NAPMInternational Purchasing

Conference & Educational Exhibit

New Orleans30 April 2000

WOW!

Larry > Bill

=

Your Moment!

No Wiggle Room!

“Incrementalism is innovation’s worst

enemy.” Nicholas Negroponte

“It means nothing less than the total

reinvention of this company.”

Jacques’ New New Ford

Ford + MSN CarPointFord + Yahoo!Ford + Oracle

Ford + HP/MCIWorldcomEtc.Etc.

NAPM: Not “Purchasing”!NAPM: Not “Supply Chain Mgt.”

NAPM = TE/IR!*

*Total Enterprise/Industry

Reinvention!

Forces @ Work

The Destruction Imperative!

Forget > Learn

“The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.”

Dee Hock

“Steve Ross had a wonderful philosophy: People get fired for

not making mistakes.”Bob Pittman

The Gales of Creative Destruction

+29M = -44M + 73M

+4M = +4M - 0M

Brand Inside

Brand Org!

108 X 5vs.

8 X 1*

* 540 vs. 8

And Now the Equivalent …

White Collar Revolution!

The Pincer 5

“Destructive” entrepreneurs/ Global Competition

“White Collar Robots”

THE INTERNET! [E.g.: GM + Ford + DaimlerChrysler]

Global Outsourcing [E.g.: India, Mexico]

Speed!!

RR on Sara Lee

“The most profitable businesses in the future will act as knowledge brokers, linking insights into what’s available

with insights into the customer’s individual needs

and preferences.”

The “&-!!+#$% in the middle”*

Jim Clark on Healtheon/WebMD

* ’twixt docs, patients, insurers and providers; $275B of $400B in waste; source: Michael

Lewis, The New New Thing

[ Incidentally …

CEO Jeff ArnoldAge: 30

First Start-up: Age 24]

“We want to be the air traffic controllers

of electrons.”Bob Nardelli,

GE Power Systems

Buzzsaw.com

Builders, Owners, Architects, Contractors, Suppliers

$4T industry

5,300 commercial bldg.-project specs on-line; +70 per day

Message …

“Supply Chain Integration demands total reinvention of the corporate structure, systems … and “culture.”

E.g. …

“E-business is the final nail in the coffin

for bureaucracy at GE.”

Jack Welch/GE Annual Report 2000

Magic!

[Inter]networked Markets

meet …

[Intra]networked Workers

Source: The Cluetrain Manifesto: The End of Business as Usual

“Hyperlinks subvert hierarchy!”

The Cluetrain Manifesto

GET IT? The Character of the Web, per The Cluetrain Manifesto …

HyperlinkedDecentralized

HypertimeOpen, direct access

Rich dataBroken [no one owns it or controls it]

Borderless

[ 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]

Brand Inside

Brand Work!

Why are there no books on how to create

a “Cool, Rocking, WOW-producing

Purchasing Department”?

You are the Rock Stars

of the B2B Age!

[I.e.: Welcome to the Y2K New Orleans Jazz and Real Cool Purchasing

Dudes Festival!]

“Reward excellent failures. Punish

mediocre successes.”

Phil Daniels, Sydney exec

“You really got to me. So many of our information technology projects take on a life of their own, and I know they’ll never end up as more than ‘mediocre successes.’ ”

CEO, F100 financial services company (10-98)

“Every project we take on starts with a question:

How can we do what’s never been done

before?”Stuart Hornery, CEO, Lend Lease

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

Brand Inside

Brand Talent!

Issue Y2K

The Great War for Talent!

There is no “talent shortage” …

if …

you are a GPTW*

*Great Place To Work

“Our business needs a massive transfusion of talent. And talent, I believe, is most likely to be found among non-conformists, dissenters and rebels.” David Ogilvy

The NAESP …

Attributes of Those Who “Made” the 10th Grade History Book

–Committed!–Determined to make a difference!–Focused!–Passionate! –Irrational about their life’s project!–Ahead of their time / Paradigm

busters!–Impatient! / Action Obsessed

Attributes of Those Who “Made” the 10th Grade

History Book –Made lots of people mad!

–Flouted the chain of command!

–Creative / Quirky / Peculiar! / Rebels! / Irreverent!

–Masters of improv / Thrive on chaos / Exploit chaos!

Attributes of Those Who “Made” the 10th Grade History Book

–Forgiveness > Permission

–Bone honest!

–Flawed as the dickens!

– “In touch” with their followers’ aspirations

–Damn good at what they do!

??????????????????

“He grew his hair long, played guitar in a rock band, chased

girls, got into trouble. At age 17 he was flogged by his house

master, who described him as ‘the most difficult boy I’ve ever

had to deal with.’ ”

Tony Blair*

*talk/May 2000

Brand Outside

Context:

No “Commodities”!

“The ‘surplus society’ has a surplus of similar companies, employing similar

people, with similar educational backgrounds, working in similar jobs,

coming up with similar ideas, producing similar things, with similar

prices and similar quality.”

Kjell Nordstrom and Jonas Ridderstrale, Funky Business

“We make over three new product announcements a

day. Can you remember them?

Our customers can’t!”Carly Fiorina

“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

Message (Bud): The “distributor” is dead.

Long live the … value-added,

knowledge-intensive “business partner.”

Brand Outside

Strategy 1:

Lead the Customer!

“Wealth in this new regime flows directly from innovation, not

optimization. That is, wealth is not gained by perfecting the known,

but by imperfectly seizing the unknown.”

Kevin Kelly, New Rules for the New Economy

My NAPM Message 04.30.00 …

LEADERSHIP!PERIOD!

Brand Outside

Strategy 2:

Use E-Commerce

to Re-invent the Business!

“In the network economy, the website becomes the company’s

primary interface to the customer. The user interface becomes the marketing materials, store front,

store interior, sales staff and post-sales support all rolled into one.”

Jakob Nielsen, Designing Web Usability

Tomorrow Today: Cisco!*

70%Save $500M (service and tech

support)

Customer Engineer Chat Rooms ($1B?)

C.Sat e >> C.Sat H*Earth’s MVC

Cherry PickingVertical Markets

Plasticsnet.com: $370B; sellers pay $5K to $8K for

“storefront”; 5% to 10% cut

Hook: community services (database, catalogs, forums,

industry job bank, etc.)

Message …

COMMUNITY!/ COMMUNITY SERVICES!

“Begin by filling the stadium.

Then offer more and more services. Hopefully, as you add

more on top, the site becomes more integrated with the work process, until it is invaluable.”

Carl Bass, CEO, Buzzsaw.com

Community …

Somewhat mediated, segmented chat rooms (must be “managed”/ seeded)User-friendly technical/ professional info

Industry “intelligence”Some very timely stuff/ attractors

Hotlinks by the gazillion (to professional and unrelated stuff)

Expert/ advisor opinions (info, chats, etc.)Opportunity for users to build

own Web page

Message …

B2B is not the “cost cutting” program du jour!

Message …

Remember the “Soft stuff”!*

*Soft = Hard [Waterman & Peters]

Message [Paradox] …

TRUST RULES!

Speaking of paradoxes …

B2B

1999 – 2004: 50X

2004: $7.4Source: GartnerGroup (per Reuters 1-26-00)

T

GM/Ford/DaimlerChrysler (02-27)

Auto parts supply “Co.”$240B (+$500B)

I.P.O.

Goal?

Drive profits to zero!*

*Remember AMR and “dynamic pricing.”

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

Jack on the Web’s “Naked Truth”

“You desperately want to have enough technology in your

product offering, so that you don’t end up being in a commodity

situation.”

“Where does the Internet rank in priority?

It’s No. 1, 2, 3, and 4.” Jack Welch

Web Strategy: GE Power Systems

“Launch and Learn”(4 sites in 30 days)

There are 2 Kinds of …

Defense*

vs.

Offense**

*Fend off upstarts.**Reinvent our marketspace!

Jargon Bath!

Bureaucracy free …Systemically integrated …

Internet intense …Knowledge based …

Time and location free …“Instantly” responsive …

Customer centric …Mass customization enabled.

Translation …

Bureaucracy free = Flat org, no B.S.Systemically integrated = Whole supply chain

tightly wired/ friction freeInternet intense = Do it all via the Web

Knowledge based = Open accessTime and location free = Whenever, wherever

“Instantly” responsive = Speed demonsCustomer centric = Customer calls the shotsMass customization enabled = Every product

and service rapidly tailored to client requirements

Brand Outside

Strategy 3:

It’s the Experience!

“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

“The [Starbucks] Fix” Is on …

“We have identified a ‘third place.’ And I really believe that sets us apart. The third place is

that place that’s not work or home. It’s the place our

customers come for refuge.”Nancy Orsolini, District Manager

Experience: “Rebel Lifestyle!”

“What we sell is the ability for a 43-year-old accountant to dress in black leather, ride through small towns and have people be afraid

of him.”

Harley exec, quoted in Results-based Leadership

Mantra: “Any good can be ing-ed”

the driving experiencethe pumping experience

the sitting experiencethe reading experiencethe washing experiencethe cooking experience

Joseph Pine & James Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage

Think …

Supply Chain-ingB2B-ing

“This is the end of the pure product era. For instance, car

makers are beginning to understand that the car is a

platform for delivering services that drive the customer

experience.”Carly Fiorina, HP @ Comdex ’99

Brand Leadership

Passion Rules!

Brand Leadership!

“A key – perhaps the key – to leadership is the effective

communication of a story.”

Howard Gardner Leading Minds: An Anatomy of Leadership

Brand Leadership:ENTHUSIASM RULES!

“I am a dispenser of enthusiasm.”/ Ben

Zander

Message to NAPM: You are

Re-invention Evangelists!

Ann Richards’ Dogma

Show up!

Know your message!

PUT YOURSELF AT RISK EVERY DAY!

This is your moment. This is

your game to lose … or WIN. Now!