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