Tom Peters Seminar2000: Distinct or … Extinct

The 21st Century CFO

Deloitte & ToucheLaguna Niguel

09November2000

Structure

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Forces @ Work I

The Destruction Imperative!

“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 (08.00)

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

“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

“Acquisitions are about buying market share.

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

Peter Job, CEO, Reuters

“Our ideal acquisition is a small startup that has a great technology product on the drawing board that is going to come out in six to twelve months.

We buy the engineers and the next generation product. …”

John Chambers, Cisco

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]

Brand Inside

Brand Org: Lean, Linked,

Electronic & Malleable

White Collar Revolution!

“Assetless Company”

John Bryan, CEO, on selling all Sara Lee’s manufacturing

RR on “Assetless” [J.B.] 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.”

Advance Paradigm

Data on 165,000,000 prescriptions per year; docs and insurers have access to

records

Reduces med errors; saves $2.88 per scrip [prescribing errors]; docs save

$14,000 per year in review time

Rev in ’99: $2B; $477M in ’98Source: Business Week (09.00)

Cisco, Dell =

Brand-owning companies who sell Customer

Satisfaction

Source: David Schneider & Grady Means, MetaCapitalism

Brand Inside

Brand Work: The Professional

Service Firm Model

So what will be the Basic Building

Block of the New Org?

Answer: PSF![Professional Service Firm]

Department Head

to …

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

“P.S.F.”: Summary

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

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

Point of View (Methodology)W.W.P.F. (100%)

Brand Inside

Brand Talent: The Great War for Talent

“When land was the scarce resource, nations battled

over it. The same is happening now for talented people.”

Stan Davis & Christopher Meyer, futureWEALTH

“We have transitioned from an asset-based strategy

to a talent-based strategy.”

Jeff Skilling, COO, Enron

From “1, 2 or 3” [JW] to … “Best talent in each

industry segment to build best proprietary intangibles” [EM]

Source: Ed Michaels, War for Talent (05.17.00)

“We believe companies can increase their market cap 50 percent in 3 years. Steve

Macadam at Georgia Pacific changed 20 of his 40 box plant managers to put

more talented, higher paid managers in charge. He increased

profitability from $25 million to $80 million in 2 years.”

Ed Michaels, War for Talent (05.17.00)

“Diversity defines the health and wealth of nations in a new century.

Mighty is the mongrel. … The hybrid is hip. The impure, the mélange, the adulterated, the

blemished, the rough, the black-and-blue, the mix-and-match – these people are inheriting

the earth. Mixing is the new norm. Mixing trumps isolation. It spawns creativity,

nourishes the human spirit, spurs economic growth

and empowers nations.”

G. Pascal Zachary, The Global Me: New Cosmopolitans and the Competitive Edge

“The Rise of the Teen Guru”

“They’re brilliant, ambitious, and almost intuitively gifted at technology. A new generation

of whiz kids are gaining unprecedented power and

authority.”Source: Cover story, Brill’s Content, 7-8/00

The Cracked Ones Let in the Light

“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

Women and new-economy

management …

The New Economy …

Shout goodbye to “command and control”!

Shout goodbye to hierarchy!

Shout goodbye to “knowing one’s place”!

Women’s Stuff = New Economy Match

Improv skillsRelationship-centric

Less “rank consciousness”Self determinedTrust sensitive

IntuitiveNatural “empowerment freaks” [less

threatened by strong people]Intrinsic [motivation] > Extrinsic

“TAKE THIS QUICK QUIZ: Who manages more things at once? Who puts more effort into their appearance? Who usually takes care of the details? Who finds it

easier to meet new people? Who asks more questions in a conversation? Who is a better

listener? Who has more interest in communication skills? Who is more inclined to get involved?

Who encourages harmony and agreement? Who has better intuition? Who works with a longer ‘to do’ list? Who enjoys a recap to the day’s events? Who is

better at keeping in touch with others?”

Source: Selling Is a Woman’s Game: 15 Powerful Reasons Why Women Can Outsell Men, Nicki Joy &

Susan Kane-Benson

“Boys are trained in a way that will make

them irrelevant.”

Phil Slater

Mantra2000

Talent = Brand

New Economy: Was-Is • Pine-paneled Office• Address: 1 Big Man Plaza• Secretary• Suit • Formal • Rank conscious• Pretense (“Failures are

for fools.”)• I love “Yes men”• Self-contained

• Seat 9B, UA233• Address: Rick@Corp.com• Typing: 60 WPM• Casual M-F• Approachable• We are a HOT Team • Screwing up is as normal

as breathing• I love Misfits!• I love partners

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Forces @ Work II

The Commodity Trap

“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

Brand Outside

The Death Knell for Ordinary:

Pursuing Difference!

The Eight Strategies

Pursue Pioneering CustomersRe-invent via E-commerce & the Web

Scramble up the V.A. ChainEmbrace Design

Emphasize the Total ExperienceSeek Out “Opportunity #1” [& #1A]

Cede ControlBecome Brand-obsessed

Brand Outside

Strategy 1:

Hitch Your Wagon to Pioneers!

“Our strategies must be tied to leading edge

customers on the attack. If we focus on the defensive

customers, we will also become defensive.”

John Roth, CEO, Nortel

Brand Outside

Strategy 2:Use E-Commerce to

Re-invent Everything!

Tomorrow Today: Cisco!

90% of $20B (=$50M/day)

75% mfg. outsourced; 50% of orders routed to supplier who ships direct

Gross margin: 65%; Net margin: 28%

Savings in service and support from customer self-management: $500M

Enron: $400B in annual on-line trading transactions. [50% total bus.] Much stimulated by the

Web per se.

Schwab: $25B per week in asset transactions [80% of trades]

[Transition to e.Schwab: Rev. fell, then quickly doubled]

Tomorrow Today: Cisco!

90% of $20B; save $550M

C.Sat e >> C.Sat H

Customer Engineer Chat Rooms/Collaborative

Design ($1B “free” consulting) (45,000 customer problems a week solved via

customer collaboration)

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

WebWorld = Everything

Web as a way to run your business’ 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

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.

“There is 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 imagined before!

“One cannot be tentative about this. Excuses like ‘channel

conflict’ or ‘marketing and sales aren’t ready’ cannot be allowed. Delay and you risk being cut out of your own market, perhaps not by traditional competitors but by companies you

never heard of 24 months ago.”

Jack Welch [07.00/Forbes.com]

Brand Outside

Strategy 3: Fighting Back via

Systems Integration!

THE CASE

GM/Ford/DaimlerChrysler (02-27)

Covisint$240B (+$500B)

I.P.O.

Solectron, IBM, Nortel, Matsushita, Seagate, Etc.

E2Open.com

$700B

B2B

1999 – 2004: 50X

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

Goal?

Drive profits to zero!*

*Remember AMR and “dynamic pricing.”

Message: “BOX” SELLERS LOSE!

THE RESPONSE

09.11.2000: HP bids $18,000,000,000

for PricewaterhouseCoopers

Consulting bus! (31,000 bods)

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

price of entry.”

Ann Livermore, Hewlett Packard

“We want to be the air traffic

controllers of electrons.”

Bob Nardelli, GE Power Systems

Brand Outside

Strategy 4:

Women Rule!

?????????

Home Furnishings … 94%Vacations … 92%

Houses … 91%Bank Account … 89%

Health Care … 80%Consumer Electronics … 51%

Cars … 50%+/80%Etc.

48% working wives > 50%80% checks

61% bills53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

Women … 50+%(!!!) of Web users; 6 of 10 new users; 83% of wired women are primary decision makers for family

healthcare, finances, education.

Source: Business Week; Jupiter Communications

$4.8T > Japan

9M/27.5M/$3.6T > Germany

Read This Book …

EVEolution: The Eight Truths of Marketing to Women

Faith Popcorn & Lys Marigold

“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.”

Faith Popcorn

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

Weight Watchers International “Model”

“What if ExxonMobil or Shell dipped into their credit card database to help commuting women

interview and make a choice of car pool partners?”

“What if American Express made a concerted effort to connect up female empty-nesters

through on-line and off-line programs, geared to help women re-enter the workforce with today’s

skills?”

EVEolution

“Women don’t buy

brands. They join them.”

Faith Popcorn, EVEolution

THIS JUST MIGHT BE THE BIGGEST “THING” IN THIS

SEMINAR. [PLEASE: THINK ABOUT IT!]

“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 Altan … THIS IS EVEN BIGGER THAN THE

INTERNET!

Tom Peters

“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

Speaking of Enormous

[Missed] [Huge] Opportunities ...

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%)

Aging/“Elderly”

$$$$$$$$$$$$“I’m in charge!”

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Brand Leadership

Passion Rules!

“Create a Cause, not a ‘business.’ ”

Gary Hamel, Fortune (06.00), on re-inventing a company (Exemplar #1:

Charles Schwab)

Summary

Death of the Corporation?Lessons from the Bees?

90% White-collar Carnage?Rockin’ Finance Department?

Talent Obsession?Same-old Same-old?

Cool Customers?Total E-reinvention?

Written any $18B Checks Lately?Women’s Market?

Business as Cause?