LONGLONG

Tom Peters’ Tom Peters’

EXCELLENCEXCELLENCE. ALWAYS.E. ALWAYS.

Catalyst For ChangeCatalyst For ChangeNational Black MBA AssociationNational Black MBA AssociationWashington/17 September 2008Washington/17 September 2008

NOTENOTE:: To appreciateTo appreciate this presentation this presentation [and ensure [and ensure

that it is not a that it is not a messmess],], you need you need Microsoft fonts:Microsoft fonts:

“Showcard Gothic,”“Showcard Gothic,” “Ravie,”“Ravie,” “Chiller”“Chiller”

andand “Verdana”“Verdana”

The 100 The 100 YearYear

Storm Storm

***Hubris***HubrisAxiom Axiom [upon which Nobel prizes were won][upon which Nobel prizes were won]: We can : We can eradicate risk eradicate risk [with the new math, the new instruments[with the new math, the new instruments].].We can refine the eradication process ad We can refine the eradication process ad infinitum infinitum [derivatives of derivatives of derivatives[derivatives of derivatives of derivatives].].A few tens of trillions of $$ of exposure—so A few tens of trillions of $$ of exposure—so what?what?We don’t want to be the first1st to bail—only We don’t want to be the first1st to bail—only wimps quit when they get their third wimps quit when they get their third consecutive $10M bonus at age 29.consecutive $10M bonus at age 29.I got this because I’m smart—this was not I got this because I’m smart—this was not repeat not luck; I deserved every damn penny.repeat not luck; I deserved every damn penny.[Counter text: [Counter text: Fooled By Randomness—Nassim Nicholas Fooled By Randomness—Nassim Nicholas Taleb]Taleb]

***Greed***GreedDuh.Duh.

***Quant primacy***Quant primacyToo much faith in super-smart intellectuals Too much faith in super-smart intellectuals [Reminds me to the point of dotting of the “i”s and crossing [Reminds me to the point of dotting of the “i”s and crossing of the “t”s of David Halberstam’s of the “t”s of David Halberstam’s The Best & The Brightest—The Best & The Brightest—on the on the Vietnam quagmire]Vietnam quagmire]

If you’re not a 100% quant convert, you’re If you’re not a 100% quant convert, you’re “old school” and held up to ridicule—even if “old school” and held up to ridicule—even if you’re Warren Buffett.you’re Warren Buffett.

***Step shift in complexity***Step shift in complexityFact is, “it” became incomprehensible.Fact is, “it” became incomprehensible.Connectedness Connectedness [in general, global][in general, global] totally new totally new and, again, incomprehensible.and, again, incomprehensible.

***Perception Is Everything***Perception Is EverythingFinancial markets are, by design, a house of Financial markets are, by design, a house of cards—e.g., basic idea is to take a dollar of cards—e.g., basic idea is to take a dollar of deposits and lend 10 based thereupon, deposits and lend 10 based thereupon, depending on the depositors not to withdraw depending on the depositors not to withdraw all at once.all at once.Emotions rule as much on Wall Street as at Emotions rule as much on Wall Street as at the football stadium!!!!!!the football stadium!!!!!!

ExExppectations are ectations are evereveryythinthing!!!!!g!!!!!Madness of crowds is just that—madness!!!!!Madness of crowds is just that—madness!!!!!It is axiomatic that house prices will rise and It is axiomatic that house prices will rise and rise and rise—and then rise some more.rise and rise—and then rise some more.

***Basics Rotten***Basics Rotten

MarMaryy and Joe couldn’t have and Joe couldn’t have ppaid the loan back if hell aid the loan back if hell had frozen over—thehad frozen over—theyy were were not, simnot, simppllyy, creditworth, creditworthy.y.The incentives were nutty—lend to anyone The incentives were nutty—lend to anyone and everyone and collect the full commission and everyone and collect the full commission when you book the loan and get fired if you when you book the loan and get fired if you don’t don’t book it.book it.

[Message from [Message from In Search of Excellence, in another context, In Search of Excellence, in another context, It’s the basics, stupid—Japan is killing us, circa 1980, because It’s the basics, stupid—Japan is killing us, circa 1980, because (1) their cars work and (2) they ask their workers how to (1) their cars work and (2) they ask their workers how to make them even better.]make them even better.]

***Good Ideology Run Amok***Good Ideology Run AmokDe-regulation = Holy.De-regulation = Holy.If de-regulation is good, then more is If de-regulation is good, then more is better.better.

***Thank God for Paulson—It’d Be Worse ***Thank God for Paulson—It’d Be Worse Without Him.Without Him.

***No One ***No One Knows the Knows the

Ending to This Ending to This StoryStory

***History Repeats Repeats Repeats Itself***History Repeats Repeats Repeats ItselfSouth Sea BubbleSouth Sea Bubble

TulipsTulipsEtcEtcEtcEtcEtcEtc

S & LS & LJunk bondsJunk bondsDot-comDot-com

Sub-primeSub-primeTKTKTKTKTKTK

***Black Swans***Black SwansBelieve it: s%^& happens. Believe it: s%^& happens. [See Taleb once again—[See Taleb once again—The Black Swan.]The Black Swan.]

NB: NB: Your resYour respponse to one or two black swans onse to one or two black swans is is yyour life leour life leggacacy—it’s easy to be a genius y—it’s easy to be a genius when the market is rising rising rising.when the market is rising rising rising.

Slides at …Slides at …

tompeters.comtompeters.com

MBWMBWAA

Excellence1982: The Bedrock “Eight Basics”Excellence1982: The Bedrock “Eight Basics”

1. A Bias for 1. A Bias for ActionAction2. Close to the 2. Close to the CustomerCustomer3. 3. AutonomAutonomyy and and EntreEntreppreneurshireneurshipp4. Productivity Through 4. Productivity Through PeoPeopplele5. 5. Hands OnHands On, , Value-DrivenValue-Driven6. 6. Stick toStick to the Knitting the Knitting7. 7. SimSimpplele Form, Form, LeanLean Staff Staff8. Simultaneous 8. Simultaneous Loose-TightLoose-Tight Properties” Properties”

““Breakthrough” 82*Breakthrough” 82*

People! People! CustomersCustomers

! ! Action! Action! Values! Values!

**In Search of ExcellenceIn Search of Excellence

Hard Is SoftHard Is SoftSoft Is HardSoft Is Hard

Hard Is Hard Is SoftSoft (Plans, (Plans, ##ss))

Soft Is Soft Is HardHard (people, (people, customers, values, customers, values,

relationships))relationships))

““You must You must bebe the change you the change you

wish to see in the wish to see in the world.”world.”

Gandhi

““It’s It’s alwaalwayyss showtime.”showtime.”

—David D’Alessandro, Career Warfare

Why in Why in the the World did World did youyou go to go to SiberiaSiberia??

EnterpriseEnterprise* ** (*at its best):* ** (*at its best): An An emotionalemotional, , vitalvital, , innovativeinnovative, , jojoyyfulful, , creativecreative, , entreentreppreneurialreneurial endeavor endeavor that elicits maximum that elicits maximum

concerted humanconcerted human potential in the potential in the wholeheartedwholehearted serviceservice of others of others.****Employees, Customers, Suppliers, Communities, Owners, Temporary partners**Employees, Customers, Suppliers, Communities, Owners, Temporary partners

… … no less than no less than CathedralsCathedrals in which the full and in which the full and

awesome power of the awesome power of the Imagination and Spirit and Imagination and Spirit and native Entrepreneurial flairnative Entrepreneurial flair

of diverse individualsof diverse individuals is is unleashed in passionate unleashed in passionate pursuit of … Excellence.pursuit of … Excellence.

““The role of the Director is to The role of the Director is to create a space where the actors create a space where the actors

and actresses canand actresses can become become more than they’ve ever more than they’ve ever been before, more than been before, more than

they’ve dreamed of they’ve dreamed of beingbeing.”.” —Robert Altman, Oscar acceptance speech—Robert Altman, Oscar acceptance speech

L(+21) = L(-L(+21) = L(-21)21)

Leadership(21A.D.) = Leadership(21A.D.) = Leadership(21B.C.)Leadership(21B.C.)

““We Have …We Have …

ThankThank you, Howard you, Howard (Starbucks)!(Starbucks)!

InternalInternal organizational organizational

excellenceexcellence* *** ** = = Deepest “Blue Deepest “Blue

Ocean”Ocean”

ThankThank you ,Herb you ,Herb

““You have to You have to treat your treat your

employees like employees like customers.”customers.” —Herb Kelleher, —Herb Kelleher,

upon being asked his “secret to success”upon being asked his “secret to success”

Source: Joe Nocera, Source: Joe Nocera, NYTNYT, “Parting Words of an Airline Pioneer,” , “Parting Words of an Airline Pioneer,” on the occasion of Herb Kelleher’s retirement after 37 years on the occasion of Herb Kelleher’s retirement after 37 years at Southwest Airlines (SWA’s pilots union took out a full-pageat Southwest Airlines (SWA’s pilots union took out a full-page ad in USA Today thanking HK for all he had done; across thead in USA Today thanking HK for all he had done; across the

way in Dallas American Airlines’ pilots were picketing theway in Dallas American Airlines’ pilots were picketing the Annual Meeting)Annual Meeting)

ThankThank you Ben, you Ben,

Norm, Ike, and Norm, Ike, and DelawareDelaware

GiveGive good good tea! tea!

““Allied commands depend Allied commands depend on mutual confidence on mutual confidence [and this confidence] [and this confidence] is gained, above all is gained, above all

through the through the develodeveloppmentment of friendshiof friendshippss.”.”

——General D.D. Eisenhower, General D.D. Eisenhower, Armchair GeneralArmchair General* (05.08)* (05.08)

*“Perhaps his most outstanding ability [at West Point] was*“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds;of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his it was a quality that would pay great dividends during his

future coalition commandfuture coalition command

““eighty eighty percent of percent of success is success is

showing up.” showing up.” ——Woody AllenWoody Allen

ThankThank you , you ,

Nelson Nelson Mandela …Mandela …

ThankThank you , you ,Rich …Rich …

““Mapping your Mapping your competitive competitive position”*position”*

or …or …

*Rich D’Aveni/*Rich D’Aveni/HBRHBR

1. Have you in the1. Have you in the last last 1010 daysdays … … visitedvisited a a customer?customer?2. Have you called a 2. Have you called a customer … customer … TODAYTODAY?? * * * * * *

The “Have The “Have you …” you …”

50*50**See *See Appendix OneAppendix One

ThankThank you , you ,

Conrad …Conrad …

Conrad Hilton, at a gala Conrad Hilton, at a gala celebrating his life,celebrating his life,

was asked, “What was the was asked, “What was the most important lesson most important lesson

you’ve learned in you long you’ve learned in you long and distinguished career?” and distinguished career?”

His immediate answer …His immediate answer …

Conrad Hilton, at a gala celebrating his life,Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned was asked, “What was the most important lesson you’ve learned

in you long and distinguished career?” in you long and distinguished career?”

His immediate answer: His immediate answer: ““remember remember to tuck the to tuck the

shower curtain shower curtain inside the inside the bathtubbathtub””

ThankThank you you

Dr. GroopmanDr. Groopman

1818””

““The four most The four most important words in any important words in any

organizationorganization

are …are … ‘What do ‘What do you think?’you think?’ ” ”

Source: courtesy Dave Wheeler,Source: courtesy Dave Wheeler, posted at tompeters.com, source ofposted at tompeters.com, source of

original unknown (0609.08) original unknown (0609.08)

ThankThank you , you ,WalterWalter

Politics Politics politics politics politics politics politics politics politicspolitics politics politics politics politics politics politics politics politics politics politics politicspolitics politics politics politics politics politicspolitics politics politics politics politics politicspolitics politics politics politicspolitics politics politics

politicspolitics

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

“Success doesn’t depend on the number of “Success doesn’t depend on the number of people you know; it depends on the number people you know; it depends on the number

of people you know in of people you know in hihigghh places!”places!”

oror

“Success doesn’t depend on the number of “Success doesn’t depend on the number of people you know; it depends on the number people you know; it depends on the number

of people you know in of people you know in lowlow places!” places!”

George Crile George Crile (Charlie Wilson’s War)(Charlie Wilson’s War) on Gust on Gust

Avrakotos’ strategy:Avrakotos’ strategy: “He had “He had become something of a become something of a

legend with these legend with these people who manned the people who manned the

underbelly of the underbelly of the Agency [CIA].”Agency [CIA].”

Loser:Loser: “He’s such a“He’s such a suck-up!” suck-up!”

Winner:Winner: “He’s such a“He’s such a suck-down.” suck-down.”

ThankThank you, Henry you, Henry

““Courtesies of a small Courtesies of a small and trivial character are and trivial character are

the ones which strike the ones which strike deepest in the grateful deepest in the grateful

and appreciating heart.”and appreciating heart.”

—Henry Clay

The Manager’s The Manager’s Book of Book of DecenciesDecencies: :

How Small How Small /gestures Build /gestures Build

Great Companies.Great Companies. —Steve Harrison, Adecco

““It was much later that I realized It was much later that I realized Dad’s secret. He gained respect by Dad’s secret. He gained respect by giving it. He talked and listened to giving it. He talked and listened to

the fourth-grade kids in Spring Valley the fourth-grade kids in Spring Valley who shined shoes the same way he who shined shoes the same way he talked and listened to a bishop or a talked and listened to a bishop or a

college president.college president. He was He was seriously interested in seriously interested in

who you were and what who you were and what you had to sayyou had to say.”.”Sara Lawrence-Lightfoot, Respect

Press Ganey AssocPress Ganey Assoc:: 139,380139,380 former former patients from patients from 225225 hospitals: hospitals:

nonenone of THE top 15 factors of THE top 15 factors

determining determining PPatient atient SSatisfaction atisfaction referred to patient’s health referred to patient’s health outcomeoutcome

PSPS directldirectly related to y related to StaffStaff InteractionInteraction

PSPS directldirectly correlated with y correlated with Employee Employee SatisfactionSatisfaction

Source: Source: Putting Patients FirstPutting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel, Susan Frampton, Laura Gilpin, Patrick Charmel

“There is a misconception that supportive interactions require more staff or more time and are therefore more costly. Although

labor costs are a substantial part of any hospital budget, the interactions themselves add nothing to the budget.

Kindness is Kindness is freefree.. Listening to patients or answering their

questions costs nothing. It can be argued that negative interactions—alienating patients, being non-responsive to their needs or limiting their sense of control—can be very costly. …

Angry, frustrated or frightened patients may be combative, withdrawn and less cooperative—requiring far more time than it would have taken to interact with them initially in a

positive way.” —Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel

ThankThank you you

HeatherHeather

““Forget Forget ChinaChina, , IndiaIndia and the and the

InternetInternet: Economic : Economic Growth Is Driven Growth Is Driven

by by WomenWomen.”.” —Headline,

Economist, April 15, 2006, Leader, page 14

10 UNASSAILABLE REASONS WOMEN RULE10 UNASSAILABLE REASONS WOMEN RULE

WomenWomen make [all] the financial decisions.WomenWomen control [all] the wealth.WomenWomen [substantially] outlive men.WomenWomen start most of the new businesses.Women’sWomen’s work force participation rates have soared worldwide.WomenWomen are closing in on “same pay for same job.”WomenWomen are penetrating senior ranks rapidly [even if the pace is slow for the corner office per se].Women’sWomen’s leadership strengths are exceptionally well aligned with new organizational effectiveness imperatives.WomenWomen are better salespersons than men.WomenWomen buy [almost] everything—commercial as well as consumer goods.

So what exactly is the point of So what exactly is the point of menmen??

7/17/133

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!““People turning 50 People turning 50

today have today have more more thanthan halfhalf of of their adult life their adult life

ahead of them.”ahead of them.” —Bill

Novelli, 50+: Igniting a Revolution to Reinvent America

ThankThank you Sheik you Sheik MohammadMohammad

24%24%

Single Single greatest act greatest act

of pure of pure imaginationimagination

dubaidubai

ThankThank you Larry you Larry

and Jimand Jim

*Basement Systems Inc.*Basement Systems Inc.*Larry Janesky*Larry Janesky**Dry Basement ScienceDry Basement Science (115,000!)(115,000!)

*1990: $0; 2003: $13M; *1990: $0; 2003: $13M; 2007: 2007:

$62,000,000$62,000,000

Jim’s Mowing CanadaJim’s Mowing CanadaJim’s Mowing UKJim’s Mowing UKJim’s AntennasJim’s Antennas

Jim’s BookkeepingJim’s BookkeepingJim’s Building MaintenanceJim’s Building Maintenance

Jim’s Carpet CleaningJim’s Carpet CleaningJim’s Car CleaningJim’s Car Cleaning

Jim’s Computer ServicesJim’s Computer Services

Jim’s Dog WashJim’s Dog WashJim’s Driving SchoolJim’s Driving School

Jim’s FencingJim’s FencingJim’s FloorsJim’s Floors

Jim’s PaintingJim’s PaintingJim’s PavingJim’s Paving

Jim’s Pergolas [gazebos]Jim’s Pergolas [gazebos]Jim’s Pool CareJim’s Pool Care

Jim’s Pressure CleaningJim’s Pressure CleaningJim’s RoofingJim’s Roofing

Jim’s Security DoorsJim’s Security DoorsJim’s TreesJim’s Trees

Jim’s Window CleaningJim’s Window CleaningJim’s WindscreensJim’s Windscreens

Note: Download, free, Jim Penman’s book: What Will They Franchise Next? The Story of Jim’s Group

#4 Japan#4 Japan#3 USA#3 USA

#2 China#2 China

#1 #1 GermanyGermany

Reason!!!Reason!!!

MittelstandMittelstand

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The

answer seems obvious: Buy a Buy a very large one very large one and just waitand just wait.”.”

—Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

The The lastlast word: word: There There is is nono “last “last

word.”word.”

ThankThank you Eleanor you Eleanor

and Kevinand Kevin

““Do one Do one thing every thing every

day that day that scares you.”scares you.”

—Eleanor Roosevelt

Kevin Roberts’ CredoKevin Roberts’ Credo

11. Ready. Fire! Aim.. Ready. Fire! Aim.2. If it ain’t broke ... Break it!2. If it ain’t broke ... Break it!3. Hire crazies.3. Hire crazies.4. Ask dumb questions.4. Ask dumb questions.5. Pursue failure.5. Pursue failure.6. Lead, follow ... or get out of the way!6. Lead, follow ... or get out of the way!7. Spread confusion.7. Spread confusion.8. Ditch your office.8. Ditch your office.9. Read odd stuff.9. Read odd stuff.

10. Avoid moderationAvoid moderation!!

ThankThank you John you John

1/401/40

“This is so simple it sounds stupid, but it is amazing how few oil people really

understand that you only you only find oil if you find oil if you drill wellsdrill wells.. You may

think you’re finding it when you’re drawing maps and

studying logs, but you have to drill.”

Source: The Hunters, by John Masters, Canadian O & G wildcatter

““We made mistakes, of course. Most of them were We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the omissions we didn’t think of when we initially wrote the software. software. We fixed them by doing it over and over, again We fixed them by doing it over and over, again and again.and again. We do the same today. While our competitors We do the same today. While our competitors are still sucking their thumbs trying to make the design are still sucking their thumbs trying to make the design

perfect, we’re already on prototype versionperfect, we’re already on prototype version ##55..

By the time our rivals areBy the time our rivals are ready with wires and screws, we are on versionready with wires and screws, we are on version

##1010.. It gets back to It gets back to planning versus actingplanning versus acting: : We act We act from day onefrom day one; ; others plan how others plan how toto planplan——for monthsfor months.”.” —Bloomberg by —Bloomberg by

BloombergBloomberg

““You miss You miss

100100%%

of the shots of the shots you never you never

take.”take.” —Wayne—Wayne GretzkyGretzky

““RewardReward excellent failures.

PunishPunish mediocre

successes.”Phil Daniels, Sydney exec

ThankThank you , USG … you , USG …

RelentlessRelentless:: “One of “One of

my superstitions had always been my superstitions had always been when I started to go anywhere or when I started to go anywhere or

to do anything,to do anything, notnot to to turnturn backback ,, or stop, or stop,

until the thing intended was until the thing intended was accomplished.”accomplished.” —Grant

ThankThank you , Fred … you , Fred …

4/404/40

DECENTRALIZATIONDECENTRALIZATION..

EXECUTION.EXECUTION.ACCOUTABILITY.ACCOUTABILITY.

66:15A.M. :15A.M.

““Execution Execution isis strategy.” strategy.”

—Fred Malek—Fred Malek

ThankThank you , Gary … you , Gary …

We We areare the the companycompany we keepwe keep

Measure “Strangeness”/Portfolio QualityMeasure “Strangeness”/Portfolio Quality

StaffStaffConsultantsConsultants

VendorsVendorsOut-sourcing Partners Out-sourcing Partners (#, Quality)(#, Quality)

Innovation Alliance PartnersInnovation Alliance PartnersCustomersCustomers

Competitors Competitors (who we “benchmark” against)(who we “benchmark” against)

Strategic Initiatives Strategic Initiatives Product Portfolio Product Portfolio (LineEx v. Leap)(LineEx v. Leap)

IS/IT ProjectsIS/IT ProjectsHQ LocationHQ LocationLunch MatesLunch Mates

LanguageLanguageBoardBoard

““Normal” Normal”

= = “o “o forfor 800”800”

“The The Bottleneck Bottleneck

Is at the Top Is at the Top of the of the

Bottle”Bottle”“Where are you likely to find people with the least diversity of

experience, the largest investment in the past, and the greatest reverence for industry dogma:

AtAt thethe totop!”p!”

— Gary Hamel/Harvard Business Review

ThankThank you , 7-11… you , 7-11…

TP: TP: “How to flush

$500,000 down

the toilet in one easy

lesson!!”

< CAPEX< CAPEX> People!> People!

Brand Brand = =

Talent.Talent.

Our Mission

To develop and manage To develop and manage talent;talent;

to apply that talent,to apply that talent,throughout the world, throughout the world,

for the benefit of clients;for the benefit of clients;to do so in partnership; to do so in partnership;

to do so with profit.to do so with profit.

WPP

#1#1 cause of cause ofDis-satisfaction?Dis-satisfaction?

2/year 2/year = =

legacy.legacy.

53 = 53 = 5353

““Leaders Leaders

‘‘dodo’’ people. people.

Period.”Period.” —Anon.

““The leaders of Great The leaders of Great

Groups Groups lovelove talent talent and know where to find and know where to find

it. They it. They revel revel in the in the talent of others.”talent of others.”

—Warren Bennis & Patricia Ward Biederman, —Warren Bennis & Patricia Ward Biederman, Organizing Organizing GeniusGenius

““Leaders Leaders

‘‘SERVESERVE’’ people. people.

Period.”Period.” —inspired by Robert Greenleaf

ThankThank you , Mike … you , Mike …

EXCELLENCE. EXCELLENCE.

BEDROCK.BEDROCK.LEADERSHIP. LEADERSHIP.

THE 9Ps. THE 9Ps. THE 1M.THE 1M.

PURPOSEPURPOSE..PASSIONPASSION..PotentialPotential..PresencePresence..PersonalPersonal..

PERSISTENCEPERSISTENCE..PEOPLEPEOPLE. . PotentPotent..

PositivePositive..

The greatest dangerThe greatest dangerfor most of usfor most of us

is not that our aim isis not that our aim istoo hightoo high

and we miss it,and we miss it,but that it isbut that it is

too lowtoo lowand we reach it.and we reach it.

Michelangelo

““Excellence can be obtained if you:Excellence can be obtained if you:

... care more than others think... care more than others think is wise;is wise; ... risk more than others think ... risk more than others think is safe;is safe; ... dream more than others think ... dream more than others think is practical;is practical; ... expect more than others think ... expect more than others think is possible.”is possible.”

Source: Anon.Source: Anon. (Posted @ tompeters.com by (Posted @ tompeters.com by K.Sriram, November 27, 2006 1:17 AM)K.Sriram, November 27, 2006 1:17 AM)