Tom Peters’

Re-Imagine!Business Excellence in a Disruptive Age

Staffing Industry Analysts/ Chicago/03.23.2004

Slides at …

tompeters.com

1. All Bets Are Off.

“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

Jobs Technology

Globalization War, Warfighting

& Security

Jobs New Technology

Globalization War, Warfighting &

Security

The Perfect (Jobs) Storm

Off-shoringWC Automation

Reluctance to hire

“14 MILLION service jobs are in

danger of being shipped overseas” —

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

study

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

We Are Not Alone: “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

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

anymore.” —Carly Fiorina/ HP/

01.08.2004

“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.”)

Jobs Technology

Globalization War, Warfighting &

Security

<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

Jobs Technology

Globalization War, Warfighting &

Security

“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 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

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

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

Jobs Technology

Globalization

War, Warfighting & Security

“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

Staffing Industry Rant: Tom’s Top Ten

1. Permanent employment is cooked.2. This is your moment. 3. “Staffing” is not a commodity business. It is about … PEOPLE!4. Client “GPA” = 1.98; modal “Grade”: D; A < 10%. (And you wonder why margins are slipping?)5. Consolidation/“bulking up” is not the answer.6. He who adds the most value wins. (P.S.: There are no limits!)7. Add value in niches.8. The V.A. game: Eat or be eaten!9. Talent rules! Best talent rules (more)!10. There is/should be no difference between a staffing firm’s “roster” and the New York Yankees!

2. The Destruction Imperative.

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

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

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

“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

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

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

“Acquisitions are about buying market share.

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

Peter Job, CEO, Reuters

3. IS/ IT/ Web:“On the Bus” or “Off the Bus.”

“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

“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

4. The White Collar

Revolution.

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

E.g. …

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

3 years.

Source: BW (01.28.02)

“A bureaucrat is an expensive

microchip.”Dan Sullivan, consultant and

executive coach

“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

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

market, but not actually make”)

Source: The Company, John Micklethwait & Adrian Wooldridge

5. The “PSF Solution”:

The Professional Service Firm Model.

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

6. The Heart of the Value

Added Revolution: PSFs Unbound/ The

“Solutions Imperative.”

“The ‘surplus society’ has a surplus of

similar companies, employing

similar people, with similar educational backgrounds, coming up

with similar ideas, producing

similar things, with similar prices

and similar quality.”

Kjell Nordström and Jonas Ridderstråle, Funky Business

“Companies have defined so much ‘best practice’

that they are now more or less identical.”

Jesper Kunde, A Unique Moment

“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

Gerstner’s IBM: Systems Integrator of

choice. Global Services:

$35B. Pledge/’99: Business Partner Charter. 72 strategic partners,

aim for 200. Drop many in-house

programs/products. (BW/12.01).

“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)

“SCS”/Supply Chain Solutions: 750 locations;

$2.5B; fastest growing division; 19 acquisitions,

including a bank

Source: Fast Company/02.04

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”).

Source: USA Today/06.14.2002

John Deere Landscapes: “This is our

future.”

“ ‘Architecture’ is becoming a commodity.

Winners will be ‘Turnkey Facilities Management’

providers.”SMPS Exec

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%

Source: WSJ/05.16.03

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

7. 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

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?

The “Experience Ladder”

Experiences Services

Goods Raw Materials

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

“Lexus sells its cars as containers for our

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

Harman International

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.

Source: WSJ/05.21.2002

<TGWvs.

>TGR

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

8. Boss Job One:

The Talent Obsession.

Age of AgricultureIndustrial Age

Age of Information IntensificationAge of Creation Intensification

Source: Murikami Teruyasu, Nomura Research Institute

Brand = Talent.

“The leaders of Great Groups love talent and know where to find it. They revel in

the talent of others.”Warren Bennis & Patricia Ward Biederman,

Organizing Genius

From “1, 2 or you’re out” [JW] to …

“Best Talent in each industry segment to build

best proprietary intangibles” [EM]

Source: Ed Michaels, War for Talent

Message: Some people are better than other

people. Some people are a helluva lot better than other

people.

“Top performing companies are two to four times more likely

than the rest to pay what it takes to prevent losing

top performers.”

Ed Michaels, War for Talent (05.17.00)

My ideal job!

9. Leading in Totally Screwed Up Times: The

Passion Imperative.

G.H.: “Create a ‘cause,’ not a ‘business.’ ”

“Reward excellent

failures. Punish mediocre successes.”

Phil Daniels, Sydney exec (and, de facto, Jack)

“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

Staffing Industry Rant: Tom’s Top Ten

1. Permanent employment is cooked.2. This is your moment. 3. “Staffing” is not a commodity business. It is about … PEOPLE!4. Client “GPA” = 1.98; modal “Grade”: D; A < 10%. (And you wonder why margins are slipping?)5. Consolidation/“bulking up” is not the answer.6. He who adds the most value wins. (P.S.: There are no limits!)7. Add value in niches.8. The V.A. game: Eat or be eaten!9. Talent rules! Best talent rules (more)!10. There is/should be no difference between a staffing firm’s “roster” and the New York Yankees!

“If things seem under control, you’re just not

going fast enough.”

Mario Andretti