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Title: Tom Peters

Tom Peters Re-Imagine!Business Excellence
in a Disruptive Age06.30.2004
Slides at
Uncertainty is the only thing to be sure of.
Anthony Muh,head of investment in Asia,
Citigroup Asset Management If you dont like
change, youre going to like irrelevance even
less. General Eric Shinseki, Chief of Staff,
U. S. Army
What is it that distinguishes the thousands of
years of history from what we think of as modern
times? The answer goes way beyond the progress of
science, technology, capitalism and democracy.
The revolutionary idea that defines the boundary
between modern times and the past is the mastery
of risk the notion that the future is more than
a whim of the gods and that men and women are not
passive before nature. Thinkers like Luca
Paccioli, Jacob Bernoulli and Abraham de Moivre
converted risk-taking into one of the prime
catalysts that drives modern Western society
and converted the future from an enemy into an
opportunity.Peter Bernstein, Against the Gods
The Remarkable Story of Risk
Unless nimble and sophisticatede risk management
systems are in place, the firm will be unable to
benefit from revenue growth.There is a hell
of a paradox. We try to model risk scenarios but
end up instead increasing the complexity of the
business to the point where it is almost
unmanageable.Source IBM Business Consulting
Services/The Global CEO Study 2004
We have no future because our present is too
volatile. We have only risk management. The
spinning of the given moments scenarios. Pattern
recognition. from William Gibson, Pattern
Harvey Mackays Meeting Ender What are the five
things that could go wrong, and what would we do
about each one?
Importance of Success Factors by Various
Gurus/Estimates by Tom Peters
Strategy Systems Passion Execution
Porter 50 20 15
15Drucker 35 30
15 20Bennis 25
20 30 25Peters
15 20 35
In Toms world, its 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
Successful Businesses Dozen Truths TPs
30-Year Perspective1. Insanely Great Quirky
Talent.2. Disrespect for Tradition.3. Totally
Passionate (to the Point of Irrationality) Belief
in What We Are Here to Do.4. Utter
Disbelief at the BS that Marks Normal Industry
Behavior.5. A Maniacal Bias for Execution and
Utter Contempt for Those Who Dont Get
It.6. Speed Demons.7. Up or Out. (Meritocracy
Is Thy Name. Sycophancy Is Thy Scourge.)8.
Passionate Hatred of Bureaucracy.9. Willingness
to Lead the Customer and Take the Heat
Associated Therewith. (Mantra Satan Invented
Focus Groups to Derail True Believers.)10.
Reward Excellent Failures. Punish Mediocre
Successes. 11. Courage to Stand Alone on Ones
Record of Accomplishment Against All the
Forces of Conventional Wisdom.12. A Crystal
Clear Understanding of the power of a Good Story
(Brand Power).
Kevin Roberts Credo1. Ready.
Fire! Aim.2. If it aint broke ... Break it!3.
Hire crazies.4. Ask dumb questions.5. Pursue
failure.6. Lead, follow ... or get out of the
way!7. Spread confusion.8. Ditch your
office.9. Read odd stuff.10. Avoid moderation!
Sir Richards RulesFollow your passions.Keep
it simple.Get the best people to help
you.Re-create yourself.Play.Source
Its no longer enough to be a change agent.
You must be a change insurgentprovoking,
prodding, warning everyone in sight that
complacency is death. Bob Reich
It is the foremost taskand responsibilityof
our generation to re-imagine our enterprises,
private and public. from the back cover,
Management has a lot to do with answers.
Leadership is a function of questions. And the
first question for a leader always is Who do we
intend to be? Not What are we going to do? but
Who do we intend to be? Max De Pree, Herman
The greatest dangerfor most of usis not that
our aim istoo highand we miss it,but that it
istoo lowand we reach it.Michelangelo
Joe J. Jones 1942 2003 HE WOULDA DONE
T. J. Peters 1942 2--- HE WAS A PLAYER!
Characteristics of the Also ransMinimize
riskRespect the chain of commandSupport the
bossMake budgetFortune, article on Most
Admired Global Corporations
60 30 90 6090 60 gt 60 30 (??)
Montgomery Ward Kmart Sears Macys DEC
Wang Compaq Chase Manhattan American Motors
Chrysler U. S. Steel Bethlehem Steel
ATT Soviet Union
WalMart Dell Microsoft U.S.A.
Re-imagine Everything All Bets Are Off.
Mount Madness v.2004Perfect StormXCorporate
Jobs TechnologyGlobalization War, Warfighting
Jobs New TechnologyGlobalization War,
Warfighting Security
In a global economy, the government cannot give
anybody a guaranteed success story, but you can
give people the tools to make the most of their
own lives. WJC, from Philip Bobbitt, The Shield
of Achilles War, Peace, and the Course of History
14 MILLION service jobs are in danger of being
shipped overseas The Dobbs Report/USNWR/11.03/r
e new UCB study
Income Confers No Immunity as Jobs Migrate
Headline/USA Today/02.04
When I was growing up, my parents used to say to
me Finish your dinnerpeople in China are
starving. I, by contrast, find myself wanting to
say to my daughters Finish your homeworkpeople
in China and India are starving for your job.
Thomas Friedman/06.24.2004
SiemensTotal (94 to 04), 376K to 415K
Germany, 218K to 167K6X Prague (Today its
Hungary, tomorrow itll be Lithuania and
EstoniaIG Metall rep)Assembly-line jobs are
not the only ones at risk software work is
next.Source BusinessWeek/05.2004
One Singaporean worker costs as much
as 3 in Malaysia 8
in Thailand 13 in China
18 in India. Source The Straits
Thaksinomics (after Taksin Shinawatra, PM)/
Bangkok Fashion City/ managed asset reflation
(add to brand value of Thai textiles by
demonstrating flair and design excellence)Sourc
e The Straits Times/03.04.2004
The proper role of a healthily functioning
economy is to destroy jobs and to put labor to
use elsewhere. Despite this truth, layoffs and
firings will always sting, as if the invisible
hand of free enterprise has slapped workers in
the face. Joseph Schumpeter
--79 of U.S. jobs in structurally changed
professions (permanently eliminated jobs)(40K
of 160K U.S. IBM)--As we trade we release more
labor from the service sector because our highly
skilled and highly paid workers lose their
competitive advantage. So we go to the next big
thing. We specialize in innovation. We develop
new products and start new industries. (Erica
Groshen, labor economist Fed of NY)Source
There is no job that is Americas God-given
right anymore. Carly Fiorina/ HP/ 01.08.2004
America, like everyone else, must get used to
being a loser as well as a gainer in the global
economy. In the end, the 21st century is
unlikely to be the American Century. When the
Chinese Consumer Is King/New York
Times/12.14.2003. The notion that God
intended Americans to be permanently wealthier
than the rest of the world, that gets less and
less likely as time goes on. Robert Solow,
Nobel laureate in economics/New York
In Store International Equality, Intranational
InequalityThe 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
Headline/ Fortune/ 11.03 (We should finally
admit that we do not and cannot know, and regard
that fact with serenity rather than anxiety.)
Either we modernize or we will be modernized by
the unremitting force of the markets. Gerhard
People skills emotional intelligence
(financial service sales, 78/248K RNs,
28/512K lawyers, 24/182K)Imagination
creativity (architects, 44/60K designers,
43/230K photographers, 38/50K)Analytic
reasoning (legal assts, 66/159K electronic
engs, 28/147K computer operators,
55/367K)Source Where the Jobs
Are/NYT/05.13.2004/data 1994-2004
-Formulaic intelligence (health record clerks,
63/36K secretaries typists, 30/1.3M
bookkeepers, 13/247K)Manual dexterity (sewing
machine ops, 50/347K lathe ops, 49/30K
butchers, 23/67K)Muscle power (timber cutters,
32/25K farm workers, 20/182K) Source Where
the Jobs Are/NYT/05.13.2004/data 1994-2004
Over the last decade the biggest employment
gains came in occupations that rely on people
skills and emotional intelligence and among jobs
that require imagination and creativity. Trying
to preserve existing jobs will prove futiletrade
and technology will transform the economy whether
we like it or not. Americans will be better off
if they strive to move up the hierarchy of human
talents. Thats where our future lies. Michael
Cox, Richard Alm and Nigel Holmes/Where the Jobs
Jobs TechnologyGlobalization War, Warfighting
Behind Surging Productivity The Service Sector
Delivers. Firms Once Thought Immune to Boosting
Worker Output Are Now Big Part of the Trend
A bureaucrat is an expensive microchip.Dan
Sullivan, consultant and executive coach
E.g. Jeff Immelt 75 of admin, back room,
finance digitalized in 3 years.Source BW
UPS used to be a trucking company with
technology. Now its a technology company with
trucks. Forbes, upon naming UPS Company of the
Year in Y2000
lt1000A.D. paradigm shift 1000s of years1000
100 years for paradigm shift1800s gt prior 900
years1900s 1st 20 years gt 1800s2000 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
We found that the pace of development from one
societal type to another is accelerating. The
agricultural society originated 10,000 years ago,
the industrial society between 200 and 100 years
ago, the information-based society 20 years ago.
Rolf Jensen/The Dream Society How the Coming
Shift from Information to Imagination Will
Transform Your Business
Unless mankind redesigns itself by changing our
DNA through altering our genetic makeup,
computer-generated robots will take over the
world. Stephen Hawking, in the German magazine
What strategic motto will dominate this
transition from nation-state to market-state? If
the slogan that animated the liberal,
parliamentary nation-states was make the world
safe for democracy, what will the forthcoming
motto be? Perhaps making the world available,
which is to say creating new worlds of choice and
protecting the autonomy of persons to choose.
Philip Bobbitt, The Shield of Achilles War,
Peace, and the Course of History
better material welfare vs. maximize the
opportunity of its people Philip Bobbitt, The
Shield of Achilles War, Peace, and the Course of
I genuinely believe we are living through the
greatest intellectual moment in history.Matt
Ridley, Genome
In 25 years, youll probably be able to get the
sum total of all human knowledge on a personal
device.Greg Blonder, VC was Chief Technical
Adviser for Corporate Strategy _at_ ATT Barrons
A California biotechnology company has put the
entire sequence of the human genome on a single
chip, allowing researchers to conduct on the
complex relationships between the 30,000 genes
that make up a human being in a single
experiment. Page 3, Financial Times/10.03.2003
Sequenom/David Ewing Duncan/Wired11.02Sequenom
has industrialized the SNP single nucleotide
polymorphisms identification process. This,
Im told, is the first time a healthy human has
ever been screened for the full gamut of
genetic-disease markers. On the horizon
multi-disease gene kits, available at WalMart,
as easy to use as home-pregnancy tests. You
cant look at humanity separate from machines
were so intertwined were almost the same
species, and the difference is getting smaller.
Help! Theres nobody in the cockpit. In the
future, will the airlines no longer need
pilots?Grumman Global Hawk/ 24 hours/ Edwards
to South AustraliaSource The
Theres going to be a fundamental change in
the global economy unlike anything we have had
since the cavemen began bartering.Arnold
Baker, Chief Economist, Sandia National
Jobs TechnologyGlobalization War, Warfighting
Asias 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
populationliving in China, India and Russiahave
been integrated into the global market economy,
many of them highly educated workers, who can do
just about any job in the world. Were talking
about three billion people. Craig
Cost of a Programmer, per IBM China 12.50
per hourUSA 56 per hourSource
We erect walls to foreign trade and even
discourage job-displacing innovations. But time
and again through our history, we have discovered
merely to preserve the comfortable features of
the present, rather than reaching for new levels
of prosperity, is a sure path to stagnation.
Alan Greenspan/03.12.2004
China Roars!
The World Must Learn to Live with a Wide-awake
China Headline/FT/11.03
Chinese Industrial Growth Rate Slows!April 03
to April 04 19.1May 03 to May 04
17.5Source NYT/06.11.04
China has become a manufacturing hub for the
rest of the world in low-end labor-intensive
goodsand the rest of the world is becoming a
manufacturing hub for China in high-end,
capital-intensive goods. China may be a threat
to certain parts of the global supply chain that
rely on low-cost labor, but it represents an even
greater opportunity via production-efficiency
gains, economic welfare gains and long-term
dynamic potential. Its booming exports are more
than matched by booming industrial imports and
foreign investment opportunities. It has become
the new engine of global growth.Source Glen
Hodgson Mark Worrall/Export Development Canada,
in China Takes Off, David Hale Lyric Hughes
Hale/Foreign Affairs/Nov-Dec2003
1990-2003 Exports 8X (380B) 6 global exports
2003 vs. 3.9 2000 16 of Total Global Growth in
2002.Source China Takes Off, David Hale
Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003
1998-2003 45,000,000 layoffs in state sector
offset by 450B in foreign investment foreign
companies account for 50 of exports vs. 31 in
Mexico, 15 in Korea.Source China Takes
Off, David Hale Lyric Hughes Hale/Foreign
50 of output from private firms, 37 from
state-owned firms 80 of workforce (incl. rural)
now in private employ.Source China Takes
Off, David Hale Lyric Hughes Hale/Foreign
Population growth 1 two-thirds of housing
privately owned, 90 of urban Chinese own a home
(vs. 61 in Japan)Source China Takes Off,
David Hale Lyric Hughes Hale/Foreign
200 cities with gt1,000,000 population.Source
China Takes Off, David Hale Lyric Hughes
Hale/Foreign Affairs/Nov-Dec2003
Shanghai. 17 million people. 10,000 p.c. (10X
China). 2000-2003 30 p.a. growth.Source
Washington Post/6.130.04
200,000,000 unemployed must create 20,000,000
jobs per year to offset layoffs 400,000,000
elderly Chinese by 2030 (currently no pension
funds).Source China Takes Off, David Hale
Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003
397,000,000 fixed phone lines 90X since
1989.Source China Takes Off, David Hale
Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003
2003 China-Hong Kong leading producer in 8 of 12
key consumer electronic product areas (gt50
DVDs, digital cameras gt33.33 DVD-ROM drives,
personal desktop and notebook computers gt25
mobile phones, color TVs, PDAs, car
stereos).Source China Takes Off, David Hale
Lyric Hughes Hale/Foreign Affairs/Nov-Dec2003
When the Chinese Consumer Is King Americas
mass market is second to none. Someday it will
just be second. Headline, New York
As China becomes the worlds factory and
Flextronics becomes the biggest electronics
manufacturer in China, policy makers and analysts
wonder whether there will be a future for
manufacturing in Singapore, Malaysia, North
America or Europe. Asia Inc./02.2004
Going Global Flush with billions in foreign
reserves, China is embarking on a buying spree
Cover/ Newsweek/ 03.01.04/ on Chinas aggressive
offshore acquisition activity (buying brands,
technology, etc.)
Chinese Offshore Tourists93 3M03 21M
Steel China 20X EU.Source Newsweek/05.2004
World economic output U.S.A., 21 EU, 16
China, 13 (2X since1991)Source New York
Indian GDP/1990-2002 Ag, 34 to 21 services,
40 to 56Source The Economist/02.04
Level 5 (top) ranking/Carnegie Mellon Software
Engineering Institute 35 of 70 companies in
world are from IndiaSource Wired/02.04
GE is a champion of Indias scientists,
technicians, business analysts and graduates,
thousands of whom work at the U.S. conglomerates
offshore service centers in India. They are the
low-cost, high capability vanguard of GEs
outsourcing to India. Along the way, GE has
transformed its cost structure, enhanced its
ability to provide technology services and
incubated a rare world-class industry in India.
Forget India, Lets Go to Bulgaria Headline,
BW/03.04, re SAP, BMW, Siemens et al.
CLONING COLLEGE South Koreas biomedical
researchers, unhampered by politics, do
world-class research on the cheap Headline,
Jobs TechnologyGlobalization War, Warfighting
The worlds new dimension (computers, Internet,
globalization, instantaneous communication,
widely available instruments of mass destruction
and so on) amounts to a new metaphysics that, by
empowering individual zealots or agitated tribes
with unappeasable grievances, makes the world
unstable and dangerous in radically new ways.
Lance Morrow/Evil
The Breaking of Nations Order and Chaos in the
Twenty-first CenturyRobert Cooper (as
interpreted by Tom Peters)
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
Al-Qaida Said to have 18,000 Militants for
RaidsSource AP/05.25.2004/from International
Institute for Strategic Studies annual survey of
world affairs
What happened after 1945 was not so much a
radically new system as the concentration and
culmination of the old one. Robert Cooper, on
the Cold War, from The Breaking of Nations Order
and Chaos in the Twenty-first Century
What has been emerging into the daylight since
1989 is not a rearrangement of the old system but
a new system. Behind this lies a new form of
statehood, or at least states that are behaving
in a radically different way from the past.
Robert Cooper, The Breaking of Nations Order
and Chaos in the Twenty-first Century
The image of peace and order through a single
hegemonic power center is wrong. It was not
the empires but the small states that proved to
be a dynamic force in the world. Empires are
ill-designed for promoting change. Holding an
empire together requires an authoritarian
political style innovation leads to
instability. Robert Cooper, The Breaking of
Nations Order and Chaos in the Twenty-first
Read This!
The new century risks being overrun by both
anarchy and technology. The two great destroyers
of history may reinforce each other. Both the
spread of terrorism and that of weapons of mass
destruction point to a world in which Western
governments are losing control. The spread of the
technology of mass destruction represents a
potentially massive redistribution of power away
from the advanced industrial (and democratic)
states and toward smaller states that may be less
stable and have less of a stake in an orderly
world or more dramatically still, it may
represent a redistribution of power away from the
state itself and towards individuals, that is to
say terrorists or criminals. In the past to be
damaging, an ideological movement had to be
widespread to recruit enough support to take on
authority. Henceforth, comparatively small groups
will be able to do the sort of damage which
before only state armies or major revolutionary
movements could achieve. A few fanatics with a
dirty bomb or biological weapons will be able
to cause death on a scale not previously
envisaged. Emancipation, diversity, global
communicationall of the things that promise an
age of riches and creativitycould also bring a
nightmare in which states lose control of the
means of violence and people lose control of
their futures.Robert Cooper, The Breaking of
Nations Order and Chaos in the Twenty-first
Before we can talk about the security
requirements for today and tomorrow, we have to
forget the security rules of yesterday. Robert
Cooper, The Breaking of Nations Order and Chaos
in the Twenty-first Century
BEGAN ON SEPTEMBER 11, 2001. Al-Qaeda
represents a new and profoundly dangerous kind of
organizationone that might be called a virtual
state. On September 11 a virtual state proved
that modern societies are vulnerable as never
The deadliest strength of Americas new
adversaries is their very fluidity, Defense
Secretary Donald Rumsfeld believes. Terrorist
networks, unburdened by fixed borders,
headquarters or conventional forces, are free to
study the way this nation responds to threats and
adapt themselves to prepare for what Mr. Rumsfeld
is certain will be another attack. Business
as usual wont do it, he said. His answer is to
develop swifter, more lethal ways to fight. Big
institutions arent swift on their feet in
adapting but rather ponderous and clumsy and
slow. The New York Times/09.04.2002
From Weapon v. Weapon To
Org structure v. Org structure
Our military structure today is essentially one
developed and designed by Napoleon.Admiral
Bill Owens, former Vice Chairman, Joint Chiefs of
The organizations we created have become
tyrants. They have taken control, holding us
fettered, creating barriers that hinder rather
than help our businesses. The lines that we drew
on our neat organizational diagrams have turned
into walls that no one can scale or penetrate or
even peer over. Frank Lekanne Deprez René
Tissen, Zero Space Moving Beyond Organizational
In an era when terrorists use satellite phones
and encrypted email, US gatekeepers stand armed
against them with pencils and paperwork, and
archaic computer systems that dont talk to each
other.Boston Globe (09.30.2001)
Erics ArmyFlat.Fast.Agil
e.Adaptable.Light But Lethal.Talent/ I Am
an Army of One.Info-intense.Network-centric.
Float like a butterfly. Sting like a bee. Ali
To fight terrorism with an army is like trying
to shoot a cloud of mosquitoes with a machine
gun. Review of Terror in the Name of
Rather than have massive armies that people can
go along and inspect, it is now about having
rapidly deployable expediency forces that can be
dropped by land, sea or air and with full
support. MoD official, on Defense Secretary
Geoff Hoons defense white paper (12.2003)
Palmisano is pushing IBMs ability to assemble
SWAT teams of hardware, software services,
research and sales people to cure customers
headaches. Fortune/06.14.04
We must not only transform our armed forces but
the Defense Department that serves themby
encouraging a culture of creativity and
intelligent risktaking. We must promote a more
entrepreneurial approach one that encourages
people to be proactive, not reactive, and to
behave less like bureaucrats and more like
venture capitalists one that does not wait for
threats to emerge and be validated, but rather
anticipates them before they appear and develops
new capabilities to dissuade them and deter
them. Donald Rumsfeld, Foreign Affairs
OODA Loop/Boyd CycleUnraveling the
competition/ Quick Transients/ Quick Tempo (NOT
JUST SPEED!)/ Agility/ So quick it is
disconcerting (adversary over-reacts or
under-reacts)/ Winners used tactics that caused
the enemy to unravel before the fight (NEVER
HEAD TO HEAD)BOYD The Fighter Pilot Who
Changed the Art of War (Robert Coram)
Fast TransientsButtonhook turn (YF16
could flick from one maneuver to another faster
than any aircraft)BOYD The Fighter Pilot Who
Changed the Art of War (Robert Coram)
Blitzkrieg is far more than lightning thrusts
that most people think of when they hear the
term rather it was all about high operational
tempo and the rapid exploitation of
opportunity./ Arrange the mind of the
enemy.T.E. Lawrence/ Float like a butterfly,
sting like a bee.Ali BOYD The Fighter Pilot
Who Changed the Art of War (Robert Coram)
F86 vs. MiG/Korea/101Bubble canopy (360 degree
view)Full hydraulic controls (The F86 driver
could go from one maneuver to another faster than
the MiG driver)MiG faster in raw
acceleration and turning ability F86 quicker
in changing maneuversBOYD The Fighter Pilot
Who Changed the Art of War (Robert Coram)
ManeuveristsBOYD The Fighter Pilot Who
Changed the Art of War (Robert Coram)
All Bets Are Off!
There will be more confusion in the business
world in the next decade than in any decade in
history. And the current pace of change will only
accelerate.Steve Case
We are in a brawl with no rules.Paul Allaire
Strategy meetings held once or twice a year to
Strategy meetings needed several times a week
Source New York Times on Meg Whitman/eBay
How we feel about the evolving future tells us
who we are as individuals and as a civilization
Do we search for stasisa regulated, engineered
world? Or do we embrace dynamisma world of
constant creation, discovery and competition?
Do we value stability and control? Or evolution
and learning? Do we think that progress
requires a central blueprint? Or do we see it as
a decentralized, evolutionary process? Do we
see mistakes as permanent disasters? Or the
correctable byproducts of experimentation? Do
we crave predictability? Or relish surprise?
These two poles, stasis and dynamism,
increasingly define our political, intellectual
and cultural landscape. Virginia Postrel, The
Future and Its Enemies
Lets competeby training the best workers,
investing in R D, erecting the best
infrastructure and building an education system
that graduates students who rank with the worlds
best. Our goal is to be competitive with the best
so we both win and create jobs. Craig Barrett
The Winning Edge Peters Big61.
Research-Innovation2. Entrepreneurial Attitude
Support (Especially from Capital
Markets)3. Creative (Obstreperous)
Education4. Free Trade-Open Markets5.
Individual Self-reliance ( Supports
Therefore)6. Cutting-edge Infrastructure
How Nations Become Wealthy 1.
Property rights 2. Scientific rationalism
3. Capital markets 4. Fast and efficient
communications and transportation
Source The Birth of Plenty How the Prosperity
of the Modern World Was
Created, William Bernstein
2. Re-imagine Permanence The Destruction
It is generally much easier to kill an
organization than change it substantially.
Kevin Kelly, Out of Control
Wealth in this new regime flows directly from
innovation, not optimization. That is, wealth is
not gained by perfecting the known, but by
imperfectly seizing the unknown.Kevin Kelly,
New Rules for the New Economy
C.E.O. to C.D.O.
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.SP 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
Mr. Foster and his McKinsey colleagues collected
detailed performance data stretching back 40
years for 1,000 U.S. companies. They found that
none of the long-term survivors managed to
outperform the market. Worse, the longer
companies had been in the database, the worse
they did.Financial Times/11.28.2002
Its just a fact Survivors underperform.
Dick Foster
Rate of Leaving F5001970-1990 4XSource
The Company, John Micklethwait Adrian
Wooldridge (1974-200 One-half biggest 100
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 Innovators Dilemma
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
ForgetgtLearnThe problem is never how to get
new, innovative thoughts into your mind, but how
to get the old ones out.Dee Hock
Success Kills!The more successful a company,
the flatter its forgetting curve. Gary Hamel
and C.K. Prahalad
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 Im sure there are success
stories out there, but at this moment I draw a
blank.Mark Sirower, The Synergy Trap
Conglomerates dont work. James Surowiecki,
The New Yorker (07.01.2002)
MERGERS Why Most Big Deals Dont Pay Off. A
BusinessWeek analysis shows that 61 of buyers
destroyed shareholder wealth. BusinessWeek/10.14
Mergers and acquisitions get the headlines, but
studies show they often end up destroying
shareholder value instead of creating it. Thats
one reason why organic growth is so prized by
corporations and investors. In fact, if you
compare the stock performance of a new index of
23 companies that are masters of organic growth
to the SP500, the Organic Growth Index beat the
SP500 handily, 31 vs. 22 over the year ending
January 2004. And looking further back at a
five-year period ending in 2002, the OGI walloped
the SP500, 25 vs. 3.
(The OGI includes WalMart, Sysco,
Harley-Davidson, Bed, Bath Beyond, NVR)
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
Acquisitions are about buying market share. Our
challenge is to create markets. There is a big
difference. Peter Job, CEO, Reuters
The 58B hostile bid by Sanofi-Synthelabo for
Aventis has been greeted skeptically, as has the
news that Novartis may counterbid. Few investors
believe that Big Pharma can compensate for a
deficit of new drugs by getting bigger. Some
suspect the converse is true that size has made
them sluggish. That has led to some thinking
the unthinkable that pharmaceutical companies
should leave drug discovery to biotech companies
and focus their efforts on development and
marketing. Financial Times/03.2004
Active mutators in placid times tend to die off.
They are selected against. Reluctant mutators in
quickly changing times are also selected
against.Carl Sagan Ann Druyan, Shadows of
Forgotten Ancestors
Survival of the Fittest Not the Fattest/John
Kay/FT03.27.2003I have heard it from people
who make pharmaceuticals and from people who make
defense equipment. From executives in utilities
and executives in advertising. Among banks and
law firms. .. They all expect their industry to
develop the way the car industry has. In an
increasingly globalized marketplace, maturing
industries will become steadily more
concentrated. Only a small number of big
companies will survive.There is one problem
with these analogies. What is said about the
motor industry is not true.The peak of
concentration in the automobile industry was
reached in the early 1950s and since then there
has been a substantial decline. However you look
at it, small carmakers have been steadily gaining
market share at the expense of large ones. Back
in the 1960s, the 10 largest carmakers had a
market share of 85 percent today it is about 75
percent. Concentration has fallen, even though
weak firms have been repeatedly absorbed through
mergers.As markets evolve, differentiation
becomes steadily more important. Success in the
motor industry comes not from size or scale, but
from developing competitive advantages in
operations and marketing those advantages
internationally. The same is true in
pharmaceuticals and defense equipment, utilities
and banking, telecommunications and media.
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.
Natures process is the exact opposite one of
growth, fragmentation and dispersal. There is no
megalomania, no merging for mergings 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
The Industrial Revolution was about scale vast
factory complexes, skyscrapers and railway grids
concentrating power in the hands of rulers of
large territories not only responsible rulers
such as Bismarck and Disraeli, but Hitler and
Stalin too. But the post-Industrial Revolution
empowers any one with a cellular phone and a bag
of explosives. Americas military superiority
guarantees that such new adversaries will not
fight according to our notions of fairness they
will come at us by surprise, asymmetrically, at
our weakest points. Robert Kaplan, Warrior
TP on
Acquisitions1. Big Big Disaster.
(Statistically.) (There are exceptions e.g.,
Citigroup.)2. Big (GE, Cisco, Omnicom) acquires
small/specialist Good if you can
retain Top Talent.3. Odds on achieving
projected synergies among Mixed Big
cultures 10.4. Max Scale Advantages are
achieved at a smaller size than imagined.5.
Attacked by Big, Mediocre Medium marries
Mediocre Medium to bulk up. Result Big
Mediocrity or worse.6. Any sizeif Great
Focusedcan win, locally or globally.7.
Increasingly, Alliances deliver more value than
mergers and clearly abet flexibility.
Winning the Merger Game Is Possible--Lots of
deals--Little deals--Friendly deals--Stay
close to core competence--Strategy is easy to
understandSource The Mega-merger Mouse
Trap/Wall Street Journal/02.17.2004/David
Harding Sam Rovit, Bain Co./re Comcast-Disney
Most of our predictions are based on very linear
thinking. Thats why they will most likely be
wrong.Vinod Khosla, in GIGATRENDS, Wired
The Gales of Creative Destruction29M -44M
73M4M 4M - 0M
The secret of fast progress is inefficiency,
fast and furious and numerous failures.Kevin
RM A lot of companies in the Valley fail.RN
Maybe not enough fail.RM What do you mean
by that?RN Whenever you fail, it means
youre trying new things.Source Fast Company
The Silicon Valley of today is built less atop
the spires of earlier triumphs than upon the
rubble of earlier debacles.Newsweek/ Paul Saffo
... natural selection is death. ... Without huge
amounts of death, organisms do not change over
time. ... Death is the mother of structure. ...
It took four billion years of death ... To invent
the human mind ... The Cobra Event
Axiom (Hypothesis) We have been screwed by
Benchmarking Best Practice C.I./Kaizen.
Axiom (Hypothesis) We need Masters of
Discontinuity/ Masters of Ambiguity in
discontinuous/ambiguous times.
Organize for performance customer
satisfaction.Disorganize for renewal
Rose gardeners face a choice every spring how
to prune our roses. The long-term fate of a rose
garden depends on this decision. If you want to
have the largest and most glorious roses of the
neighborhood, you will prune hard. You will
reduce each rose plant to a maximum of three
stems. This represents a policy of low tolerance
and tight control. You force the plant to make
the maximum use of its available resources, by
putting them into the the roses core business.
However, if this is an unlucky year late frost,
deer, green-fly invasion, you may lose the main
stems or the whole plant! Pruning hard is a
dangerous policy in an unpredictable environment.
Thus, if you are in a spot where you know nature
may play tricks on you, you may opt for a policy
of high tolerance. You will leave more stems on
the plant. You will never have the biggest roses,
but you have a much-enhanced chance of having
roses every year. You will achieve a gradual
renewal of the plant. In short, tolerant pruning
achieves two ends (1) It makes it easier to cope
with unexpected environmental changes. (2) It
leads to a continuous restructuring of the plant.
The policy of tolerance admittedly wastes
resourcesthe extra buds drain away nutrients
from the main stem. But in an unpredictable
environment, this policy of tolerance makes the
rose healthier. Tolerance of internal weakness,
ironically, allows the rose to be stronger in the
long run.Arie De Geus, The Living Company
Japans Science Gap Rice farming culture
uniqueness suppressed. Govt control of R D.
Promotion based on seniority. Consensus vs.
debate. (U.S. friends can be mortal enemies.)
Bias for C.I. vs. bold leaps. Lack of
competition and critical evaluation (peer
review). Syukuro Manabe What we need to create
is job insecurity rather than security to make
people compete more.Hideki Shirakawa, Nobel
laureate, chemistry
December 2000 Swiss House for Advanced Research
Education. Cambridge, Massachusetts. Xavier
Comtesse You never hear a Swiss say, I want to
change the world. We need to take more risks.
The Word(s) on Vitality Gary HamelSell By
jettison old crapSpin Out support
entrepreneursSpin In buy young firms
No Wiggle Room! Incrementalism is innovations
worst enemy. Nicholas Negroponte
Just Say No I dont intend to be known as the
King of the Tinkerers. CEO, large financial
services company
Perfection is achieved only by institutions on
the point of collapse. C. Northcote Parkinson
Beware of the tyranny of making Small Changes
to Small Things. Rather, make Big Changes to Big
Things. Roger Enrico, former Chairman, PepsiCo
2A. Yo, Jim Collins . OrToms Case for
intrepid, unprincipled, reckless, predatory,
with boundless ambition, civilized in externals
but a savage at heart.
Herman Melville on JPJ intrepid, unprincipled,
reckless, predatory, with boundless ambition,
civilized in externals but a savage at heart.
from Evan Thomas, John Paul Jones Sailor, Hero,
Father of the American Navy
Huh?Humility The Surprise Factor in
Leadership bosses with Gung-ho Qualities and
Charisma May Be Out of Fashion Headline/FT/re
Jim Tom. Joined at the hip. Not.
I. Good to GreatII. Built to LastIII. Quiet,
Humble Leaders
I. Good to GreatII. Built to LastIII. Quiet,
Humble Leaders
Good to Great Fannie Mae Kroger Walgreens
Philip Morris Pitney Bowes Abbott
Kimberly-Clark Wells Fargo
Great Companies SET THE AGENDA. (Period.)
AGENDA SETTERS Set the Table/ Pioneers/
Questors/ AdventurersUS Steel Ford Macys
Sears Litton Industries ITT The Gap
Limited WalMart PG 3M Intel IBM
Apple Nokia Cisco Dell MCI Sun Oracle
Microsoft Enron Schwab GE Southwest
Laker People Express Ogilvy Chiat/Day
Virgin eBay Amazon Sony BMW CNN
I. Good to GreatII. Built to LastIII. Quiet,
Humble Leaders
Built to Last v. Built to FlipThe problem with
Built to Last is that its a romantic notion.
Large companies are incapable of ongoing
innovation, of ongoing flexibility.Increasingl
y, successful businesses will be ephemeral. They
will be built to yield something of value and
once that value has been exhausted, they will
vanish.Fast Company
But what if former head of strategic planning
at Royal Dutch Shell Arie De Geus is wrong in
suggesting, in The Living Company, that firms
should aspire to live forever? Greatness is
fleeting and, for corporations, it will become
ever more fleeting. The ultimate aim of a
business organization, an artist, an athlete or a
stockbroker may be to explode in a dramatic
frenzy of value creation during a short space of
time, rather than to live forever.Kjell
Nordström and Jonas Ridderstråle, Funky Business
The difficulties arise from the inherent
conflict between the need to control existing
operations and the need to create the kind of
environment that will permit new ideas to
flourishand old ones to die a timely death. We
believe that most corporations will find it
impossible to match or outperform the market
without abandoning the assumption of continuity.
The current apocalypsethe transition from a
state of continuity to state of discontinuityhas
the same suddenness as the trauma that beset
civilization in 1000 A.D. Richard Foster
Sarah Kaplan, Creative Destruction (The
McKinsey Quarterly)
Warren Bennis Patricia Ward Biederman/
Organizing Genius Great Groups Dont Last Very
W.A. Mozart 1756 1791 HE CHANGED THE
Jane Jacobs Exuberant Variety vs. the Great
Blight of Dullness. F.A. Hayek Spontaneous
Discovery Process. Joseph Schumpeter the
Gales of Creative Destruction.
I. Good to GreatII. Built to LastIII. Quiet,
Humble Leaders
Huh?Quiet, workmanlike, stoic leaders bring
about the big transformations.--JC
Humble Pastels?T. Paine/P. Henry/A.
Hamilton/T. Jefferson/B. FranklinA. Lincoln/U.S.
Grant/W.T. ShermanTR/FDR/LBJ/RR/JFKPatton/Monty/
HalseyM.L. King/C. de Gaulle/M. Gandhi/W.
n/Djarassi/Watson H. Clinton/G. Steinem/I.
Gandhi/G. Meir/M. Thatcher E. Shockley/A.
Grove/J. Welch/L. Gerstner/L. Ellison/B.
Gates/S. Jobs/S. McNealy/T. Turner/R. Murdoch/W.
Wriston A. Carnegie/J.P. Morgan/H. Ford/S.
Honda/J.D. Rockefeller/T.A. Edison
Rummy/Norm/Henry/Wolfie Elizabeth Cady
Stanton/Susan B. Anthony/Martha Cary
Thomas/Carrie Chapman Catt/Alice Paul/Anna
Elizabeth Dickinson/Arabella Babb
Mansfield/Margaret Sanger
Audie Murphy was the most decorated soldier in
WW2. He won every medal we had to offer, plus 5
presented by Belgium and France. There was one
common medal he never won
the Good Conduct medal.
To Hell With Well Behaved Recently a young
mother asked for advice. What, she wanted to
know, was she to do with a 7-year-old who was
obstreperous, outspoken, and inconveniently
willful? Keep her, I replied. The
suffragettes refused to be polite in demanding
what they wanted or grateful for getting what
they deserved. Works for me. Anna
Men with no vices have very few virtues. A.
Jim Collins vs. Michael Maccobyquiet,
workmanlike, stoicvs. larger-than-life
leaders/ egoists, charmers, risk-takers with
big visions Carnegie, Rockefeller, Edison,
Ford, Welch, Jobs, Gates
Johannes Kepler Quiet humble
stoic??Joshua Gilder Anne-Lee Gilder,
Heavenly Intrigue Johannes Kepler, Tycho Brahe,
and the Murder Behind One of Historys Greatest
Scientific Discoveries
In Italy for 30 years under the Borgias they had
warfare, terror, murder, bloodshedand produced
Michelangelo, da Vinci and the Renaissance. In
Switzerland they had brotherly love, 500 years of
democracy and peace, and what did they
producethe cuckoo clock.Orson Welles, as
Harry Lime, in The Third Man
3. Re-imagine IS/ IT/ the WebNo Room for Wimps!
E-commerce is happening the way all the hype
said it would. Internet deployment is happening.
Broadband is happening. Everything we ever said
about the Internet is happening. And it is very,
very early. We cant even glimpse ITs potential
in changing the way people work and live. Andy
Grove (BusinessWeek/August 2003)
100 square feet
Dells OptiPlex FacilityBig Job 6 to 8
hours.(80,000 per day)Parts Inventory 100
square feet.
Productivity!McKesson 2002-2003 Revenue 7B
Employees 500Source USA Today/06.14.04
Invisible Supplier Has Penneys Shirts All
Buttoned Up From Hong Kong, It Tracks Sales,
Restocks Shelves, Ships Right to the Store.
Headline, Wall Street Journal (09.11.03)
Our entire facility is digital. No paper, no
film, no medical records. Nothing. And its all
integratedfrom the lab to X-ray to records to
physician order entry. Patients dont have to
wait for anything. The information from the
physicians office is in registration and vice
versa. The referring physician is immediately
sent an email telling him his patient has shown
up. Its wireless in-house. We have 800
notebook computers that are wireless. Physicians
can walk around with a computer thats
pre-programmed. If the physician wants, well go
out and wire their house so they can sit on the
couch and connect to the network. They can review
a chart from 100 miles away. David Veillette,
CEO, Indiana Heart Hospital (HealthLeaders/12.2002
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 militarys
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/Broadbands New Killer
App/Business 2.0/ OCT2002
The mechanical speed of combat vehicles has not
increased since Rommels day, so the difference
is all in the operational speed, faster
communications and faster decisions. Edward
Luttwak, on the unprecedented pace of the move
toward Baghdad
The Real News X1,000,
flash mobs (!)
Impact No. 1/ Logistics Distribution
WalMart Dell
FedEx UPS Ryder Cisco Etc. Etc. Ad
Autobytel 400. WalMart 13.Source
WebWorld Everything Web as a way to run your
businesss innardsWeb as connector for your
entire supply-demand chain Web as spiders web
which re-conceives the industryWeb/B2B as
ultimate wake-up call to commodity
producersWeb as the scourge of slack,
inefficiency, sloth, bureaucracy, poor customer
dataWeb 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 Worlds Best at Everything as next
door neighbor
Theres no use trying, said Alice. One cant
believe impossible things. I daresay you
havent had much practice, said the Queen. When
I was your age, I always did it for half an hour
a day. Why, sometimes Ive believed as many as
six impossible things before breakfast.Lewis
Inet allows you to dream dreams you could
never have dreamed before!
Supposejust supposethat the Web is a new world
were just beginning to inhabit. Were like the
earlier European settlers in the United States,
living on the edge of the forest. We dont know
whats there and we dont know exactly what we
need to do to find out Do we pack mountain
climbing gear, desert wear, canoes, or all three?
Of course while the settlers may not have known
what the geography of the New World was going to
be, they at least knew that there was a
geography. The Web, on the other hand, has no
geography, no landscape. It has no distance. It
has nothing natural in it. It has few rules of
behavior and fewer lines of authority. Common
sense doesnt hold here, and uncommon sense
hasnt yet emerged. David Weinberger, Small
Pieces Loosely Joined
Message eCommerce is not a technology play! It
is a relationship, partnership, organizational
and communications play, made possible by new
Message There is no such thing as an effective
B2B or Internet-supply chain strategy in a
low-trust, bottlenecked-communication, six-layer
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
Brand Inside Rules!If I could have chosen not
to tackle the IBM culture head-on, I probably
wouldnt have. My bias coming in was toward
strategy, analysis and measurement. In
comparison, changing the attitude and behaviors
of hundreds of thousands of people is very, very
hard. Lou Gerstner, Who Says Elephants Cant
I came to see in my time at IBM that culture
isnt just one aspect of the gameit is the
game Lou Gerstner, Who Says Elephants Cant
Read It Closely We dont sell insurance
anymore. We sell speed. Peter Lewis,
The New Infantry Battalion/New York
Times/12.01.2002Pentagons Urgent Search for
Speed. 270 soldiers (1/3rd normal complement)
140 robotic off-road armored trucks. Every
soldier is a sensor. Revolutionary
capabilities. Find-to-hit 45 minutes to 15
minutes in just one year.
Hyperlinks subvert hierarchy!The Cluetrain
Words to Live By Hierarchy is an
organization with its face toward the CEO and its
ass toward the customer.Kjell Nordstrom and
Jonas Ridderstrale, Funky Business
Case CRM
Amen!The Age of the Never Satisfied
CustomerRegis McKenna
Anne Busqu
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