World Innovation Forum*(*Modesty is everything)

EVERYTHING YOU THOUGHT YOU KNEW

ABOUT INNOVATION IS WRONG*

(*Except, of course, what the other presenters have said/will say)

Tom Peters/New York/0524.2006

World Innovation Forum

YOU ONLY FIND OIL IF YOU

DRILL WELLSTom Peters/New York/0524.2006

Case: Perceived

Rommel invents Blitzkrieg.Germans kick the tar out of

the French in two weeks.Q.E.D.

Case: Lesson Learned

Planned innovation (P.I., not C.I.) is possible, is cool,

is effective.

Case: Reality

Germans cross Meuse into France. Whoops: French intelligence completely drops

the ball. (Loses track of the Germans—literally.)

Germans keep advancing; outrun supply lines; no land-air co-ordination.

Hitler orders advance stopped.General never gets the word.

General marches to Paris, virtually unopposed.Germans shocked.

After the fact, Germans label it “Blitzkrieg.”

Case: Lesson Learned

Do something.Get lucky.

Attribute luck to superior planning.

Get medals.

TP “Lessons Learned”

Innovation = DisDis (Disciplined Disorganization)

Luck is a very good thing.* **

(*More “lessons” later: E.g., If you hire a bunch of disciplined weirdos and try a lot of weird stuff, the odds of getting lucky go up remarkably) (**Career

success depends on convincing others that you knew what the hell you were doing all along. Good news: Say it long enough and loud enough and

you will believe it. Great news: Keep saying it and you, too, can become a “guru.”)

Lessons: Containerization

Need-drivenA thousand “parents”

MessyEvolutionary

“Trivial”Experimentation

Trial & ERRORLoooong time for systemic adaptation/s

(many innovations) (bill of lading, standard time)

Not …

“Plan-driven”The product of “Strategic Thinking/Planning”

The product of “focus groups”

Slides @

tompeters.com*

*Also: EVERYTHING.LONG

PREVIEW.

“It is not the strongest of the

species that survives, nor the most intelligent, but the one most

responsive to change.” —Charles Darwin

“The most successful

people are those who

are good at plan B.”

—James Yorke, mathematician, chaos theory specialist, in The New Scientist

“We are in a brawl with

no rules.” —Paul Allaire

S.A.V.

Sam’s Secret

#1!

“Reward excellent failures.

Punish mediocre

successes.”Phil Daniels, Sydney exec

Axioms.

What “We” Know “For Sure” About Innovation

Big mergers [by & large] don’t workScale is over-rated

Strategic planning is the last refuge of scoundrelsFocus groups are counter-productive

“Built to last” is a chimera Success kills

“Forgetting” is impossibleRe-imagine is a charming idea

“Orderly innovation process” is an oxymoronic phrase (= Believed only by morons with ox-like brains)

“Tipping points” are easy to identify … long after they will do you any good

“Facts” aren’tAll information making it to the top is filtered

to the point of danger and hilarity“Success stories” are the illusions of egomaniacs (and “gurus”)

If you believe the “cause & effect” memoirs of CEOs you should be institutionalized

“Herd behavior” (XYZ is “hot”) is ubiquitous … and amusing“Top teams” are “Dittoheads”

Statistically, CEOs have little effect on performance“Expert” prediction is rarely better than rolling the dice

Pathetic!

“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

“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 very large one and just wait.”

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

“Not a single company that qualified as having made a sustained transformation ignited its leap with a big

acquisition or merger. Moreover, comparison companies—those that failed to

make a leap or, if they did, failed to sustain it—often tried to make themselves great with a

big acquisition or merger. They failed to grasp the simple truth that while you can buy

your way to growth, you cannot buy your way to

greatness.” —Jim Collins/Time/2004

“I don’t believe in

economies of scale. You don’t get better by being bigger. You get worse.” —

Dick Kovacevich/Wells Fargo/Forbes/08.04 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%;

J.P. Morgan Chase, 0.9%)

Scale?

“Microsoft’s Struggle With

Scale” —Headline, FT, 09.2005

“Troubling Exits at Microsoft” —Cover Story, BW, 09.2005

“Too Big to Move Fast?” —Headline, BW, 09.2005

More than $$$$

#1 R&D spending,

last 25 years?

GM

10,000,000,000,000*

*2,000,000,000

EXCELLENCE.

4/40.

4/40

De-cent-ral-iz-a-tion!

Ex-e-cu-

tion!

“Execution is the job of

the business leader.” —Larry Bossidy & Ram

Charan/ Execution: The Discipline of Getting Things Done

“Execution is a

systematic process of rigorously

discussing hows and whats, tenaciously following through, and

ensuring accountability.” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“We have a ‘strategic plan.’ It’s

called doing things.” — Herb Kelleher

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

understand that you only find oil if you drill 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

Ac-count-a-bil-ity!

“GE has set a standard of candor.

… There is no puffery. … There isn’t an ounce of

denial in the place.” —

Kevin Sharer, CEO Amgen, on the “GE mystique” (Fortune)

6:15A.M.

FLASH!

Innovation

is easy!

“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

We become who we hang

out with!

Measure “Strangeness”/Portfolio Quality

StaffConsultants

VendorsOut-sourcing Partners (#, Quality)

Innovation Alliance PartnersCustomers

Competitors (who we “benchmark” against)

Strategic Initiatives Product Portfolio (LineEx v. Leap)

IS/IT ProjectsHQ LocationLunch Mates

LanguageBoard

“The Bottleneck

Is at the Top of the

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:

At the top!”

— Gary Hamel/Harvard Business Review

“Beware of the tyranny of making

Small Changes to Small

Things. Rather,

make Big Changes

to Big Things.”

—Roger Enrico, former Chairman, PepsiCo

Line Extensions:

86 percent of new

products. 62 percent of revenues.

39 percent of profit.

Source: Blue Ocean Strategy, Chan Kim and Renée Mauborgne

Innovation Index: How many of your Top 5 Strategic

Initiatives/Key Projects score 8 or higher (out of 10) on a

“Weird”/ “Profound”/ “Wow”/“Game- changer”

Scale?

OPPORTUNITY.

“Women are the

majority market”

—Fara Warner/The Power of the Purse

1. Men and women are different.2. Very different.3. VERY, VERY DIFFERENT.4. Women & Men have a-b-s-o-l-u-t-e-l-y nothing in common.5. Women buy lotsa stuff.

6. WOMEN BUY A-L-L THE STUFF.7. Women’s Market = Opportunity No. 1.8. Men are (STILL) in charge.9. MEN ARE … TOTALLY, HOPELESSLY CLUELESS ABOUT WOMEN.10. Women’s Market = Opportunity No. 1.

Cases!McDonald’s (“mom-centered” to “majority consumer”;

not via kids)

Home Depot (“Do it [everything!] Herself”)

P&G (more than “house cleaner”)

DeBeers (“right-hand rings”/$4B)

AXA FinancialKodak (women = “emotional centers of the household”)

Nike (> jock endorsements; new def sports; majority consumer)

AvonBratz (young girls want “friends,” not a blond stereotype)

Source: Fara Warner/The Power of the Purse

10. Women’s Market =

Opportunity No. 1.

10.6

“Forget China, India and the

Internet: Economic Growth Is Driven

by Women.” —Headline, Economist,

April 15, Leader, page 14

????????

Weenie of the year,

2006 …

????????

6/44

OPPORTUNITY.

2000-2010 Stats

18-44: -1%

55+: +21%(55-64: +47% )

44-65: “New Customer Majority” *

*45% larger than 18-43; 60% larger by 2010Source: Ageless Marketing, David Wolfe & Robert Snyder

“The New Customer Majority is the only adult

market with realistic prospects for significant

sales growth in dozens of product lines for thousands of companies.” —David Wolfe & Robert Snyder,

Ageless Marketing

BEDROCK.

Brand =

Talent.

“The role of the Director is to create a

space where the actor or actress can become more than they’ve ever been before, more than

they’ve dreamed of being.” —Robert Altman, Oscar

acceptance

Our Mission

To develop and manage talent;

to apply that talent,throughout the world,

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

to do so with profit.

WPP

EXCELLENCE.

TRANSCENDENCE.THRILLS.

Synonyms

PurityTranscendence

VirtueEleganceMajesty

Antonyms

Mediocrity

“Why in the world did you go to Siberia?”

The Peters Principles: Enthusiasm.

Emotion. Excellence. Energy. Excitement. Service. Growth.

Creativity. Imagination. Vitality. Joy. Surprise. Independence. Spirit. Community. Limitless human potential. Diversity. Profit. Innovation. Design.

Quality. Entrepreneurialism. Wow.

Business* ** (*at its best): An emotional, vital, innovative, joyful,

creative, entrepreneurial endeavor that elicits

maximum concerted human potential in the

wholehearted service of others.***

**Excellence. Always.***Employees, Customers, Suppliers, Communities, Owners, Temporary partners

Radically Thrilling Language!

“Radically Thrilling.”

—BMW Z4 (ad)

CTO**Chief Thrills Officer

Synonyms

PurityTranscendence

VirtueEleganceMajesty

Antonyms

Mediocrity

CTO**Chief Transcendence Officer

CRO*

*Chief Revenue Officer

Inno.0524.06

Parallel universe/Exec Ed v resident MBAEnd run regnant powers/JKCFind done deals-practicing mavericks/ Stone-ReGoBell curves/2016 in 2006Non-industry benchmarkingEverything = PortfolioV.C.s all!Hot language/Wow-Astonish me-Insanely great-immortal-Make something greatCrazy customers/PW-EmbraerCrazy suppliers /Top decile R&DWeird alliancesMottos/Paul Arden (“Whatever You Think Think the Opposite”)Hire freaks/Enough weird people?Weird Boards!!!

CEO track record of Innovation (nobody starts at 45!)System/GE-Immelt“Strategic thrust overlay”CalendarBig Delta easier than Small DeltaMBWA with freaks-weirdos/JKCMBWA/Boonies’ labsV.C.-formal/IntelAcquire weirdChildren’s crusadeOld farts crusadeWomen’s crusadeGo Global at any sizeStop listening to customers Talent!/Unusual sources-Hire innovators-V.C.sEschew giant mergers

Remember: scale economies max out earlyAssisted suicide! (“Built to last” = Chimera-snare-delusion)Burn your press clippings“Forgetting” “strategy”Fire all strategic plannersTempo!Final product bears little relation to starting notionDesign! Design! Design! (“culture,” not program)All innovation: Pissed-off peopleGut feel rules!Focus groups suckWeird focus groups okayBe-Do philosophy

CelebrationsCulture-little as well as big Inno (“everyone-an-innovator”)Life = Wow ProjectsAcknowledge messiness-pursue serendipity (Blitzkrieg-Containers-Science-Jim Utterback)R.F.A.Culture of execution4/40: decentralization, execution, accountability, 615AMEVP (S.O.U.B.)/Systems-process “un-design”Diversity for diversity’s sakeWomen-Women-Women/customers (they “are the market,” not a “segment”)-leadersBoomers-Geezers (“all the money”)

CRO (Chief Revenue Officer) “culture”/top-line obsessedCIO (Chief INNOVATION Officer)LaughterFacility-space configurationExperiments-prototypes“Reward excellent failures. Punish mediocre successes.”Bizarrely high incentives (& penalties)We are what we eat/We are who we hang out with (E.g.: Staff-Consultants-Vendors-Out-sourcing Partners/#, Quality-Innovation Alliance Partners-Customers-Competitors/who we “benchmark” against -Strategic Initiatives -Product Portfolio/LineEx v. Leap-IS/IT Projects-HQ Location-Lunch Mates-Language-Board)

Drill more wells!