIP.

21. Re-imagine Leadership for Totally Screwed-Up

Times:

The Passion Imperative.

The Passion Imperative: The

Leadership50

XI. NEW BUSINESS. NEW

RULES.

22. A Re-imagineer’s Credo: Tom’s

60TIBs**TIB = This I Believe

23. Tom’s

Re-imagine Manifesto!

Boil It Down!

Parting Words

*Hands That Shape Humanity, a project of the Bishop Desmond Tutu Foundation

Master Presentation

Begins.

Part One.

Re-imagine!

Father’s World!

60,000

600/200

168/18,500/51,000

“China’s size does not merely enable low-cost manufacturing; it forces it. Increasingly, it is what

Chinese businesses and consumers choose for themselves that determines how the American

economy operates.” —Ted Fishman/“The Chinese Century”/

The New York Times Magazine /07.04.04

“One Monday this spring, a forty-three-year-old salesclerk at the Home Depot in Plano, Texas,

scribbled some updates onto an old resume and took it to his local copy shop. To his education

and work history—a bachelor’s degree in industrial engineering and technology, service in

the U.S. Marine Corps—he added a recent moonlighting job as a handyman and a new

‘career objective.’ Ten minutes later, in southern India, a middle-age Hindu man in a cavernous

workplace began to type the Home Depot clerk’s words.” —The New Yorker /07.05.2004

“The Ultimate Luxury Item Is Now

Made in China” —Headline/p1/The New York Times/

07.13.2004/Topic: Luxury Yachts made in Zhongshan

“Vaunted German Engineers Face

Competition From China” —Headline, p1/WSJ/07.15.2004

“When the Silk Road Gets Paved”/Forbes Global/09.04

Express highways: 168 miles in ’89 … 18,500 in ’03 … 51,000 in ’08 (v. U.S.

Interstate: 46,500)

Implications: $200M Intel plant in Chengdu (pop. 9.9M); 1/3rd Shanghai

wage rate

“You get an educated workforce, remarkable infrastructure, a lot of

government support. These [Southeast Asian] governments have made life sciences a top priority—and

they have a great venture capital community there.” —Glenn Rice, VP Pharmaceutical

Discovery and Development, SRI International (On the rapid migration of drug discovery from the U.S. at a 20% to 40% cost saving Rice adds that 40%

to 60% of U.S. postdocs are from China and Taiwan) From: Stanford Business /August 2004

International Herald Tribune

/09.13.2004: P1/600 foreign R&D labs in China, 200 new

per year

60,000*

*New factories in China opened by foreigners/2000-2003/

Edward Gresser, Progressive Policy Institute/Wall Street Journal 09.27.04

“Reuters Plans To Triple Jobs at Site In India” —Headline/

New York Times/ World Business/10.08.04/10% of total workforce in Bangalore by 2006

Level 5 (top) ranking/Carnegie Mellon

Software Engineering Institute: 35 of 70

companies in world are from India

Source: Wired/02.04

“JET BLUE has a secret weapon: a virtual

reservations center. … Jet Blue’s 600 agents all work

from home. …”

Source: Ad for Avaya/BW/07.19.2004

Colorado Springs: McDonald’s call center for Drive-

through (incl. electronic photo of customer)

Source: NYT/07.18.04

Business 2.0 outsources section

of August 2004 issue!

Source: USA Today/07.19.2004

“About a year ago I hired a developer in India to do my job. I pay him $12,000 to do the job I get paid $67,300

for. He is happy to have the work. I am happy that I only have to work about 90 minutes per day (I still have to attend meetings myself, and I spend a few minutes

every day talking code with my Indian counterpart.) The rest of my time my employer thinks I’m telecommuting.

They are happy to let me telecommute because my output is higher than most of my coworkers. Now I’m considering getting a second job and doing the same

thing with it. That may be pushing my luck though. The extra money would be nice, but that could push my

workday over five hours.” —from posting at Slashdot (02.04.04), reported by Dan Pink, A Whole New Mind

New Delhi/09.13.2004/The Economic Times

P1: “Airport Traffic Racks Up 26% Growth in 4 Months”

P1: “EMPLOYABLE GRADUATES IN DEMAND” (“The Business Process Outsourcing sector is facing a roadblock. …BPO companies are struggling to hire new employees in sufficient numbers. …”)

P11: “Tourist Arrivals Surge 26% in Lean Apr-Aug”

“AT&T Said to Be Takeover

Target” —headline, Newsweek,

07.26.04, on KKR’s possible bid

Re-imagine!

Father’s World II.

“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)

“Don’t get left on the shelf: Innovation, not advertising, is the solution to FMCG [Fast-Moving

Consumer Goods] companies’ problems with retailer power

and own-label brands” —Headline/FT/10.12.04

“I’m worried our business model might run out of steam in two or three years. We make lots of incremental product

improvements, get them to launch as quickly as we can and then fire a big cannon full of marketing dollars at them. But each time the lifetime of that product gets shorter and the amount of dollars we spend gets higher. Eventually there will be no dollars

left.” —CEO/FMCG co./FT/10.12

“Judging by the profit warnings from a bunch of FMCG giants [Colgate, Unilever, Coke, Cadbury], that time is already upon us. [The FMCGs] have a solution: spend more on advertising. Good

luck to them. We tell our clients something different: It’s too late. Rather than frittering margins on ever bigger ad budgets,

companies must start to innovate.” —Tim Thorne, CEO, Edengene/corporate growth consultants/FT/10.12

“[At Pfizer, Merck, Unilever, Nestle] and other companies, the standard stage-gate approach to

product development has become ingrained that it has driven out the very innovative thinking that it was designed to encourage. And while the returns on

innovation effort appear to be falling for large companies, it is often the unheralded start-up or new entrant that comes up with the latest hit product. …

Thus, Coca-Cola, once celebrated for its innovation and vision, has been late to every new trend in the drinks

industry in the past decade, from sports drinks to bottled water.” —Julian Birkenshaw, Rick Delbridge & John Bessant,

“A Leap into the Unknown,” FT/09.17.04

“We’re now entering a new phase of business where the group will be a

franchising and management company where brand management is central.” —David

Webster, Chairman, InterContinental Hotels Group

“InterContinental will now have far more to do with brand ownership than hotel

ownership.” —James Dawson of Charles Stanley (brokerage)

Source: International Herald Tribune, 09.16, on the sacking of CEO Richard North, whose entire background is in finance

“We have to move up the value chain and focus increased efforts on becoming a knowledge-based, entrepreneurial economy if we are to prosper in the medium to long

term.” —Tony Dromgoole, Chief Executive, Irish Management Institute

franchising and management company where brand management is central.”

—David Webster, Chairman, InterContinental Hotels Group

“InterContinental will now have far more to do with brand ownership than

hotel ownership.” —James Dawson of Charles Stanley

(brokerage)

“What I am really wanting to do is a design school, toi teach the sensibility that

goes into the building of a business into a company with

a point of view.” —Ralph Lauren, International Herald Tribune/09.16.2004

My Story.

A Coherent Story: Context-Solution-BedrockContext1: Intense Pressures (China/Tech/Competition)

Context2: Painful/Pitiful Adjustment (Slow, Incremental, Mergers)

Solution1: New Organization (Technology, Web+ Revolution, Virtual-“BestSourcing,”“PSF” “nugget”)

Solution2: No Option: Value-added Strategy (Services- Solutions-Experiences-DreamFulfillment “Ladder”)

Solution3: “Aesthetic” “VA” Capstone (Design-Brands)

Solution4: New Markets (Women, ThirdAge)

Bedrock1: Innovation (New Work, Speed, Weird, Revolution)

Bedrock2: Talent (Best, Creative, Entrepreneurial, Schools)

Bedrock3: Leadership (Passion, Bravado, Energy, Speed)

Tom Peters’

Re-Imagine!Business Excellence in a Disruptive Age

17September2004

Slides at …

tompeters.com

“Uncertainty is the only thing to be sure of.” —Anthony Muh,

head of investment in Asia, Citigroup Asset Management

“If you don’t like change, you’re going to like

irrelevance even less.” —General Eric Shinseki, Chief of Staff,

U. S. Army

“What is it that distinguishes the thousands of years of history from what we think of as modern times?

The answer goes way beyond the progress of science, technology, capitalism and democracy. … The

revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more than a whim of the gods

and that men and women are not passive before nature. [ Thinkers like Luca Paccioli, Jacob Bernoulli and Abraham de Moivre] converted risk-taking into

one of the prime catalysts that drives modern Western society … and converted the future from an enemy into an opportunity.”—Peter Bernstein, Against the

Gods: The Remarkable Story of Risk

“Unless nimble and sophisticated risk management systems are in place, the firm

will be unable to benefit from revenue growth.”

“There is a hell of a paradox. We try to model risk scenarios but end up instead

increasing the complexity of the business to the point where it is almost

unmanageable.”

Source: IBM Business Consulting Services/The Global CEO Study 2004

“We have no future because our present is too volatile.

We have only risk management. The spinning

of the given moment’s scenarios. Pattern

recognition.” —from William Gibson, Pattern Recognition

Harvey Mackay’s Meeting Ender: “What are the five

things that could go wrong, and what would we do

about each one?”

Biases.

Importance of Success Factors by Various “Gurus”/Estimates by Tom Peters

Strategy Systems Passion Execution Porter 50% 20 15 15

Drucker 35% 30 15 20

Bennis 25% 20 30 25

Peters 15% 20 35 30

Hardball: Are You Playing to Play or Playing to Win? by George Stalk & Rob Lachenauer/HBS Press

“The winners in business have always played hardball.” “Unleash massive and overwhelming force.” “Exploit

anomalies.” “Threaten your competitor’s profit sanctuaries.” “Entice your competitor into retreat.”

Approximately 640 Index entries: Customer/s (service,

retention, loyalty), 4. People (employees, motivation, morale, worker/s), 0.

Innovation (product development, research & development, new products), 0.

“In Tom’s world, it’s always better to try a

swan dive and deliver a

colossal belly flop than to step timidly off the

board while holding your nose.” —Fast Company /October2003

Successful Businesses’ Dozen Truths: TP’s 30-Year Perspective

1. Insanely Great & Quirky Talent.2. Disrespect for Tradition.3. Totally Passionate (to the Point of Irrationality) Belief in What We Are Here to Do.4. Utter Disbelief at the BS that Marks “Normal Industry Behavior.”5. A Maniacal Bias for Execution … and Utter Contempt for Those Who Don’t “Get It.”6. Speed Demons.7. Up or Out. (Meritocracy Is Thy Name. Sycophancy Is Thy Scourge.)8. Passionate Hatred of Bureaucracy.9. Willingness to Lead the Customer … and Take the Heat Associated Therewith. (Mantra: Satan Invented Focus Groups to Derail True Believers.)10. “Reward Excellent Failures. Punish Mediocre Successes.” 11. Courage to Stand Alone on One’s Record of Accomplishment Against All the Forces of Conventional Wisdom.12. A Crystal Clear Understanding of the power of a Good Story (Brand Power).

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!

Sir Richard’s Rules:

Follow your passions.Keep it simple.

Get the best people to help you.Re-create yourself.

Source: Fortune/10.03

“It’s no longer enough to be a ‘change agent.’ You

must be a change insurgent—provoking,

prodding, warning everyone in sight that

complacency is death.” —Bob Reich

Total Enterprise Revision: “Not optional”

Total “Value proposition” revision: “Not optional”

“All-the-way” IS/IT solutions: “Not optional”

Full-scale globalization: “Not optional”

Work done where it best makes sense: “Not optional”

Everything You Need to Know about “Strategy”

1. Do you have awesome Talent … everywhere? (“We are the Yankees of home improvement here in Omaha.”) Do you push that Talent to pursue Audacious Quests?2. Is your Talent Pool loaded with wonderfully peculiar people who others wouldcall “problems”? And what about your Extended Community of customers, vendors et al?3. Is your Board of Directors as cool as your product offerings … and does it have50 percent (or at least one-third) Women Members?4. Long-term, it’s a “Top-line World”: Is creating a “culture” that cherishes above all things Innovation and Entrepreneurship your primary aim? Remember: Innovation … not Imitation!5. Are the Ultimate Rewards heaped upon those who exhibit an unswerving “Bias for Action,” to quote the co-authors of In Search of Excellence? Are your O.O.D.A. loops shorter than the next guy’s? 6. Do you routinely use hot, aspirational words-terms like “Excellence” and B.H.A.G. (Big Hairy Audacious Goal, per Jim Collins) and “Let’s make a dent in the Universe” (the Word according to Steve Jobs)? Is “Reward excellent failures, punish mediocre successes” your de facto or de jure motto?7. Do you subscribe to Jerry Garcia’s dictum: “We do not merely want to be the best of the best, we want to be the only ones who do what we do”?8. Do you elaborate on and enhance Jerry G’s dictum by adding, “We subscribe to ‘Best Sourcing’—and only want to associate with the ‘best of the best’.” 9. Do you embrace the new technologies with child-like enthusiasm and a revolutionary’s zeal?10. Do you “serve” and “satisfy” customers … or “go berserk” attempting to provide every customer with an “awesome experience” that does nothing less than transform the way she or he sees the world?11. Do you understand … to your very marrow … that the two biggest under-served markets are Women and Boomers-Geezers? And that to “take advantage” of these two Monster “Trends” (FACTS OF LIFE) requires fundamental re-alignment of the enterprise?12. Are your leaders accessible? Do they wear their passion on their sleeves? Does integrity ooze out of every pore of the enterprise? Is “We care” your implicit motto?13. Do you understand business mantra #1 of the ’00s: DON’T TRY TO COMPETEWITH WAL*MART ON PRICE OR CHINA ON COST? (And if you get this last idea, then see the 12 above!)

Biz “Strategy” Rule #1

Don’t even think about competing with

Wal*Mart on price or China on cost!

“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)

Hardball: Are You Playing to Play or Playing to Win? by George Stalk & Rob Lachenauer/HBS Press

“The winners in business have always played hardball.” “Unleash massive and overwhelming force.” “Exploit

anomalies.” “Threaten your competitor’s profit sanctuaries.” “Entice your competitor into retreat.”

Approximately 640 Index entries: Customer/s (service,

retention, loyalty), 4. People (employees, motivation, morale, worker/s), 0.

Innovation (product development, research & development, new products), 0.

Ten Good Reasons to “Get Up in the Morning”

1. Empower one and all to vigorously seek WOW! in their work/projects. (Or else.) Foster the “Brand You Spirit” and the “Entrepreneurial Urge” at every turn. (Or else.) 2. Blow up “education” as we know it today! Re-tool education to emphasize the arts, creativity, entrepreneurial behavior. (Or else.)3. Seek out the bold, the strange, the misfits, the dreamers—and welcome their presence in our midst.4. Drag enthusiasm, passion, Technicolor and bold commitment out of the closet! Make Passion your Passion! (Hint: Passion makes the world go ‘round.)5. Be a champion for: Women Roar! Women Rule!6. Underscore the importance of/stupendous opportunities associated with the “cool new markets”: Women, Boomers and Geezers, Hispanics, Greenies, Wellness.7. Dramatically re-orient healthcare from after-the-fact “fixes” to before-the-fact attention to prevention-Wellness. (And “kindly suggest” that the “acute-care” “industry” give some passing thought to Quality.)8. Ensure that the historically neglected “intangibles” are the prime basis for individual and enterprise success.9. Support Globalization as the best—if indeed messy—path to maximum human freedom, security and welfare.10. Swear by the motto: “Reward excellent failures; punish mediocre successes.”

“We all agree your theory is crazy. The

question, which divides us, is

whether it is crazy enough.” —Niels Bohr, to Wolfgang Pauli

Purpose.

It is the foremost task—and responsibility—of our generation to

re-imagine our enterprises, private

and public. —from the back cover, Re-imagine!

“Management has a lot to do with answers. Leadership is a function of questions. And the

first question for a leader always is: ‘Who do we

intend to be?’ Not ‘What are we going to do?’ but ‘Who do

we intend to be?’” —Max De Pree, Herman Miller

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

Joe J. Jones Joe J. Jones 1942 – 2003 1942 – 2003

HE WOULDA DONE SOME HE WOULDA DONE SOME

REALLY COOL STUFF REALLY COOL STUFF

BUT …BUT …

HIS BOSS WOULDN’T LET HIM! HIS BOSS WOULDN’T LET HIM!

T. J. Peters T. J. Peters 1942 – 2---1942 – 2---

HE WAS A PLAYER!HE WAS A PLAYER!

Characteristics of the “Also rans”*

“Minimize risk”“Respect the chain of

command”“Support the boss”

“Make budget”*Fortune, article on “Most Admired Global Corporations”

60 – 30 = 90 – 60*

*90 – 60 > 60 – 30 (??)

I. NEW BUSINESS.

NEW CONTEXT.

Montgomery Ward … Kmart … Sears … Macy’s … DEC … Wang

… Compaq … Chase Manhattan … American Motors … Chrysler …

U. S. Steel … Bethlehem Steel … AT&T … Soviet Union …

Wal*Mart … Dell … Microsoft … U.S.A. …

1. Re-imagine Everything: All Bets Are Off.

Mount Madness v.2004

Perfect Storm

Corporate Mal-adaptivity

Jobs Technology

Globalization War, Warfighting

& Security

The Big Three Drivers of Change

Abundance

Automation

Source” Dan Pink, A Whole New Mind

Jobs New Technology

Globalization War, Warfighting &

Security

“In a global economy, the government cannot give

anybody a guaranteed success story, but you can give people the tools to make the most of

their own lives.” —WJC, from Philip Bobbitt,

The Shield of Achilles: War, Peace, and the Course of History

“14 MILLION service jobs are in

danger of being shipped overseas” —

The Dobbs Report/USN&WR/11.03/re new UCB

“Income Confers No Immunity as Jobs Migrate” —Headline/USA Today/02.04

“When I was growing up, my parents used to say to me:

‘Finish your dinner—people in China are starving.’ I, by contrast, find myself wanting to say to my

daughters: ‘Finish your homework—people in China and India are starving for your job.’ ” —Thomas Friedman/06.24.2004

Siemens

Total (’94 to ’04), 376K to 415K; Germany, 218K to 167K

6X Prague (“Today it’s Hungary, tomorrow it’ll be Lithuania and Estonia”—IG Metall

“Assembly-line jobs are not the only ones at risk; software work is next.”

Source: BusinessWeek/05.2004

“One Singaporean worker costs as much as …

3 … in Malaysia 8 … in Thailand 13 … in China 18 … in India.”

Source: The Straits Times/08.18.03

“Thaksinomics” (after Thaksin Shinawatra, PM)/ “Bangkok

Fashion City”/ “managed asset reflation” (add to brand value of

Thai textiles by demonstrating flair and design excellence)

Source: The Straits Times/03.04.2004

“The proper role of a healthily functioning economy is to destroy

jobs and to put labor to use elsewhere. Despite this truth, layoffs and firings will always

sting, as if the invisible hand of free enterprise has slapped

workers in the face.” —Joseph Schumpeter

--79% of U.S. jobs in “structurally changed professions” (“permanently eliminated jobs”)(40K of 160K U.S. IBM)

--“As we trade we release more labor from the service sector because our highly skilled and highly paid workers lose their competitive advantage. So we go to the next big thing. We specialize in innovation. We develop new products and start new industries.” (Erica Groshen, labor economist Fed of NY)

Source: CNN/Money/01.07.2004

“There is no job that is America’s God-given right

anymore.” —Carly Fiorina/ HP/

01.08.2004

“America, like everyone else, must get used to being a loser as well as a gainer in the global economy. In the end, the

21st century is unlikely to be the American Century.” —“When the Chinese Consumer Is King”/New

York Times/12.14.2003. “The notion that God intended Americans to be permanently

wealthier than the rest of the world, that gets less and less likely as time

goes on.” —Robert Solow, Nobel laureate in economics/New York Times/12.14.2003

In Store: International Equality, Intranational Inequality

“The new organization of society implied by the triumph of individual autonomy and the true equalization of opportunity based upon merit will lead to very great

rewards for merit and great individual autonomy. This will leave individuals far more responsible for

themselves than they have been accustomed to being during the industrial period. It will also reduce the

unearned advantage in living standards that has been enjoyed by residents of advanced industrial societies

throughout the 20th century.”

James Davidson & William Rees-Mogg,The Sovereign Individual

“WHAT ARE PEOPLE GOING TO DO WITH

THEMSELVES?” —Headline/

Fortune/ 11.03 (“We should finally admit that we do not and cannot know, and regard that fact with serenity

rather than anxiety.”)

“Either we modernize or we will be modernized by the unremitting force of the markets.” —Gerhard Schroeder

-Formulaic intelligence (health record clerks, 63%/36K;

secretaries & typists, 30%/1.3M; bookkeepers, 13%/247K)

Manual dexterity (sewing machine ops, 50%/347K; lathe ops, 49%/30K; butchers, 23%/67K)

Muscle power (timber cutters, 32%/25K; farm workers, 20%/182K)

Source: “Where the Jobs Are”/NYT/05.13.2004/data 1994-2004

+People skills & emotional intelligence (financial service sales, 78%/248K; RNs, 28%/512K; lawyers, 24%/182K)

Imagination & creativity (architects, 44%/60K; designers, 43%/230K; photographers, 38%/50K)

Analytic reasoning (legal assts, 66%/159K; electronic engs, 28%/147K)

Source: “Where the Jobs Are”/NYT/05.13.2004/data 1994-2004

“Over the past decade the biggest employment gains came in occupations that rely on people skills and emotional intelligence ... and among jobs that require imagination and creativity. …

Trying to preserve existing jobs will prove futile—trade and technology will transform the

economy whether we like it or not. Americans will be better off if they strive to move up the hierarchy of human talents. That’s where our

future lies.” —Michael Cox, Richard Alm and Nigel Holmes/“Where the Jobs Are”/NYT/05.13.2004

The “Intangibles Economy” Reaches Botswana

“Mma Ramotswe had a detective agency in Africa, at the foot of Kgale Hill. These were its assets: a tiny

white van, two desks, two chairs, a telephone, and an old typewriter. Then there was a teapot, in which Mma

Ramotswe—the only lady private detective in Botswana—brewed redbush tea. And three mugs—one for

herself, one for her secretary, and one for the client. What else does a detective agency really need? Detective agencies rely on human intuition and

intelligence, both of which Mma Ramotswe had in abundance. No inventory would ever include those, of course.” —Alexander McCall Smith, The No. 1 Ladies’ Detective Agency

“The era of ‘left brain’ dominance—and the

Information Age it engendered—Is giving way to a new world in which ‘right brain’ qualities—

inventiveness, empathy, meaning—will govern.” —Dan Pink, A

Whole New Mind

“The past few decades have belonged to a certain kind of person with a certain kind of mind—computer

programmers who could crank code, lawyers who could craft contracts, MBAs who could crunch

numbers. But the keys to the kingdom are changing hands. The future belongs to a very different kind of

person with a very different kind of mind—creators and empathizers, pattern recognizers and meaning makers.

These people—artists, inventors, designers, storytellers, caregivers, consolers, big picture thinkers—will now reap society’s richest rewards and share its

greatest joys.” —Dan Pink, A Whole New Mind

L-Directed Thinking: sequential, literal, functional, textual,

analyticto

R-Directed Thinking: simultaneous, metaphorical,

aesthetic, contextual, syntheticSource: Dan Pink/A Whole New Mind

“Left-brain style thinking used to be the driver, and right-brain style thinking the passenger. Now R-Directed Thinking is

suddenly grabbing the wheel, stepping on the gas, and determining where we’re

going and how we’re going to get there. L-Directed aptitudes—the kind measured by the SAT and employed by CPAs—are still

necessary. But they’re no longer sufficient.” —Dan Pink, A Whole New Mind

The Big Three Drivers of Change

Abundance

Automation

Source: Dan Pink, A Whole New Mind

“But abundance has also produced an ironic result: The very triumph of L-Directed Thinking has lessened its significance. The prosperity it has

unleashed has placed a premium on things that appeal to less rational,

more R-Directed sensibilities—beauty, spirituality, emotion.” —Dan Pink,

A Whole New Mind

Software’s Enormous Inroads

Lawyers

Accountants

Agriculture Age (farmers)

Industrial Age (factory workers)

Information Age (knowledge workers)

Conceptual Age (creators and empathizers)

Pentium III 800MHz: $42,893.00/#Hermes Scarf: $1,964.29

Saving Private Ryan on DVD: $874.75Mercedes-Benz: $18.98

Hot-rolled steel: $0.19

Source: Fortune (3.20.00)

“The MFA is the new

MBA.” —Dan Pink, A Whole New

“What does this mean for you and me? How can we prepare for the conceptual age? On one

level, the answer is straightforward. In a world tossed by Abundance, Asia and Automation, in a which L-Directed Thinking remains necessary

but no longer sufficient, we must become proficient in R-Directed Thinking and master aptitudes that are ‘high concept’ and ‘high touch.’ But on another level, that answer is

inadequate. What exactly are we supposed to do?” —Dan Pink, A Whole New Mind

Design.Story.

Symphony.Empathy.

Play.Source: Dan Pink, A Whole New Mind

“What I am really wanting to do is a design school, to teach the sensibility that

Not just function, but also … DESIGN.Not just argument, but also … STORY.Not just focus, but also … SYMPHONY.

Not just logic, but also … EMPATHY.Not just seriousness, but also … PLAY.

Jobs Technology

Security

“Behind Surging Productivity: The Service

Sector Delivers. Firms Once Thought Immune to

Boosting Worker Output Are Now Big Part of the Trend” —

Headline/WSJ/11.03

“A bureaucrat is an expensive

microchip.”Dan Sullivan, consultant and

executive coach

E.g. …

Jeff Immelt: 75% of “admin, back room, finance” “digitalized” in

3 years.

Source: BW (01.28.02)

“UPS used to be a trucking

company with technology. Now it’s a technology

company with trucks.” —Forbes

<1000A.D.: paradigm shift: 1000s of years1000: 100 years for paradigm shift

1800s: > prior 900 years1900s: 1st 20 years > 1800s

2000: 10 years for paradigm shift

21st century: 1000X tech

change than 20th century (“the ‘Singularity,’ a merger between humans and computers that is so rapid and profound it

represents a rupture in the fabric of human history”)

Ray Kurzweil

“We found that the pace of development from one societal type to another is

accelerating. The agricultural society originated 10,000 years ago, the industrial

society between 200 and 100 years ago, the information-based society 20 years ago.” —

Rolf Jensen/The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business

“Unless mankind redesigns itself by changing our DNA through altering our genetic

makeup, computer-generated robots will take

over the world.” – Stephen

Hawking, in the German magazine Focus

“What strategic motto will dominate this transition from nation-state to market-state? If the slogan that animated the

liberal, parliamentary nation-states was ‘make the world safe for democracy,’ what

will the forthcoming motto be? Perhaps ‘making the world available,’ which is to say creating new worlds of choice and protecting the autonomy of persons to

choose.” —Philip Bobbitt, The Shield of Achilles: War, Peace, and the Course of History

“better material welfare” vs. “maximize the opportunity of its

people” —Philip Bobbitt, The Shield of Achilles:

War, Peace, and the Course of History

“I genuinely believe we are living through the greatest intellectual moment in history.”

Matt Ridley, Genome

“In 25 years, you’ll probably be able to get the

sum total of all human knowledge on a personal

device.”Greg Blonder, VC [was Chief Technical

Adviser for Corporate Strategy @ AT&T] [Barron’s 11.13.2000]

“A California biotechnology company has put the entire

sequence of the human genome on a single chip, allowing

researchers to conduct on the complex relationships between the 30,000 genes that make up a

human being in a single experiment.” —Page 3, Financial Times/10.03.2003

Sequenom/David Ewing Duncan/Wired11.02

“Sequenom has industrialized the SNP [single nucleotide polymorphisms] identification

process.” “This, I’m told, is the first time a healthy human has ever been screened for the

full gamut of genetic-disease markers.” “On the horizon: multi-disease gene kits, available at Wal*Mart, as easy to use as home-pregnancy tests.” “You can’t look at humanity separate from machines; we’re so intertwined we’re

almost the same species, and the difference is getting smaller.”

“Help! There’s nobody in the cockpit. In the future, will the

airlines no longer need pilots?”

Grumman Global Hawk/ 24 hours/ Edwards to South

Australia

Source: The Economist/12.21.2002

“There’s going to be a fundamental change in the

global economy unlike anything we have had since the cavemen began bartering.”

Arnold Baker, Chief Economist, Sandia National Laboratories

Jobs Technology

Security

“Reuters Plans To Triple Jobs at Site In India” —Headline/

New York Times/ World Business/10.08.04/10% of total workforce in Bangalore by 2006

“Asia’s rise is the economic event of our age. Should it proceed as it has over the last few decades, it

will bring the two centuries of global domination by Europe and,

subsequently, its giant North American offshoot to an end.”

—Financial Times (09.22.2003)

“The transfer of power from West to East is gathering pace

and soon will dramatically change the context for dealing with international challenges—

as well as the challenges themselves.” —James Hoge, editor, Foreign

Affairs, “A Global Power Shift in the Making: Is the United States Ready?”

“The world has arrived at a rare strategic inflection point where nearly half its

population—living in China, India and Russia—have been integrated into the global market economy, many of them highly educated workers, who can do

just about any job in the world. We’re talking about three billion

people.” —Craig Barrett/Intel/01.08.2004

Cost of a Programmer, per IBM …

China: $12.50 per hourUSA: $56 per hour

Source: WSJ/01.19.2004

‘We erect walls to foreign trade and even discourage job-displacing innovations. But time and again

through our history, we have discovered merely to preserve the

comfortable features of the present, rather than reaching for new levels of

prosperity, is a sure path to stagnation.” —Alan Greenspan/03.12.2004

China Roars!

“The World Must Learn to Live with

a Wide-awake China” —Headline/FT/11.03

Chinese Industrial Growth Rate Slows!

April ’03 to April ’04: 19.1%

May ’03 to May ’04: 17.5%

“China has become a manufacturing hub for the rest of the world in low-end labor-intensive goods—and the

rest of the world is becoming a manufacturing hub for China in high-end, capital-intensive goods. …

China may be a threat to certain parts of the global supply chain that rely on low-cost labor, but it

represents an even greater opportunity via production-efficiency gains, economic welfare gains and long-term dynamic potential. Its booming exports are more than matched by booming industrial imports and foreign investment opportunities. It has become

the new engine of global growth.”Source: Glen Hodgson & Mark Worrall/Export Development Canada, in “China Takes

Off,” David Hale & Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003

1990-2003: Exports 8X ($380B); 6% global exports 2003 vs. 3.9% 2000; 16% of

Total Global Growth in 2002.

Source: “China Takes Off,” David Hale & Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003

1998-2003: 45,000,000 layoffs in state sector; offset by $450B in

foreign investment; foreign companies account for 50+% of exports vs. 31% in Mexico,

15% in Korea.

50% of output from private firms, 37% from state-owned

firms; 80% of workforce (incl. rural) now in private

employ.

Population growth = 1%; two-thirds of housing

privately owned, 90% of urban Chinese own a home

(vs. 61% in Japan)

200 cities with >1,000,000 population.

Shanghai. 17 million people. $10,000 p.c. (10X

China). 2000-2003: 30% p.a. growth.

Source: Washington Post/6.130.04

200,000,000 unemployed; must create 20,000,000 jobs per year

to offset layoffs; 400,000,000 elderly Chinese by 2030

(currently no pension funds).

397,000,000 fixed phone

lines = 90X since 1989.

2003: China-Hong Kong leading producer in 8 of 12 key consumer electronic product areas (>50%: DVDs, digital cameras; >33.33%:

DVD-ROM drives, personal desktop and notebook computers; >25% mobile phones, color TVs,

PDAs, car stereos).Source: “China Takes Off,” David Hale & Lyric Hughes

Hale/Foreign Affairs/Nov-Dec2003

“When the Chinese Consumer Is King:

America’s mass market is second to none.

Someday it will just be second.” —Headline, New York Times/12.14.2003

“As China becomes the world’s factory and Flextronics becomes

the biggest electronics manufacturer in China, policy makers and analysts wonder

whether there will be a future for manufacturing in Singapore, Malaysia, North America or

Europe.” —Asia Inc./02.2004

“In China’s Countryside, Farmers Are Cultivating

Agribusiness Explosion as Subsidies Cut U.S. Export Dominance” —Headline/p1/WSJ

Europe/10.15.04

“Going Global: Flush with billions in foreign reserves,

China is embarking on a buying spree” —Cover/ Newsweek/ 03.01.04/ on

China’s aggressive offshore acquisition activity (buying brands,

technology, etc.)

Chinese Offshore Tourists

’93: 3M’03: 21M

Steel: China

20X EU.

Source: Newsweek/05.2004

World economic output: U.S.A., 21%; EU, 16%; China, 13%

(2X since1991)

Source: New York Times/12.14.2003

“Let China sleep, for when

she awakes she will shake the world.”

“Let China sleep, for when she awakes she will shake the world.” —Napoleon

Indian GDP/1990-2002: Ag, 34% to 21%; services,

40% to 56%

Source: The Economist/02.04

Level 5 (top) ranking/Carnegie Mellon

Software Engineering Institute: 35 of 70

companies in world are from India

Source: Wired/02.04

“You get an educated workforce, remarkable infrastructure, a lot of

government support. These [Southeast Asian] governments have made life sciences a top priority—and

they have a great venture capital community there.” —Glenn Rice, VP Pharmaceutical

Discovery and Development, SRI International (On the rapid migration of drug discovery from the U.S. at a 20% to 40% cost saving Rice adds that 40%

to 60% of U.S. postdocs are from China and Taiwan) From: Stanford Business /August 2004

350,000 engineering grads per year

>50% F500 outsource software work to India

GE: 48% of software developed in India (Sign in GE India office: “Trespassers will be recruited”)

“GE is a champion of India’s scientists, technicians, business analysts and

graduates, thousands of whom work at the U.S. conglomerate’s offshore service centers in India. They are the low-cost,

high capability vanguard of GE’s outsourcing to India. Along the way, GE

has transformed its cost structure, enhanced its ability to provide technology services and incubated a rare world-class

industry in India.” —FT/06.03.03

“Forget India, Let’s Go to Bulgaria” —Headline,

BW/03.04, re SAP, BMW, Siemens et al. “near-shoring”

“CLONING COLLEGE: South Korea’s

biomedical researchers, unhampered by politics, do world-class research

on the cheap” —Headline,

Newsweek/03.01.04

Support for Free Trade/>$100,000

1999: 57 %

2004: 28%Source: Dan Pink, A Whole New Mind

Jobs Technology

Globalization

War, Warfighting & Security

“The world’s new dimension (computers, Internet, globalization,

instantaneous communication, widely available instruments of mass

destruction and so on) amounts to a new metaphysics that, by empowering

individual zealots or agitated tribes with unappeasable grievances, makes the world unstable and dangerous in

radically new ways.” —Lance Morrow/Evil

The Breaking of Nations: Order and Chaos in the

Twenty-first CenturyRobert Cooper (as interpreted by Tom Peters)

“This is a dangerous world and it is going to become more dangerous.”

“We may not be interested in chaos but

chaos is interested in us.”

Source: Robert Cooper, The Breaking of Nations: Order and Chaos in the Twenty-first Century

“Al-Qaeda Said to have 18,000 Militants for

Raids”Source: AP/05.25.2004/from International Institute for

Strategic Studies annual survey of world affairs

“What happened after 1945 was not so much a radically new system as the concentration and culmination of the old

one.” —Robert Cooper, on the Cold War, from The

Breaking of Nations: Order and Chaos in the Twenty-first Century

“What has been emerging into the daylight since 1989 is not a

rearrangement of the old system but a new system. Behind this lies

a new form of statehood, or at least states that are behaving in a

radically different way from the past.” —Robert Cooper, The Breaking of Nations: Order

and Chaos in the Twenty-first Century

“The image of peace and order through a single hegemonic power center [is

wrong]. … It was not the empires but the small states that proved to be a dynamic

force in the world. Empires are ill-designed for promoting change. Holding

an empire together requires an authoritarian political style; innovation

leads to instability.” —Robert Cooper, The Breaking of Nations: Order and Chaos in the Twenty-first

Century

Read This!

“The new century risks being overrun by both anarchy and technology. The two great destroyers of history may reinforce each other. Both the spread of terrorism and that of weapons of mass destruction point to a world in which

Western governments are losing control. The spread of the technology of mass destruction represents a potentially massive redistribution of power

away from the advanced industrial (and democratic) states and toward smaller states that may be less stable and have less of a stake in an orderly world; or more dramatically still, it may represent a redistribution of power

away from the state itself and towards individuals, that is to say terrorists or criminals. In the past to be damaging, an ideological movement had to be

widespread to recruit enough support to take on authority. Henceforth, comparatively small groups will be able to do the sort of damage which

before only state armies or major revolutionary movements could achieve. A few fanatics with a ‘dirty bomb’ or biological weapons will be able to cause

death on a scale not previously envisaged. … Emancipation, diversity, global communication—all of the things that promise an age of riches and creativity—could also bring a nightmare in which states lose control of the means of

violence and people lose control of their futures.”—Robert Cooper, The Breaking of Nations: Order and Chaos in the Twenty-first Century

Reflect.

“Before we can talk about the security requirements for today

and tomorrow, we have to forget the security rules of yesterday.” —Robert Cooper, The

Breaking of Nations: Order and Chaos in the Twenty-first Century

“IT MAY SOMEDAY BE SAID THAT THE 21ST CENTURY BEGAN ON SEPTEMBER 11, 2001. …

“Al-Qaeda represents a new and profoundly dangerous kind of

organization—one that might be called a ‘virtual state.’ On September 11 a virtual

state proved that modern societies are vulnerable as never before.”—Time/09.09.2002

“The deadliest strength of America’s new adversaries is their very fluidity, Defense Secretary Donald

Rumsfeld believes. Terrorist networks, unburdened by fixed borders, headquarters or conventional forces, are

free to study the way this nation responds to threats and adapt themselves to prepare for what Mr. Rumsfeld is certain will be another attack. …

“ ‘Business as usual won’t do it,’ he said. His answer is to develop swifter, more lethal ways

to fight. ‘Big institutions aren’t swift on their feet in adapting but rather ponderous and clumsy

and slow.’ ”—The New York Times/09.04.2002

From: Weapon v. Weapon

To: Org structure v. Org structure

“Our military structure today is essentially one

developed and designed by Napoleon.”

Admiral Bill Owens, former Vice Chairman, Joint Chiefs of Staff

“The organizations we created have become tyrants. They have taken

control, holding us fettered, creating barriers that hinder rather than help our businesses. The lines that we drew on our neat organizational diagrams have turned into walls

that no one can scale or penetrate or even peer over.” —Frank Lekanne Deprez &

René Tissen, Zero Space: Moving Beyond Organizational Limits.

“In an era when terrorists use satellite

phones and encrypted email, US gatekeepers stand armed against them with pencils

and paperwork, and archaic computer systems that don’t

talk to each other.”Boston Globe (09.30.2001)

Eric’s Army

Flat.Fast.Agile.Adaptable.Light … But Lethal.Talent/ “I Am an Army of One.”Info-intense.Network-centric.

“Float like a butterfly.

Sting like a bee.” —Ali

“To fight terrorism with an army is like trying to

shoot a cloud of mosquitoes with a

machine gun.” —Review of Terror in the Name

of God/NYT/11.2003

“Rather than have massive armies that people can go along and

inspect, it is now about having rapidly deployable expediency forces that can be dropped by

land, sea or air and with full support.” —MoD official, on Defense Secretary Geoff

Hoon’s defense white paper (12.2003)

“Palmisano is pushing IBM’s ability to assemble SWAT

teams of hardware, software services, research and sales

people to cure customers’ headaches.” —Fortune/06.14.04

“We must not only transform our armed forces but the Defense Department that serves them—

by encouraging a culture of creativity and intelligent risktaking. We must promote a more entrepreneurial approach: one that encourages

people to be proactive, not reactive, and to behave less like bureaucrats and more like

venture capitalists; one that does not wait for threats to emerge and be ‘validated,’ but rather

anticipates them before they appear and develops new capabilities to dissuade them and

deter them.” —Donald Rumsfeld, Foreign Affairs

OODA Loop/Boyd Cycle“Unraveling the competition”/ Quick Transients/ Quick Tempo (NOT JUST

SPEED!)/ Agility/ “So quick it is disconcerting” (adversary over-reacts or under-reacts)/ “Winners used tactics that caused the enemy to unravel before the

fight” (NEVER HEAD TO HEAD)

BOYD: The Fighter Pilot Who Changed the Art of War (Robert Coram)

At the heart of Boyd’s thinking is an idea labeled “OODA Loops.” OODA stands for the Observe-Orient-Decide-Act cycle. In short, the player with the quickest OODA Loops disorients the enemy to an extreme degree. In the world of aerial combat, for example, the confused adversary subjected to an opponent with short OODA cycles often flies into the ground rather than becoming the victim of machine gun fire or a missile. Boyd is careful to distinguish between raw speed and maneuverability. In aerial dogfighting in Korea (Boyd’s incubator), Soviet MiGs flown by Chinese pilots were faster and could climb higher, but our F-86 had “faster transients”—it could change direction more quickly; hence our technically inferior craft (by conventional design standards) achieved a 10:1 kill ratio.

“Fast Transients”

“Buttonhook turn” (YF16: “could flick from one maneuver to another faster than any aircraft”)

“Blitzkrieg is far more than lightning thrusts that most people think of

when they hear the term; rather it was all about high operational tempo

and the rapid exploitation of opportunity.”/ “Arrange the mind of

the enemy.”—T.E. Lawrence/ “Float like a butterfly, sting like a

bee.”—Ali

F86 vs. MiG/Korea/10:1

Bubble canopy (360 degree view)

Full hydraulic controls (“The F86 driver could go from one maneuver to another faster than the MiG driver”)

MiG: “faster in raw acceleration and turning ability”; F86: “quicker in

changing maneuvers”BOYD: The Fighter Pilot Who Changed the Art of War (Robert Coram)

“Maneuverists”

All Bets Are Off!

“There will be more

confusion in the business world in the next decade than in any decade in history. And the current pace of

change will only accelerate.”Steve Case

“We are in a

brawl with no rules.”

Paul Allaire

S.A.V.

“Strategy meetings held once

or twice a year” to “Strategy meetings needed several

times a week”

Source: New York Times on Meg Whitman/eBay

“How we feel about the evolving future tells us who we are as individuals and as a civilization: Do we search for stasis—a regulated, engineered world? Or do we embrace dynamism—a world of constant creation,

discovery and competition? Do we value stability and control? Or evolution and learning? Do we think that progress requires a central blueprint? Or do we see it as a decentralized, evolutionary process? Do we see mistakes as permanent disasters? Or the correctable

byproducts of experimentation? Do we crave predictability? Or relish surprise? These two poles,

stasis and dynamism, increasingly define our political, intellectual and cultural landscape.” —Virginia Postrel,

The Future and Its Enemies

“Let’s compete—by training the best workers, investing in R & D,

erecting the best infrastructure and building an education system that graduates students who rank with the worlds best. Our goal is to be competitive with the best so we

both win and create jobs.” —Craig Barrett (Time/03.01.04)

The Winning Edge: Peters’ Big6

1. Research-Innovation2. Entrepreneurial Attitude & Support (Especially from Capital Markets)

3. Creative (“Obstreperous”) Education4. Free Trade-Open Markets5. Individual Self-reliance (& Supports Therefore)

6. Cutting-edge Infrastructure

How Nations Become Wealthy

1. Property rights 2. Scientific rationalism 3. Capital markets 4. Fast and efficient communications and transportation

Source: The Birth of Plenty: How the Prosperity of the Modern World Was Created, William Bernstein

2. Re-imagine Permanence:

The Emperor Has No Clothes!

“It is generally much easier to kill an

organization than change it

substantially.” Kevin Kelly, Out of Control

“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

C.E.O. to

C.D.O.

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

BUILT TO … DETERIORATE!

“When it comes to investing, I am old school. Buy a good stock, stick it in the drawer and when you check back years later the stock should be worth more. There’s only one problem. When I checked the drawer

recently it was full of clunkers, including Lucent, down 94 percent from its 1999 high. Maybe once upon a time buy and hold was a viable strategy.

Today, it no longer makes sense.”—Charles Stein/ “Investment Strategies Must Shift with Realities”/Boston Globe/10.10.04

A sample of Stein’s “Blue Chip-turned-clunker” examples: Fannie Mae (featured in Collins’ Good to Great). Coke. (“Clunker,” make that

“Stinker.”) Merck. (The mightiest fall—stock down 63 percent since 2000; tumble preceded Vioxx) Uh … Microsoft. (“Microsoft’s stock price is no

higher today than it was in 1998.”)

“It is not clear there is such a thing as a ‘Blue Chip,’” Shawn Kravetz, president of Boston-based hedge fund Esplanade Capital, told Stein. “Kravetz’s point is a serious one,” Stein continues. “Greatness is not

permanent. … This process of creative destruction isn’t new. But with the world moving ever faster, and with competition on steroids, the quaint

notion of buying and holding is hopelessly out of step.”

“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/11.28.2002

“It’s just a fact: Survivors underperform.”

—Dick Foster

“The difficulties … arise from the inherent conflict between the need to control existing operations and the need to create the kind of environment that will permit new ideas to flourish—and old ones to die a

timely death. … We believe that most corporations will find it impossible to

match or outperform the market without abandoning the assumption of continuity. … The current apocalypse—the transition from a state of continuity to state of discontinuity—has the same suddenness [as the trauma that beset civilization in

1000 A.D.]”

Richard Foster & Sarah Kaplan, “Creative Destruction” (The McKinsey Quarterly)

Rate of Leaving F500

1970-1990: 4XSource: The Company, John Micklethwait & Adrian

Wooldridge (1974-200: One-half biggest 100 disappear)

“Far from being a source of comfort,

bigness became a code for inflexibility.” —John

Micklethwait & Adrian Wooldridge, The Company

“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

“The corporation as we know it, which is now 120 years old, is

not likely to survive the next 25 years. Legally and

financially, yes, but not structurally and economically.”

Peter Drucker, Business 2.0

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

Success Kills!

“The more successful a company, the flatter its

forgetting curve.” — Gary Hamel and C.K. Prahalad

“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

“Conglomerates don’t work.” —James

Surowiecki, The New Yorker (07.01.2002)

“MERGERS: Why Most Big Deals Don’t Pay Off. A

BusinessWeek analysis

shows that 61% of buyers destroyed shareholder wealth.” —BusinessWeek/10.14.2002

“Mergers and acquisitions get the headlines, but studies show they often end up destroying shareholder

value instead of creating it. That’s one reason why organic growth is so prized by corporations and

investors. In fact, if you compare the stock performance of a new index of 23 companies that are masters of organic growth to the S&P500, the Organic Growth

Index beat the S&P500 handily, 31% vs. 22% over the year ending January 2004. And looking further back at a

five-year period ending in 2002, the OGI walloped the S&P500, 25% vs. 3%.” —Fortune.com/06.03.2004 (The OGI includes

Wal*Mart, Sysco, Harley-Davidson, Bed, Bath & Beyond, NVR)

Re-imagine General Electric

“wELCH was to a large degree a growth-by-acquisition man. ‘In the late ’90s,’ Immelt says, ‘we became

business traders, not business growers. Today organic growth is absolutely the biggest task of everyone of

our companies. If we don’t hit our organic growth

targets, people are not going to get paid.’ … Immelt has staked GE’s future growth on the force

that guided the company at it’s birth and for much of its history: breathtaking, mind-

blowing, world-rattling technological innovation.” —“GE Sees the Light”/Business 2.0/July 2004

Market Share, Anyone?

— 240 industries; market-share leader

is ROA leader 29% of the time

— Profit / ROA leaders: “aggressively weed out customers who generate low returns”

Source: Donald V. Potter, Wall Street Journal

Market Share, Anyone?

240 industries: Market-share

leader is ROA leader 29% of

the time

Source: Donald V. Potter, Wall Street Journal

“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%)

“Welch was to a large degree a growth-by-acquisition man. ‘In the late ’90s,’ Immelt says,

‘We became business traders, not business growers. Today organic growth is absolutely

the biggest task of everyone of our companies.

If we don’t hit our organic growth targets, people are not going to get

paid.’ … Immelt has staked GE’s future growth on the force that guided the company at it’s

birth and for much of its history: breathtaking, mind-blowing, world-rattling technological

innovation.” —“GE Sees the Light”/Business 2.0/July 2004

Total Enterprise Revision

“Not optional”

Total “Value proposition” revision: “Not optional”

“All-the-way” IS/IT solutions: “Not optional”

Full-scale globalization: “Not optional”

Work done where it best makes sense: “Not optional”

“Acquisitions are about buying market share.

Our challenge is to create markets. There is a big difference.”

Peter Job, CEO, Reuters

“The $58B hostile bid by Sanofi-Synthelabo for Aventis has been greeted skeptically, as has the news that Novartis may counterbid. Few

investors believe that Big Pharma can compensate for a deficit of new drugs by

getting bigger. Some suspect the converse is true: that size has made them sluggish. … That has led to some thinking the unthinkable: that pharmaceutical companies should leave drug

discovery to biotech companies and focus their efforts on development and marketing.”

—Financial Times/03.2004

“Active mutators in placid times tend to die off. They

are selected against. Reluctant mutators in

quickly changing times are also selected against.”

Carl Sagan & Ann Druyan, Shadows of Forgotten Ancestors

““Survival of the Fittest Not the Fattest”/John Kay/Survival of the Fittest Not the Fattest”/John Kay/FTFT03.27.200303.27.2003

“I have heard it from people who make pharmaceuticals and from people who make defense equipment. From executives in utilities and executives in advertising. Among

banks and law firms. .. They all expect their industry to develop the way the car industry has. In an increasingly globalized marketplace, maturing industries will become steadily more concentrated. Only a small number of big companies will

survive.

“There is one problem with these analogies. What is said about the motor industry is not true.The peak of concentration in the automobile industry was reached in the

early 1950s and since then there has been a substantial decline. However you look at it, small carmakers have been steadily gaining market share at the expense of large ones. Back in the 1960s, the 10 largest carmakers had a market share of 85 percent; today it is about 75 percent. Concentration has fallen, even though weak firms have

been repeatedly absorbed through mergers.

“As markets evolve, differentiation becomes steadily more important. Success in the motor industry comes not from size or scale, but from developing competitive

advantages in operations and marketing those advantages internationally. The same is true in pharmaceuticals and defense equipment, utilities and banking,

telecommunications and media.”

Lessons from the Bees!

“Since merger mania is now the rage, what lessons can the bees teach us? A simple one: Merging is not in

nature. [Nature’s] process is the exact opposite: one of growth, fragmentation and dispersal. There is no

megalomania, no merging for merging’s sake. The point is that unlike corporations, which just get bigger, bee colonies know when the time has come to split up into

smaller colonies which can grow value faster. What the bees are telling us is that the corporate

world has got it all wrong.”David Lascelles, Co-director of The Centre for the

Study of Financial Innovation [UK]

“The Industrial Revolution was about scale: vast factory complexes, skyscrapers and railway

grids concentrating power in the hands of rulers of large territories: not only responsible rulers such as Bismarck and Disraeli, but Hitler and Stalin too. But the post-Industrial Revolution

empowers any one with a cellular phone and a bag of explosives. America’s military superiority

guarantees that such new adversaries will not fight according to our notions of fairness: they will come at us by surprise, asymmetrically, at our weakest points.” —Robert Kaplan, Warrior Politics

TP on Acquisitions

1. Big + Big = Disaster. (Statistically.) (There are exceptions; e.g., Citigroup.)2. Big (GE, Cisco, Omnicom) acquires small/specialist = Good … if you can retain Top Talent.3. Odds on achieving “projected synergies” among Mixed Big “cultures”: 10%.4. Max Scale Advantages are achieved at a smaller size than imagined.5. Attacked by Big, Mediocre Medium marries Mediocre Medium to “bulk up.” Result: Big Mediocrity … or worse.6. Any size—if Great & Focused—can win, locally or globally.7. Increasingly, Alliances deliver more value than mergers —and clearly abet flexibility.

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/02.17.2004/David Harding & Sam Rovit, Bain & Co./re

Comcast-Disney

“Most of our predictions are based

on very linear thinking. That’s why they will

most likely be wrong.”Vinod Khosla, in “GIGATRENDS,” Wired 04.01

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

“The secret of fast progress is

inefficiency, fast and furious and numerous

failures.”Kevin Kelly

RM: “A lot of companies in the Valley fail.”

RN: “Maybe not enough fail.”

RM: “What do you mean by that?”

RN: “Whenever you fail, it means you’re trying new things.”

Source: Fast Company

“The Silicon Valley of today is built less atop

the spires of earlier triumphs than upon the

rubble of earlier debacles.”—Newsweek/ Paul Saffo (03.02)

“... natural selection is death. ... Without huge amounts of death, organisms do not change over time. ... Death is the mother of structure. ... It took four billion years of death ... To invent the human mind ...”

— The Cobra Event

Axiom (Hypothesis): We have been screwed by Benchmarking … Best Practice … C.I./Kaizen.

Axiom (Hypothesis): We need Masters of Discontinuity/

Masters of Ambiguity … in discontinuous/ambiguous

times.

“Organize” for … performance & customer satisfaction.

“Disorganize” for … renewal & innovation.

“Rose gardeners face a choice every spring: how to prune our roses. The long-term fate of a rose garden depends on this decision. If you want to have

the largest and most glorious roses of the neighborhood, you will prune hard. You will reduce each rose plant to a maximum of three stems. This

represents a policy of low tolerance and tight control. You force the plant to make the maximum use of its available resources, by putting them into the

the rose’s ‘core business.’ However, if this is an unlucky year [late frost, deer, green-fly invasion], you may lose the main stems or the whole plant!

Pruning hard is a dangerous policy in an unpredictable environment. Thus, if you are in a spot where you know nature may play tricks on you, you may opt for a policy of high tolerance. You will leave more stems on the plant.

You will never have the biggest roses, but you have a much-enhanced chance of having roses every year. You will achieve a gradual renewal of the plant. In short, tolerant pruning achieves two ends: (1) It makes it easier to

cope with unexpected environmental changes. (2) It leads to a continuous restructuring of the plant. The policy of tolerance admittedly wastes

resources—the extra buds drain away nutrients from the main stem. But in an unpredictable environment, this policy of tolerance makes the rose

healthier. Tolerance of internal weakness, ironically, allows the rose to be stronger in the long run.”—Arie De Geus, The Living Company

“We don’t see Pele’s work as destruction but as

cleansing. She’s a creator. When she comes through she wipes the land clean and leaves us new fertile

ground.” —Keola Hanoa, on the Big Island’s volcanoes (National Geographic/10.04)

Only One Big Issue …

“People think the president has to be the main organizer. No, the president is the

main dis-organizer. Everybody ‘manages’ quite well; whenever anything goes wrong,

they take immediate action to make sure nothing’ll go wrong again. The problem is,

nothing new will ever happen, either.”* —Harry Quadracci, Quad/Graphics

*Beware ICD/Inexorable Centralist Drift—TP

“The sun is setting on the Information Society—even before we have fully adjusted to its demands as individuals and as

companies. We have lived as hunters and as farmers, we have worked in factories and now we live in an information-based

society whose icon is the computer. We stand facing the fifth kind of society: the Dream Society. … The Dream Society is emerging this very instant—the shape of the future is visible today. Right

now is the time for decisions—before the major portion of consumer purchases are made for emotional, nonmaterialistic

reasons. Future products will have to appeal to our hearts, not to our heads. Now is the time to add emotional value to products and services.” —Rolf Jensen/The Dream Society:How the Coming Shift from

Information to Imagination Will Transform Your Business

Japan’s Science Gap *

Rice farming culture: uniqueness suppressed. Gov’t control of R & D. Promotion based on

seniority. Consensus vs. debate. (U.S.: friends can be mortal enemies.) Bias for C.I. vs. “bold

leaps.” Lack of competition and critical evaluation (peer review). Syukuro Manabe:

“What we need to create is job insecurity rather than security to make people compete more.”

*Hideki Shirakawa, Nobel laureate, chemistry

December 2000: Swiss House for Advanced Research &

Education. Cambridge, Massachusetts. Xavier

Comtesse: “You never hear a Swiss say, ‘I want to change the

world.’ We need to take more risks.”

“The Word(s)” on Vitality: Gary Hamel

“Sell By” [jettison old crap]

Spin Out [support entrepreneurs]

Spin In [buy young firms]

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

“Perfection is achieved only by institutions on the point of

collapse.”— C. Northcote Parkinson

“Beware of the tyranny of making

Small Changes to Small Things. Rather, make Big Changes to Big

Things.” —Roger Enrico, former Chairman, PepsiCo

Sysco!

“Never bite off less than

you can chew” —Freddy Adu, teenage soccer phenom (from Audi’s

“Never Follow” Website)

“Learn not to be

careful.”

—Photographer Diane Arbus to her students (Careful = “The sidelines,” per Harriet Rubin in The Princessa)

“[At Pfizer, Merck, Unilever, Nestle] and other companies, the standard stage-gate approach to

product development has become ingrained that it has driven out the very innovative thinking that it was designed to encourage. And while the returns on

innovation effort appear to be falling for large companies, it is often the unheralded start-up or new entrant that comes up with the latest hit product. …

Thus, Coca-Cola, once celebrated for its innovation and vision, has been late to every new trend in the drinks

industry in the past decade, from sports drinks to bottled water.” —Julian Birkenshaw, Rick Delbridge & John Bessant,

“A Leap into the Unknown,” FT/09.17.04

Bottom line: No promotion to senior levels of public or private enterprise should ever again be granted to anyone who does not present a CV saturated by a clear and compelling demonstration of sustained commitment to Radical Change. Do we wish for “good strategists”? Why not! But the heart of the matter goes far beyond any plan, no matter how brilliant. The heart of the matter is Heart & Will ... a record of upsetting apple carts, dislodging “establishments,” and fundamentally altering deep-rooted “cultures” to embrace change of the most primal sort. I titled my most recent book Re-imagine! Business Excellence in a Disruptive Age. “Excellence” in a “disruptive age” is not excellence amidst placid waters. The notion of excellence itself changes ... dramatically. We need our public and private Churchills, leaders who can re-imagine, who can call forth wellsprings of daring and guts and spirit and spunk, from one and all, to topple the way things may have been for many generations—and who inspire us to venture forth into today’s and tomorrow’s whitewaters with insouciance and bravado and determination.

Do you understand business mantra #1 of

the ’00s: DON’T TRY TO COMPETE WITH

WAL*MART ON PRICE OR CHINA ON COST?

The Case for IPMs (Itinerant Potential Machines)

“It is almost impossible to take action to prevent something that hasn’t

occurred previously” —Judge Richard Posner, “The 9/11 Report: A Dissent”/New York

2A. Re-imagine Tomorrow’s

Organizations:

Itinerant Potential Machines.

TALENT POOL TO DIE FOR. Youthful. Insanely energetic. Value creativity. Risk taking is routine. Failing is normal … if you’re stretching. Want to “make their

bones” in “the revolution.”Love the new technologies. Well rewarded. Don’t plan to

be around 10 years from now.

TALENT POOL PLUS. Seek out and work with “world’s best” as needed (it’s often

needed). “We aim to change the world, and we need gifted colleagues—who well may

not be on our payroll.”

BRASSY-BUT-GROUNDED-LEADERSHIP. Say “I don’t know”—and then unleash the TALENT.

Have a vision to be DRAMATICALLY DIFFERENT—but don’t expect the co. to be around forever. Will scrap pet projects, and change course 180

degrees—and take a big write-off in the process. NO REGRETS FROM SCREW-UPS WHOSE TIME

HAS NOT-YET-COME. GREAT REGRETS AT TIME & $$$ WASTED ON “ME TOO” PRODUCTS

AND PROJECTS.

BRASSY-BUT-GROUNDED-LEADERSHIP. (Cont.) “Visionary” leaders matched by leaders with

shrewd business sense: “HOW DO WE TURN A PROFIT ON THIS GORGEOUS IDEA?”

Appreciate “market creation” as much as or more than “market share growth.” ARE

INSANELY AWARE THAT MARKET LEADERS ARE ALWAYS IN PRECARIOUS POSITIONS,

AND THAT MARKET SHARE WILL NOT PROTECT US, IN TODAY’S VOLATILE WORLD,

FROM THE NEXT KILLER IDEA AND KILLER ENTREPRENEUR. (Gates. Ellison. Venter.

McNealy. Walton. Case. Etc.)

ALLIANCE MANIACS. Don’t assume that “the best resides within.” WORK WITH A

SHIFTING ARRAY OF STATE-OF-THE-ART PARTNERS FROM ONE END OF THE “SUPPLY CHAIN” TO THE OTHER.

Including vendors and consultants and … especially … PIONEERING CUSTOMERS …

who will “pull us into the future.”

TECHNOLOGY-NETWORK FANATICS. Run the whole-damn-company, and relations with all

outsiders, on the Internet … at Internet speed. Reluctant to work with those who don’t share

this (radical) vision.

POTENTIAL MACHINES-ORGANISMS. Don’t know what’s coming next. But are ready to jump at opportunities, especially those that challenge-overturn our own “way of doing

things.”

The SE17: Origins of Sustainable

Entrepreneurship

SE17/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, Microsoft, Nokia, FedEx)

3. Love the Great Leap/Enjoy the Hunt (Apple, Oracle, Intel, Nokia, Sony)

4. Culture of Outspoken-ness (Intel, Microsoft, FedEx, CitiGroup, PepsiCo)

5. Encourage Vigorous Dissent/Genetically “Noisy” (Intel, Apple, Microsoft)

6. “Culturally” as well as organizationally Decentralized (GE, J & J, Omnicom)7. Multi-entrepreneurship/Many Independent-minded Stars (GE, Time Warner)8. Keep decentralizing—tireless in pursuit of wiping out Centralizing Tendencies (J & J, Virgin)9. Scour the world for Ingenious Alliance Partners—especially exciting startups (Pfizer)10. Don’t overdo “pursuit of synergy” (GE, J & J, Time Warner)11. Find and Encourage and Promote Strong-willed/ Independent people (GE, PepsiCo)12. Ferret out Talent … anywhere and everywhere/ “No limits” approach to retaining top talent (Nike, Virgin, GE, PepsiCo)

13. Unmistakable Results & Accountability focus from the get-go to the grave (GE, New York Yankees, PepsiCo)14. Up or Out (GE, McKinsey, big consultancies and law firms and ad agencies and movie studios in general)15. Competitive to a fault! (GE, New York Yankees, News Corp/Fox, PepsiCo)16. “Bi-polar” Top Team, with “Unglued” Innovator #1, powerful Control Freak #2 (Oracle, Virgin, old Raychem) (God help you when #2 is missing: Enron)17. Masters of Loose-Tight/Hard-nosed about a very few Core Values, Open-minded about everything else (Virgin)

2B. Yo, Jim Collins . Or:

Tom’s Case for …

Technicolor!

“intrepid, unprincipled, reckless, predatory, with

boundless ambition, civilized in externals but

a savage at heart.”

Herman Melville on JPJ: “intrepid, unprincipled,

reckless, predatory, with boundless ambition,

civilized in externals but a savage at heart.” —from Evan

Thomas, John Paul Jones: Sailor, Hero, Father of the American Navy

“Humility: The Surprise Factor in Leadership … bosses with Gung-

ho Qualities and Charisma May Be Out of Fashion” —Headline/FT/

re JCollins/10.03

Jim & Tom. Joined at the

hip. Not.

I. Good to GreatII. Built to LastIII. Quiet, Humble Leaders

Good to Great: Fannie Mae … Kroger … Walgreens … Philip

Morris … Pitney Bowes … Abbott … Kimberly-Clark … Wells Fargo

Great Companies … SET THE AGENDA.

(Period.)

AGENDA SETTERS: “Set the Table”/ Pioneers/ Questors/ Adventurers

US Steel … Ford … Macy’s … Sears … Litton Industries … ITT … The Gap … Limited … Wal*Mart … P&G … 3M …

Intel … IBM … Apple … Nokia … Cisco … Dell … MCI … Sun … Oracle …

Microsoft … Enron … Schwab … GE … Southwest … Laker …People Express

… Ogilvy … Chiat/Day … Virgin … eBay … Amazon … Sony … BMW … CNN …

Built to Last v. Built to Flip

“The problem with Built to Last is that it’s a romantic notion. Large companies are

incapable of ongoing innovation, of ongoing flexibility.”

“Increasingly, successful businesses will be ephemeral. They will be built to yield

something of value – and once that value has been exhausted, they will vanish.”

Fast Company

“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 will become

ever more fleeting. 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.”

Kjell Nordström and Jonas Ridderstråle, Funky Business

“The difficulties … arise from the inherent conflict between the need to control existing operations and the need to create the kind of environment that will permit new ideas to flourish—and old ones to die a

timely death. … We believe that most corporations will find it impossible to

match or outperform the market without abandoning the assumption of continuity. … The current apocalypse—the transition from a state of continuity to state of discontinuity—has the same suddenness [as the trauma that beset civilization in

1000 A.D.]”

Richard Foster & Sarah Kaplan, “Creative Destruction” (The McKinsey Quarterly)

BUILT TO … DETERIORATE!

“When it comes to investing, I am old school. Buy a good stock, stick it in the drawer and when you check back years later the stock should be worth more. There’s only one problem. When I checked the drawer

recently it was full of clunkers, including Lucent, down 94 percent from its 1999 high. Maybe once upon a time buy and hold was a viable strategy.

Today, it no longer makes sense.”—Charles Stein/ “Investment Strategies Must Shift with Realities”/Boston Globe/10.10.04

A sample of Stein’s “Blue Chip-turned-clunker” examples: Fannie Mae (featured in Collins’ Good to Great). Coke. (“Clunker,” make that

“Stinker.”) Merck. (The mightiest fall—stock down 63 percent since 2000; tumble preceded Vioxx) Uh … Microsoft. (“Microsoft’s stock price is no

higher today than it was in 1998.”)

“It is not clear there is such a thing as a ‘Blue Chip,’” Shawn Kravetz, president of Boston-based hedge fund Esplanade Capital, told Stein. “Kravetz’s point is a serious one,” Stein continues. “Greatness is not

permanent. … This process of creative destruction isn’t new. But with the world moving ever faster, and with competition on steroids, the quaint

notion of buying and holding is hopelessly out of step.”

Warren Bennis & Patricia Ward Biederman/

Organizing Genius: Great Groups Don’t

Last Very Long!

W.A. Mozart W.A. Mozart 1756 – 17911756 – 1791

HE CHANGED THE WORLDHE CHANGED THE WORLD

AND AND

ENRICHED HUMANITY ENRICHED HUMANITY

Jane Jacobs: Exuberant Variety vs. the Great Blight of Dullness.

F.A. Hayek: Spontaneous Discovery Process. Joseph Schumpeter: the Gales of Creative Destruction.

“Quiet, workmanlike, stoic leaders bring about the big

transformations.”--JC

WellingtonNelsonDisraeliChurchill

MontgomeryThatcher

“Humble” Pastels?

T. Paine/P. Henry/A. Hamilton/T. Jefferson/B. FranklinA. Lincoln/U.S. Grant/W.T. Sherman

TR/FDR/LBJ/RR/JFKPatton/Monty/Halsey

M.L. King/C. de Gaulle/M. Gandhi/W. ChurchillPicasso/Mozart/Copernicus/Newton/Einstein/Djarassi/Watson

H. Clinton/G. Steinem/I. Gandhi/G. Meir/M. Thatcher E. Shockley/A. Grove/J. Welch/L. Gerstner/L. Ellison/B. Gates/

S. Jobs/S. McNealy/T. Turner/R. Murdoch/W. Wriston A. Carnegie/J.P. Morgan/H. Ford/S. Honda/J.D. Rockefeller/

T.A. Edison Rummy/Norm/Henry/Wolfie

Elizabeth Cady Stanton/Susan B. Anthony/Martha Cary Thomas/Carrie Chapman Catt/Alice Paul/Anna Elizabeth

Dickinson/Arabella Babb Mansfield/Margaret Sanger

Audie Murphy was the most decorated soldier in WW2.

He won every medal we had to offer, plus 5 presented by Belgium and France. There was one common medal he

never won …

… the Good Conduct medal.

“To Hell With Well Behaved … Recently a young

mother asked for advice. What, she wanted to know, was she to do with a 7-year-old who was obstreperous, outspoken, and

inconveniently willful? ‘Keep her,’ I replied. … The suffragettes refused to be polite

in demanding what they wanted or grateful for getting what they deserved.

Works for me.” —Anna Quindlen/Newsweek

“Men with no vices have very few virtues.” —A. Lincoln

Jim Collins vs. Michael Maccoby

“quiet, workmanlike, stoic”vs.

“larger-than-life leaders”/ “egoists, charmers, risk-takers with big

visions”: Carnegie, Rockefeller, Edison, Ford, Welch, Jobs, Gates

Johannes Kepler: Quiet … humble … stoic??*

*Joshua Gilder & Anne-Lee Gilder, Heavenly Intrigue: Johannes Kepler, Tycho Brahe, and the Murder Behind One of History’s Greatest Scientific Discoveries

“In Italy for 30 years under the Borgias they had warfare, terror, murder,

bloodshed—and produced Michelangelo, da Vinci and the

Renaissance. In Switzerland they had brotherly love, 500 years of democracy and peace, and what did they produce

—the cuckoo clock.”

Orson Welles, as Harry Lime, in The Third Man

II. NEW BUSINESS. NEW TECH.

3. Re-imagine Organizing I:

IS/IT Leads the (Virtual) Way!

“E-commerce is happening the way all the hype said it would. Internet

deployment is happening. Broadband is happening. Everything we ever said about the Internet is happening. And it

is very, very early. We can’t even glimpse IT’s potential in changing the way people work and live.” —Andy Grove

(BusinessWeek/August 2003)

100 square feet

Dell’s OptiPlex Facility

Big Job: 6 to 8 hours.(80,000 per day)

Parts Inventory: 100 square feet.

Productivity!

McKesson 2002-2003: Revenue … +$7B

Employees … +500

“Invisible Supplier Has Penney’s Shirts All

Buttoned Up: From Hong Kong, It Tracks Sales,

Restocks Shelves, Ships Right to the Store.” —Headline, Wall

Street Journal (09.11.03)

“Our entire facility is digital. No paper, no film, no medical records. Nothing. And it’s all integrated—from the lab to X-ray to records to physician order entry. Patients don’t have to wait for anything. The information from the physician’s office is

in registration and vice versa. The referring physician is immediately sent an email telling him his patient has shown up. … It’s wireless in-house. We have 800 notebook computers that are wireless. Physicians can walk around with a computer that’s

pre-programmed. If the physician wants, we’ll go out and wire their house so they can sit on the couch and connect to the

network. They can review a chart from 100 miles away.” —David Veillette, CEO, Indiana Heart Hospital (HealthLeaders/12.2002)

“MIT Everyware: EVERY LECTURE, EVERY QUIZ, ALL ONLINE, FOR

FREE. MEET THE GLOBAL GEEKS GETTING AN MIT EDUCATION,

OPEN SOURCE-STYLE.” —Headline/Wired/09.03

“Dawn Meyerreicks, CTO of the Defense Information Systems Agency, made one of the most fateful military calls of the 21st century. After 9/11 … her office

quickly leased all the available transponders covering Central Asia. The implications should change everything about U.S. military thinking in the

years ahead.

“The U.S. Air Force had kicked off its fight against the Taliban with an ineffective bombing campaign, and Washington was anguishing over whether to send in a few Army divisions. Donald Rumsfeld told Gen. Tommy Franks to

give the initiative to 250 Special Forces already on the ground. They used satellite phones, Predator surveillance drones, and GPS- and laser-based

targeting systems to make the air strikes brutally effective.

“In effect, they ‘Napsterized’ the battlefield by cutting out the middlemen (much of the military’s command and control) and working directly with the

real players. … The data came in so fast that HQ revised operating procedures to allow intelligence analysts and attack planners to work directly

together. Their favorite tool, incidentally, was instant messaging over a secure network.”—Ned Desmond/“Broadband’s New Killer App”/Business

2.0/ OCT2002

“The mechanical speed of combat vehicles has not

increased since Rommel’s day, so the difference is all in the

operational speed, faster communications and faster

decisions.” —Edward Luttwak, on the unprecedented pace of the move toward Baghdad

The Real “News”: X1,000,000

TowTruckNet.com

e-piphany

epicurious.com

“Passionate amateurs, empowered by technology and linked to one another, are reshaping business,

politics, science and culture.” —Charles Leadbeater/Fast

Company/10.2004

“flash mobs” (!)

Impact No. 1/ Logistics &

Distribution: Wal*Mart … Dell … Amazon.com …

Autobytel.com … FedEx … UPS … Ryder …

Cisco … Etc. … Etc. … Ad Infinitum.

Autobytel: $400.

Wal*Mart: 13%.Source: BW(05.13.2002)

WebWorld = Everything

Web as a way to run your business’s innardsWeb as connector for your entire supply-demand chain Web as “spider’s web” which re-conceives the industry

Web/B2B as ultimate wake-up call to “commodity producers”

Web as the scourge of slack, inefficiency, sloth, bureaucracy, poor customer data

Web as an Encompassing Way of LifeWeb = Everything (P.D. to after-sales)

Web forces you to focus on what you do bestWeb as entrée, at any size, to World’s Best at Everything

as next door neighbor

“There’s no use trying,” said Alice. “One can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was

your age, I always did it for half an hour a day. Why, sometimes I’ve

believed as many as six impossible things before breakfast.”

Lewis Carroll

I’net …

… allows you to dream dreams

you could never have dreamed

before!

“Suppose—just suppose—that the Web is a new world we’re just beginning to inhabit. We’re like the earlier European settlers in the United States, living on the

edge of the forest. We don’t know what’s there and we don’t know exactly what we need to do to find out: Do we pack mountain climbing gear, desert wear, canoes, or all three? Of course while the settlers may not have

known what the geography of the New World was going to be, they at least knew that there was a geography. The Web, on the other hand, has no

geography, no landscape. It has no distance. It has nothing natural in it. It has few rules of behavior and fewer lines of authority. Common sense doesn’t hold

here, and uncommon sense hasn’t yet emerged.” David Weinberger, Small Pieces Loosely Joined

Message: eCommerce is not a technology play! It is a

relationship, partnership, organizational and

communications play, made possible by new

technologies.

Message: There is no such thing as an effective B2B or

Internet-supply chain strategy in a low-trust,

bottlenecked-communication, six-layer

organization.

“Ebusiness is about rebuilding the organization from the

ground up. Most companies today are not built to exploit the Internet.

Their business processes, their approvals, their hierarchies, the

number of people they employ … all of that is wrong for running an

ebusiness.”

Ray Lane, Kleiner Perkins

“Most of what I see is elimination

of the middle people.” —Lee Scott, CEO, Wal*Mart, on

the relentless drive to even further reduce costs (Christmas tree lights at Asda v. Wal*Mart USA: $21 v $6, same factory)

Brand Inside Rules!

“If I could have chosen not to tackle the IBM culture head-on, I probably

wouldn’t have. My bias coming in was toward strategy, analysis and measurement. In comparison,

changing the attitude and behaviors of hundreds of thousands of people is

very, very hard.” —Lou Gerstner, Who Says Elephants Can’t Dance?

“I came to see in my time at IBM that

culture isn’t just one aspect of the game—it is the game” —Lou Gerstner,

Who Says Elephants Can’t Dance?

Read It Closely: “We don’t sell

insurance anymore. We sell speed.”

Peter Lewis, Progressive

The New Infantry Battalion/New York Times/12.01.2002

“Pentagon’s Urgent Search for Speed.” 270 soldiers (1/3rd normal complement); 140 robotic off-road armored trucks. “Every soldier is a

sensor.” “Revolutionary capabilities.” Find-to-hit: 45 minutes to 15 minutes

… in just one year.

“Hyperlinks subvert hierarchy!”

The Cluetrain Manifesto

[ 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]

IS/IT is strategy!

5% F500 have CIO on Board: “While some of the world’s

most admired companies—Tesco, Wal*Mart—are transforming the business

landscape by including technology experts on their boards, the vast majority are

missing out on ways to boost productivity, competitiveness and shareholder value.”

Source: Burson-Marsteller

3A. Re-imagine IS/ IT/ the Web:

Direct!

Nexus/Confluence

Self-serviceOwnership Society

Brand You1t1

“The Web enables total transparency. People with

access to relevant information are beginning to challenge any type of

authority. The stupid, loyal and humble customer, employee, patient

or citizen is dead.”

“Parents, doctors, stockbrokers, even military leaders are starting to

lose the authority they once had. There are all these roles premised on access to privileged information. …

What we are witnessing is a collapse of that advantage,

prestige and authority.”Michael Lewis, next

“The Age of the

Never Satisfied Customer”

Regis McKenna

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

“A seismic shift is underway in healthcare. The Internet is

delivering vast knowledge and new choices to consumers—raising their

expectations and, in many cases, handing them the controls.

[Healthcare] consumers are driving radical, fundamental change.”

Deloitte Research, “Winning the Loyalty of the eHealth Consumer”

TP’s July “Journey to Direct”

-- infoUSA Client Conference/DBM-- Chairman/DNC-- Wired on Arnold/Howard/moveon.org-- BzzAgent.com and TPC--Guerilla PR Wired: Waging a Successful Publicity Campaign Online, Offline, and Everywhere in Between/Michael Levine (TP starts blogging)-- My Dinner With … party planning consultants-- 15,000 WFGers

MassNarrowcast

1t1: DBM/CRM1t1: Web

1t1: Direct Mail/Telemarketing1t1: Door-to-door Reps-Parties/MLM

Growth Projections: 2003-2010

Narrowcast media … 13.5%Mass media … 3.5%

Source: Sanford C. Bernstein & Co

Narrowcast World …

Infomercials … $256 billion Quantity … 250,000 per month (U.S. & Canada) Growth rate … 10% p.a. Purchases … $91 billion Price … $50/30-minutes to $15,000/30 min Source: Washington Post/092604

440 new consumer mags in 2003/10% of 6,200 total mags are general

interest, down from 30% in 1980 —Samir Husni/U. Miss/BW0704

“It’s not size that counts most, but the ability to deliver someone elusive to

advertisers.” —Mary Berner/CEO/Fairchild Publications/2003: W Jewlery to 75,000 of W’s 469,000

subscribers who spend >$60,000 a year on jewelry

“Money that used to go for 30-second network spots now pays for closed-circuit sports programming piped into Hispanic bars and for ads in Upscale, a custom-

published magazine distributed to black barbershops. … ‘We are a big marketer—

we are not a mass marketer,’ says Lawrence Light, McDonald’s chief

marketing officer.” —BW/0704

“Monolithic blocks of eyeballs are gone. In their place is a

perpetually shifting mosaic of audience micro-segments that

forces marketers to play an endless game of hide-and-seek.” —Eric Schmitt/Forrester Research/

BW(0704)

“If you go back 40 years, people wanted to be identified as normal. So they wanted the most popular car and

the most popular color. From the consumer point of view, we’ve had a

change from ‘I want to be normal’ to ‘I want to be special’.” —Lawrence Light, Global

Chief Marketing Officer, McDonald’s (BW/07.04)

“If we look over just the last half-dozen years, our media mix has shifted in the U.S. from two-thirds on prime-time network TV to two-thirds not on prime-time

network.” —Lawrence Light, Global Chief Marketing Officer, McDonald’s (BW/07.04)

“The old days of advertising vs. promotion vs. merchandising vs. display vs. events—

that’s a mindset that has to disappear. It’s all promotion. The purpose is to elevate the brand perception in the

customer’s mind. A T-shirt is a medium, a package is a print ad, it’s not just a

container; we think about a store design as outdoor advertising.” —Lawrence Light, Global Chief

Marketing Officer, McDonald’s (BW/07.04)

Q/BW : Do you think the mass market is a thing of the past?

A/Lawrence Light, McD’s Global CMO: The answer is yes. … What has changed is technology has facilitated our ability to reach people on a more customized, more personalized basis. That’s a revolution.

Old New

Consumers Couch potatoes, passively Empowered media users control receive whatever the and shape the content, thanks networks broadcast to TiVo, iPod and the Internet Aspirations To keep up with the crowd To stand out from the crowd TV Choice Three networks plus a Hundreds of channels, plus PBS station, maybe video on demand

Magazines Age of the big glossies: Age of the special interest: Time, Life, Look and A magazine for every hobby Newsweek and affinity group

Ads Everyone hums the Talking to a group of one: Alka-Seltzer jingle Ads go ever narrower

Brands Rise of the big, ubiquitous Niche brands, product extensions brands, from Coca-Cola and mass customization mean to Tide lots of new variations

Source: BusinessWeek/07.12

Direct Selling’s Potent Promise

-- “This industry is global and is growing exponentially.” —Roger Barnett, investment banker specializing in direct

selling

-- DSA: 175,000 Americans sign up per week (475,000 world wide)

-- All industries (wellness, telecoms, financial services … Crayola’s Big Yellow Box)

-- Global: Avon, 70%; Tupperware, 75%; China & India huge

-- MLM’s share of direct selling: 56% in 1990 to 82% in 2003

Case: CRM

“CRM has, almost universally, failed

to live up to expectations.”

Butler Group (UK)

No! No! No! FT: “The aim [of CRM] is to make customers feel as they did in the pre-

electronic age when service was more personal.”

Psych 101: Strongest Force on Earth?

My need to be in perceived control of my universe!

CGE&Y (Paul Cole): “Pleasant

Transaction” vs. “Systemic Opportunity.” “Better job

of what we do today” vs. “Re-think overall

enterprise strategy.”

Here We Go Again: Except It’s Real This Time!

Bank online: 24.3M (10.2002); 2X Y2000.

Wells Fargo: 1/3rd; 3.3M; 50% lower

attrition rate; 50% higher growth in balances than off-line; more likely to cross-purchase; “happier and stay

with the bank much longer.”

Source: The Wall Street Journal/10.21.2002

DIM/Self-service Rules!

ATMsCheckoutPhones

SpeedpassThe Web (eBay, Amazon,

Travelocity, Mapquest, banking et al.)HR, Project management, etc.

Minus 1.3M secretaries

MinuteClinic: “Next to the Express Checkout,

Express Medical Care”

Source: Headline/NYT/07.18.04 (on MinuteClinic at Targets and Cub Foods stores in Minneapolis

Self-serve Nation!

Radisson: check-in via Web up to 1-week prior to arrival

Holiday Inn: computer menu, also keeps track bill and a running total of calories

and carbs

Hilton: roaming check-in clerks, WiFi-enabled

“The latest mobiles, on sale for $200 to $300 in Japan, function as wallets, letting people pay

their utility bills or buy movie tickets by putting their handset near a reader. … New I-mode

phones also have a bar-code-reading camera that people can point at the bar code on a

magazine or poster, taking them straight to the Website with updated and detailed information on, say, a concert or a discount sale.” —“Super

Phone: Kei-Ichi Enoki, a founding father of the mobile Web, is moving beyond email and games to make the phone a remote

control for living” (Forbes Global/09.20.2004)

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

4. Re-imagine Jobs: The White

Collar Bloodbath.

Steel: 75,000,000 tons in ’82 to 102,000,000 tons in ’02. 289,000 steelworkers

in ’82 to 74,000 steelworkers in ’02.

Source: Fortune/11.24.03

108 X 5vs.

8 X 1= 540 vs. 8 (-98.5%)

E.g. …

Jeff Immelt: 75% of “admin, back room, finance” “digitalized” in

3 years.

Source: BW (01.28.02)

“The coefficient of friction associated with the grunge of business

is amazing!”Michael Schrage

“A bureaucrat is an expensive

microchip.”Dan Sullivan, consultant and

executive coach

IBM’s Project

eLiza!** “Self-bootstrapping”/ “Artilects”

Deep Blue Redux*: 2,240 EKGs … 1,120 heart attacks.

Hans Ohlin (50 yr old chief of coronary care, Univ of

Lund/SW) : 620. Lars Edenbrandt’s

software: 738.

*Only this time it matters!

Probable parole violations: Simple model (age, # of previous offenses, type of crime)

beats M.D. shrinks.

100 studies: Statistical formulas > Human

judgment. “In virtually all cases, statistical thinking

equaled or surpassed human judgment.”—Atul Gawande,

Complications

“Unless mankind redesigns itself by changing our DNA through altering our genetic

makeup, computer-generated robots will take

over the world.” – Stephen

Hawking, in the German magazine Focus

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

shoes.”F.G.

“Organizations will still be critically important in the

world, but as ‘organizers,’ not

‘employers’!” — Charles Handy

“The virtual corporation is research, development, design, marketing, financing, legal, and

other headquarters functions with few or no manufacturing

capabilities – a company with a head but no body.”

Richard Rosecrance, The Rise of the Virtual State

Ford: “Vehicle brand owner” (“design, engineer, and

market, but not actually make”)

Source: The Company, John Micklethwait & Adrian Wooldridge

“P&G Hires Out Employee Services to IBM” —Burlington Free Press/09.10.03/

on IBM’s 10-year, $400M contract with P&G (P&G farmed out IT to HP in May, Facilities to

Jones Lang LaSalle in June)

“WHERE IS YOUR JOB GOING”: writing software, designing chips,

reading MRIs, processing mortgages, preparing tax returns, managing

computer networks (etc: GE Capital’s 15,000 in Delhi), preparing PP slides

for McKinsey (350 in Chennai), equity analysis of U.S. companies (Morgan

Stanley) …Source: Fortune/11.24.03

I was described in public as a “radical” by a senior Japanese official, during a Summer 2004 conference in Nagano. (Actually, which I guess even amplifies the label, he was a Japanese-

American, who spent much of his career in Silicon Valley.) I retorted sharply that I was no such animal! Alas, he’d been taking detailed notes during my presentation. “But didn’t you say you could readily imagine a $50 billion corporation, perhaps in pharmaceuticals, which had only two full-time employees—you and one other. And ‘outsourced’ everything else?” Then he added that “one of the two would, of course, be a woman.”

No Limits?

“Short on Priests, U.S. Catholics Outsource Prayer to Indian Clergy” —Headline, New York

Times/06.13.04 (“Special intentions,” $.90 for Indians, $5.00 for Americans)

07.04/TP In Nagano …

Revenue: $10B

FTE: 1*

*Maybe

Not “out sourcing”Not “off shoring”

Not “near shoring”Not “in sourcing”

but …

“Best Sourcing”

III. NEW BUSINESS. NEW

VALUE PROPOSITION.

5. Re-imagine the Organization: The

Professional Service Firm (“PSF”) Imperative.

Sarah: “ Daddy, what do you do?”

Papa: “I manage a ‘cost center.’ ”

Sarah: “ Papa, what do you do?”

Papa: “I’m ‘overhead.’ ”

Sarah: “ Daddy, what do you do?”

Papa: “I’m a ‘bureaucrat.’ ”

Job One: Getting (WAY) beyond the

“Cost center,” “Overhead” mentality

So what will be the Basic Building

Block of the New Org?

Every job done in W.C.W. is

also done “outside”

…for profit!

Answer: PSF![Professional Service Firm]

Department Head

to …

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

TP to HRMAC: You are the …

Rock Stars of the Age of

Talent!

DD$21M

TP to NAPM: You are the …

Rock Stars of the

B2B Age!

“P.S.F.”: Summary

H.V.A. Projects (100%)Pioneer Clients

WOW Work (see below)Hot “Talent” (see below)“Adventurous” “culture”

Proprietary Point of View (Methodology)W.W.P.F. (100%)/Outside Clients (25%++)

When: Now!

BMW’s Designworks/USA:

>50% from outside work

G.M. = The Recruitment and Development of Top Talent.

[Period!]

V.C. = Bets on “Talent.” Bets on Projects. [Period!]

Dept. Head I = Sports G.M.

Dept. Head II = V.C.

eHR*/PCC***All HR on the Web

**Productivity Consulting Center

Source: E-HR: A Walk through a 21st Century HR Department, John Sullivan, IHRIM

Model PSF …

(1) Translate ALL departmental activities into discrete W.W.P.F. “Products.”(2) 100% go on the Web.

(3) Non-awesome are outsourced (75%??).

(4) Remaining “Centers of Excellence” are retained & leveraged to the hilt!

“Typically in a mortgage company or financial services company, ‘risk

management’ is an overhead, not a revenue center. We’ve become more

than that. We pay for ourselves, and we

actually make money for the company.” —Frank

Eichorn, Director of Credit Risk Data Management Group, Wells Fargo Home Mortgage (Source: sas.com)

6. Re-imagine Business’

Basic Value Proposition: PSFs Unbound/ The

“Solutions Imperative.”

Base Case: The Sameness Trap

“While everything may

be better, it is also increasingly the same.”

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

“When we did it ‘right’ it was still pretty ordinary.”

Barry Gibbons on “Nightmare No. 1”

Fight ’til Death!

“I thought, ‘What a dreadful mission I have in life.’ I’d love to get six-thousand restaurants up to

spec, but when I do it’s ‘Ho-hum.’ It’s bugged me ever since. It’s one of the great paradoxes of

modern business. We all know distinction is key, and yet in the last twenty years we have created a plethora of ho-hum products and services. Just

go fly in an airplane. It could be such an enlightening experience. Ho-hum. We swim in an

ocean of ho-hum, and I’m going to fight it. I’m going to die fighting it.”

— Barry Gibbons

Funky Business: “To succeed we must stop being so goddamn

normal. In a winner-takes-all world,

normal = nothing.”

“Customers will try ‘low cost

providers’ … because the Majors have not

given them any clear reason not to.”

Leading Insurance Industry Analyst

“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.”

“Companies have defined so much ‘best practice’

that they are now more or less identical.”

Jesper Kunde, Unique Now ... or Never

“This is an essay about what it takes to create and sell something remarkable. It is a plea for originality, passion, guts and daring. You can’t be remarkable by following someone else who’s remarkable. One way to figure

out a theory is to look at what’s working in the real world and determine what the successes have in common. But what could the Four Seasons and

Motel 6 possibly have in common? Or Neiman-Marcus and Wal*Mart? Or Nokia (bringing out new hardware every 30 days or so) and Nintendo

(marketing the same Game Boy 14 years in a row)? It’s like trying to drive

looking in the rearview mirror. The thing that all these companies have in common is that they have nothing in common. They are outliers. They’re on the fringes.

Superfast or superslow. Very exclusive or very cheap. Extremely big or extremely small. The reason it’s so hard to follow the leader is this: The

leader is the leader precisely because he did something remarkable. And that remarkable thing is now taken—so it’s no longer remarkable when you

decide to do it.” —Seth Godin, Fast Company/02.2003

“We make over three new product announcements a

day. Can you remember

them? Our customers can’t!”Carly Fiorina

09.11.2000: HP bids

$18,000,000,000for

PricewaterhouseCoopersconsulting business!

“These days, building the best server isn’t enough. That’s the

price of entry.”Ann Livermore, Hewlett-Packard

And the “M” Stands for … ?

Gerstner’s IBM: “Systems Integrator of choice.” (BW)

IBM Global Services: $35B

Rainmaker-in-Chief

“[Sam] 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/06.14.04

“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 th 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

+49%/profits

+52%/revenue

Source: WSJ/10.13.2004/“Infosys 2nd-Period Profit Rose Amid Demand for Outsourcing”

AT&T: President David Dorman: Back to long distance … but with “bundles of lucrative corporate services” for the likes of Merrill

Lynch, MasterCard, Hyatt. Consumer: Dump 25M subscribers

(50%)—hold on to high enders.

Source: BW/05.20.2002

Is There a There There: The Ericsson Case

1. 50+% Mfg to Solectron/Flextronics2. Substantial R&D to India3. Division for licensing technology4. JV with Sony on “crown jewel” handsets5. Net: “a wireless specialist that depends on services more than manufacturing, on knowledge more than metal”

Source: BW/11.04.02

Flextronics

--$14B; 100K employees; 60% p.a. growth (’93-’00)

-- “contract mfg” to EMS/Electronics Manufacturing Services (design, mfg, logistics,

repair); “total package of outsourcing solutions” (Pamela Gordon, Technology Forecasters)

-- “The future of manufacturing isn’t just in making things but adding value” (3,500 design

engineers)

Source: Asia Inc./02.2004

“Customer Satisfaction” to “Customer Success”

“We’re getting better at [Six Sigma] every day. But we really

need to think about the customer’s profitability. Are customers’

bottom lines really benefiting from what we provide them?”

Bob Nardelli, GE Power Systems

“We want to be the air traffic

controllers of electrons.”

Bob Nardelli, GE Power Systems

Keep In Mind: Customer

Satisfaction versus

Customer

Success

Nardelli’s goal ($50B to $100B by 2005):

“… move Home Depot beyond selling ‘goods’ to selling ‘home services.’ …

He wants to capture home improvement dollars wherever and

however they are spent.” E.g.: “house calls” (At-Home Service: $10B by ’05?) … “pros shops” (Pro Set) … “home project management”

(Project Management System … “a deeper selling relationship”).

New York-Presbyterian: 7-year, $500M consulting (systemic) and equipment contract with

GE Medical Systems

E.g. …

UTC/Otis + Carrier: boxes to “integrated building systems”

Leased AC: Units of “Coolth”

New York-Presbyterian: 7-year, $500M consulting

(generic) and equipment contract with GE Medical

Systems

Staples

New CEO Ron Sargent: 2X to $20B, in face of Wal*Mart (et al.) via delivery and other

servicesSource: BusinessWeek/08.03

John Deere Landscapes: “This is our

future.”

“UPS wants to take over the sweet spot in the endless loop

of goods, information and capital that all the packages

[it moves] represent.”ecompany.com/06.01 (E.g., UPS Logistics

manages the logistics of 4.5M Ford vehicles, from 21 mfg. sites to 6,000 NA dealers)

“Big Brown’s New Bag: UPS Aims to Be the Traffic Manager

for Corporate America” —Headline/BW/07.19.2004

“SCS”/Supply Chain Solutions: 750 locations;

$2.5B; fastest growing division; 19 acquisitions,

including a bank

Source: Fast Company/02.04

“No longer are we only an insurance provider. Today,

we also offer our customers the products and services that help them

achieve their dreams, whether it’s financial security, buying a car, paying

for home repairs, or even taking a dream vacation.”—Martin Feinstein, CEO,

Farmers Group

“VISIONS OF A BRAND-NAME OFFICE EMPIRE. Sam Zell is not a man plagued by self doubt. Mr. Zell controls public

companies that own nearly 700 office buildings in the United States. … Now Mr. Zell says he will

transform the real estate market by turning those REITs into national brands. … Mr. Zell

believes [clients] will start to view those offices as something more than a commodity chosen chiefly by price and location.” –New York Times

(12.16.2001)

(brokerage)

“ ‘Architecture’ is becoming a commodity.

Winners will be ‘Turnkey Facilities Management’

providers.”SMPS Exec

“We are a ‘real estate facilities consulting’ organization, not just

an ‘interior design’ firm.”

Jean Bellas, founder, SPACE (from SMPS Marketer)

Omnicom: 60% (of

$7B) from marketing services

And the Winners Are …

Televisions –12%Cable TV service +5%

Toys -10%Child care +5%

Photo equipment -7%Photographer’s fees +3%

Sports Equipment -2%Admission to sporting event +3%

New car -2%Car repair +3%

Dishes & flatware -1%Eating out +2%

Gardening supplies -0.1%Gardening services +2%

IBM/Q3/10.15.03/Rev: +5%

Services/Consulting: +11%Software: +5%Hardware: -5%

PCs: -2%Technology/Chips: -33%

FEES! FEES! FEES!

—Cover Story, BW/09.29.03

Turnkey Nation/s

HP … Sun … Farmers Group … Northwestern Mutual Financial Network …

IBM … AT&T … Ericsson … GE Power Systems … GE Industrial Systems … Ford … Siemens … Home Depot …

Deere … UTC Otis … UTC Carrier … UPS … Springs Industries … RCI …

Equity Office Properties … Omnicom … India … Singapore … Etc.

Core Logic: (1) 108X5 to 8X1/ eLiza/ 100sf. (2)

Dept. to PSF/ WWPF. (3) V.A. via PSFs Unbound/ “Solutions”/ “Customer

Success.”

6A. Re-imagine Organizational Barriers: The

Solutions25.**NO MORE “SILOS.” NO MORE

“STOVEPIPES.”

1. It’s the (OUR!) organization, stupid!2. Friction free! 3. No STOVEPIPES!4. “Stovepiping” is a F.O.—Firing Offense.5. ALL on the web! (ALL = ALL.)6. Open access!6. Project Managers rule! (E.g.: Control the purse strings and evals.)7. VALUE-ADDED RULES! (Services Rule.) (Experiences Rule.) (Brand Rules.)8. SOLUTIONS RULE! (We sell SOLUTIONS. Period. We sell PRODUCTIVITY & PROFITABILITY. Period.)9. Solutions = “Our ‘culture.’ ”10. Partner with B.I.C. (Best-In-Class). Period.

“The organizations we created have become tyrants. They have taken

control, holding us fettered, creating barriers that hinder rather than help our businesses. The lines that we drew on our neat organizational diagrams have turned into walls

that no one can scale or penetrate or even peer over.” —Frank Lekanne Deprez &

René Tissen, Zero Space: Moving Beyond Organizational Limits.

“Once devised in Riyadh, the tasking order took hours to get to the Navy’s six aircraft carriers—because the

Navy had failed years earlier to procure the proper communications gear that would have connected the

Navy with its Air Force counterparts. … To compensate for the lack of communications capability, the Navy was forced to fly a daily cargo mission from

the Persian Gulf and Red Sea to Riyadh in order to pick up a computer printout of the air mission tasking

order, then fly back to the carriers, run photocopy machines at full tilt, and distribute the documents to the air wing squadrons that were planning the next

strike.” –Bill Owens, Lifting the Fog of War

Duh???*: “We’ve come up with a solution. … We’ve begun to create a form of

communications that is much better than we had before, and that’s allowed us to gather better data. We’ve finally realized

that we have an interplay with other hospitals and with pre-hospital.”—Dr. Ben Honigman, ER, U. Colorado Hospital, on “diverts” (Denver

Post/05.05.02)

*Internet + Data + Open data exchange + Barrier busting

12. All functions contribute equally—IS, HR, Finance, Purchasing, Engineering, Logistics, Sales, Etc.13. Project Management can come from any function.14. WE ARE ALL IN SALES. PERIOD.15. We all invest in “wiring” the customer organization.16. WE ALL “LIVE THE BRAND.” (Brand = Solutions. That MAKE MONEY FOR OUR CUSTOMER- PARTNER.)17. We use the word “PARTNER” until we all want to barf!18. We NEVER BLAME other parts of our organization for screw-ups.19. WE AIM TO REINVENT THIS INDUSTRY!20. We hate the word-idea “COMMODITY.”

21. We believe in “High tech, High touch.”22. We are DREAMERS.23. We deliver . (PROFITS.) (CUSTOMER SUCCESS.)24. If we play the “SOLUTIONS GAME” brilliantly, no one can touch us!25. Our TEAM needs 100% I.C.s (Imaginative Contributors). This is the ULTIMATE “All Hands” affair!

KEY WORDS: Partners with our Customers in creating Memorable, Value-added Solutions/ Successes/ Experiences.

WHICH REQUIRES: Total Enterprise Responsiveness … beyond functional walls.

IV. NEW BUSINESS. NEW

BRAND.

Theater I: A World of Scintillating “Experiences.”

“Experiences are as distinct from services as services are from

goods.”Joseph Pine & James Gilmore, The Experience Economy:

Work Is Theatre & Every Business a Stage

“Club Med is more than just a ‘resort’; it’s a means of rediscovering oneself, of inventing an

entirely new ‘me.’ ”

Source: Jean-Marie Dru, Disruption

“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

“Guinness as a brand is all about community.

It’s about bringing people together and sharing

stories.”—Ralph Ardill, Imagination, in re Guinness Storehouse

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

WHAT CAN BROWN DO FOR YOU?

“When Pete Rozelle ran the league, it was a

football business and a good one. Now it’s truly

an entertainment business.” —Paul Much,

Investment Advisor

Best Web Site?

buildabear.com

Build-A-Bear

--1997 to 2004: $0 to $300M

--Maxine Clark/CEO (25 yrs May Dept Stores)

--Build-A-Bear Workshops

--Engagement! (“Where Best Friends Are Made”)

--http://www.buildabear.com/buildaparty

The “Experience Ladder”

Experiences Services

Goods Raw Materials

1940: Cake from flour, sugar (raw materials economy): $1.00

1955: Cake from Cake mix (goods economy): $2.00

1970: Bakery-made cake (service economy): $10.00

1990: Party @ Chuck E. Cheese (experience economy) $100.00

Message:

“Experience” is the

“Last 80%”

P.S.: “Experience” applies to all work!

1940: Cake from flour, sugar (raw materials economy): $1.00

1955: Cake from Cake mix (goods economy): $2.00

1970: Bakery-made cake (service

economy): $10.001990: Party @ Chuck E. Cheese

(experience economy) $100.00

Bob Lutz: “I see us as being in the art business. Art,

entertainment and mobile sculpture, which,

coincidentally, also happens to provide transportation.”

Source: NYT 10.19.01

Bob Lutz: “It’s more right brain. I see us being in the art

business. Art, entertainment and mobile sculpture, which, coincidentally, also happens to provide transportation.”

Source: NYT 10.19.01

“Motown Is Stealing Hollywood’s Best Tricks …

With Oprah’s 276-car giveaway all over the news last week, GM got just what it

wanted: a blockbuster debut [for its ‘unheralded Pontiac G6’].”

Source: Newsweek/09.27.04 (Cost: $7 million … “A car that gets off to a slow start has little hope of ever losing the stigma of distressed merchandise.”)

“Lexus sells its cars as containers for our

sound systems. It’s marvelous.”—Sidney Harman/

Harman International

Now You’ve Heard It All …

“We want our branches to be a place where people come as a

destination.” —Amy Brady, on the BofA

effort to learn from Starbucks and Gap (“The Fun Factor”/The Boston Globe/08.30.04

LAN Installation Co.

Geek Squad (2% to 30%/Minn.)

From “Service’ to “Cause”

7X. 730A-800P. F12A.*

*Plus: “WOW Department’” “Kill a Stupid Rule” contests, etc. 2001R: 34%; P: 29%; ’90-’00: 2,048%.

Commerce Bank/NJ ($10B). Source: FC05.02.

It’s All About EXPERIENCES: “Trapper” to “Wildlife Damage-control Professional”

Trapper: <$20 per beaver pelt.

WDCP: $150/“problem beaver”; $750-$1,000 for flood-control

piping … so that beavers can stay.

Moving Companies

WSJ/08.2003: “In Texas, They’ll fill your empty fridge with brie and

wine. An outfit in New York promises quick high-speed Internet

hookup. And when Allied Van Lines finishes unloading your couch, they’ll have a feng shui

expert figure out the right spot. …”

Duet … Whirlpool … “washing machine” to “fabric care system” … white goods: “a sea of

undifferentiated boxes” … $400 to $1,300 … “the Ferrari of washing machines” …

consumer: “They are our little mechanical buddies. They have personality. When they are

running efficiently, our lives are running efficiently. They are part of my family.” …

“machine as aesthetic showpiece” … “laundry room” to “family studio” / “designer laundry

room” (complements Sub-Zero refrigerator and home-theater center)

Source: New York Times Magazine/01.11.2004

1997-2001

>$600: 10% to 18%$400-$600: 49% to 32%

<$400: 41% to 50%

Source: Trading Up, Michael Silverstein & Neil Fiske

“A Bedtime Story, for $20,000”/CNN

Int’l Sleep Products Assn: 20% of mattresses sold in 2003 >$1,000 vs. 15% in 2000. Fastest growing segment: $5,000 to

$20,000.

ISPA exec: “The Baby Boomers are getting older, and more affluent. As you get older, your body changes and those aches and pains develop. So they have the money

and the inclination to upgrade.”

“Clients want either the best or

the least expensive; there

is no in between.” —John Di Julius, Secret

Service

“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 …

StoryAdventure

Smile Focus

PlotPassion

First Step (?!): Hire a theater director, as

a consultant or FTE!

Words!

— Magician of Magical Moments— Maestro of Moments of Truth— Recruiter of Raving Fans— Impresario of First Impressions— Wizard of WOW— Captain of Brilliant Comebacks— Director of Electronic Customer Experiences— Conductor of Customer Intimacy— King of Customer Community— Queen of Customer Retention— CEO of Ownership Experience— Managing Director of After-sales Experience

One company’s answer:

*Chief eXperience Officer

Experience …

Cirque du Soleil

DO YOU MEASURE UP?*

*If not, why not?

“Most executives have no idea how to add value to a market in the metaphysical

world. But that is what the market will cry out for in the future. There is no lack of ‘physical’ products to

choose between.”

Jesper Kunde, Unique Now ... or Never [on the excellence of Nokia, Nike, Lego, Virgin et al.]

Extraction & Goods: Male dominance

Services & Experiences: Female

dominance

“Women don’t buy

brands. They join them.”

EVEolution

The “Experience Ladder”

Experiences Services

Goods Raw Materials

<TGWvs.

Dell + IBM + Harley-Davidson*

= Magic!*Frictionless throughout Supply-chain + EncompassingSolutions

+ Scintillating Experience

Theater II: Embracing the

“Dream Business.”

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

“A shipping clerk earning $25,000 a year treats herself to silk pajamas at Victoria’s Secret. A dual-income couple earning

$125,000 orders a $4,000 Viking range for their townhouse even though the developer offered to throw in a perfectly serviceable

generic range at no extra charge. These purchases reflect an important worldwide behavioral shift. Consumers today are willing to pay a significant premium for goods and services that are emotionally important to them and that deliver the perceived values of quality, performance and engagement.

But in other categories that aren’t emotionally important, they become bargain hunters: a passionate Mercedes driver will shop at Target every weekend; a construction worker who

splurges on a $3,000 set of Callaway golf clubs will buy store brand groceries.” —Trading Up: The New American Luxury/Michael

Silverstein & Neil Fiske

Common Products “Dream” Products

Maxwell House StarbucksBVD Victoria’s SecretPayless FerragamoHyundai FerrariSuzuki Harley-DavidsonAtlantic City AcapulcoNew Jersey CaliforniaCarter KennedyConners PeleCNN Millionaire

Source: Gian Luigi Longinotti-Buitoni

The Marketing of Dreams (Dreamketing)

Dreamketing: Touching the clients’ dreams.Dreamketing: The art of telling stories

and entertaining.Dreamketing: Promote the dream, not

the product.Dreamketing: Build the brand around

the main dream.Dreamketing: Build the “buzz,” the

“hype,” the “cult.”Source: Gian Luigi Longinotti-Buitoni

Building the Creative Organization

Choose a creator: The cultural leader who gives the company an aesthetic point of view.Hire eclectically: Hire collaborators with different cultures and past histories in order to balance rigor with emotion.Prepare vertically: Develop a rigorous understanding of the product and the client.Develop horizontally: Promote curiosity in unrelated disciplines.Lead emotionally: Engender passionate dedication through vision and freedom.Build for the long haul: Creativity requires a lifetime commitment.

Constantly Magnify Perceived Value

Maximize your value-added by fulfilling the dreams of your clients.

Only invest in what is valuable for your client.Don’t let the short-term results weaken the

long-term value of your brand.Balance rigorous control of the financial endeavor

with the emotional management of your brand.Build a financial structure that allows risk-taking:

NO RISKS—NO DREAMS.Establish long-term “price power” in order to avoid

the trap of the commodity product.

Experience Ladder/TP

Dreams Come True Awesome Experiences

SolutionsServicesGoods

Raw Materials

Furniture vs. Dreams

“We do not sell ‘furniture’ at Domain. We sell dreams. This is accomplished by

addressing the half-formed needs in our customers’ heads. By uncovering these

needs, we, in essence, fill in the blanks. We convert ‘needs’ into ‘dreams.’ Sales are the

inevitable result.”

— Judy George, Domain Home Fashions

HORCHOW.COMFurniture. Accessories. Dreams.

“The Ritz-Carlton experience enlivens the

senses, instills well-being, and fulfills even

the unexpressed wishes and needs of our guests.”

— from the Ritz-Carlton Credo

Safe, On-time and ...

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

amaze, surprise, entertain.”— Herb Kelleher, SWA / LUV

“The sun is setting on the Information Society—even before we have fully adjusted to its demands as individuals and as

companies. We have lived as hunters and as farmers, we have worked in factories and now we live in an information-based

society whose icon is the computer. We stand facing the fifth kind of society: the Dream Society. … The Dream Society is emerging this very instant—the shape of the future is visible today. Right

now is the time for decisions—before the major portion of consumer purchases are made for emotional, nonmaterialistic

reasons. Future products will have to appeal to our hearts, not to our heads. Now is the time to add emotional value to products and services.” —Rolf Jensen/The Dream Society:How the Coming Shift from

Information to Imagination Will Transform Your Business

“In Denmark, eggs from free-range hens have conquered over 50 percent of the market. Consumers do not want hens to live their lives in small, confining cages. They are willing to pay 15 percent to 20 percent more for the story about animal ethics. This is classic Dream Society logic. Both kind of eggs are similar in

quality, but consumers prefer eggs with the better story. After we debated the issue and stockpiled 50

other examples, the conclusion became evident: Stories and tales speak directly to the heart rather than the brain. After a century where society was marked by

science and rationalism, the stories and values are returning to the scene.” —Rolf Jensen/The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business

Six Market Profiles

1. Adventures for Sale2. The Market for Togetherness, Friendship and Love3. The Market for Care4. The Who-Am-I Market5. The Market for Peace of Mind6. The Market for Convictions

Six Market Profiles

1. Adventures for Sale/IBM2. The Market for Togetherness, Friendship and Love/IBM3. The Market for Care/IBM4. The Who-Am-I Market/IBM5. The Market for Peace of Mind/IBM6. The Market for Convictions/IBM

Rogaine.

Help Keep Your Hair.

Help Keep Your Confidence.

Source: Ad on the side of a bus/Dublin/10.04

Product: Rogaine.

Solution: Help Keep Your Hair.

Dream-come-true: Help Keep Your Confidence.

Source: Ad on the side of a bus/Dublin/10.04

’70s: Cost (BCG’s “cost curves”)

’80s: TQM-CI (Japan)

’90s: Service

’00s: Solutions/Experiences’10s: Dream Fulfillment

New Market Realities

Selling Dreams: How to Make Any Product Irresistible, Gian Luigi Longinotti-Buitoni

The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your

Business, Rolf Jensen

Trading Up: The New American Luxury, Michael Silverstein & Neil Fiske

Embracing the “Dream Society”: Even “culture change,” daunting as it is, is not a fully adequate term. Requisite is a particular type of culture change that flies in the face of most traditional training and development practices of, say, the last hundred or more years. “Most managers,” says Danish marketing guru Jesper Kunde in Unique Now ... or Never, “have no idea how to add value to a market in the metaphysical world. But that is what the market will cry out for in the future. There is no lack of ‘physical’ products to choose between.” What about a new degree, an MMM (Master of Metaphysical Management) to supplant the MBA?

9. Re-imagine the “Soul” of Enterprise:

Design Rules!

“Having spent a century or more focused on other goals—solving manufacturing problems, lowering

costs, making goods and services widely available, increasing convenience, saving energy—we are

increasingly engaged in making our world special. More people in more aspects of life are drawing

pleasure and meaning from the way their persons, places and things look and feel. Whenever we have the

chance, we’re adding sensory, emotional appeal to ordinary function.” — Virginia Postrel, The Substance of Style: How

the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

“If modernist design ideology promised efficiency, rationality

and truth, today’s diverse aesthetics offers a different

trifecta: freedom, beauty and pleasure.” —Virginia Postrel, The Substance of Style:

How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

“As soon as the Taliban fell, Afghan men lined up at barber shops to have their beards shaved off. Women

painted their nails with once-forbidden polish. Formerly clandestine beauty salons opened in prominent

locations. Men traded postcards of beautiful Indian movie stars…. Even burka merchants diversified their wares, adding colors like brown, peach and green to the blue and off-white dictated by the Taliban’s whip-wielding virtue police. Freed to travel to city markets,

village women demanded better fabric, finer embroidery and more variety in their traditional

garments.” —Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

“With its carefully conceived mix of colors and

textures, aromas and music, Starbucks is 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

“Elaborating on the techniques of one-of-a-kind boutique hotels, Starwood Hotels &

Resorts [W, Sheraton, Westin] has adopted a strategy of

‘Winning by design.’ ” —Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking

Commerce, Culture and Consciousness

“The lowliest household tool has become an object of color, texture, personality, whimsy, even elegance. Dozens, probably

hundreds, of distinctively designed toilet-brush sets are available—functional, flamboyant, modern, mahogany. For

about five bucks, you can buy Rubbermaid’s basic plastic bowl brush with caddy, which comes in seven different colors, to

hide the bristles and keep the drips off the floor. For $8 you can take home a Michael Graves brush from Target, with a rounded

blue handle and translucent white container. At $14 you can have an OXO brush, sleek and modern in a hard, shiny white plastic holder that opens as smoothly as the bay door on a science-fiction spaceship. For $32, you can order Philippe

Starck’s Excalibur brush, whose hilt-like handle creates a lid when sheathed in its caddy. At $55 there’s Stefano

Giovannoni’s Merdolino brush for Alessi … Cross the $100 barrier, and you can find all sorts …” —Virginia Postrel, The

Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

DESIGN IS INEVITABLE! DESIGN IS THE DIFFERENCE!

DESIGN RULES!

Design Myths.

Unconventional [Design] Messages

Not about ... “Lumpy Objects”!

Not about ... $79,000 objects

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

Design Transforms even the [Biggest] Corporations!

TARGET … “the champion of America’s new design democracy” (Time) “Marketer of the Year 2000”

(Advertising Age)

Lady Sensor, Mach3, and …

$70M on developing the OralB CrossAction toothbrush

23 patents, including 6 for the packaging

Source: www.ecompany.com [06.00]

Design2002

LISTERINE’s …

PocketPaks

Westin’s …

Heavenly Bed

Design’s place in the universe.

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

“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

“The good 10 percent of American product design comes

out of big-idea companies that don’t believe in talking to the

customer. They're run by passionate maniacs who make everybody’s life miserable until

they get what they want.”

Bran Ferren, Applied Minds/Wired 1-2001

“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 …”

“Passionate maniacs …” “Fundamental soul …”

Bottom Line.

Design “is” … WHAT & WHY I LOVE.

I LOVE my ZYLISS Garlic Peeler!

All Time No.1 (TP)

Ziplocs

Design “is” … WHY I

GET MAD. MAD.

Wanted: THE DESIGNER OF MY

RADIO SHACK PHONE. Major

Reward!

Design is never neutral.

Hypothesis: DESIGN is the principal difference between love and

THE BASE CASE: I am a design fanatic. Though not “artistic,” I love “cool stuff.” But it goes [much]

further, far beyond the personal. Design has become a professional obsession. I SIMPLY BELIEVE THAT DESIGN PER SE IS THE PRINCIPAL

REASON FOR EMOTIONAL ATTACHMENT [or detachment] RELATIVE TO A PRODUCT OR

SERVICE OR EXPERIENCE. Design, as I see it, is

arguably the #1 DETERMINANT of whether a product-service-experience stands out … or doesn’t.

Furthermore, it’s another “one of those things” that damn few companies put – consistently – on the

front burner.

Message (?????): Men cannot design for women’s

needs.

“Perhaps the macho look can be interesting … if you

want to fight dinosaurs. But now to survive you need intelligence,

not power and aggression. Modern intelligence means

intuition—it’s female.”

Source: Philippe Starck, Harvard Design Magazine (Summer 1998)

Step No. 1:

NOTEBOOK POWER!

[Start recording the awesome & the awful]

User …

STOP BLAMING

YOURSELF! (Don

Norman/Design of Everyday Things)

“Sometimes I have episodes of wild fury in rental cars. It’s not road

rage. It’s more like design rage.”

Susan Casey, www.ecompany.com

The Designer’s Ring

“For years I thought that Dante should have established a ‘designer’s ring’ in his Hell. If any

designer’s product raised a blister, caused a bruise, ripped a stocking, or caused any of the

thousand things that frustrate us with the products we use, that designer would be assigned the designer’s ring in Hell and forced to use that product for all of eternity.” — James Pirki, designer

and professor, Syracuse University

15 “Leading” Biz Schools

Design/Core: 0Design/Elective: 1Creativity/Core: 0

Creativity/Elective: 4Innovation/Core: 0

Innovation/Elective: 6

Source: DMI/Summer 2002

“There is little evidence that mastery of the knowledge

acquired in business schools enhances people’s careers, or

that even attaining the MBA credential itself has much effect on graduates’ salaries or career attainment.” —Jeffrey Pfeffer (tenured professor,

Stanford GSB/2004)

“What I am really wanting to do is a design school, to teach the sensibility that

“Having spent a century or more focused on other goals—solving manufacturing problems, lowering

costs, making goods and services widely available, increasing convenience, saving energy—we are

increasingly engaged in making our world special. More people in more aspects of life are drawing

pleasure and meaning from the way their persons, places and things look and feel. Whenever we have the

chance, we’re adding sensory, emotional appeal to ordinary function.” — Virginia Postrel, The Substance of Style: How

the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness

DESIGN IS INEVITABLE! DESIGN IS THE DIFFERENCE!

DESIGN RULES!

“Business people don’t need to ‘understand

designers better.’ Businesspeople need to be designers.” —Roger Martin/Dean/Rotman

Management School/Univ of Toronto

Design is …

Design is a … 15 cent bud

I LOVE my ZYLISS Garlic Peeler!

WHY I WIPE UP OTHER PEOPLE’S PEE: A DESIGN CLASSIC

The [small] saga of the toilet in a hole-in-the-wall Texaco on Rte 2

Design is SURPRISE!

Ralph Kaplan, By Design: “What effects us so strongly when we

see an MG or a beautifully balanced knife is that someone

has pleased us by making what we wanted and never we wanted.”

Design + Beauty is Fred S.’s thesis and

Herb K.’s napkin [and Cousin Ben’s]

Great Design is “Cheeky”

Branson’s stated hurdle for any new Virgin product or service:

best quality, good value,

innovative, challenge existing alternatives, sense of fun or

cheekiness

Niels Bohr to Wolfgang Pauli: “We all agree your theory is crazy. The

question, which divides us, is

whether it is crazy enough.”

The Nerve to Get Personal!

Nintendo Designer: “I am not

‘creating a game.’ I am in the game. The game is not

for children, it is for me.”

Funky Business: “To succeed we must stop being so goddamn

normal. In a winner-takes-all world,

normal = nothing.”

To some [big?] extent,

women must design for women, kids for kids, Hispanics for

Hispanics. THERE IS A LIMIT TO OUR COMPREHENSION OF

OTHERS.

Great + risky design is always [??] a product of

engaging the Client – from the start – in a

journey to the unknown.

“Products from the major competing companies around the world will

become increasingly similar. Inevitably, this means that the whole

of a company’s personality, its identity, will become the most

significant factor in making a choice between one company and its

products and another.”

Wally Olins, Corporate Identity

“Identity is corporate

strategy made visible.”

Wally Olins

I LOVE cool stuff. (Much of it costs less than $10.)

I HATE uncool stuff.(Much of it costs more than $10.)

I LOVE stuff that works.

I HATE stuff that doesn’t work. I ESPECIALLY HATE stuff that

doesn’t work and makes me feel like an idiot.

I like stuff I like.

I hate stuff I hate.

I take my likes and hates seriously.

DESIGN is the principal difference between the two

reactions.

DESIGN transforms the perception of what’s possible. E.g.: Plate-glass

windows. Apple II.

Design = Character

(which is why knock offs are so easy to see through) (Design = WHO

ARE WE?!)

Great Design is respectful

of me.

Awareness can be raised!

Compare 10 order forms or data fields at a Web site.

Save great and awful junk mail.

Go on a <$10 shopping spree.

Pay attention to signage. (And instruction manuals.)

Start a notebook. NOW.

Web = PURE DESIGN MEDIUM

Great design = One-page

business plan (Jim Horan)

Lowly Forms Ain’t! Users …

STOP BLAMING

YOURSELVES!

(Don Norman)

“A good programmer can be a hundred times more productive than an average one, easily. The gap has little to do with technical or mathematical or engineering training, much to do with taste, good judgment, aesthetic gifts.”

David Gelernter, Machine Beauty

George Nelson, 1940: “Whenever furniture is criticized, the public is

blamed. ‘When they want something better,’ the refrain goes,

‘we’ll be only too glad to make it for them.’ The average

manufacturer has no convictions whatever about design.”

DESIGN IS LIFE. The rest

is details.

Design “is” … WHAT &

WHY I LOVE. LOVE.

Design “is” … WHY I

GET MAD. MAD.

Design is never neutral.

Design is thinking about … THE

PRESENTATION OF …

Design is why it takes a year to

“do” a …

Design is why it takes only a minute

to declare …

Wanted: Dead or Alive: THE

DESIGNER OF MY RADIO SHACK PHONE. Major

Reward!

Simple!!!!!!!!!!!! (customers call because the process is so easy they can’t

believe they’re done)

30% of revenues directly from site (vs. 6% for others)

Source: BusinessWeek (09.00)

Progressive

“We don’t sell insurance anymore.

We sell speed.” – Peter Lewis

Digital cameras, wireless Net links,

etc.: SOME CLAIMS PAID WITHIN 20 MINUTES!

Source: BusinessWeek (09.00)

Design Case P … Thomas Hine: The Total

Package: The Secret History and Hidden Meanings of

Boxes, Bottles, Cans and Other Persuasive Containers

“The most fundamental difference between a traditional market and

the places through which you push your cart is that in modern retailing

all the selling is done without people. It replaces people with

packages.” —Thomas Hine/The Total Package

“Packages have personality. They create

confidence and trust. They spark fantasies.

They move the goods!” —Thomas Hine/The Total Package

Oatmeal/1870: “horses and a few stray Scots”

Oatmeal/1890/Quaker: “a delicacy for the epicure, a nutritious dainty

for thr invalid, a delight to the children”

Difference: Packaging!

Thomas Hine/The Total Package

“During the thirty minutes you spend on an average trip to the supermarket, about thirty thousand different products vie to

win your attention and ultimately to make you believe in their promise. When the

door opens, you enter an arena where your emotions are in play—and a walk down the aisles is an exercise in self-definition. Few experiences in life offer the visual intensity of a Safeway, a Krogers. …” —Thomas Hine/The Total Package

Research: customers aware of 11,000 packages in 1,800 seconds

walking the aisles.

Opportunity = 1/6th second!

Source: Thomas Hine/The Total Package

“Packaging strives at once to offer excitement and reassurance. It promises something newer and better, but not necessarily different. When we talk about a tourist destination, or even a

presidential contender, being packaged, that’s not really a metaphor. The same projection of

intensified ordinariness, the same combination of titillation and reassurance, are used for

laundry detergents, theme parks and candidates alike.” —Thomas Hine/The Total Package

“One, consumers really do not distinguish between a product and

its package. Two, consumers relate emotionally not to the facts

(the realities) of the product/packages they are

involved with, but rather to their perceived realities.” —Walter Stern in

Thomas Hine/The Total Package

“What’s important to recognize is that fast-food

and hotel chains are not like packages, but that they are

packages—packaged places and experiences.” —Thomas

Hine/The Total Package

9A. Re-imagine the Infrastructure of

Enterprise: Design = “Beautiful” Systems.

Fred S.’s “mediocre” thesis. Herb K.’s

napkin.

Great design = One-page

business plan (Jim Horan)

The One-page Proposal: How to Get Your Business Pitch onto One Persuasive Page —Patrick Riley (“Why not one and a half? Why not two? Sorry, it’s one or nothing. Once the proposal extends past the first page,

the battle is lost.”)

There Are Lawyers … and Then There Are Lawyers: John De Laney/ICM

ANYTHING TRULY IMPORTANT CAN BE

BOILED DOWN TO 1/3RD PAGE.

K.I.S.S.: Gordon Bell (VAX

daddy): 500/50. Chas.

Wang (CA): Behind schedule?

Cut least productive 25%.

1Y/2N: Commerce Bank2 Pizzas: JB

Plastic Bulldozer: MD

Systems: Must have. Must

hate. / Must design. Must un-

design.

Mgt. Team

includes … EVP (S.O.U.B.)

Executive Vice President, Stomping Out Unnecessary Bullshit

First Steps: “Beauty Contest”!

1. Select one form/document: invoice, air bill, sick leave policy, customer returns-claim form.

2. Rate the selected doc on a scale of 1 to 10 [1 = Bureaucratica Obscuranta/ Sucks; 10 = Work

of Art] on four dimensions: Beauty. Grace. Clarity. Simplicity.

3. Re-invent!4. Repeat, with a new selection, every 15 working

“Beautiful”“Aesthetic Triumph”

“Breathtaking”

“Deposits may be made by a minor and withdrawals thereof may be made by a

minor without the consent of a parent or guardian, neither of whom, in that

capacity, shall have any right to attach or interfere in any manner with such

deposits or withdrawals.”

“Minors may make deposits and withdrawals from their accounts without the

consent or interference of a parent or guardian.”

“This Grievance Procedure must be used if the nature of the complaint deals with the quality of services given to the Member, including

complaints about waiting times, physician demeanor and behavior, or adequacy of facilities (as opposed to whether or not a particular

service is a Covered service and what amount, if any, should be paid). Also, this Grievance Procedure will be applied under all circumstances to any Universal Healthcare supplemental products which the Member

may have bought independently from this SeniorPlus plan. If the nature of the Member’s complaint deals with a Covered Service stated

in this SeniorPlus or the level of payment associated with this plan,

please refer to the Medicare Appeals procedure, stated in Section X.”

Source: Siegel & Gale

“If you have a complaint about quality of service received, waiting times, physician behavior, or the adequacy of medical facilities, please use our grievance process.

“lf you have a complaint about coverage or payment, please use the Medicare Appeals procedure (see Section

X).”

Source: Siegel & Gale

10. Re-imagine the Fundamental Selling

Proposition: “It” all adds up to …

THE BRAND (THE STORY).

The Heart of Branding …

“WHO ARE WE?”

(brokerage)

“WHAT’S OUR

STORY?”

“WHAT’S THE

DREAM?”

“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

“Apple opposes, IBM solves, Nike exhorts, Virgin enlightens,

Sony dreams, Benetton

protests. … Brands are not nouns but verbs.”

Source: Jean-Marie Dru, Disruption

Message: ALL ‘BUSINESS MODELS’

ARE IN FACT … BRAND

STATEMENTS!

DO THE HOUSEKEEPERS & CLERKS “BUY

IT”? [ARE YOU V-E-R-Y SURE?]

“EXACTLY HOW ARE WE

DRAMATICALLY DIFFERENT?”

1st Law Mktg Physics: OVERT BENEFIT (Focus: 1 or 2 > 3 or 4/“One Great Thing.” Source #1: Personal Passion)

2ND Law: REAL REASON TO BELIEVE (Stand & Deliver!)

3RD Law: DRAMATIC DIFFERENCE (Execs Don’t Get It:

See the next slide.)

Source: Jump Start Your Business Brain, Doug Hall

2 Questions:

“How likely are you to purchase this new product or service?” (95% to 100% weighting by execs)

“How unique is this new product or service?” (0% to 5%*)

*No exceptions in 20 years – Doug Hall, Jump Start Your Business Brain

“If you are not one of the major players, you have to take a position that is contrary to the global trend.”

“We have to ask ourselves: How can we be different? We have to find out what we can be best in the world at.”

Source: IBM Business Consulting Services/The Global CEO Study 2004

Doug Hall, P&G vet and long-time proprietor of Eureka Ranch, is

my favorite marketing guru. One reason is his ... Declaration of Dramatic Difference. Well, he doesn’t call it that—I do. In Jump Start Your Business Brain, Hall gives us his Three Laws of Marketing Physics. The Law of Dramatic Difference is number three. It goes this way. Prospective customers evaluate a new product. Then they’re asked (1) if they’d buy it and (2) if they see it as “unique.” The firm’s execs in turn evaluate and weigh the prospective customers’ reactions. Without fail, the execs deciding to launch or not bet close to one-hundred of their marbles on the intent-to-buy question, and virtually ignore the uniqueness issue. The problem, or should I say “THE PROBLEM”: In actual fact the intent-to-buy response is a poor predictor of subsequent real-world success (or failure), while the “uniqueness” assessment almost perfectly predicts the true response to the product.

“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

“A great company is defined by the

fact that it is not compared

to its peers.”Phil Purcell, Morgan Stanley

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

“WHY DOES IT MATTER TO

THE CLIENT?”

“EXACTLY HOW DO I PASSIONATELY CONVEY THAT

DRAMATIC DIFFERENCE TO THE

CLIENT ?”

“Brand Promise” Exercise: (1) Who Are WE? (poem/novella/song, then 25

words.) (2) List three ways in which we are UNIQUE … to our Clients.

(3) Who are THEY (competitors)? (ID, 25 words.)

(4) List 3 distinct “us”/“them” differences. (5) Try “results” on your teammates. (6) Try ’em on a friendly Client. (7) Try ’em on a

skeptical Client!

Rules of “Radical Marketing”

Love + Respect Your Customers!Hire only Passionate Missionaries!Create a Community of Customers!

Celebrate Craziness!Be insanely True to the Brand!

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

Branding: Is-Is Not “Table”

TNT is not: TNT is: TNT is not:

Juvenile Contemporary Old-fashioned

Mindless Meaningful Elitist

Predictable Suspenseful Dull

Frivolous Exciting Slow

Superficial Powerful Self-important

Message …

Is Not >> Is

“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

What Can [Can’t] Be Branded?“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

Story > Brand

Market Power = Story Power = Dream Power

Kevin Roberts*:

Lovemarks!

*CEO/Saatchi & Saatchi

10A. Re-imagine 2004: “Excellence” Found!

And the Winner is …

1. Audacity of Vision2. Innovation/R&D/Design3. Talent Acquisition & Development4. Resultant “Experience”5. Strategic Alliances6. Operations7. Financial Management8. Overall/Sustaining Excellence9. “Wow!”

Cirque du Soleil!

Cirque du Soleil: Talent (12 full-time

scouts, database of 20,000). R&D (40% of

profits; 2X avg corp). Controls (shows are profit centers; partners like Disney offset costs;

$100M on $500M). Scarcity builds buzz/brand (1 new show per year. “People tell me we’re leaving money on the table by not duplicating our shows. They’re right.”—Daniel

Lamarre, president).Source: “The Phantasmagoria Factory”/Business 2.0/1-2.2004

Ex2004

Cirque du Soleil

Infosys

Build-A-Bear

Griffin Health Services Corporation

Infosys/Planet-warping Aspirations …

“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

Build-A-Bear

--1997 to 2004: $0 to $300M

--Maxine Clark/CEO (25 yrs May Dept Stores)

--Build-A-Bear Workshops

--Engagement! (“Where Best Friends Are Made”)

--Theater!

--http://www.buildabear.com/buildaparty

Best Web Site?

buildabear.com

Griffin Health Services Corporation/

Griffin Hospital/Planetree Alliance

“It was the goal of the Planetree Unit to help

patients not only get well faster but also to stay well longer.” —Putting Patients First, Susan Frampton,

Laura Gilpin, Patrick Charmel

“Those of us working in healthcare have an obligation to be of service in this world, to be bringers of light and

hope. Our work is spiritual by its nature, as the Planetree model has acknowledged for decades.”

“Our definition of spirituality is coming into a right relationship with all that is, establishing a loving,

nurturing, caring relationship. Planetree’s has been to refocus our attention on the power of relationships, and, in particular, the mind-body-spirit relationship essential to healing. It has opened a door that will

never be closed.” —Leland Kaiser, “Holistic Hospitals”

Source: Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel

The 9 Planetree Practices

1. The Importance of Human Interaction2. Informing and Empowering Diverse Populations: Consumer Health Libraries and Patient Information3. Healing Partnerships: The importance of Including Friends and Family4. Nutrition: The Nurturing Aspect of Food5. Spirituality: Inner Resources for Healing6. Human Touch: The Essentials of Communicating Caring Through Massage7. Healing Arts: Nutrition for the Soul8. Integrating Complementary and Alternative Practices into Conventional Care9. Healing Environments: Architecture and Design Conducive to Health

Source: Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel

“Planetree is about human beings caring

for other human beings.” —Putting Patients First, Susan

Frampton, Laura Gilpin, Patrick Charmel (“Ladies and gentlemen serving ladies and gentlemen”—4S credo)

V. NEW BUSINESS.

NEW MARKETS.

11. Re-imagine the Customer I: Trends Worth

Trillion$$$ …

Women Roar.

?????????

Home Furnishings … 94%Vacations … 92% (Adventure Travel … 70%/ $55B travel equipment)

Houses … 91%D.I.Y. (major “home projects”) … 80%

Consumer Electronics … 51% (66% home computers)

Cars … 68% (90%)All consumer purchases … 83%

Bank Account … 89%Household investment decisions … 67%Small business loans/biz starts … 70%

Health Care … 80%

Riding Lawnmowers

2/3rds working women/50+% working wives > 50%

80% checks61% bills

53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

1970-1998

Men’s median income: +0.6%Women’s median income: + 63%

Source: Martha Barletta, Marketing to Women

$5+T > Japan

10M/28M/$3.6T > Germany

Business Purchasing Power

Purchasing mgrs. & agents: 51%HR: >>50%

Admin officers: >50%

Women-owned Bus.

U.S. employees > F500 employees worldwide

New golfers … 37%Basketball … 13.5M

1 in 27 (’70) … 1 in 3 (’96)

1874 … Jock Strap1977 … Jogbra

1977 ... 25K

1996 … 42M

1970 … 1%

2002 … 50%

91% women: ADVERTISERS DON’T

UNDERSTAND US. (58% “ANNOYED.”)

Source: Greenfield Online for Arnold’s Women’s Insight Team (Martha Barletta, Marketing to Women)

Carol Gilligan/ In a Different Voice

Men: Get away from authority, familyWomen: Connect

Men: Self-orientedWomen: Other-oriented

Men: RightsWomen: Responsibilities

Men: Individual perspective. “Core unit is ‘me.’ ”

Pride in self-reliance.

Women: Group perspective. “Core unit is ‘we.’ ” Pride in team

accomplishment.

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.”

“Society today is determined to believe that men and women possess

the same skills, aptitudes and potentials—just as science, ironically,

is beginning to prove that we are completely different. —Allan Pease & Barbara

Pease, Why Men Can Only Do One Thing at a Time and Women Never Stop Talking

How many men does it take to change a roll of toilet paper?

It’s unknown. It’s never happened.

Source: Allan Pease & Barbara Pease, Why Men Can Only Do One Thing at a Time and Women Never Stop Talking

“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!)

“Shopping: A Guy’s Nightmare or a Girl’s Dream Come True?”

“Buy it and be gone”vs.

“Hang out and enjoy the experience”

Source: The Charleston [WV] Gazette/06.22.2002

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

Women's View of Male Salespeople

Technically knowledgeable; assertive; get to the point; pushy;

condescending; insensitive to women’s needs.

Source: Judith Tingley, How to Sell to the Opposite Sex (Martha Barletta, Marketing to Women)

Women as Healthcare Decision Makers

— read vociferously— want choices

— value convenience— look for small signs of

sensitivity (gowns that close)

Source: Cheryl Stone, Rynne Marketing Group

Women and Healthcare

— Women are more dissatisfied— Women are frustrated by the way they

are treated and spoken to by physicians

— Women seek more information— Women are more pressed for time

— Women make most healthcare decisions and purchases

Source: Patricia Braus, Marketing Health Care to Women

Women and Financial Advisors

Women want ...— a plan

— to be listened to— to read about it and think about it

Women do not want ...— a high-pressure sales pitch

Source: Kathleen Boyd, SVP, Wheat First Butcher Singer

(now part of Wachovia Securities)

Read This: Barbara & Allan Pease’s

Why Men Don’t Listen & Women Can’t Read Maps

“It is obvious to a woman when another woman is upset, while a man generally has to physically witness

tears or a temper tantrum or be slapped in the face before he even has a clue that anything is going on. Like most female mammals, women are equipped with far more finely tuned

sensory skills than men.” Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps

“Resting” State: 30%, 90%: “A woman knows her children’s

friends, hopes, dreams, romances, secret fears, what they are

thinking, how they are feeling. Men are vaguely aware of some short people also living in the house.”

Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps

“As a hunter, a man needed vision that would allow him to zero in on targets in the distance … whereas a woman needed eyes

to allow a wide arc of vision so that she could monitor any predators sneaking up on the nest. This is why modern men can find their way effortlessly to a distant pub,

but can never find things in fridges, cupboards or drawers.”

“Female hearing advantage contributes significantly to what is

called ‘women’s intuition’ and is one of the reasons why a woman can read between the lines of what people say. Men, however, shouldn’t despair.

They are excellent at imitating animal sounds.”

Senses

Vision: Men, focused; Women, peripheral.

Hearing: Women’s discomfort level I/2 men’s.

Smell: Women >> Men.Touch: Most sensitive man <

Least sensitive women.

Sensitivity to differences: Twice as many card stacks.

More “contextual,” “holistic.”

“People powered”: Age 3 days, baby girls 2X eye contact.

“When a woman is upset, she talks emotionally to her friends; but an upset man rebuilds a motor or

fixes a leaking tap.”Barbara & Allan Pease, Why Men Don’t Listen &

Women Can’t Read Maps

Stress* ** Men: Fight or flee

Women: Seek the company of friends

*Source: UCLA, “Female Response to Stress: Tend and Befriend, Not Fight or Flight”/Psychological Review**90% of stress research: men

“Women speak and hear a language of connection and intimacy, and men

speak and hear a language of status and independence. Men communicate to obtain information, establish their

status, and show independence. Women communicate to create

relationships, encourage interaction, and exchange feelings.”

Judy Rosener, America’s Competitive Secret

??????????????

“Never sacrifice a friendship for a good column.”

“Never sacrifice a good column for a friendship.”

“The Hollywood scripts that men write tend to be direct and

linear, while women’s compositions have many

conflicts, many climaxes, and many endings.”

Helen Fisher, The First Sex: The Natural Talents of Women and How They Are

Changing the World

“I only really understand myself, what I’m really thinking and

feeling, when I’ve talked it over with my circle of female friends. When days go by without that connection, I feel like a radio playing in an empty room.”

Anna Quindlen

“Women are more comfortable talking or

thinking about people and relationships, while men

prefer to contemplate things.” —research reported in the New York

Times (08.10.2003)

“Men and women have different styles of fearing. Men’s fears focus around

what we experience as our independence, and women’s around

loss of significant relationships. We fear engulfment, anything that

threatens to rob us of our power and control. Women most fear

abandonment, isolation, loss of love.” —Sam Keen, Fire in the Belly (see also Susan Rice)

Editorial/Men: Tables, rankings.*

Editorial/Women: Narratives that cohere.*

*Redwood (UK)

“Where the Girls Are: They’re Online, Solving Puzzles and Making Up Characters in Narrative-

driven Games” —Headline/WSJ/10.28

Initiate Purchase

Men: Study “facts & features.”

Women: Ask lots of people for input.

Read This Book …

EVEolution: The Eight Truths of Marketing to Women

Faith Popcorn & Lys Marigold

EVEolution: Truth No. 1

Connecting Your Female Consumers to Each

Other Connects Them to Your Brand

“The ‘Connection Proclivity’ in women starts early. When asked,

‘How was school today?’ a girl usually tells her mother every

detail of what happened, while a boy might grunt, ‘Fine.’ ”

EVEolution

What If …

“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

The New New Jiffy Lube

“In the male mold, Jiffy Lube was going all out to deliver quick, efficient service. But, in the

female mold, women were being turned off by the ‘let’s get it fixed fast, no conversation

required’ experience.”

New JL: “Control over her environment. Comfort in the service setting. Trust that her car

is being serviced properly. Respect for her intelligence and ability.”

EVEolution

“Women don’t buy

brands. They join them.”

EVEolution

Purchasing Patterns

Women: Harder to convince; more loyal once convinced.

Men: Snap decision; fickle.

2.6 vs. 21

Cents & Sensibility

“Our advisory sessions [with women] changed from a purely

analytical, male approach to something that starts with the heart

and ends with the figures.”

Lowe’s …

Gets it. 1989:

13%/“lumber shop” … 2002: >50%

“War has broken out over your home-improvement dollar, and Lowe’s has

superpower Home Depot on the defensive. It’s not-so-

secret ploy: Lure women.” —Forbes.com

“Home Depot is still very much a guy’s chain. But women, according to Lowe’s

research, initiate 80 percent of all home-improvement purchase decisions,

especially the big ticket orders like kitchen cabinets, flooring and bathrooms. ‘We

focused on a customer nobody in home improvement has focused on. Don’t get me

wrong, but women are far more discriminating than men,’ says CEO Robert

Tillman, 59, a Lowe’s lifer.” —Forbes.com

“Women’s Work: Do-it-yourself has become do-it-herself, and toolmakers are taking notice” —Headline/San Francisco

Chronicle/08.03

Tomboy Tools. E.g.:

smaller, lighter in weight. Tupperware “party” model.

“Darcy Winslow is a leading figure in Nike Goddess, a

companywide grassroots team whose goal is a once-and-for-all shift in how a high-testosterone outfit sells to, designs for, and

communicates with women.” —Fast

Company/08.2002

“Women weren’t comfortable in our stores. So I figured out where they would be comfortable—most likely their own homes. The [first

Nike Goddess] store has more of a residential feel. I wanted it to have furnishings, not fixtures. Above all,

I didn’t want it to be girlie.” —John Hoke, designer, Nike

Yes!: “Crest Spinoff Targets Women”—cover story,

Ad Age/06.03.02

Crest Rejuvenating Effects. “Chicks in charge” team. $50M launch. Packaging.

Taste. Features.

“Mattel Sees Untapped Market for Blocks: Little Girls”—Headline,

WSJ/04.06.02

“Last year more than 90% of Lego sets purchased were for boys. Mattel says Ello

—with interconnecting plastic squares, balls, triangles, squiggles,

flowers and sticks, in pastel colors and with rounded corners—will go beyond

Lego’s linear play patterns.”

“Volvo Teams Up to Build What Women Want:

Concept Car Goes for Great Storage, Easy

Maintenance” —headline/USA Today/12.16.2003/140-person team;80%

Ford Hybrid SUV Wallops Expectations

Women>$100K

College EdSource: USA Today/05.14.04

Not!“Year of the

Woman”

Enterprise Reinvention!

RecruitingHiring/Rewarding/Promoting

Structure Processes

MeasurementStrategyCulture Vision

Leadership

THE BRAND ITSELF!

“Honey, are you sure you have

the kind of money it takes to

be looking at a car like this?”

STATEMENT OF PHILOSOPHY: I am a businessperson. An analyst. A pragmatist. The enormous social good of increased women’s

power is clear to me; but it is not my bailiwick. My “game” is haranguing business leaders

about my fact-based conviction that women’s increasing power – leadership skills

and purchasing power – is the strongest and most dynamic force at work in the American

economy today. Dare I say it as a long-time Palo Alto resident … THIS IS EVEN BIGGER THAN

THE INTERNET!

Tom Peters

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’re marketing to

women entrepreneurs because it is a huge opportunity.” — Cherie Piebes

27 March 2000: email to TP from Shelley Rae Norbeck

“I make 1/3rd 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!”

“If we are single, they say we couldn’t catch a man. If we are

married, they say we are neglecting him. If we are divorced,

they say we couldn’t keep him. If we are widowed, they say we

killed him.”Kathleen Brown, on the joys of female political candidacy

Psssst! Wanna see my “porn” collection?

Norwegian Law: Boards must have

at least 40%

women.

Ass Of The Year2002: Maurice Greenberg, A.I.G., on the Company’s New (All Male) Leadership Team

“In a lot of countries of the world, it would be very difficult for a woman to

be a good CEO. … I have a responsibility to do the best we can for

shareholders.” * **

*Source: New York Times/05.05.02**Wouldn’t you love to watch him tell that … face-to-face

… to Margaret Thatcher or Carly Fiorina? (I would.)

Ad from Furniture /Today (04.01):“MEET WITH THE EXPERTS!: How

Retailing’s Most Successful Stay that Way”

Presenting Experts: M = 16;

F = ?? (94% = 272)

Stupid: “Amazing, now that I think about it. A bunch of

guys --developers, architects, contractors,

engineers, bankers--sitting around designing shopping centers. And the ‘end users’

will be overwhelmingly women!”

“Customer is King”: 4,440

“Customer is Queen”: 29

Source: Steve Farber/Google search/04.2002

F.Y.I.

“Women Beat Men at Art of Investing”

Source: Miami Herald, reporting on a study by Profs. Terrance Odean and Brad Barber, UC Davis (Cause: Guys are “in and out” of

stocks more often; women choose carefully and hold on for the long term)

Investment Club Returns

Women-only clubs 1997 … 17.9%Mixed … 17.3%

Men-only … 15.6%

Source: National Assoc. Investors

Value Line: Top State* Investment Clubs 2000

8 … All male19 … Coed

22 … All FEMALE

* VT & Maine not included; D.C. included

JBQ: Stop Treating Women Investors Like Idiots!

“Why all this focus on women and our lack of investment guts? A far greater problem, it seems to

me, is trigger-happy speculation, mostly by men. The kind of guys whose family savings went south

with the dot-coms. Imagine a list of their money mistakes: Shoot from the hip. Overtrade their

accounts. Believe they’re smarter than the market. Think with their mouse rather than their brain.

Praise their own genius when stocks go up. Hide their mistakes from their wives.”

Source: Newsweek 01.08.01

Notes to the CEO

--Women are not a “niche”; so get this out of the “Specialty Markets” group.--The competition is starting to catch on. (E.g.: Nike, Nokia, Wachovia, Ford, Harley-Davidson, Jiffy Lube, Charles Schwab, Citigroup, Aetna.)

--If you “dip your toes in the water,” what makes you think you’ll get splashy results?--Bust through the walls of the corporate silos.--Once you get her, don’t let her slip away.--Women ARE the long run!

1. Men and women are different.2. Very different.3. VERY, VERY DIFFERENT.4. Women & Men have a-b-s-o-l-u-t-e-l-y nothing in common.5. Women buy lotsa stuff.6. WOMEN BUY A-L-L THE STUFF.7. Women’s Market = Opportunity No. 1.8. Men are (STILL) in charge.9. MEN ARE … TOTALLY, HOPELESSLY CLUELESS ABOUT WOMEN.10. Women’s Market = Opportunity No. 1.

“And even if they manage to get the age thing right, [Marti] Barletta says companies still tend to screw up in fairly predictable ways when they add women to the equation. Too often, their first impulse is to paint the

brand pink, lavishing their ads with flowers and bows, or, conversely, pandering with images of women

warriors and other cheesy clichés. In other cases they use language intended to be empathetic that come

across instead as borderline offensive. ‘One bank took out an ad saying, We recognize women’s special

needs,’ says Barletta. ‘No offense, but doesn’t that sound like the Special Olympics?’ ” —Fast Company/03.04

“Secrets” of Marketing to Women

1. Show her “real” women and reliable scenarios.2. Focus on connection and teamwork.3. Capture her imagination by using stories.4. Make it multisensory.5. Add the little extras.6. Tap the emotional power of music.7. Create customer evangelists.8. Form brand alliances.

Source: Lisa Johnson & Andrea Learned, Don’t Think Pink:

What Really Makes Women Buy and How to Increase Your Share of This Crucial Market

“Five Clichés of Women (as Portrayed by Advertisers) …

Perfect MumAlpha FemaleFashionista

Beauty BunnyGreat Granny”

Source: The Independent /09.29.04 (on forthcoming “First London ‘Think Pink’ Conference”)

“Unilever brand Dove’s use of six generously proportioned ‘real women’ to promote its skin-firming preparations must qualify as one of the most talked-about marketing decisions taken

this summer. It was also one of the most successful: Since the campaign broke, sales of the firming lotion have gone up 700 percent in

the UK, 300 percent in Germany and 220 percent in the Netherlands.” —Financial

Times/09.29.04

“In Dove Ads, Normal Is the New

Beautiful” —Headline,

Advertising Age/09.27.04

Must Reads!

EVEolution: The Eight Truths of Marketing to Women, Faith Popcorn

and Lys Marigold

Marketing to Women, Martha Barletta

Don’t Think Pink: What Really Makes Women Buy, Lisa Johnson and

Andrea Learned

12. Re-imagine the Customer II: Trends Worth

Trillion$$$ … Boomer Bonanza/ Godzilla

Geezer.

“It’s like a tsunami coming at you. You know

the tidal wave is going to hit, and it’s a question

of whether we’ll be ready.” —Ed Schneider, Professor of

Gerontology, USC

Subject: Marketers & Stupidity

“It’s 18-44, stupid!”

Subject: Marketers & Stupidity

Or is it: “18-44 is stupid,

stupid!”

2000-2010 Stats

18-44: -1%

55+: +21%(55-64: +47%)

“Some 350,00 people turn 50 each month in the United

States, providing an enormous and growing pool of potential buyers [of giant RVs] for at least the next decade.” —

Craig Kennison, industry analyst/Chicago Tribune/06.07.2004

44-65: “New Consumer Majority” *

*45% larger than 18-43; 60% larger by 2010Source: Ageless Marketing, David Wolfe & Robert Snyder

“The New Consumer Majority is the only adult

market with realistic prospects for significant

sales growth in dozens of product lines for thousands of companies.” —David Wolfe & Robert

Snyder, Ageless Marketing

“Baby-boomer Women: The Sweetest

of Sweet Spots for Marketers” —David Wolfe and Robert

Snyder, Ageless Marketing

“For today’s emancipated, educated, high-expectation women,

the mid-forties to mid-fifties is the Age of

Mastery.” —Gail Sheehy (in More)

“Tap into a midlife woman’s renewed sense of self, and your cash registers are likely to start

ringing” —Headline/Fast Company/03.04

“BABY-BOOMER, COME HOME: Gap Hopes a New

Chain Will Bring Back Women Who Once

Bought Its Jeans” —headline/ BusinessWeek/0704

Aging/“Elderly”

$$$$$$$$$$$$“I’m in charge!”

“NOT ACTING THEIR AGE: As Baby Boomers

Zoom into Retirement, Will America Ever Be the

Same?”USN&WR Cover/06.01

“Sixty Is the New Thirty”

—Cover/AARP/11.03

$7T wealth (70%)/$2T annual income50% all discretionary spending

79% own homes/40M credit card users41% new cars/48% luxury cars

$610B healthcare spending/74% prescription drugs

5% of advertising targets

Ken Dychtwald, Age Power: How the 21st Century Will Be Ruled by the New Old

“Advertisers pay more to reach the kid because they think that once someone hits

middle age he’s too set in his ways to be

susceptible to advertising. … In fact, this notion of impressionable kids

and hidebound geezers is little more than a fairy tale, a Madison

Avenue gloss on Hollywood’s cult of youth.”—James Surowiecki (The New

Yorker/04.01.2002)

Read This!

Carol Morgan & Doran Levy,

Marketing to the Mindset of Boomers

and Their Elders

“Marketers attempts at reaching those over 50 have

been miserably unsuccessful. No market’s motivations and needs are so poorly understood.”—Peter

Francese, founding publisher, American Demographics

“Households headed by someone 40 or older enjoy 91% ($9.7T) of

our population’s net worth. … The mature market is the dominant

market in the U.S. economy, making the majority of

expenditures in virtually every category.” —Carol Morgan & Doran Levy, Marketing to

the Mindset of Boomers and Their Elders

Median Household Net Worth

<35: $7K35-44: $44K45-54: $83K

55-64: $112K65-69: $114K70-74: $120K>74: $100K

Source: U.S. Census

78M67% of wealth ($28T)

Source: U.S. Census/Federal Reserve/WSJ

Net Worth Household Heads

= 15X <35

Source: U.S. Census/WSJ

“The mature market cannot be dismissed as entrenched in its

brand loyalties.” —Carol Morgan &

Doran Levy, Marketing to the Mindset of Boomers and Their Elders

“Focused on assessing the marketplace based on lifetime

value (LTV), marketers may dismiss the mature market as

headed to its grave. The reality is that at 60 a person in the U.S. may enjoy 20 or 30 years of life.” —Carol

Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders

“While the average American age 12 or older watched at least five

movies per year in a theater, those 40 and older were the most

frequent moviegoers, viewing 12 or more a year.”—Carol Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders

“Women 65 and older spent $14.7 billion on apparel in 1999, almost as much as that spent by 25- to 34-year-

olds. While spending by the older women increased by 12% from the previous year, that of the younger group increased by only 0.1%. But

who in the fashion industry is currently pursuing this market?” —Carol

Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders

Possession Experiences /“Desires for things”/Young adulthood/to 38

Catered Experiences/ “Desires to be served by others”/Middle adulthood

Being Experiences/“Desires for transcending experiences”/Late

adulthood

Source: David Wolfe and Robert Snyder/Ageless Marketing

“Elderly”

— Purchase “experiences” more than just “things”

— Convenience / Comfort / Access / Need to be

appreciated = Top Priorities

Source: Ken Dychtwald, Age Wave

Starting to Reach Out:

Sony, Ford, Walt Disney, Target, Anheuser-Busch,

Source: WSJ

“ ‘Age Power’ will rule the 21st century, and we are woefully

unprepared.”Ken Dychtwald, Age Power: How the 21st

Century Will Be Ruled by the New Old

No: “Target Marketing”

Yes: “Target

Innovation” & “Target Delivery Systems”

“The baby-boom generation is the

first wellness generation.” —Paul Zane Pilzer/

The Wellness Revolution: The Next Trillion Dollar Industry

Wellness = $$$$$$$$

Currently $200B, $1T by 2013 (Source: Paul Zane

Pilzer, The Wellness Revolution: The Next Trillion Dollar Industry)

Boomers & Geezers

1. The numbers of people involved are ... enormous.2. The wealth of these people is ... staggering. (The 50+ group in the U.S. controls 70 percent, or $7 trillion, of our wealth.)3. This is the first “aging” group that ... refuses to “act their age”—a very cool thing for goods and services producers. (“Sixty Is the New Thirty”—AARP magazine cover in 2003.)4. The Boomer-Geezer cohort mostly wants to buy ... experiences. 5. One more time: VERY FEW FIRMS ARE AGRESSIVELY ADDRESSING THIS ISSUE-OPPORTUNITY. (“Addressing” = Re-aligning “culture” to Embrace the Boomers-Geezers.)

And ….

Hispanics: 38.5%

growth, 1990-2000, vs. 9.3% overall*

*Source: Communispace/2003

“Relative to the demand, the success

stories are pitifully few” —Andrew Nuttney, Research Director, The

Research & Advisory Group; on marketing effectively to Hispanics

“BofA Is Betting Its Future on the Hispanic Market” *

“We expect to get no less than

80 % of our future growth in

retail banking from the Hispanic market.” —Ken Lewis, CEO, BofA

*Fortune/04.2003

Duh!“We want our associate population to mirror our

customer population at every level, from the executive suite all the way to the retail floor. In the marketplace, basically what I want to do is draw a concentric circle around every one of our 2,300 stores, and I want the assortment in that store to match the ethnicity of the

neighborhood it’s in. Some neighborhoods are all Hispanic, so we can put in a full Hispanic format. That’s

what Super Saver is. All the signage is in both languages. There’s a 100 percent Spanish-speaking

staff in the store.”—Larry Johnston, CEO, Albertsons

Marketing to Women, Martha Barletta

EVEolution: The Eight Truths of Marketing to Women, Faith Popcorn & Lys Marigold

Ageless Marketing, David Wolfe & Robert Snyder

Marketing to the Mindset of Boomers and Their Elders, Carol Morgan & Doran Levy

Selling Dreams: How to Make Any Product Irresistible, Gian Luigi Longinotti-Buitoni

The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business, Rolf Jensen

Trading Up: The New American Luxury, Michael Silverstein & Neil Fiske

Big/Mostly Missed Market OPPORTUNITIES1. Women buy everything. (Everything = A really, really lot.)2. Boomers & Geezers have all the money. (Trillions upon more trillions.)3. The Hispanic market is growing soooooo fast and is influencing styles soooooo fundamentally, it’d make your head swim … if you were paying the slightest bit of attention. (Hispanic-origin population in the U.S. grew by 39 percent from 1990 to 2000—while the population as a whole increased by 9 percent.)4. “Outside the beltway” concerns with All Things Green are growing exponentially. Green products. Green buildings. Environmental sensibilities and stewardship as a primary measure of enterprise citizenship.5. Medicine, the practice thereof, many miracle cures and the stupendous promise of biotech not withstanding, is broken. Dealing with problems before they arise is becoming “the new cool”— at least it is if you’re a patient. Hence: Wellness (products & services) is a burgeoning market. No, make that “stupendous.”6. DAMN FEW ARE PAYING ATTENTION TO ANY OF THE ABOVE—OR AT LEAST NO MORE THAN LIP SERVICE.7. To “take advantage” requires far, far more than “initiatives”—it demands fundamental strategic & cultural enterprise re-alignment. (E.g.: If you want to glom on to the “women’s market opportunity,” more or less put lots & lots of women in charge—see above.)8. So … use the new micro-segmentation tools to your heart’s desire—but don’t forget the basics.9. REPEAT AFTER ME: WOMEN BUY EVERYTHING!10. REPEAT AFTER ME: BOOMERS AND GEEZERS HAVE ALL THE MONEY!11. REPEAT AFTER ME: THERE ARE A LOT MORE HISPANICS AROUND THAN THERE WERE YESTERDAY.12. REPEAT AFTER ME: DO I HATE MONEY? AM I ASHAMED OF PROFIT? AM I AN ENEMY OF CAPITALISM? IF “NO” TO THESE QUESTIONS, THEN WHY AM I SO STUPID?

The Hunch of a Lifetime: An Emergent (Market) Nexus

I have a sense/hunch there’s an interesting nexus among several of the ideas about New Market Realities that I promote … namely Women-Boomers-Wellness-Green-Intangibles. Each one drives the Fundamental (Traditional) Economic Value Proposition toward the “softer side”: From facts- & figures-obsessed males toward relationship-oriented Women. From goods-driven youth toward “experiences”-craving Boomers. From quick-fix & pill-popping “healthcare” toward a holistically inclined “Wellness Revolution.” From mindless exploitation of the Earth’s resources toward increased awareness of the fragility and preciousness of our Environment. From “goods” and “services” toward Design- & Creativity-rich Intangibles-Experiences-Dreams Fulfilled. This so-called “softer side”—as the disparate likes of IBM’s Sam Palmisano and Harley-Davidson’s Rich Teerlink teach us—is now & increasingly “where the loot is,” damn near all the loot. That is, the “softer side” has become the Prime Driver of tomorrow’s “hard” economic value. Furthermore, each of the Five Key Ideas (Women-Boomers-Wellness-Green-Intangibles) feeds off and complements the other four. Dare I use the word “synergy”? Perhaps. (Or: Of course!) I can imagine an enterprise defining its raison d’etre in terms of these Five Complementary Key Ideas. (HINT: DAMN FEW DO TODAY.)

An Emergent Nexus

Men …………………………….……………….... WomenYouth ………………………………… Boomers/Geezers“Fix It”Healthcare………………... Wellness/PreventionExploit-the-Earth ……...... Preserve/Cherish the PlanetTangibles ……………………………………… Intangibles

WomenBoomersWellness

GreenIntangibles

tom peters’ re-imagine! business excellence in a disruptive age 22october2004/part 1

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