Tom Peters’ Re-Imagine! Business Excellence in a Disruptive Age CPCU/LA/25October2004
Tom Peters’ Re-Imagine! Business Excellence in a Disruptive Age 22October2004/Part 1
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Transcript of Tom Peters’ Re-Imagine! Business Excellence in a Disruptive Age 22October2004/Part 1
Tom Peters’
Re-Imagine!Business Excellence in a Disruptive Age
22October2004/Part 1
Contents: The Chapter Heading Slides follow.
Summer 2004: Not Your
Father’s World!
Biases.
Purpose.
I. NEW BUSINESS.
NEW CONTEXT.
1. Re-imagine Everything: All Bets Are Off.
Jobs Technology
Globalization War, Warfighting
& Security
2. Re-imagine Permanence:
The Destruction Mandate.
2A. Re-imagine Tomorrow’s
Organizations:
Itinerant Potential Machines.
2B. Yo, Jim Collins . Or:
Tom’s Case for …
Technicolor!
II. NEW BUSINESS. NEW TECH.
3. Re-imagine IS/ IT/ the Web:No Room for
Wimps!
3A. Re-imagine IS/ IT/ the Web:
Direct!
4. Re-imagine Jobs: The White
Collar Bloodbath.
III. NEW BUSINESS. NEW
VALUE PROPOSITION.
5. Re-imagine the Organization: The
Professional Service Firm (“PSF”) Imperative.
6. Re-imagine Business’
Basic Value Proposition: PSFs Unbound/ The
“Solutions Imperative.”
6A. Re-imagine Organizational Barriers: The
Solutions25.**NO MORE “SILOS.” NO MORE
“STOVEPIPES.”
IV. NEW BUSINESS. NEW
BRAND.
7. Re-imagine Enterprise as
Theater I: A World of Scintillating “Experiences.”
8. Re-imagine Enterprise as
Theater II: Embracing the
“Dream Business.”
9. Re-imagine the “Soul” of Enterprise:
Design Rules!
9A. Re-imagine the Infrastructure of
Enterprise: Design = “Beautiful” Systems.
10. Re-imagine the Fundamental Selling Proposition: “It” all
adds up to …
THE BRAND.
10A. Re-imagine 2004: “Excellence” Found!
V. NEW BUSINESS.
NEW MARKETS.
11. Re-imagine the Customer I: Trends Worth
Trillion$$$ …
Women Roar.
12. Re-imagine the Customer II: Trends Worth
Trillion$$$ … Boomer Bonanza/ Godzilla
Geezer.
VI. NEW BUSINESS. NEW
WORK.
13. Re-imagine Work: The
WOW Project. (Or Bust.)
14. Re-imagine Implementation I: The F4 Recipe.*
*Find a Fellow Freak Far away
14A. Re-imagine Implementation II: Getting to WOW
Through Mastery of …
The Sales25.
14B. Re-imagine Implementation III:
Getting Things Done … The Power & Implementation34.
15. Re-imagine Boss Work I: Start a WOW Projects Epidemic!
Emphasize … Demos, Heroes, Stories!
15A. Re-imagine Boss Work II: Send Them on
Quests!
VII. NEW BUSINESS. NEW
YOU.
16. Re-imagine the Individual: Welcome
to a Brand You World … Distinct or
Extinct
17. Re-imagine
Excellence I: The Talent
Obsession.
17A. ADDENDA to Re-imagine Excellence: Tom Peters’
The
Talent50
17B. Re-imagine Excellence II: Meet the
New Boss … Women Rule!
VIII. NEW BUSINESS. NEW
BEDROCK.
18. Re-imagine Education.*
*Or perish
New Work. New World. New Education. The
Three Must Meet.
19. Re-imagine Healthcare
Healthcare Tsunami
HealthCare21
HealthCare2
IX. NEW BUSINESS. (NEW) BRAND INSIDE RULES
20. Re-imagine the Roots of Innovation: THINK WEIRD … the
High Value Added Bedrock.
X. NEW BUSINESS. NEW LEADERSHIP.
21. Re-imagine Leadership for Totally Screwed-Up
Times:
The Passion Imperative.
The Passion Imperative: The
Leadership50
XI. NEW BUSINESS. NEW
RULES.
22. A Re-imagineer’s Credo: Tom’s
60TIBs**TIB = This I Believe
23. Tom’s
Re-imagine Manifesto!
Boil It Down!
Parting Words
HTSH*
*Hands That Shape Humanity, a project of the Bishop Desmond Tutu Foundation
Master Presentation
Begins.
Part One.
Re-imagine!
Summer 2004: Not Your
Father’s World!
60,000
600/200
168/18,500/51,000
“China’s size does not merely enable low-cost manufacturing; it forces it. Increasingly, it is what
Chinese businesses and consumers choose for themselves that determines how the American
economy operates.” —Ted Fishman/“The Chinese Century”/
The New York Times Magazine /07.04.04
“One Monday this spring, a forty-three-year-old salesclerk at the Home Depot in Plano, Texas,
scribbled some updates onto an old resume and took it to his local copy shop. To his education
and work history—a bachelor’s degree in industrial engineering and technology, service in
the U.S. Marine Corps—he added a recent moonlighting job as a handyman and a new
‘career objective.’ Ten minutes later, in southern India, a middle-age Hindu man in a cavernous
workplace began to type the Home Depot clerk’s words.” —The New Yorker /07.05.2004
“The Ultimate Luxury Item Is Now
Made in China” —Headline/p1/The New York Times/
07.13.2004/Topic: Luxury Yachts made in Zhongshan
“Vaunted German Engineers Face
Competition From China” —Headline, p1/WSJ/07.15.2004
“When the Silk Road Gets Paved”/Forbes Global/09.04
Express highways: 168 miles in ’89 … 18,500 in ’03 … 51,000 in ’08 (v. U.S.
Interstate: 46,500)
Implications: $200M Intel plant in Chengdu (pop. 9.9M); 1/3rd Shanghai
wage rate
“You get an educated workforce, remarkable infrastructure, a lot of
government support. These [Southeast Asian] governments have made life sciences a top priority—and
they have a great venture capital community there.” —Glenn Rice, VP Pharmaceutical
Discovery and Development, SRI International (On the rapid migration of drug discovery from the U.S. at a 20% to 40% cost saving Rice adds that 40%
to 60% of U.S. postdocs are from China and Taiwan) From: Stanford Business /August 2004
International Herald Tribune
/09.13.2004: P1/600 foreign R&D labs in China, 200 new
per year
60,000*
*New factories in China opened by foreigners/2000-2003/
Edward Gresser, Progressive Policy Institute/Wall Street Journal 09.27.04
26
“Reuters Plans To Triple Jobs at Site In India” —Headline/
New York Times/ World Business/10.08.04/10% of total workforce in Bangalore by 2006
Level 5 (top) ranking/Carnegie Mellon
Software Engineering Institute: 35 of 70
companies in world are from India
Source: Wired/02.04
“JET BLUE has a secret weapon: a virtual
reservations center. … Jet Blue’s 600 agents all work
from home. …”
Source: Ad for Avaya/BW/07.19.2004
Colorado Springs: McDonald’s call center for Drive-
through (incl. electronic photo of customer)
Source: NYT/07.18.04
Business 2.0 outsources section
of August 2004 issue!
Source: USA Today/07.19.2004
“About a year ago I hired a developer in India to do my job. I pay him $12,000 to do the job I get paid $67,300
for. He is happy to have the work. I am happy that I only have to work about 90 minutes per day (I still have to attend meetings myself, and I spend a few minutes
every day talking code with my Indian counterpart.) The rest of my time my employer thinks I’m telecommuting.
They are happy to let me telecommute because my output is higher than most of my coworkers. Now I’m considering getting a second job and doing the same
thing with it. That may be pushing my luck though. The extra money would be nice, but that could push my
workday over five hours.” —from posting at Slashdot (02.04.04), reported by Dan Pink, A Whole New Mind
New Delhi/09.13.2004/The Economic Times
P1: “Airport Traffic Racks Up 26% Growth in 4 Months”
P1: “EMPLOYABLE GRADUATES IN DEMAND” (“The Business Process Outsourcing sector is facing a roadblock. …BPO companies are struggling to hire new employees in sufficient numbers. …”)
P11: “Tourist Arrivals Surge 26% in Lean Apr-Aug”
“AT&T Said to Be Takeover
Target” —headline, Newsweek,
07.26.04, on KKR’s possible bid
Re-imagine!
Summer 2004: Not Your
Father’s World II.
“A focus on cost-cutting and efficiency has helped many
organizations weather the downturn, but this approach will ultimately render them obsolete. Only the
constant pursuit of innovation can ensure long-term success.” —Daniel Muzyka,
Dean, Sauder School of Business, Univ of British Columbia (FT/09.17.04)
“Don’t get left on the shelf: Innovation, not advertising, is the solution to FMCG [Fast-Moving
Consumer Goods] companies’ problems with retailer power
and own-label brands” —Headline/FT/10.12.04
“I’m worried our business model might run out of steam in two or three years. We make lots of incremental product
improvements, get them to launch as quickly as we can and then fire a big cannon full of marketing dollars at them. But each time the lifetime of that product gets shorter and the amount of dollars we spend gets higher. Eventually there will be no dollars
left.” —CEO/FMCG co./FT/10.12
“Judging by the profit warnings from a bunch of FMCG giants [Colgate, Unilever, Coke, Cadbury], that time is already upon us. [The FMCGs] have a solution: spend more on advertising. Good
luck to them. We tell our clients something different: It’s too late. Rather than frittering margins on ever bigger ad budgets,
companies must start to innovate.” —Tim Thorne, CEO, Edengene/corporate growth consultants/FT/10.12
“[At Pfizer, Merck, Unilever, Nestle] and other companies, the standard stage-gate approach to
product development has become ingrained that it has driven out the very innovative thinking that it was designed to encourage. And while the returns on
innovation effort appear to be falling for large companies, it is often the unheralded start-up or new entrant that comes up with the latest hit product. …
Thus, Coca-Cola, once celebrated for its innovation and vision, has been late to every new trend in the drinks
industry in the past decade, from sports drinks to bottled water.” —Julian Birkenshaw, Rick Delbridge & John Bessant,
“A Leap into the Unknown,” FT/09.17.04
“We’re now entering a new phase of business where the group will be a
franchising and management company where brand management is central.” —David
Webster, Chairman, InterContinental Hotels Group
“InterContinental will now have far more to do with brand ownership than hotel
ownership.” —James Dawson of Charles Stanley (brokerage)
Source: International Herald Tribune, 09.16, on the sacking of CEO Richard North, whose entire background is in finance
“We have to move up the value chain and focus increased efforts on becoming a knowledge-based, entrepreneurial economy if we are to prosper in the medium to long
term.” —Tony Dromgoole, Chief Executive, Irish Management Institute
“We’re now entering a new phase of business where the group will be a
franchising and management company where brand management is central.”
—David Webster, Chairman, InterContinental Hotels Group
“InterContinental will now have far more to do with brand ownership than
hotel ownership.” —James Dawson of Charles Stanley
(brokerage)
Source: International Herald Tribune, 09.16, on the sacking of CEO Richard North, whose entire background is in finance
“What I am really wanting to do is a design school, toi teach the sensibility that
goes into the building of a business into a company with
a point of view.” —Ralph Lauren, International Herald Tribune/09.16.2004
My Story.
A Coherent Story: Context-Solution-BedrockContext1: Intense Pressures (China/Tech/Competition)
Context2: Painful/Pitiful Adjustment (Slow, Incremental, Mergers)
Solution1: New Organization (Technology, Web+ Revolution, Virtual-“BestSourcing,”“PSF” “nugget”)
Solution2: No Option: Value-added Strategy (Services- Solutions-Experiences-DreamFulfillment “Ladder”)
Solution3: “Aesthetic” “VA” Capstone (Design-Brands)
Solution4: New Markets (Women, ThirdAge)
Bedrock1: Innovation (New Work, Speed, Weird, Revolution)
Bedrock2: Talent (Best, Creative, Entrepreneurial, Schools)
Bedrock3: Leadership (Passion, Bravado, Energy, Speed)
Tom Peters’
Re-Imagine!Business Excellence in a Disruptive Age
17September2004
Slides at …
tompeters.com
“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
“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 sophisticated 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 moment’s scenarios. Pattern
recognition.” —from William Gibson, Pattern Recognition
Harvey Mackay’s Meeting Ender: “What are the five
things that could go wrong, and what would we do
about each one?”
Biases.
Importance of Success Factors by Various “Gurus”/Estimates by Tom Peters
Strategy Systems Passion Execution Porter 50% 20 15 15
Drucker 35% 30 15 20
Bennis 25% 20 30 25
Peters 15% 20 35 30
Hardball: Are You Playing to Play or Playing to Win? by George Stalk & Rob Lachenauer/HBS Press
“The winners in business have always played hardball.” “Unleash massive and overwhelming force.” “Exploit
anomalies.” “Threaten your competitor’s profit sanctuaries.” “Entice your competitor into retreat.”
Approximately 640 Index entries: Customer/s (service,
retention, loyalty), 4. People (employees, motivation, morale, worker/s), 0.
Innovation (product development, research & development, new products), 0.
“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
Successful Businesses’ Dozen Truths: TP’s 30-Year Perspective
1. 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 Don’t “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 One’s 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’ Credo
1. Ready. Fire! Aim.2. If it ain’t 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 Richard’s Rules:
Follow your passions.Keep it simple.
Get the best people to help you.Re-create yourself.
Play.
Source: Fortune/10.03
“It’s no longer enough to be a ‘change agent.’ You
must be a change insurgent—provoking,
prodding, warning everyone in sight that
complacency is death.” —Bob Reich
Total Enterprise Revision: “Not optional”
Total “Value proposition” revision: “Not optional”
“All-the-way” IS/IT solutions: “Not optional”
Full-scale globalization: “Not optional”
Work done where it best makes sense: “Not optional”
Everything You Need to Know about “Strategy”
1. Do you have awesome Talent … everywhere? (“We are the Yankees of home improvement here in Omaha.”) Do you push that Talent to pursue Audacious Quests?2. Is your Talent Pool loaded with wonderfully peculiar people who others wouldcall “problems”? And what about your Extended Community of customers, vendors et al?3. Is your Board of Directors as cool as your product offerings … and does it have50 percent (or at least one-third) Women Members?4. Long-term, it’s a “Top-line World”: Is creating a “culture” that cherishes above all things Innovation and Entrepreneurship your primary aim? Remember: Innovation … not Imitation!5. Are the Ultimate Rewards heaped upon those who exhibit an unswerving “Bias for Action,” to quote the co-authors of In Search of Excellence? Are your O.O.D.A. loops shorter than the next guy’s? 6. Do you routinely use hot, aspirational words-terms like “Excellence” and B.H.A.G. (Big Hairy Audacious Goal, per Jim Collins) and “Let’s make a dent in the Universe” (the Word according to Steve Jobs)? Is “Reward excellent failures, punish mediocre successes” your de facto or de jure motto?7. Do you subscribe to Jerry Garcia’s dictum: “We do not merely want to be the best of the best, we want to be the only ones who do what we do”?8. Do you elaborate on and enhance Jerry G’s dictum by adding, “We subscribe to ‘Best Sourcing’—and only want to associate with the ‘best of the best’.” 9. Do you embrace the new technologies with child-like enthusiasm and a revolutionary’s zeal?10. Do you “serve” and “satisfy” customers … or “go berserk” attempting to provide every customer with an “awesome experience” that does nothing less than transform the way she or he sees the world?11. Do you understand … to your very marrow … that the two biggest under-served markets are Women and Boomers-Geezers? And that to “take advantage” of these two Monster “Trends” (FACTS OF LIFE) requires fundamental re-alignment of the enterprise?12. Are your leaders accessible? Do they wear their passion on their sleeves? Does integrity ooze out of every pore of the enterprise? Is “We care” your implicit motto?13. Do you understand business mantra #1 of the ’00s: DON’T TRY TO COMPETEWITH WAL*MART ON PRICE OR CHINA ON COST? (And if you get this last idea, then see the 12 above!)
Biz “Strategy” Rule #1
Don’t even think about competing with
Wal*Mart on price or China on cost!
“A focus on cost-cutting and efficiency has helped many
organizations weather the downturn, but this approach will ultimately render them obsolete. Only the
constant pursuit of innovation can ensure long-term success.” —Daniel Muzyka,
Dean, Sauder School of Business, Univ of British Columbia (FT/09.17.04)
Hardball: Are You Playing to Play or Playing to Win? by George Stalk & Rob Lachenauer/HBS Press
“The winners in business have always played hardball.” “Unleash massive and overwhelming force.” “Exploit
anomalies.” “Threaten your competitor’s profit sanctuaries.” “Entice your competitor into retreat.”
Approximately 640 Index entries: Customer/s (service,
retention, loyalty), 4. People (employees, motivation, morale, worker/s), 0.
Innovation (product development, research & development, new products), 0.
Ten Good Reasons to “Get Up in the Morning”
1. Empower one and all to vigorously seek WOW! in their work/projects. (Or else.) Foster the “Brand You Spirit” and the “Entrepreneurial Urge” at every turn. (Or else.) 2. Blow up “education” as we know it today! Re-tool education to emphasize the arts, creativity, entrepreneurial behavior. (Or else.)3. Seek out the bold, the strange, the misfits, the dreamers—and welcome their presence in our midst.4. Drag enthusiasm, passion, Technicolor and bold commitment out of the closet! Make Passion your Passion! (Hint: Passion makes the world go ‘round.)5. Be a champion for: Women Roar! Women Rule!6. Underscore the importance of/stupendous opportunities associated with the “cool new markets”: Women, Boomers and Geezers, Hispanics, Greenies, Wellness.7. Dramatically re-orient healthcare from after-the-fact “fixes” to before-the-fact attention to prevention-Wellness. (And “kindly suggest” that the “acute-care” “industry” give some passing thought to Quality.)8. Ensure that the historically neglected “intangibles” are the prime basis for individual and enterprise success.9. Support Globalization as the best—if indeed messy—path to maximum human freedom, security and welfare.10. Swear by the motto: “Reward excellent failures; punish mediocre successes.”
“We all agree your theory is crazy. The
question, which divides us, is
whether it is crazy enough.” —Niels Bohr, to Wolfgang Pauli
Purpose.
It is the foremost task—and responsibility—of our generation to
re-imagine our enterprises, private
and public. —from the back cover, Re-imagine!
“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 Miller
The greatest dangerfor most of us
is not that our aim istoo high
and we miss it,but that it is
too lowand we reach it.
Michelangelo
Joe J. Jones Joe J. Jones 1942 – 2003 1942 – 2003
HE WOULDA DONE SOME HE WOULDA DONE SOME
REALLY COOL STUFF REALLY COOL STUFF
BUT …BUT …
HIS BOSS WOULDN’T LET HIM! HIS BOSS WOULDN’T LET HIM!
T. J. Peters T. J. Peters 1942 – 2---1942 – 2---
HE WAS A PLAYER!HE WAS A PLAYER!
Characteristics of the “Also rans”*
“Minimize risk”“Respect the chain of
command”“Support the boss”
“Make budget”*Fortune, article on “Most Admired Global Corporations”
60 – 30 = 90 – 60*
*90 – 60 > 60 – 30 (??)
I. NEW BUSINESS.
NEW CONTEXT.
Montgomery Ward … Kmart … Sears … Macy’s … DEC … Wang
… Compaq … Chase Manhattan … American Motors … Chrysler …
U. S. Steel … Bethlehem Steel … AT&T … Soviet Union …
Wal*Mart … Dell … Microsoft … U.S.A. …
1. Re-imagine Everything: All Bets Are Off.
Mount Madness v.2004
Perfect Storm
X
Corporate Mal-adaptivity
Jobs Technology
Globalization War, Warfighting
& Security
The Big Three Drivers of Change
Abundance
Asia
Automation
Source” Dan Pink, A Whole New Mind
Jobs New Technology
Globalization 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/USN&WR/11.03/re 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 dinner—people in China are starving.’ I, by contrast, find myself wanting to say to my
daughters: ‘Finish your homework—people in China and India are starving for your job.’ ” —Thomas Friedman/06.24.2004
Siemens
Total (’94 to ’04), 376K to 415K; Germany, 218K to 167K
6X Prague (“Today it’s Hungary, tomorrow it’ll be Lithuania and Estonia”—IG 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 Times/08.18.03
“Thaksinomics” (after Thaksin Shinawatra, PM)/ “Bangkok
Fashion City”/ “managed asset reflation” (add to brand value of
Thai textiles by demonstrating flair and design excellence)
Source: 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: CNN/Money/01.07.2004
“There is no job that is America’s 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 Times/12.14.2003
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
“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.”)
“Either we modernize or we will be modernized by the unremitting force of the markets.” —Gerhard Schroeder
-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
+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)
Source: “Where the Jobs Are”/NYT/05.13.2004/data 1994-2004
“Over the past 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 futile—trade 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. That’s where our
future lies.” —Michael Cox, Richard Alm and Nigel Holmes/“Where the Jobs Are”/NYT/05.13.2004
The “Intangibles Economy” Reaches Botswana
“Mma Ramotswe had a detective agency in Africa, at the foot of Kgale Hill. These were its assets: a tiny
white van, two desks, two chairs, a telephone, and an old typewriter. Then there was a teapot, in which Mma
Ramotswe—the only lady private detective in Botswana—brewed redbush tea. And three mugs—one for
herself, one for her secretary, and one for the client. What else does a detective agency really need? Detective agencies rely on human intuition and
intelligence, both of which Mma Ramotswe had in abundance. No inventory would ever include those, of course.” —Alexander McCall Smith, The No. 1 Ladies’ Detective Agency
“The era of ‘left brain’ dominance—and the
Information Age it engendered—Is giving way to a new world in which ‘right brain’ qualities—
inventiveness, empathy, meaning—will govern.” —Dan Pink, A
Whole New Mind
“The past few decades have belonged to a certain kind of person with a certain kind of mind—computer
programmers who could crank code, lawyers who could craft contracts, MBAs who could crunch
numbers. But the keys to the kingdom are changing hands. The future belongs to a very different kind of
person with a very different kind of mind—creators and empathizers, pattern recognizers and meaning makers.
These people—artists, inventors, designers, storytellers, caregivers, consolers, big picture thinkers—will now reap society’s richest rewards and share its
greatest joys.” —Dan Pink, A Whole New Mind
L-Directed Thinking: sequential, literal, functional, textual,
analyticto
R-Directed Thinking: simultaneous, metaphorical,
aesthetic, contextual, syntheticSource: Dan Pink/A Whole New Mind
“Left-brain style thinking used to be the driver, and right-brain style thinking the passenger. Now R-Directed Thinking is
suddenly grabbing the wheel, stepping on the gas, and determining where we’re
going and how we’re going to get there. L-Directed aptitudes—the kind measured by the SAT and employed by CPAs—are still
necessary. But they’re no longer sufficient.” —Dan Pink, A Whole New Mind
The Big Three Drivers of Change
Abundance
Asia
Automation
Source: Dan Pink, A Whole New Mind
“But abundance has also produced an ironic result: The very triumph of L-Directed Thinking has lessened its significance. The prosperity it has
unleashed has placed a premium on things that appeal to less rational,
more R-Directed sensibilities—beauty, spirituality, emotion.” —Dan Pink,
A Whole New Mind
Software’s Enormous Inroads
Docs
Lawyers
Accountants
Source: Dan Pink, A Whole New Mind
Agriculture Age (farmers)
Industrial Age (factory workers)
Information Age (knowledge workers)
Conceptual Age (creators and empathizers)
Source: Dan Pink, A Whole New Mind
Pentium III 800MHz: $42,893.00/#Hermes Scarf: $1,964.29
Saving Private Ryan on DVD: $874.75Mercedes-Benz: $18.98
Hot-rolled steel: $0.19
Source: Fortune (3.20.00)
“The MFA is the new
MBA.” —Dan Pink, A Whole New
Mind
“What does this mean for you and me? How can we prepare for the conceptual age? On one
level, the answer is straightforward. In a world tossed by Abundance, Asia and Automation, in a which L-Directed Thinking remains necessary
but no longer sufficient, we must become proficient in R-Directed Thinking and master aptitudes that are ‘high concept’ and ‘high touch.’ But on another level, that answer is
inadequate. What exactly are we supposed to do?” —Dan Pink, A Whole New Mind
Design.Story.
Symphony.Empathy.
Play.Source: Dan Pink, A Whole New Mind
“What I am really wanting to do is a design school, to teach the sensibility that
goes into the building of a business into a company with
a point of view.” —Ralph Lauren, International Herald Tribune/09.16.2004
Not just function, but also … DESIGN.Not just argument, but also … STORY.Not just focus, but also … SYMPHONY.
Not just logic, but also … EMPATHY.Not just seriousness, but also … PLAY.
Source: Dan Pink, A Whole New Mind
Jobs Technology
Globalization War, Warfighting &
Security
“Behind Surging Productivity: The Service
Sector Delivers. Firms Once Thought Immune to
Boosting Worker Output Are Now Big Part of the Trend” —
Headline/WSJ/11.03
“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 (01.28.02)
“UPS used to be a trucking
company with technology. Now it’s a technology
company with trucks.” —Forbes
<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
“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 Focus
“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 History
“I genuinely believe we are living through the greatest intellectual moment in history.”
Matt Ridley, Genome
“In 25 years, you’ll 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&T] [Barron’s 11.13.2000]
“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/Wired11.02
“Sequenom has industrialized the SNP [single nucleotide polymorphisms] identification
process.” “This, I’m 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 Wal*Mart, as easy to use as home-pregnancy tests.” “You can’t look at humanity separate from machines; we’re so intertwined we’re
almost the same species, and the difference is getting smaller.”
“Help! There’s nobody in the cockpit. In the future, will the
airlines no longer need pilots?”
Grumman Global Hawk/ 24 hours/ Edwards to South
Australia
Source: The Economist/12.21.2002
“There’s 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 Laboratories
Jobs Technology
Globalization War, Warfighting &
Security
“Reuters Plans To Triple Jobs at Site In India” —Headline/
New York Times/ World Business/10.08.04/10% of total workforce in Bangalore by 2006
“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 transfer of power from West to East is gathering pace
and soon will dramatically change the context for dealing with international challenges—
as well as the challenges themselves.” —James Hoge, editor, Foreign
Affairs, “A Global Power Shift in the Making: Is the United States Ready?”
“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
Cost of a Programmer, per IBM …
China: $12.50 per hourUSA: $56 per hour
Source: WSJ/01.19.2004
‘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: 19.1%
May ’03 to May ’04: 17.5%
Source: NYT/06.11.04
“China has become a manufacturing hub for the rest of the world in low-end labor-intensive goods—and 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 Affairs/Nov-Dec2003
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 Affairs/Nov-Dec2003
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 Affairs/Nov-Dec2003
200 cities with >1,000,000 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 (>50%: DVDs, digital cameras; >33.33%:
DVD-ROM drives, personal desktop and notebook computers; >25% 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:
America’s mass market is second to none.
Someday it will just be second.” —Headline, New York Times/12.14.2003
“As China becomes the world’s 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
“In China’s Countryside, Farmers Are Cultivating
Agribusiness Explosion as Subsidies Cut U.S. Export Dominance” —Headline/p1/WSJ
Europe/10.15.04
“Going Global: Flush with billions in foreign reserves,
China is embarking on a buying spree” —Cover/ Newsweek/ 03.01.04/ on
China’s aggressive offshore acquisition activity (buying brands,
technology, etc.)
Chinese Offshore Tourists
’93: 3M’03: 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 Times/12.14.2003
“Let China sleep, for when
she awakes she will shake the world.”
“Let China sleep, for when she awakes she will shake the world.” —Napoleon
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
“You get an educated workforce, remarkable infrastructure, a lot of
government support. These [Southeast Asian] governments have made life sciences a top priority—and
they have a great venture capital community there.” —Glenn Rice, VP Pharmaceutical
Discovery and Development, SRI International (On the rapid migration of drug discovery from the U.S. at a 20% to 40% cost saving Rice adds that 40%
to 60% of U.S. postdocs are from China and Taiwan) From: Stanford Business /August 2004
India
350,000 engineering grads per year
>50% F500 outsource software work to India
GE: 48% of software developed in India (Sign in GE India office: “Trespassers will be recruited”)
Source: Dan Pink, A Whole New Mind
“GE is a champion of India’s scientists, technicians, business analysts and
graduates, thousands of whom work at the U.S. conglomerate’s offshore service centers in India. They are the low-cost,
high capability vanguard of GE’s 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.” —FT/06.03.03
“Forget India, Let’s Go to Bulgaria” —Headline,
BW/03.04, re SAP, BMW, Siemens et al. “near-shoring”
“CLONING COLLEGE: South Korea’s
biomedical researchers, unhampered by politics, do world-class research
on the cheap” —Headline,
Newsweek/03.01.04
Support for Free Trade/>$100,000
1999: 57 %
2004: 28%Source: Dan Pink, A Whole New Mind
Jobs Technology
Globalization
War, Warfighting & Security
“The world’s 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 Century
“Al-Qaeda Said to have 18,000 Militants for
Raids”Source: 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
Century
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 communication—all of the things that promise an age of riches and creativity—could 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 Century
Reflect.
“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
“IT MAY SOMEDAY BE SAID THAT THE 21ST CENTURY BEGAN ON SEPTEMBER 11, 2001. …
“Al-Qaeda represents a new and profoundly dangerous kind of
organization—one that might be called a ‘virtual state.’ On September 11 a virtual
state proved that modern societies are vulnerable as never before.”—Time/09.09.2002
“The deadliest strength of America’s 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 won’t do it,’ he said. His answer is to develop swifter, more lethal ways
to fight. ‘Big institutions aren’t 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 Staff
“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 Limits.
“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 don’t
talk to each other.”Boston Globe (09.30.2001)
Eric’s Army
Flat.Fast.Agile.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 God/NYT/11.2003
“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
Hoon’s defense white paper (12.2003)
“Palmisano is pushing IBM’s 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 them—
by 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
Boyd
OODA Loop/Boyd Cycle“Unraveling 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)
At the heart of Boyd’s thinking is an idea labeled “OODA Loops.” OODA stands for the Observe-Orient-Decide-Act cycle. In short, the player with the quickest OODA Loops disorients the enemy to an extreme degree. In the world of aerial combat, for example, the confused adversary subjected to an opponent with short OODA cycles often flies into the ground rather than becoming the victim of machine gun fire or a missile. Boyd is careful to distinguish between raw speed and maneuverability. In aerial dogfighting in Korea (Boyd’s incubator), Soviet MiGs flown by Chinese pilots were faster and could climb higher, but our F-86 had “faster transients”—it could change direction more quickly; hence our technically inferior craft (by conventional design standards) achieved a 10:1 kill ratio.
“Fast Transients”
“Buttonhook 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/10:1
Bubble 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 maneuvers”BOYD: The Fighter Pilot Who Changed the Art of War (Robert Coram)
“Maneuverists”
BOYD: 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
S.A.V.
“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 stasis—a regulated, engineered world? Or do we embrace dynamism—a 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
“Let’s compete—by 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 (Time/03.01.04)
The Winning Edge: Peters’ Big6
1. 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 Emperor Has No Clothes!
“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.
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
BUILT TO … DETERIORATE!
“When it comes to investing, I am old school. Buy a good stock, stick it in the drawer and when you check back years later the stock should be worth more. There’s only one problem. When I checked the drawer
recently it was full of clunkers, including Lucent, down 94 percent from its 1999 high. Maybe once upon a time buy and hold was a viable strategy.
Today, it no longer makes sense.”—Charles Stein/ “Investment Strategies Must Shift with Realities”/Boston Globe/10.10.04
A sample of Stein’s “Blue Chip-turned-clunker” examples: Fannie Mae (featured in Collins’ Good to Great). Coke. (“Clunker,” make that
“Stinker.”) Merck. (The mightiest fall—stock down 63 percent since 2000; tumble preceded Vioxx) Uh … Microsoft. (“Microsoft’s stock price is no
higher today than it was in 1998.”)
“It is not clear there is such a thing as a ‘Blue Chip,’” Shawn Kravetz, president of Boston-based hedge fund Esplanade Capital, told Stein. “Kravetz’s point is a serious one,” Stein continues. “Greatness is not
permanent. … This process of creative destruction isn’t new. But with the world moving ever faster, and with competition on steroids, the quaint
notion of buying and holding is hopelessly out of step.”
“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
“It’s just a fact: Survivors underperform.”
—Dick Foster
“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 flourish—and 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 apocalypse—the transition from a state of continuity to state of discontinuity—has the same suddenness [as the trauma that beset civilization in
1000 A.D.]”
Richard Foster & Sarah Kaplan, “Creative Destruction” (The McKinsey Quarterly)
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
“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
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
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: I’m sure there are success stories
out there, but at this moment I draw a blank.”
Mark Sirower, The Synergy Trap
“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
“Mergers and acquisitions get the headlines, but studies show they often end up destroying shareholder
value instead of creating it. That’s 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 S&P500, the Organic Growth
Index beat the S&P500 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 S&P500, 25% vs. 3%.” —Fortune.com/06.03.2004 (The OGI includes
Wal*Mart, Sysco, Harley-Davidson, Bed, Bath & Beyond, NVR)
Re-imagine General Electric
“wELCH was to a large degree a growth-by-acquisition man. ‘In the late ’90s,’ Immelt says, ‘we became
business traders, not business growers. Today organic growth is absolutely the biggest task of everyone of
our companies. If we don’t hit our organic growth
targets, people are not going to get paid.’ … Immelt has staked GE’s future growth on the force
that guided the company at it’s birth and for much of its history: breathtaking, mind-
blowing, world-rattling technological innovation.” —“GE Sees the Light”/Business 2.0/July 2004
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
Market Share, Anyone?
240 industries: Market-share
leader is ROA leader 29% of
the time
Source: Donald V. Potter, Wall Street Journal
“I don’t believe in
economies of scale. You don’t get better by being bigger. You get worse.” —Dick Kovacevich/
Wells Fargo/Forbes08.2004 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%; J.P. Morgan Chase, 0.9%)
“Welch was to a large degree a growth-by-acquisition man. ‘In the late ’90s,’ Immelt says,
‘We became business traders, not business growers. Today organic growth is absolutely
the biggest task of everyone of our companies.
If we don’t hit our organic growth targets, people are not going to get
paid.’ … Immelt has staked GE’s future growth on the force that guided the company at it’s
birth and for much of its history: breathtaking, mind-blowing, world-rattling technological
innovation.” —“GE Sees the Light”/Business 2.0/July 2004
Total Enterprise Revision
“Not optional”
Total “Value proposition” revision: “Not optional”
“All-the-way” IS/IT solutions: “Not optional”
Full-scale globalization: “Not optional”
Work done where it best makes sense: “Not optional”
“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/Survival of the Fittest Not the Fattest”/John Kay/FTFT03.27.200303.27.2003
“I 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. [Nature’s] process is the exact opposite: one of growth, fragmentation and dispersal. There is no
megalomania, no merging for merging’s sake. The point is that unlike corporations, which just get bigger, bee colonies know when the time has come to split up into
smaller colonies which can grow value faster. What the bees are telling us is that the corporate
world has got it all wrong.”David Lascelles, Co-director of The Centre for the
Study of Financial Innovation [UK]
“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. America’s 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 Politics
TP on Acquisitions
1. 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 size—if Great & Focused—can 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 understand
Source: “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. That’s why they will
most likely be wrong.”Vinod Khosla, in “GIGATRENDS,” Wired 04.01
The Gales of Creative Destruction
+29M = -44M + 73M
+4M = +4M - 0M
“The secret of fast progress is
inefficiency, fast and furious and numerous
failures.”Kevin Kelly
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 you’re 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 (03.02)
“... 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 & innovation.
“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 rose’s ‘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
resources—the 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
“We don’t see Pele’s work as destruction but as
cleansing. She’s a creator. When she comes through she wipes the land clean and leaves us new fertile
ground.” —Keola Hanoa, on the Big Island’s volcanoes (National Geographic/10.04)
Only One Big Issue …
“People think the president has to be the main organizer. No, the president is the
main dis-organizer. Everybody ‘manages’ quite well; whenever anything goes wrong,
they take immediate action to make sure nothing’ll go wrong again. The problem is,
nothing new will ever happen, either.”* —Harry Quadracci, Quad/Graphics
*Beware ICD/Inexorable Centralist Drift—TP
“The sun is setting on the Information Society—even before we have fully adjusted to its demands as individuals and as
companies. We have lived as hunters and as farmers, we have worked in factories and now we live in an information-based
society whose icon is the computer. We stand facing the fifth kind of society: the Dream Society. … The Dream Society is emerging this very instant—the shape of the future is visible today. Right
now is the time for decisions—before the major portion of consumer purchases are made for emotional, nonmaterialistic
reasons. Future products will have to appeal to our hearts, not to our heads. Now is the time to add emotional value to products and services.” —Rolf Jensen/The Dream Society:How the Coming Shift from
Information to Imagination Will Transform Your Business
Japan’s Science Gap *
Rice farming culture: uniqueness suppressed. Gov’t 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 Hamel
“Sell By” [jettison old crap]
Spin Out [support entrepreneurs]
Spin In [buy young firms]
No Wiggle Room!
“Incrementalism is innovation’s worst enemy.”
Nicholas Negroponte
Just Say No …
“I don’t 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
Sysco!
“Never bite off less than
you can chew” —Freddy Adu, teenage soccer phenom (from Audi’s
“Never Follow” Website)
“Learn not to be
careful.”
—Photographer Diane Arbus to her students (Careful = “The sidelines,” per Harriet Rubin in The Princessa)
“[At Pfizer, Merck, Unilever, Nestle] and other companies, the standard stage-gate approach to
product development has become ingrained that it has driven out the very innovative thinking that it was designed to encourage. And while the returns on
innovation effort appear to be falling for large companies, it is often the unheralded start-up or new entrant that comes up with the latest hit product. …
Thus, Coca-Cola, once celebrated for its innovation and vision, has been late to every new trend in the drinks
industry in the past decade, from sports drinks to bottled water.” —Julian Birkenshaw, Rick Delbridge & John Bessant,
“A Leap into the Unknown,” FT/09.17.04
Bottom line: No promotion to senior levels of public or private enterprise should ever again be granted to anyone who does not present a CV saturated by a clear and compelling demonstration of sustained commitment to Radical Change. Do we wish for “good strategists”? Why not! But the heart of the matter goes far beyond any plan, no matter how brilliant. The heart of the matter is Heart & Will ... a record of upsetting apple carts, dislodging “establishments,” and fundamentally altering deep-rooted “cultures” to embrace change of the most primal sort. I titled my most recent book Re-imagine! Business Excellence in a Disruptive Age. “Excellence” in a “disruptive age” is not excellence amidst placid waters. The notion of excellence itself changes ... dramatically. We need our public and private Churchills, leaders who can re-imagine, who can call forth wellsprings of daring and guts and spirit and spunk, from one and all, to topple the way things may have been for many generations—and who inspire us to venture forth into today’s and tomorrow’s whitewaters with insouciance and bravado and determination.
Do you understand business mantra #1 of
the ’00s: DON’T TRY TO COMPETE WITH
WAL*MART ON PRICE OR CHINA ON COST?
The Case for IPMs (Itinerant Potential Machines)
“It is almost impossible to take action to prevent something that hasn’t
occurred previously” —Judge Richard Posner, “The 9/11 Report: A Dissent”/New York
Times
2A. Re-imagine Tomorrow’s
Organizations:
Itinerant Potential Machines.
TALENT POOL TO DIE FOR. Youthful. Insanely energetic. Value creativity. Risk taking is routine. Failing is normal … if you’re stretching. Want to “make their
bones” in “the revolution.”Love the new technologies. Well rewarded. Don’t plan to
be around 10 years from now.
TALENT POOL PLUS. Seek out and work with “world’s best” as needed (it’s often
needed). “We aim to change the world, and we need gifted colleagues—who well may
not be on our payroll.”
BRASSY-BUT-GROUNDED-LEADERSHIP. Say “I don’t know”—and then unleash the TALENT.
Have a vision to be DRAMATICALLY DIFFERENT—but don’t expect the co. to be around forever. Will scrap pet projects, and change course 180
degrees—and take a big write-off in the process. NO REGRETS FROM SCREW-UPS WHOSE TIME
HAS NOT-YET-COME. GREAT REGRETS AT TIME & $$$ WASTED ON “ME TOO” PRODUCTS
AND PROJECTS.
BRASSY-BUT-GROUNDED-LEADERSHIP. (Cont.) “Visionary” leaders matched by leaders with
shrewd business sense: “HOW DO WE TURN A PROFIT ON THIS GORGEOUS IDEA?”
Appreciate “market creation” as much as or more than “market share growth.” ARE
INSANELY AWARE THAT MARKET LEADERS ARE ALWAYS IN PRECARIOUS POSITIONS,
AND THAT MARKET SHARE WILL NOT PROTECT US, IN TODAY’S VOLATILE WORLD,
FROM THE NEXT KILLER IDEA AND KILLER ENTREPRENEUR. (Gates. Ellison. Venter.
McNealy. Walton. Case. Etc.)
ALLIANCE MANIACS. Don’t assume that “the best resides within.” WORK WITH A
SHIFTING ARRAY OF STATE-OF-THE-ART PARTNERS FROM ONE END OF THE “SUPPLY CHAIN” TO THE OTHER.
Including vendors and consultants and … especially … PIONEERING CUSTOMERS …
who will “pull us into the future.”
TECHNOLOGY-NETWORK FANATICS. Run the whole-damn-company, and relations with all
outsiders, on the Internet … at Internet speed. Reluctant to work with those who don’t share
this (radical) vision.
POTENTIAL MACHINES-ORGANISMS. Don’t know what’s coming next. But are ready to jump at opportunities, especially those that challenge-overturn our own “way of doing
things.”
The SE17: Origins of Sustainable
Entrepreneurship
SE17/Origins of Sustainable Entrepreneurship
1. Genetically disposed to Innovations that upset apple carts (3M, Apple, FedEx, Virgin, BMW, Sony, Nike, Schwab,
Starbucks, Oracle, Sun, Fox, Stanford University, MIT)2. Perpetually determined to outdo oneself, even to the
detriment of today’s $$$ winners (Apple, Cirque du Soleil, Microsoft, Nokia, FedEx)
3. Love the Great Leap/Enjoy the Hunt (Apple, Oracle, Intel, Nokia, Sony)
4. Culture of Outspoken-ness (Intel, Microsoft, FedEx, CitiGroup, PepsiCo)
5. Encourage Vigorous Dissent/Genetically “Noisy” (Intel, Apple, Microsoft)
SE17/Origins of Sustainable Entrepreneurship
6. “Culturally” as well as organizationally Decentralized (GE, J & J, Omnicom)7. Multi-entrepreneurship/Many Independent-minded Stars (GE, Time Warner)8. Keep decentralizing—tireless in pursuit of wiping out Centralizing Tendencies (J & J, Virgin)9. Scour the world for Ingenious Alliance Partners—especially exciting startups (Pfizer)10. Don’t overdo “pursuit of synergy” (GE, J & J, Time Warner)11. Find and Encourage and Promote Strong-willed/ Independent people (GE, PepsiCo)12. Ferret out Talent … anywhere and everywhere/ “No limits” approach to retaining top talent (Nike, Virgin, GE, PepsiCo)
SE17/Origins of Sustainable Entrepreneurship
13. Unmistakable Results & Accountability focus from the get-go to the grave (GE, New York Yankees, PepsiCo)14. Up or Out (GE, McKinsey, big consultancies and law firms and ad agencies and movie studios in general)15. Competitive to a fault! (GE, New York Yankees, News Corp/Fox, PepsiCo)16. “Bi-polar” Top Team, with “Unglued” Innovator #1, powerful Control Freak #2 (Oracle, Virgin, old Raychem) (God help you when #2 is missing: Enron)17. Masters of Loose-Tight/Hard-nosed about a very few Core Values, Open-minded about everything else (Virgin)
2B. Yo, Jim Collins . Or:
Tom’s Case for …
Technicolor!
“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 JCollins/10.03
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/ Adventurers
US Steel … Ford … Macy’s … Sears … Litton Industries … ITT … The Gap … Limited … Wal*Mart … P&G … 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 Flip
“The problem with Built to Last is that it’s a romantic notion. Large companies are
incapable of ongoing innovation, of ongoing flexibility.”
“Increasingly, 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 flourish—and 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 apocalypse—the transition from a state of continuity to state of discontinuity—has the same suddenness [as the trauma that beset civilization in
1000 A.D.]”
Richard Foster & Sarah Kaplan, “Creative Destruction” (The McKinsey Quarterly)
BUILT TO … DETERIORATE!
“When it comes to investing, I am old school. Buy a good stock, stick it in the drawer and when you check back years later the stock should be worth more. There’s only one problem. When I checked the drawer
recently it was full of clunkers, including Lucent, down 94 percent from its 1999 high. Maybe once upon a time buy and hold was a viable strategy.
Today, it no longer makes sense.”—Charles Stein/ “Investment Strategies Must Shift with Realities”/Boston Globe/10.10.04
A sample of Stein’s “Blue Chip-turned-clunker” examples: Fannie Mae (featured in Collins’ Good to Great). Coke. (“Clunker,” make that
“Stinker.”) Merck. (The mightiest fall—stock down 63 percent since 2000; tumble preceded Vioxx) Uh … Microsoft. (“Microsoft’s stock price is no
higher today than it was in 1998.”)
“It is not clear there is such a thing as a ‘Blue Chip,’” Shawn Kravetz, president of Boston-based hedge fund Esplanade Capital, told Stein. “Kravetz’s point is a serious one,” Stein continues. “Greatness is not
permanent. … This process of creative destruction isn’t new. But with the world moving ever faster, and with competition on steroids, the quaint
notion of buying and holding is hopelessly out of step.”
Warren Bennis & Patricia Ward Biederman/
Organizing Genius: Great Groups Don’t
Last Very Long!
W.A. Mozart W.A. Mozart 1756 – 17911756 – 1791
HE CHANGED THE WORLDHE CHANGED THE WORLD
AND AND
ENRICHED HUMANITY ENRICHED HUMANITY
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
WellingtonNelsonDisraeliChurchill
MontgomeryThatcher
“Humble” Pastels?
T. Paine/P. Henry/A. Hamilton/T. Jefferson/B. FranklinA. Lincoln/U.S. Grant/W.T. Sherman
TR/FDR/LBJ/RR/JFKPatton/Monty/Halsey
M.L. King/C. de Gaulle/M. Gandhi/W. ChurchillPicasso/Mozart/Copernicus/Newton/Einstein/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 Quindlen/Newsweek
“Men with no vices have very few virtues.” —A. Lincoln
Jim Collins vs. Michael Maccoby
“quiet, workmanlike, stoic”vs.
“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 History’s Greatest Scientific Discoveries
“In Italy for 30 years under the Borgias they had warfare, terror, murder,
bloodshed—and produced Michelangelo, da Vinci and the
Renaissance. In Switzerland they had brotherly love, 500 years of democracy and peace, and what did they produce
—the cuckoo clock.”
Orson Welles, as Harry Lime, in The Third Man
II. NEW BUSINESS. NEW TECH.
3. Re-imagine Organizing I:
IS/IT Leads the (Virtual) Way!
“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 can’t even glimpse IT’s potential in changing the way people work and live.” —Andy Grove
(BusinessWeek/August 2003)
100 square feet
Dell’s OptiPlex Facility
Big Job: 6 to 8 hours.(80,000 per day)
Parts Inventory: 100 square feet.
Productivity!
McKesson 2002-2003: Revenue … +$7B
Employees … +500
Source: USA Today/06.14.04
“Invisible Supplier Has Penney’s 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 it’s all integrated—from the lab to X-ray to records to physician order entry. Patients don’t have to wait for anything. The information from the physician’s office is
in registration and vice versa. The referring physician is immediately sent an email telling him his patient has shown up. … It’s wireless in-house. We have 800 notebook computers that are wireless. Physicians can walk around with a computer that’s
pre-programmed. If the physician wants, we’ll 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)
“MIT Everyware: EVERY LECTURE, EVERY QUIZ, ALL ONLINE, FOR
FREE. MEET THE GLOBAL GEEKS GETTING AN MIT EDUCATION,
OPEN SOURCE-STYLE.” —Headline/Wired/09.03
“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
“The mechanical speed of combat vehicles has not
increased since Rommel’s 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”: X1,000,000
TowTruckNet.com
e-piphany
epicurious.com
“Passionate amateurs, empowered by technology and linked to one another, are reshaping business,
politics, science and culture.” —Charles Leadbeater/Fast
Company/10.2004
“flash mobs” (!)
Impact No. 1/ Logistics &
Distribution: Wal*Mart … Dell … Amazon.com …
Autobytel.com … FedEx … UPS … Ryder …
Cisco … Etc. … Etc. … Ad Infinitum.
Autobytel: $400.
Wal*Mart: 13%.Source: BW(05.13.2002)
WebWorld = Everything
Web as a way to run your business’s innardsWeb as connector for your entire supply-demand chain Web as “spider’s web” which re-conceives the industry
Web/B2B as ultimate wake-up call to “commodity producers”
Web as the scourge of slack, inefficiency, sloth, bureaucracy, poor customer data
Web as an Encompassing Way of LifeWeb = Everything (P.D. to after-sales)
Web forces you to focus on what you do bestWeb as entrée, at any size, to World’s Best at Everything
as next door neighbor
“There’s no use trying,” said Alice. “One can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was
your age, I always did it for half an hour a day. Why, sometimes I’ve
believed as many as six impossible things before breakfast.”
Lewis Carroll
I’net …
… allows you to dream dreams
you could never have dreamed
before!
“Suppose—just suppose—that the Web is a new world we’re just beginning to inhabit. We’re like the earlier European settlers in the United States, living on the
edge of the forest. We don’t know what’s there and we don’t 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 doesn’t hold
here, and uncommon sense hasn’t 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
technologies.
Message: There is no such thing as an effective B2B or
Internet-supply chain strategy in a low-trust,
bottlenecked-communication, six-layer
organization.
“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
“Most of what I see is elimination
of the middle people.” —Lee Scott, CEO, Wal*Mart, on
the relentless drive to even further reduce costs (Christmas tree lights at Asda v. Wal*Mart USA: $21 v $6, same factory)
Brand Inside Rules!
“If I could have chosen not to tackle the IBM culture head-on, I probably
wouldn’t 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 Can’t Dance?
“I came to see in my time at IBM that
culture isn’t just one aspect of the game—it is the game” —Lou Gerstner,
Who Says Elephants Can’t Dance?
Read It Closely: “We don’t sell
insurance anymore. We sell speed.”
Peter Lewis, Progressive
The New Infantry Battalion/New York Times/12.01.2002
“Pentagon’s 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 Manifesto
[ 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]
IS/IT is strategy!
5% F500 have CIO on Board: “While some of the world’s
most admired companies—Tesco, Wal*Mart—are transforming the business
landscape by including technology experts on their boards, the vast majority are
missing out on ways to boost productivity, competitiveness and shareholder value.”
Source: Burson-Marsteller
3A. Re-imagine IS/ IT/ the Web:
Direct!
Nexus/Confluence
Self-serviceOwnership Society
Brand You1t1
“The Web enables total transparency. People with
access to relevant information are beginning to challenge any type of
authority. The stupid, loyal and humble customer, employee, patient
or citizen is dead.”
Kjell Nordström and Jonas Ridderstråle, Funky Business
“Parents, doctors, stockbrokers, even military leaders are starting to
lose the authority they once had. There are all these roles premised on access to privileged information. …
What we are witnessing is a collapse of that advantage,
prestige and authority.”Michael Lewis, next
Amen!
“The Age of the
Never Satisfied Customer”
Regis McKenna
Anne Busquet/ American Express
Not: “Age of the Internet”
Is: “Age of Customer Control”
“A seismic shift is underway in healthcare. The Internet is
delivering vast knowledge and new choices to consumers—raising their
expectations and, in many cases, handing them the controls.
[Healthcare] consumers are driving radical, fundamental change.”
Deloitte Research, “Winning the Loyalty of the eHealth Consumer”
TP’s July “Journey to Direct”
-- infoUSA Client Conference/DBM-- Chairman/DNC-- Wired on Arnold/Howard/moveon.org-- BzzAgent.com and TPC--Guerilla PR Wired: Waging a Successful Publicity Campaign Online, Offline, and Everywhere in Between/Michael Levine (TP starts blogging)-- My Dinner With … party planning consultants-- 15,000 WFGers
MassNarrowcast
1t1: DBM/CRM1t1: Web
1t1: Direct Mail/Telemarketing1t1: Door-to-door Reps-Parties/MLM
Growth Projections: 2003-2010
Narrowcast media … 13.5%Mass media … 3.5%
Source: Sanford C. Bernstein & Co
Narrowcast World …
Infomercials … $256 billion Quantity … 250,000 per month (U.S. & Canada) Growth rate … 10% p.a. Purchases … $91 billion Price … $50/30-minutes to $15,000/30 min Source: Washington Post/092604
440 new consumer mags in 2003/10% of 6,200 total mags are general
interest, down from 30% in 1980 —Samir Husni/U. Miss/BW0704
“It’s not size that counts most, but the ability to deliver someone elusive to
advertisers.” —Mary Berner/CEO/Fairchild Publications/2003: W Jewlery to 75,000 of W’s 469,000
subscribers who spend >$60,000 a year on jewelry
“Money that used to go for 30-second network spots now pays for closed-circuit sports programming piped into Hispanic bars and for ads in Upscale, a custom-
published magazine distributed to black barbershops. … ‘We are a big marketer—
we are not a mass marketer,’ says Lawrence Light, McDonald’s chief
marketing officer.” —BW/0704
“Monolithic blocks of eyeballs are gone. In their place is a
perpetually shifting mosaic of audience micro-segments that
forces marketers to play an endless game of hide-and-seek.” —Eric Schmitt/Forrester Research/
BW(0704)
“If you go back 40 years, people wanted to be identified as normal. So they wanted the most popular car and
the most popular color. From the consumer point of view, we’ve had a
change from ‘I want to be normal’ to ‘I want to be special’.” —Lawrence Light, Global
Chief Marketing Officer, McDonald’s (BW/07.04)
“If we look over just the last half-dozen years, our media mix has shifted in the U.S. from two-thirds on prime-time network TV to two-thirds not on prime-time
network.” —Lawrence Light, Global Chief Marketing Officer, McDonald’s (BW/07.04)
“The old days of advertising vs. promotion vs. merchandising vs. display vs. events—
that’s a mindset that has to disappear. It’s all promotion. The purpose is to elevate the brand perception in the
customer’s mind. A T-shirt is a medium, a package is a print ad, it’s not just a
container; we think about a store design as outdoor advertising.” —Lawrence Light, Global Chief
Marketing Officer, McDonald’s (BW/07.04)
Q/BW : Do you think the mass market is a thing of the past?
A/Lawrence Light, McD’s Global CMO: The answer is yes. … What has changed is technology has facilitated our ability to reach people on a more customized, more personalized basis. That’s a revolution.
Old New
Consumers Couch potatoes, passively Empowered media users control receive whatever the and shape the content, thanks networks broadcast to TiVo, iPod and the Internet Aspirations To keep up with the crowd To stand out from the crowd TV Choice Three networks plus a Hundreds of channels, plus PBS station, maybe video on demand
Magazines Age of the big glossies: Age of the special interest: Time, Life, Look and A magazine for every hobby Newsweek and affinity group
Ads Everyone hums the Talking to a group of one: Alka-Seltzer jingle Ads go ever narrower
Brands Rise of the big, ubiquitous Niche brands, product extensions brands, from Coca-Cola and mass customization mean to Tide lots of new variations
Source: BusinessWeek/07.12
Direct Selling’s Potent Promise
-- “This industry is global and is growing exponentially.” —Roger Barnett, investment banker specializing in direct
selling
-- DSA: 175,000 Americans sign up per week (475,000 world wide)
-- All industries (wellness, telecoms, financial services … Crayola’s Big Yellow Box)
-- Global: Avon, 70%; Tupperware, 75%; China & India huge
-- MLM’s share of direct selling: 56% in 1990 to 82% in 2003
Case: CRM
“CRM has, almost universally, failed
to live up to expectations.”
Butler Group (UK)
No! No! No! FT: “The aim [of CRM] is to make customers feel as they did in the pre-
electronic age when service was more personal.”
Psych 101: Strongest Force on Earth?
My need to be in perceived control of my universe!
CGE&Y (Paul Cole): “Pleasant
Transaction” vs. “Systemic Opportunity.” “Better job
of what we do today” vs. “Re-think overall
enterprise strategy.”
Here We Go Again: Except It’s Real This Time!
Bank online: 24.3M (10.2002); 2X Y2000.
Wells Fargo: 1/3rd; 3.3M; 50% lower
attrition rate; 50% higher growth in balances than off-line; more likely to cross-purchase; “happier and stay
with the bank much longer.”
Source: The Wall Street Journal/10.21.2002
DIM/Self-service Rules!
ATMsCheckoutPhones
SpeedpassThe Web (eBay, Amazon,
Travelocity, Mapquest, banking et al.)HR, Project management, etc.
Minus 1.3M secretaries
MinuteClinic: “Next to the Express Checkout,
Express Medical Care”
Source: Headline/NYT/07.18.04 (on MinuteClinic at Targets and Cub Foods stores in Minneapolis
Self-serve Nation!
Radisson: check-in via Web up to 1-week prior to arrival
Holiday Inn: computer menu, also keeps track bill and a running total of calories
and carbs
Hilton: roaming check-in clerks, WiFi-enabled
Source: USA Today/08.31.04
“The latest mobiles, on sale for $200 to $300 in Japan, function as wallets, letting people pay
their utility bills or buy movie tickets by putting their handset near a reader. … New I-mode
phones also have a bar-code-reading camera that people can point at the bar code on a
magazine or poster, taking them straight to the Website with updated and detailed information on, say, a concert or a discount sale.” —“Super
Phone: Kei-Ichi Enoki, a founding father of the mobile Web, is moving beyond email and games to make the phone a remote
control for living” (Forbes Global/09.20.2004)
Welcome to D.I.Y. Nation: “Changes in business processes will emphasize self service. Your costs as a business
go down and perceived service goes up because
customers are conducting it themselves.” Ray Lane, Oracle
4. Re-imagine Jobs: The White
Collar Bloodbath.
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
108 X 5vs.
8 X 1= 540 vs. 8 (-98.5%)
E.g. …
Jeff Immelt: 75% of “admin, back room, finance” “digitalized” in
3 years.
Source: BW (01.28.02)
“The coefficient of friction associated with the grunge of business
is amazing!”Michael Schrage
“A bureaucrat is an expensive
microchip.”Dan Sullivan, consultant and
executive coach
IBM’s Project
eLiza!** “Self-bootstrapping”/ “Artilects”
Deep Blue Redux*: 2,240 EKGs … 1,120 heart attacks.
Hans Ohlin (50 yr old chief of coronary care, Univ of
Lund/SW) : 620. Lars Edenbrandt’s
software: 738.
*Only this time it matters!
Probable parole violations: Simple model (age, # of previous offenses, type of crime)
beats M.D. shrinks.
100 studies: Statistical formulas > Human
judgment. “In virtually all cases, statistical thinking
equaled or surpassed human judgment.”—Atul Gawande,
Complications
“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 Focus
“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
“The virtual corporation is research, development, design, marketing, financing, legal, and
other headquarters functions with few or no manufacturing
capabilities – a company with a head but no body.”
Richard Rosecrance, The Rise of the Virtual State
Ford: “Vehicle brand owner” (“design, engineer, and
market, but not actually make”)
Source: The Company, John Micklethwait & Adrian Wooldridge
“P&G Hires Out Employee Services to IBM” —Burlington Free Press/09.10.03/
on IBM’s 10-year, $400M contract with P&G (P&G farmed out IT to HP in May, Facilities to
Jones Lang LaSalle in June)
“WHERE IS YOUR JOB GOING”: writing software, designing chips,
reading MRIs, processing mortgages, preparing tax returns, managing
computer networks (etc: GE Capital’s 15,000 in Delhi), preparing PP slides
for McKinsey (350 in Chennai), equity analysis of U.S. companies (Morgan
Stanley) …Source: Fortune/11.24.03
I was described in public as a “radical” by a senior Japanese official, during a Summer 2004 conference in Nagano. (Actually, which I guess even amplifies the label, he was a Japanese-
American, who spent much of his career in Silicon Valley.) I retorted sharply that I was no such animal! Alas, he’d been taking detailed notes during my presentation. “But didn’t you say you could readily imagine a $50 billion corporation, perhaps in pharmaceuticals, which had only two full-time employees—you and one other. And ‘outsourced’ everything else?” Then he added that “one of the two would, of course, be a woman.”
No Limits?
“Short on Priests, U.S. Catholics Outsource Prayer to Indian Clergy” —Headline, New York
Times/06.13.04 (“Special intentions,” $.90 for Indians, $5.00 for Americans)
07.04/TP In Nagano …
Revenue: $10B
FTE: 1*
*Maybe
Not “out sourcing”Not “off shoring”
Not “near shoring”Not “in sourcing”
but …
“Best Sourcing”
III. NEW BUSINESS. NEW
VALUE PROPOSITION.
5. Re-imagine the Organization: The
Professional Service Firm (“PSF”) Imperative.
Sarah: “ Daddy, what do you do?”
Papa: “I manage a ‘cost center.’ ”
Sarah: “ Papa, what do you do?”
Papa: “I’m ‘overhead.’ ”
Sarah: “ Daddy, what do you do?”
Papa: “I’m a ‘bureaucrat.’ ”
Job One: Getting (WAY) beyond the
“Cost center,” “Overhead” mentality
So what will be the Basic Building
Block of the New Org?
Every job done in W.C.W. is
also done “outside”
…for profit!
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
TP to NAPM: You are the …
Rock Stars of the
B2B Age!
“P.S.F.”: Summary
H.V.A. Projects (100%)Pioneer Clients
WOW Work (see below)Hot “Talent” (see below)“Adventurous” “culture”
Proprietary Point of View (Methodology)W.W.P.F. (100%)/Outside Clients (25%++)
When: Now!
BMW’s Designworks/USA:
>50% from outside work
G.M. = The Recruitment and Development of Top Talent.
[Period!]
V.C. = Bets on “Talent.” Bets on Projects. [Period!]
Dept. Head I = Sports G.M.
Dept. Head II = V.C.
eHR*/PCC***All HR on the Web
**Productivity Consulting Center
Source: E-HR: A Walk through a 21st Century HR Department, John Sullivan, IHRIM
Model PSF …
(1) Translate ALL departmental activities into discrete W.W.P.F. “Products.”(2) 100% go on the Web.
(3) Non-awesome are outsourced (75%??).
(4) Remaining “Centers of Excellence” are retained & leveraged to the hilt!
“Typically in a mortgage company or financial services company, ‘risk
management’ is an overhead, not a revenue center. We’ve become more
than that. We pay for ourselves, and we
actually make money for the company.” —Frank
Eichorn, Director of Credit Risk Data Management Group, Wells Fargo Home Mortgage (Source: sas.com)
6. Re-imagine Business’
Basic Value Proposition: PSFs Unbound/ The
“Solutions Imperative.”
Base Case: The Sameness Trap
“While everything may
be better, it is also increasingly the same.”
Paul Goldberger on retail, “The Sameness of Things,” The New York Times
“When we did it ‘right’ it was still pretty ordinary.”
Barry Gibbons on “Nightmare No. 1”
Fight ’til Death!
“I thought, ‘What a dreadful mission I have in life.’ I’d love to get six-thousand restaurants up to
spec, but when I do it’s ‘Ho-hum.’ It’s bugged me ever since. It’s one of the great paradoxes of
modern business. We all know distinction is key, and yet in the last twenty years we have created a plethora of ho-hum products and services. Just
go fly in an airplane. It could be such an enlightening experience. Ho-hum. We swim in an
ocean of ho-hum, and I’m going to fight it. I’m going to die fighting it.”
— Barry Gibbons
Funky Business: “To succeed we must stop being so goddamn
normal. In a winner-takes-all world,
normal = nothing.”
“Customers will try ‘low cost
providers’ … because the Majors have not
given them any clear reason not to.”
Leading Insurance Industry Analyst
“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, Unique Now ... or Never
“This is an essay about what it takes to create and sell something remarkable. It is a plea for originality, passion, guts and daring. You can’t be remarkable by following someone else who’s remarkable. One way to figure
out a theory is to look at what’s working in the real world and determine what the successes have in common. But what could the Four Seasons and
Motel 6 possibly have in common? Or Neiman-Marcus and Wal*Mart? Or Nokia (bringing out new hardware every 30 days or so) and Nintendo
(marketing the same Game Boy 14 years in a row)? It’s like trying to drive
looking in the rearview mirror. The thing that all these companies have in common is that they have nothing in common. They are outliers. They’re on the fringes.
Superfast or superslow. Very exclusive or very cheap. Extremely big or extremely small. The reason it’s so hard to follow the leader is this: The
leader is the leader precisely because he did something remarkable. And that remarkable thing is now taken—so it’s no longer remarkable when you
decide to do it.” —Seth Godin, Fast Company/02.2003
“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
And the “M” Stands for … ?
Gerstner’s IBM: “Systems Integrator of choice.” (BW)
IBM Global Services: $35B
Rainmaker-in-Chief
“[Sam] Palmisano’s strategy is to expand tech’s borders by pushing
users—and entire industries—toward radically different business models. The payoff for IBM would be access to an ocean of revenue—Palmisano estimates it
at $500 billion a year—that technology
companies have never been able to touch.” —Fortune/06.14.04
“By making the Global Delivery Model both legitimate and mainstream, we have brought the battle to our territory. That is, after all, the purpose of strategy. We have become the leaders,
and incumbents [IBM, Accenture] are followers, forever playing catch-up. … However, creating a new business innovation is not
enough for rules to be changed. The innovation must impact clients, competitors, investors, and society. We have seen all
this in spades. Clients have embraced the model and are demanding it in even greater measure. The acuteness of their
circumstance, coupled with the capability and value of our solution, has made the choice not a choice. Competitors have been dragged kicking and screaming to replicate what we do.
They face trauma and disruption, but th game has changed forever. Investors have grasped that this is not a passing fancy, but a potential restructuring of the way the world operates and
how value will be created in the future.”
—Narayana Murthy, chairman’s letter, Infosys Annual Report 2003
+49%/profits
+52%/revenue
Source: WSJ/10.13.2004/“Infosys 2nd-Period Profit Rose Amid Demand for Outsourcing”
AT&T: President David Dorman: Back to long distance … but with “bundles of lucrative corporate services” for the likes of Merrill
Lynch, MasterCard, Hyatt. Consumer: Dump 25M subscribers
(50%)—hold on to high enders.
Source: BW/05.20.2002
Is There a There There: The Ericsson Case
1. 50+% Mfg to Solectron/Flextronics2. Substantial R&D to India3. Division for licensing technology4. JV with Sony on “crown jewel” handsets5. Net: “a wireless specialist that depends on services more than manufacturing, on knowledge more than metal”
Source: BW/11.04.02
Flextronics
--$14B; 100K employees; 60% p.a. growth (’93-’00)
-- “contract mfg” to EMS/Electronics Manufacturing Services (design, mfg, logistics,
repair); “total package of outsourcing solutions” (Pamela Gordon, Technology Forecasters)
-- “The future of manufacturing isn’t just in making things but adding value” (3,500 design
engineers)
Source: Asia Inc./02.2004
“Customer Satisfaction” to “Customer Success”
“We’re getting better at [Six Sigma] every day. But we really
need to think about the customer’s profitability. Are customers’
bottom lines really benefiting from what we provide them?”
Bob Nardelli, GE Power Systems
“We want to be the air traffic
controllers of electrons.”
Bob Nardelli, GE Power Systems
Keep In Mind: Customer
Satisfaction versus
Customer
Success
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
New York-Presbyterian: 7-year, $500M consulting (systemic) and equipment contract with
GE Medical Systems
Source: NYT/07.18.2004
E.g. …
UTC/Otis + Carrier: boxes to “integrated building systems”
Leased AC: Units of “Coolth”
New York-Presbyterian: 7-year, $500M consulting
(generic) and equipment contract with GE Medical
Systems
Source: NYT/07.18.2004
Staples
New CEO Ron Sargent: 2X to $20B, in face of Wal*Mart (et al.) via delivery and other
servicesSource: BusinessWeek/08.03
John Deere Landscapes: “This is our
future.”
“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)
“Big Brown’s New Bag: UPS Aims to Be the Traffic Manager
for Corporate America” —Headline/BW/07.19.2004
“SCS”/Supply Chain Solutions: 750 locations;
$2.5B; fastest growing division; 19 acquisitions,
including a bank
Source: Fast Company/02.04
“No longer are we only an insurance provider. Today,
we also offer our customers the products and services that help them
achieve their dreams, whether it’s financial security, buying a car, paying
for home repairs, or even taking a dream vacation.”—Martin Feinstein, CEO,
Farmers Group
“VISIONS OF A BRAND-NAME OFFICE EMPIRE. Sam Zell is not a man plagued by self doubt. Mr. Zell controls public
companies that own nearly 700 office buildings in the United States. … Now Mr. Zell says he will
transform the real estate market by turning those REITs into national brands. … Mr. Zell
believes [clients] will start to view those offices as something more than a commodity chosen chiefly by price and location.” –New York Times
(12.16.2001)
“We’re now entering a new phase of business where the group will be a
franchising and management company where brand management is central.”
—David Webster, Chairman, InterContinental Hotels Group
“InterContinental will now have far more to do with brand ownership than
hotel ownership.” —James Dawson of Charles Stanley
(brokerage)
Source: International Herald Tribune, 09.16, on the sacking of CEO Richard North, whose entire background is in finance
“ ‘Architecture’ is becoming a commodity.
Winners will be ‘Turnkey Facilities Management’
providers.”SMPS Exec
“We are a ‘real estate facilities consulting’ organization, not just
an ‘interior design’ firm.”
Jean Bellas, founder, SPACE (from SMPS Marketer)
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
Turnkey Nation/s
HP … Sun … Farmers Group … Northwestern Mutual Financial Network …
IBM … AT&T … Ericsson … GE Power Systems … GE Industrial Systems … Ford … Siemens … Home Depot …
Deere … UTC Otis … UTC Carrier … UPS … Springs Industries … RCI …
Equity Office Properties … Omnicom … India … Singapore … Etc.
Core Logic: (1) 108X5 to 8X1/ eLiza/ 100sf. (2)
Dept. to PSF/ WWPF. (3) V.A. via PSFs Unbound/ “Solutions”/ “Customer
Success.”
6A. Re-imagine Organizational Barriers: The
Solutions25.**NO MORE “SILOS.” NO MORE
“STOVEPIPES.”
1. It’s the (OUR!) organization, stupid!2. Friction free! 3. No STOVEPIPES!4. “Stovepiping” is a F.O.—Firing Offense.5. ALL on the web! (ALL = ALL.)6. Open access!6. Project Managers rule! (E.g.: Control the purse strings and evals.)7. VALUE-ADDED RULES! (Services Rule.) (Experiences Rule.) (Brand Rules.)8. SOLUTIONS RULE! (We sell SOLUTIONS. Period. We sell PRODUCTIVITY & PROFITABILITY. Period.)9. Solutions = “Our ‘culture.’ ”10. Partner with B.I.C. (Best-In-Class). Period.
“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 Limits.
“Once devised in Riyadh, the tasking order took hours to get to the Navy’s six aircraft carriers—because the
Navy had failed years earlier to procure the proper communications gear that would have connected the
Navy with its Air Force counterparts. … To compensate for the lack of communications capability, the Navy was forced to fly a daily cargo mission from
the Persian Gulf and Red Sea to Riyadh in order to pick up a computer printout of the air mission tasking
order, then fly back to the carriers, run photocopy machines at full tilt, and distribute the documents to the air wing squadrons that were planning the next
strike.” –Bill Owens, Lifting the Fog of War
Duh???*: “We’ve come up with a solution. … We’ve begun to create a form of
communications that is much better than we had before, and that’s allowed us to gather better data. We’ve finally realized
that we have an interplay with other hospitals and with pre-hospital.”—Dr. Ben Honigman, ER, U. Colorado Hospital, on “diverts” (Denver
Post/05.05.02)
*Internet + Data + Open data exchange + Barrier busting
12. All functions contribute equally—IS, HR, Finance, Purchasing, Engineering, Logistics, Sales, Etc.13. Project Management can come from any function.14. WE ARE ALL IN SALES. PERIOD.15. We all invest in “wiring” the customer organization.16. WE ALL “LIVE THE BRAND.” (Brand = Solutions. That MAKE MONEY FOR OUR CUSTOMER- PARTNER.)17. We use the word “PARTNER” until we all want to barf!18. We NEVER BLAME other parts of our organization for screw-ups.19. WE AIM TO REINVENT THIS INDUSTRY!20. We hate the word-idea “COMMODITY.”
21. We believe in “High tech, High touch.”22. We are DREAMERS.23. We deliver . (PROFITS.) (CUSTOMER SUCCESS.)24. If we play the “SOLUTIONS GAME” brilliantly, no one can touch us!25. Our TEAM needs 100% I.C.s (Imaginative Contributors). This is the ULTIMATE “All Hands” affair!
KEY WORDS: Partners with our Customers in creating Memorable, Value-added Solutions/ Successes/ Experiences.
WHICH REQUIRES: Total Enterprise Responsiveness … beyond functional walls.
IV. NEW BUSINESS. NEW
BRAND.
7. Re-imagine Enterprise as
Theater I: 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
“Guinness as a brand is all about community.
It’s about bringing people together and sharing
stories.”—Ralph Ardill, Imagination, in re Guinness Storehouse
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?
“When Pete Rozelle ran the league, it was a
football business and a good one. Now it’s truly
an entertainment business.” —Paul Much,
Investment Advisor
Best Web Site?
buildabear.com
Build-A-Bear
--1997 to 2004: $0 to $300M
--Maxine Clark/CEO (25 yrs May Dept Stores)
--Build-A-Bear Workshops
--Engagement! (“Where Best Friends Are Made”)
--http://www.buildabear.com/buildaparty
The “Experience Ladder”
Experiences Services
Goods Raw Materials
1940: Cake from flour, sugar (raw materials economy): $1.00
1955: Cake from Cake mix (goods economy): $2.00
1970: Bakery-made cake (service economy): $10.00
1990: Party @ Chuck E. Cheese (experience economy) $100.00
Message:
“Experience” is the
“Last 80%”
P.S.: “Experience” applies to all work!
1940: Cake from flour, sugar (raw materials economy): $1.00
1955: Cake from Cake mix (goods economy): $2.00
1970: Bakery-made cake (service
economy): $10.001990: Party @ Chuck E. Cheese
(experience economy) $100.00
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
Bob Lutz: “It’s more right brain. I see us being in the art
business. Art, entertainment and mobile sculpture, which, coincidentally, also happens to provide transportation.”
Source: NYT 10.19.01
“Motown Is Stealing Hollywood’s Best Tricks …
With Oprah’s 276-car giveaway all over the news last week, GM got just what it
wanted: a blockbuster debut [for its ‘unheralded Pontiac G6’].”
Source: Newsweek/09.27.04 (Cost: $7 million … “A car that gets off to a slow start has little hope of ever losing the stigma of distressed merchandise.”)
“Lexus sells its cars as containers for our
sound systems. It’s marvelous.”—Sidney Harman/
Harman International
Now You’ve Heard It All …
“We want our branches to be a place where people come as a
destination.” —Amy Brady, on the BofA
effort to learn from Starbucks and Gap (“The Fun Factor”/The Boston Globe/08.30.04
LAN Installation Co.
to
Geek Squad (2% to 30%/Minn.)
From “Service’ to “Cause”
7X. 730A-800P. F12A.*
*Plus: “WOW Department’” “Kill a Stupid Rule” contests, etc. 2001R: 34%; P: 29%; ’90-’00: 2,048%.
Commerce Bank/NJ ($10B). Source: FC05.02.
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
Moving Companies
WSJ/08.2003: “In Texas, They’ll fill your empty fridge with brie and
wine. An outfit in New York promises quick high-speed Internet
hookup. And when Allied Van Lines finishes unloading your couch, they’ll have a feng shui
expert figure out the right spot. …”
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
1997-2001
>$600: 10% to 18%$400-$600: 49% to 32%
<$400: 41% to 50%
Source: Trading Up, Michael Silverstein & Neil Fiske
“A Bedtime Story, for $20,000”/CNN
Int’l Sleep Products Assn: 20% of mattresses sold in 2003 >$1,000 vs. 15% in 2000. Fastest growing segment: $5,000 to
$20,000.
ISPA exec: “The Baby Boomers are getting older, and more affluent. As you get older, your body changes and those aches and pains develop. So they have the money
and the inclination to upgrade.”
“Clients want either the best or
the least expensive; there
is no in between.” —John Di Julius, Secret
Service
“Car designers need to create a story. Every car provides an
opportunity to create an adventure. …“The Prowler makes you smile. Why? Because it’s focused. It has a plot, a
reason for being, a passion.”
Freeman Thomas, co-designer VW Beetle; designer Audi TT
Hmmmm(?): “Only” Words …
StoryAdventure
Smile Focus
PlotPassion
First Step (?!): Hire a theater director, as
a consultant or FTE!
Words!
— Magician of Magical Moments— Maestro of Moments of Truth— Recruiter of Raving Fans— Impresario of First Impressions— Wizard of WOW— Captain of Brilliant Comebacks— Director of Electronic Customer Experiences— Conductor of Customer Intimacy— King of Customer Community— Queen of Customer Retention— CEO of Ownership Experience— Managing Director of After-sales Experience
One company’s answer:
CXO*
*Chief eXperience Officer
Experience …
Cirque du Soleil
DO YOU MEASURE UP?*
*If not, why not?
“Most executives have no idea how to add value to a market in the metaphysical
world. But that is what the market will cry out for in the future. There is no lack of ‘physical’ products to
choose between.”
Jesper Kunde, Unique Now ... or Never [on the excellence of Nokia, Nike, Lego, Virgin et al.]
Extraction & Goods: Male dominance
Services & Experiences: Female
dominance
“Women don’t buy
brands. They join them.”
EVEolution
The “Experience Ladder”
Experiences Services
Goods Raw Materials
<TGWvs.
>TGR
Dell + IBM + Harley-Davidson*
= Magic!*Frictionless throughout Supply-chain + EncompassingSolutions
+ Scintillating Experience
8. Re-imagine Enterprise as
Theater II: Embracing the
“Dream Business.”
DREAM: “A dream is a complete moment in the life of a client.
Important experiences that tempt the client to commit substantial resources. The essence of the desires of the consumer. The
opportunity to help clients become what they want to be.” —Gian Luigi
Longinotti-Buitoni
“A shipping clerk earning $25,000 a year treats herself to silk pajamas at Victoria’s Secret. A dual-income couple earning
$125,000 orders a $4,000 Viking range for their townhouse even though the developer offered to throw in a perfectly serviceable
generic range at no extra charge. These purchases reflect an important worldwide behavioral shift. Consumers today are willing to pay a significant premium for goods and services that are emotionally important to them and that deliver the perceived values of quality, performance and engagement.
But in other categories that aren’t emotionally important, they become bargain hunters: a passionate Mercedes driver will shop at Target every weekend; a construction worker who
splurges on a $3,000 set of Callaway golf clubs will buy store brand groceries.” —Trading Up: The New American Luxury/Michael
Silverstein & Neil Fiske
Common Products “Dream” Products
Maxwell House StarbucksBVD Victoria’s SecretPayless FerragamoHyundai FerrariSuzuki Harley-DavidsonAtlantic City AcapulcoNew Jersey CaliforniaCarter KennedyConners PeleCNN Millionaire
Source: Gian Luigi Longinotti-Buitoni
The Marketing of Dreams (Dreamketing)
Dreamketing: Touching the clients’ dreams.Dreamketing: The art of telling stories
and entertaining.Dreamketing: Promote the dream, not
the product.Dreamketing: Build the brand around
the main dream.Dreamketing: Build the “buzz,” the
“hype,” the “cult.”Source: Gian Luigi Longinotti-Buitoni
Building the Creative Organization
Choose a creator: The cultural leader who gives the company an aesthetic point of view.Hire eclectically: Hire collaborators with different cultures and past histories in order to balance rigor with emotion.Prepare vertically: Develop a rigorous understanding of the product and the client.Develop horizontally: Promote curiosity in unrelated disciplines.Lead emotionally: Engender passionate dedication through vision and freedom.Build for the long haul: Creativity requires a lifetime commitment.
Source: Gian Luigi Longinotti-Buitoni
Constantly Magnify Perceived Value
Maximize your value-added by fulfilling the dreams of your clients.
Only invest in what is valuable for your client.Don’t let the short-term results weaken the
long-term value of your brand.Balance rigorous control of the financial endeavor
with the emotional management of your brand.Build a financial structure that allows risk-taking:
NO RISKS—NO DREAMS.Establish long-term “price power” in order to avoid
the trap of the commodity product.
Source: Gian Luigi Longinotti-Buitoni
Experience Ladder/TP
Dreams Come True Awesome Experiences
SolutionsServicesGoods
Raw Materials
Furniture vs. Dreams
“We do not sell ‘furniture’ at Domain. We sell dreams. This is accomplished by
addressing the half-formed needs in our customers’ heads. By uncovering these
needs, we, in essence, fill in the blanks. We convert ‘needs’ into ‘dreams.’ Sales are the
inevitable result.”
— Judy George, Domain Home Fashions
HORCHOW.COMFurniture. Accessories. Dreams.
“The Ritz-Carlton experience enlivens the
senses, instills well-being, and fulfills even
the unexpressed wishes and needs of our guests.”
— from the Ritz-Carlton Credo
Safe, On-time and ...
“We defined personality as a market niche. We seek to
amaze, surprise, entertain.”— Herb Kelleher, SWA / LUV
“The sun is setting on the Information Society—even before we have fully adjusted to its demands as individuals and as
companies. We have lived as hunters and as farmers, we have worked in factories and now we live in an information-based
society whose icon is the computer. We stand facing the fifth kind of society: the Dream Society. … The Dream Society is emerging this very instant—the shape of the future is visible today. Right
now is the time for decisions—before the major portion of consumer purchases are made for emotional, nonmaterialistic
reasons. Future products will have to appeal to our hearts, not to our heads. Now is the time to add emotional value to products and services.” —Rolf Jensen/The Dream Society:How the Coming Shift from
Information to Imagination Will Transform Your Business
“In Denmark, eggs from free-range hens have conquered over 50 percent of the market. Consumers do not want hens to live their lives in small, confining cages. They are willing to pay 15 percent to 20 percent more for the story about animal ethics. This is classic Dream Society logic. Both kind of eggs are similar in
quality, but consumers prefer eggs with the better story. After we debated the issue and stockpiled 50
other examples, the conclusion became evident: Stories and tales speak directly to the heart rather than the brain. After a century where society was marked by
science and rationalism, the stories and values are returning to the scene.” —Rolf Jensen/The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business
Six Market Profiles
1. Adventures for Sale2. The Market for Togetherness, Friendship and Love3. The Market for Care4. The Who-Am-I Market5. The Market for Peace of Mind6. The Market for Convictions
Rolf Jensen/The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business
Six Market Profiles
1. Adventures for Sale/IBM2. The Market for Togetherness, Friendship and Love/IBM3. The Market for Care/IBM4. The Who-Am-I Market/IBM5. The Market for Peace of Mind/IBM6. The Market for Convictions/IBM
Rolf Jensen/The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business
Rogaine.
Help Keep Your Hair.
Help Keep Your Confidence.
Source: Ad on the side of a bus/Dublin/10.04
Product: Rogaine.
Solution: Help Keep Your Hair.
Dream-come-true: Help Keep Your Confidence.
Source: Ad on the side of a bus/Dublin/10.04
’70s: Cost (BCG’s “cost curves”)
’80s: TQM-CI (Japan)
’90s: Service
’00s: Solutions/Experiences’10s: Dream Fulfillment
New Market Realities
Selling Dreams: How to Make Any Product Irresistible, Gian Luigi Longinotti-Buitoni
The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your
Business, Rolf Jensen
Trading Up: The New American Luxury, Michael Silverstein & Neil Fiske
Embracing the “Dream Society”: Even “culture change,” daunting as it is, is not a fully adequate term. Requisite is a particular type of culture change that flies in the face of most traditional training and development practices of, say, the last hundred or more years. “Most managers,” says Danish marketing guru Jesper Kunde in Unique Now ... or Never, “have no idea how to add value to a market in the metaphysical world. But that is what the market will cry out for in the future. There is no lack of ‘physical’ products to choose between.” What about a new degree, an MMM (Master of Metaphysical Management) to supplant the MBA?
9. Re-imagine the “Soul” of Enterprise:
Design Rules!
Coda.
“Having spent a century or more focused on other goals—solving manufacturing problems, lowering
costs, making goods and services widely available, increasing convenience, saving energy—we are
increasingly engaged in making our world special. More people in more aspects of life are drawing
pleasure and meaning from the way their persons, places and things look and feel. Whenever we have the
chance, we’re adding sensory, emotional appeal to ordinary function.” — Virginia Postrel, The Substance of Style: How
the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
“If modernist design ideology promised efficiency, rationality
and truth, today’s diverse aesthetics offers a different
trifecta: freedom, beauty and pleasure.” —Virginia Postrel, The Substance of Style:
How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
“As soon as the Taliban fell, Afghan men lined up at barber shops to have their beards shaved off. Women
painted their nails with once-forbidden polish. Formerly clandestine beauty salons opened in prominent
locations. Men traded postcards of beautiful Indian movie stars…. Even burka merchants diversified their wares, adding colors like brown, peach and green to the blue and off-white dictated by the Taliban’s whip-wielding virtue police. Freed to travel to city markets,
village women demanded better fabric, finer embroidery and more variety in their traditional
garments.” —Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
“With its carefully conceived mix of colors and
textures, aromas and music, Starbucks is more indicative of our era than the iMac. It is to the Age of
Aesthetics what McDonald’s was to the Age of Convenience or Ford was to the Age of Mass
Production—the touchstone success story, the exemplar of all that is good and bad about the
aesthetic imperative. … ‘Every Starbucks store is carefully designed to enhance the quality of everything the customers see, touch, hear, smell or taste,’ writes CEO Howard Schultz.” —Virginia Postrel, The Substance of Style:
How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
“Elaborating on the techniques of one-of-a-kind boutique hotels, Starwood Hotels &
Resorts [W, Sheraton, Westin] has adopted a strategy of
‘Winning by design.’ ” —Virginia Postrel, The Substance of Style: How the Rise of Aesthetic Value Is Remaking
Commerce, Culture and Consciousness
“The lowliest household tool has become an object of color, texture, personality, whimsy, even elegance. Dozens, probably
hundreds, of distinctively designed toilet-brush sets are available—functional, flamboyant, modern, mahogany. For
about five bucks, you can buy Rubbermaid’s basic plastic bowl brush with caddy, which comes in seven different colors, to
hide the bristles and keep the drips off the floor. For $8 you can take home a Michael Graves brush from Target, with a rounded
blue handle and translucent white container. At $14 you can have an OXO brush, sleek and modern in a hard, shiny white plastic holder that opens as smoothly as the bay door on a science-fiction spaceship. For $32, you can order Philippe
Starck’s Excalibur brush, whose hilt-like handle creates a lid when sheathed in its caddy. At $55 there’s Stefano
Giovannoni’s Merdolino brush for Alessi … Cross the $100 barrier, and you can find all sorts …” —Virginia Postrel, The
Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
DESIGN IS INEVITABLE! DESIGN IS THE DIFFERENCE!
DESIGN RULES!
Design Myths.
Unconventional [Design] Messages
Not about ... “Lumpy Objects”!
Not about ... $79,000 objects
The I.D. [International Design] Forty*
Airstream … Alfred A. Knopf … Apple Computer … Amazon.com …
Bloomberg … Caterpillar … CNN … Disney … FedEx … Gillette … IBM … Martha Stewart … New Balance …
Nickelodeon … Patagonia … The New York Yankees … 3M … Etc.
* List No. 1, 1999
Unconventional [Design] Messages
Not about ... “Lumpy Objects”!
Not about ... $79,000 objects
Design Transforms even the [Biggest] Corporations!
TARGET … “the champion of America’s new design democracy” (Time) “Marketer of the Year 2000”
(Advertising Age)
Lady Sensor, Mach3, and …
$70M on developing the OralB CrossAction toothbrush
23 patents, including 6 for the packaging
Source: www.ecompany.com [06.00]
Design2002
LISTERINE’s …
PocketPaks
Westin’s …
Heavenly Bed
Design’s place in the universe.
And Tomorrow …
“Fifteen years ago companies competed on price. Now it’s
quality. Tomorrow it’s design.”
Robert Hayes
All Equal Except …
“At Sony we assume that all products of our competitors have basically the same
technology, price, performance and
features. Design is the only thing that differentiates one product from another in the
marketplace.”Norio Ohga
“Design is treated like a religion at
BMW.”Fortune
“The new Beetle fails at most categories. The only
thing it doesn’t fail in is
drop-dead charm.”Jerry Hirshberg, Nissan Design International
Object of Desire!
“Every now and then, a design comes along that radically changes the way we think about a particular object. Case in
point: the iMac. Suddenly, a computer
is no longer an anonymous box. It is a sculpture, an object of desire, something that you look at.”
Katherine McCoy & Michael McCoy, Illinois Institute of Technology
“The good 10 percent of American product design comes
out of big-idea companies that don’t believe in talking to the
customer. They're run by passionate maniacs who make everybody’s life miserable until
they get what they want.”
Bran Ferren, Applied Minds/Wired 1-2001
“We don’t have a good language to talk about this kind of thing. In most people’s
vocabularies, design means veneer. … But to me, nothing could be further from the
meaning of design. Design is the fundamental soul of a man-made creation.”
Steve Jobs
Check Out the Language:
“Tomorrow it’s design …”“Design is the only thing …”
“Design is … religion ...”“Drop-dead charm …”“Object of desire …”
“Passionate maniacs …” “Fundamental soul …”
Bottom Line.
Design “is” … WHAT & WHY I LOVE.
LOVE.
I LOVE my ZYLISS Garlic Peeler!
All Time No.1 (TP)
Ziplocs
Design “is” … WHY I
GET MAD. MAD.
Wanted: THE DESIGNER OF MY
RADIO SHACK PHONE. Major
Reward!
Design is never neutral.
Hypothesis: DESIGN is the principal difference between love and
hate!
THE BASE CASE: I am a design fanatic. Though not “artistic,” I love “cool stuff.” But it goes [much]
further, far beyond the personal. Design has become a professional obsession. I SIMPLY BELIEVE THAT DESIGN PER SE IS THE PRINCIPAL
REASON FOR EMOTIONAL ATTACHMENT [or detachment] RELATIVE TO A PRODUCT OR
SERVICE OR EXPERIENCE. Design, as I see it, is
arguably the #1 DETERMINANT of whether a product-service-experience stands out … or doesn’t.
Furthermore, it’s another “one of those things” that damn few companies put – consistently – on the
front burner.
Message (?????): Men cannot design for women’s
needs.
“Perhaps the macho look can be interesting … if you
want to fight dinosaurs. But now to survive you need intelligence,
not power and aggression. Modern intelligence means
intuition—it’s female.”
Source: Philippe Starck, Harvard Design Magazine (Summer 1998)
Step No. 1:
NOTEBOOK POWER!
[Start recording the awesome & the awful]
User …
STOP BLAMING
YOURSELF! (Don
Norman/Design of Everyday Things)
“Sometimes I have episodes of wild fury in rental cars. It’s not road
rage. It’s more like design rage.”
Susan Casey, www.ecompany.com
The Designer’s Ring
“For years I thought that Dante should have established a ‘designer’s ring’ in his Hell. If any
designer’s product raised a blister, caused a bruise, ripped a stocking, or caused any of the
thousand things that frustrate us with the products we use, that designer would be assigned the designer’s ring in Hell and forced to use that product for all of eternity.” — James Pirki, designer
and professor, Syracuse University
15 “Leading” Biz Schools
Design/Core: 0Design/Elective: 1Creativity/Core: 0
Creativity/Elective: 4Innovation/Core: 0
Innovation/Elective: 6
Source: DMI/Summer 2002
“There is little evidence that mastery of the knowledge
acquired in business schools enhances people’s careers, or
that even attaining the MBA credential itself has much effect on graduates’ salaries or career attainment.” —Jeffrey Pfeffer (tenured professor,
Stanford GSB/2004)
“What I am really wanting to do is a design school, to teach the sensibility that
goes into the building of a business into a company with
a point of view.” —Ralph Lauren, International Herald Tribune/09.16.2004
“Having spent a century or more focused on other goals—solving manufacturing problems, lowering
costs, making goods and services widely available, increasing convenience, saving energy—we are
increasingly engaged in making our world special. More people in more aspects of life are drawing
pleasure and meaning from the way their persons, places and things look and feel. Whenever we have the
chance, we’re adding sensory, emotional appeal to ordinary function.” — Virginia Postrel, The Substance of Style: How
the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness
DESIGN IS INEVITABLE! DESIGN IS THE DIFFERENCE!
DESIGN RULES!
“Business people don’t need to ‘understand
designers better.’ Businesspeople need to be designers.” —Roger Martin/Dean/Rotman
Management School/Univ of Toronto
Design is …
Design is a … 15 cent bud
vase!
I LOVE my ZYLISS Garlic Peeler!
WHY I WIPE UP OTHER PEOPLE’S PEE: A DESIGN CLASSIC
The [small] saga of the toilet in a hole-in-the-wall Texaco on Rte 2
Design is SURPRISE!
Ralph Kaplan, By Design: “What effects us so strongly when we
see an MG or a beautifully balanced knife is that someone
has pleased us by making what we wanted and never we wanted.”
Design + Beauty is Fred S.’s thesis and
Herb K.’s napkin [and Cousin Ben’s]
Great Design is “Cheeky”
Branson’s stated hurdle for any new Virgin product or service:
best quality, good value,
innovative, challenge existing alternatives, sense of fun or
cheekiness
Niels Bohr to Wolfgang Pauli: “We all agree your theory is crazy. The
question, which divides us, is
whether it is crazy enough.”
The Nerve to Get Personal!
Nintendo Designer: “I am not
‘creating a game.’ I am in the game. The game is not
for children, it is for me.”
Funky Business: “To succeed we must stop being so goddamn
normal. In a winner-takes-all world,
normal = nothing.”
To some [big?] extent,
women must design for women, kids for kids, Hispanics for
Hispanics. THERE IS A LIMIT TO OUR COMPREHENSION OF
OTHERS.
Great + risky design is always [??] a product of
engaging the Client – from the start – in a
journey to the unknown.
“Products from the major competing companies around the world will
become increasingly similar. Inevitably, this means that the whole
of a company’s personality, its identity, will become the most
significant factor in making a choice between one company and its
products and another.”
Wally Olins, Corporate Identity
“Identity is corporate
strategy made visible.”
Wally Olins
I LOVE cool stuff. (Much of it costs less than $10.)
I HATE uncool stuff.(Much of it costs more than $10.)
I LOVE stuff that works.
I HATE stuff that doesn’t work. I ESPECIALLY HATE stuff that
doesn’t work and makes me feel like an idiot.
I like stuff I like.
I hate stuff I hate.
I take my likes and hates seriously.
DESIGN is the principal difference between the two
reactions.
DESIGN transforms the perception of what’s possible. E.g.: Plate-glass
windows. Apple II.
Design = Character
(which is why knock offs are so easy to see through) (Design = WHO
ARE WE?!)
Great Design is respectful
of me.
Awareness can be raised!
Compare 10 order forms or data fields at a Web site.
Save great and awful junk mail.
Go on a <$10 shopping spree.
Pay attention to signage. (And instruction manuals.)
Start a notebook. NOW.
Web = PURE DESIGN MEDIUM
Great design = One-page
business plan (Jim Horan)
Lowly Forms Ain’t! Users …
STOP BLAMING
YOURSELVES!
(Don Norman)
“A good programmer can be a hundred times more productive than an average one, easily. The gap has little to do with technical or mathematical or engineering training, much to do with taste, good judgment, aesthetic gifts.”
David Gelernter, Machine Beauty
George Nelson, 1940: “Whenever furniture is criticized, the public is
blamed. ‘When they want something better,’ the refrain goes,
‘we’ll be only too glad to make it for them.’ The average
manufacturer has no convictions whatever about design.”
DESIGN IS LIFE. The rest
is details.
Design “is” … WHAT &
WHY I LOVE. LOVE.
Design “is” … WHY I
GET MAD. MAD.
Design is never neutral.
Design is thinking about … THE
PRESENTATION OF …
Me.
Design is why it takes a year to
“do” a …
!
Design is why it takes only a minute
to declare …
Wanted: Dead or Alive: THE
DESIGNER OF MY RADIO SHACK PHONE. Major
Reward!
SWA
Simple!!!!!!!!!!!! (customers call because the process is so easy they can’t
believe they’re done)
30% of revenues directly from site (vs. 6% for others)
Source: BusinessWeek (09.00)
Progressive
“We don’t sell insurance anymore.
We sell speed.” – Peter Lewis
Digital cameras, wireless Net links,
etc.: SOME CLAIMS PAID WITHIN 20 MINUTES!
Source: BusinessWeek (09.00)
Design Case P … Thomas Hine: The Total
Package: The Secret History and Hidden Meanings of
Boxes, Bottles, Cans and Other Persuasive Containers
“The most fundamental difference between a traditional market and
the places through which you push your cart is that in modern retailing
all the selling is done without people. It replaces people with
packages.” —Thomas Hine/The Total Package
“Packages have personality. They create
confidence and trust. They spark fantasies.
They move the goods!” —Thomas Hine/The Total Package
Oatmeal/1870: “horses and a few stray Scots”
Oatmeal/1890/Quaker: “a delicacy for the epicure, a nutritious dainty
for thr invalid, a delight to the children”
Difference: Packaging!
Thomas Hine/The Total Package
“During the thirty minutes you spend on an average trip to the supermarket, about thirty thousand different products vie to
win your attention and ultimately to make you believe in their promise. When the
door opens, you enter an arena where your emotions are in play—and a walk down the aisles is an exercise in self-definition. Few experiences in life offer the visual intensity of a Safeway, a Krogers. …” —Thomas Hine/The Total Package
Research: customers aware of 11,000 packages in 1,800 seconds
walking the aisles.
Opportunity = 1/6th second!
Source: Thomas Hine/The Total Package
“Packaging strives at once to offer excitement and reassurance. It promises something newer and better, but not necessarily different. When we talk about a tourist destination, or even a
presidential contender, being packaged, that’s not really a metaphor. The same projection of
intensified ordinariness, the same combination of titillation and reassurance, are used for
laundry detergents, theme parks and candidates alike.” —Thomas Hine/The Total Package
“One, consumers really do not distinguish between a product and
its package. Two, consumers relate emotionally not to the facts
(the realities) of the product/packages they are
involved with, but rather to their perceived realities.” —Walter Stern in
Thomas Hine/The Total Package
“What’s important to recognize is that fast-food
and hotel chains are not like packages, but that they are
packages—packaged places and experiences.” —Thomas
Hine/The Total Package
9A. Re-imagine the Infrastructure of
Enterprise: Design = “Beautiful” Systems.
Fred S.’s “mediocre” thesis. Herb K.’s
napkin.
Great design = One-page
business plan (Jim Horan)
The One-page Proposal: How to Get Your Business Pitch onto One Persuasive Page —Patrick Riley (“Why not one and a half? Why not two? Sorry, it’s one or nothing. Once the proposal extends past the first page,
the battle is lost.”)
There Are Lawyers … and Then There Are Lawyers: John De Laney/ICM
ANYTHING TRULY IMPORTANT CAN BE
BOILED DOWN TO 1/3RD PAGE.
K.I.S.S.: Gordon Bell (VAX
daddy): 500/50. Chas.
Wang (CA): Behind schedule?
Cut least productive 25%.
1Y/2N: Commerce Bank2 Pizzas: JB
Plastic Bulldozer: MD
Systems: Must have. Must
hate. / Must design. Must un-
design.
Mgt. Team
includes … EVP (S.O.U.B.)
Executive Vice President, Stomping Out Unnecessary Bullshit
First Steps: “Beauty Contest”!
1. Select one form/document: invoice, air bill, sick leave policy, customer returns-claim form.
2. Rate the selected doc on a scale of 1 to 10 [1 = Bureaucratica Obscuranta/ Sucks; 10 = Work
of Art] on four dimensions: Beauty. Grace. Clarity. Simplicity.
3. Re-invent!4. Repeat, with a new selection, every 15 working
days.
“Beautiful”“Aesthetic Triumph”
“Breathtaking”
Was
“Deposits may be made by a minor and withdrawals thereof may be made by a
minor without the consent of a parent or guardian, neither of whom, in that
capacity, shall have any right to attach or interfere in any manner with such
deposits or withdrawals.”
Is
“Minors may make deposits and withdrawals from their accounts without the
consent or interference of a parent or guardian.”
Was
“This Grievance Procedure must be used if the nature of the complaint deals with the quality of services given to the Member, including
complaints about waiting times, physician demeanor and behavior, or adequacy of facilities (as opposed to whether or not a particular
service is a Covered service and what amount, if any, should be paid). Also, this Grievance Procedure will be applied under all circumstances to any Universal Healthcare supplemental products which the Member
may have bought independently from this SeniorPlus plan. If the nature of the Member’s complaint deals with a Covered Service stated
in this SeniorPlus or the level of payment associated with this plan,
please refer to the Medicare Appeals procedure, stated in Section X.”
Source: Siegel & Gale
Is
“If you have a complaint about quality of service received, waiting times, physician behavior, or the adequacy of medical facilities, please use our grievance process.
“lf you have a complaint about coverage or payment, please use the Medicare Appeals procedure (see Section
X).”
Source: Siegel & Gale
10. Re-imagine the Fundamental Selling
Proposition: “It” all adds up to …
THE BRAND (THE STORY).
The Heart of Branding …
“WHO ARE WE?”
“We’re now entering a new phase of business where the group will be a
franchising and management company where brand management is central.”
—David Webster, Chairman, InterContinental Hotels Group
“InterContinental will now have far more to do with brand ownership than
hotel ownership.” —James Dawson of Charles Stanley
(brokerage)
Source: International Herald Tribune, 09.16, on the sacking of CEO Richard North, whose entire background is in finance
“WHAT’S OUR
STORY?”
“WHAT’S THE
DREAM?”
“We are in the twilight of a society based on data. As information and intelligence become the domain of computers, society will place more value on the one human ability that cannot be automated: emotion.
Imagination, myth, ritual - the language of emotion - will affect everything from our purchasing decisions
to how we work with others. Companies will thrive on the basis of their stories and myths. Companies will need to understand
that their products are less important than their stories.”
Rolf Jensen, Copenhagen Institute for Future Studies
“Apple opposes, IBM solves, Nike exhorts, Virgin enlightens,
Sony dreams, Benetton
protests. … Brands are not nouns but verbs.”
Source: Jean-Marie Dru, Disruption
Message: ALL ‘BUSINESS MODELS’
ARE IN FACT … BRAND
STATEMENTS!
DO THE HOUSEKEEPERS & CLERKS “BUY
IT”? [ARE YOU V-E-R-Y SURE?]
“EXACTLY HOW ARE WE
DRAMATICALLY DIFFERENT?”
1st Law Mktg Physics: OVERT BENEFIT (Focus: 1 or 2 > 3 or 4/“One Great Thing.” Source #1: Personal Passion)
2ND Law: REAL REASON TO BELIEVE (Stand & Deliver!)
3RD Law: DRAMATIC DIFFERENCE (Execs Don’t Get It:
See the next slide.)
Source: Jump Start Your Business Brain, Doug Hall
2 Questions:
“How likely are you to purchase this new product or service?” (95% to 100% weighting by execs)
“How unique is this new product or service?” (0% to 5%*)
*No exceptions in 20 years – Doug Hall, Jump Start Your Business Brain
“If you are not one of the major players, you have to take a position that is contrary to the global trend.”
“We have to ask ourselves: How can we be different? We have to find out what we can be best in the world at.”
Source: IBM Business Consulting Services/The Global CEO Study 2004
Doug Hall, P&G vet and long-time proprietor of Eureka Ranch, is
my favorite marketing guru. One reason is his ... Declaration of Dramatic Difference. Well, he doesn’t call it that—I do. In Jump Start Your Business Brain, Hall gives us his Three Laws of Marketing Physics. The Law of Dramatic Difference is number three. It goes this way. Prospective customers evaluate a new product. Then they’re asked (1) if they’d buy it and (2) if they see it as “unique.” The firm’s execs in turn evaluate and weigh the prospective customers’ reactions. Without fail, the execs deciding to launch or not bet close to one-hundred of their marbles on the intent-to-buy question, and virtually ignore the uniqueness issue. The problem, or should I say “THE PROBLEM”: In actual fact the intent-to-buy response is a poor predictor of subsequent real-world success (or failure), while the “uniqueness” assessment almost perfectly predicts the true response to the product.
“You do not merely want to be the best of the best. You
want to be considered the only ones who do
what you do.”
Jerry Garcia
“A great company is defined by the
fact that it is not compared
to its peers.”Phil Purcell, Morgan Stanley
Brand = You Must Care!
“Success means never letting the competition
define you. Instead you have to define yourself based on a point of view you care deeply
about.” Tom Chappell, Tom’s of Maine
“WHY DOES IT MATTER TO
THE CLIENT?”
“EXACTLY HOW DO I PASSIONATELY CONVEY THAT
DRAMATIC DIFFERENCE TO THE
CLIENT ?”
“Brand Promise” Exercise: (1) Who Are WE? (poem/novella/song, then 25
words.) (2) List three ways in which we are UNIQUE … to our Clients.
(3) Who are THEY (competitors)? (ID, 25 words.)
(4) List 3 distinct “us”/“them” differences. (5) Try “results” on your teammates. (6) Try ’em on a friendly Client. (7) Try ’em on a
skeptical Client!
Rules of “Radical Marketing”
Love + Respect Your Customers!Hire only Passionate Missionaries!Create a Community of Customers!
Celebrate Craziness!Be insanely True to the Brand!
Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)
Branding: Is-Is Not “Table”
TNT is not: TNT is: TNT is not:
Juvenile Contemporary Old-fashioned
Mindless Meaningful Elitist
Predictable Suspenseful Dull
Frivolous Exciting Slow
Superficial Powerful Self-important
Message …
Is Not >> Is
“Salt is salt is salt. Right? Not when it
comes in a blue box with a
picture of a little girl carrying an umbrella. Morton International continues to
dominate the U.S. salt market even though it charges more for a product that is
demonstrably the same as many other products
on the shelf.”
Tom Asaker, Humanfactor Marketing
What Can [Can’t] Be Branded?“Branding is not a problem if you have the right mentality. You go to your team and
you pin up a $200 Swiss Army Watch. Competing in the ridiculously crowded
sub-$200 watch market, they made it into a brand name, named after the most
irrelevant and useless thing in history [the Swiss Army]. And you say, ‘Gang, if they
can do it, we can do it.’ ”
Barry Gibbons
Story > Brand
Market Power = Story Power = Dream Power
Kevin Roberts*:
Lovemarks!
*CEO/Saatchi & Saatchi
10A. Re-imagine 2004: “Excellence” Found!
And the Winner is …
1. Audacity of Vision2. Innovation/R&D/Design3. Talent Acquisition & Development4. Resultant “Experience”5. Strategic Alliances6. Operations7. Financial Management8. Overall/Sustaining Excellence9. “Wow!”
Cirque du Soleil!
Cirque du Soleil: Talent (12 full-time
scouts, database of 20,000). R&D (40% of
profits; 2X avg corp). Controls (shows are profit centers; partners like Disney offset costs;
$100M on $500M). Scarcity builds buzz/brand (1 new show per year. “People tell me we’re leaving money on the table by not duplicating our shows. They’re right.”—Daniel
Lamarre, president).Source: “The Phantasmagoria Factory”/Business 2.0/1-2.2004
Ex2004
Cirque du Soleil
Infosys
Build-A-Bear
Griffin Health Services Corporation
Infosys/Planet-warping Aspirations …
“By making the Global Delivery Model both legitimate and mainstream, we have brought the battle to our territory. That is, after all, the purpose of
strategy. We have become the leaders, and incumbents [IBM, Accenture] are followers, forever playing catch-up. … However, creating a new business
innovation is not enough for rules to be changed. The innovation must impact clients, competitors, investors, and society. We have seen all this in
spades. Clients have embraced the model and are demanding it in even greater measure. The acuteness of their circumstance, coupled with the capability and value of our solution, has made the choice not a choice.
Competitors have been dragged kicking and screaming to replicate what we do. They face trauma and disruption, but the game has changed forever. Investors have grasped that this is not a passing fancy, but a potential
restructuring of the way the world operates and how value will be created in the future.”
—Narayana Murthy, chairman’s letter, Infosys Annual Report 2003
Build-A-Bear
--1997 to 2004: $0 to $300M
--Maxine Clark/CEO (25 yrs May Dept Stores)
--Build-A-Bear Workshops
--Engagement! (“Where Best Friends Are Made”)
--Theater!
--http://www.buildabear.com/buildaparty
Best Web Site?
buildabear.com
Griffin Health Services Corporation/
Griffin Hospital/Planetree Alliance
“It was the goal of the Planetree Unit to help
patients not only get well faster but also to stay well longer.” —Putting Patients First, Susan Frampton,
Laura Gilpin, Patrick Charmel
“Those of us working in healthcare have an obligation to be of service in this world, to be bringers of light and
hope. Our work is spiritual by its nature, as the Planetree model has acknowledged for decades.”
“Our definition of spirituality is coming into a right relationship with all that is, establishing a loving,
nurturing, caring relationship. Planetree’s has been to refocus our attention on the power of relationships, and, in particular, the mind-body-spirit relationship essential to healing. It has opened a door that will
never be closed.” —Leland Kaiser, “Holistic Hospitals”
Source: Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel
The 9 Planetree Practices
1. The Importance of Human Interaction2. Informing and Empowering Diverse Populations: Consumer Health Libraries and Patient Information3. Healing Partnerships: The importance of Including Friends and Family4. Nutrition: The Nurturing Aspect of Food5. Spirituality: Inner Resources for Healing6. Human Touch: The Essentials of Communicating Caring Through Massage7. Healing Arts: Nutrition for the Soul8. Integrating Complementary and Alternative Practices into Conventional Care9. Healing Environments: Architecture and Design Conducive to Health
Source: Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel
“Planetree is about human beings caring
for other human beings.” —Putting Patients First, Susan
Frampton, Laura Gilpin, Patrick Charmel (“Ladies and gentlemen serving ladies and gentlemen”—4S credo)
V. NEW BUSINESS.
NEW MARKETS.
11. Re-imagine the Customer I: Trends Worth
Trillion$$$ …
Women Roar.
?????????
Home Furnishings … 94%Vacations … 92% (Adventure Travel … 70%/ $55B travel equipment)
Houses … 91%D.I.Y. (major “home projects”) … 80%
Consumer Electronics … 51% (66% home computers)
Cars … 68% (90%)All consumer purchases … 83%
Bank Account … 89%Household investment decisions … 67%Small business loans/biz starts … 70%
Health Care … 80%
????
80%
Riding Lawnmowers
2/3rds working women/50+% working wives > 50%
80% checks61% bills
53% stock (mutual fund boom)
43% > $500K95% financial decisions/
29% single handed
1970-1998
Men’s median income: +0.6%Women’s median income: + 63%
Source: Martha Barletta, Marketing to Women
$5+T > Japan
10M/28M/$3.6T > Germany
Business Purchasing Power
Purchasing mgrs. & agents: 51%HR: >>50%
Admin officers: >50%
Source: Martha Barletta, Marketing to Women
Women-owned Bus.
U.S. employees > F500 employees worldwide
Source: Martha Barletta, Marketing to Women
New golfers … 37%Basketball … 13.5M
1 in 27 (’70) … 1 in 3 (’96)
1874?
1874 … Jock Strap1977 … Jogbra
1977 ... 25K
1996 … 42M
Yeow!
1970 … 1%
2002 … 50%
91% women: ADVERTISERS DON’T
UNDERSTAND US. (58% “ANNOYED.”)
Source: Greenfield Online for Arnold’s Women’s Insight Team (Martha Barletta, Marketing to Women)
Carol Gilligan/ In a Different Voice
Men: Get away from authority, familyWomen: Connect
Men: Self-orientedWomen: Other-oriented
Men: RightsWomen: Responsibilities
Men: Individual perspective. “Core unit is ‘me.’ ”
Pride in self-reliance.
Women: Group perspective. “Core unit is ‘we.’ ” Pride in team
accomplishment.
Source: Martha Barletta, Marketing to Women
FemaleThink/ Popcorn
“Men and women don’t think the same way, don’t communicate the same
way, don’t buy for the same reasons.”
“He simply wants the transaction to take place. She’s interested in
creating a relationship. Every place women go, they make
connections.”
“Society today is determined to believe that men and women possess
the same skills, aptitudes and potentials—just as science, ironically,
is beginning to prove that we are completely different. —Allan Pease & Barbara
Pease, Why Men Can Only Do One Thing at a Time and Women Never Stop Talking
How many men does it take to change a roll of toilet paper?
It’s unknown. It’s never happened.
Source: Allan Pease & Barbara Pease, Why Men Can Only Do One Thing at a Time and Women Never Stop Talking
“Men seem like loose cannons. Men always move faster through a store’s
aisles. Men spend less time looking. They usually don’t like asking where things are.
You’ll see a man move impatiently through a store to the section he wants,
pick something up, and then, almost abruptly he’s ready to buy. For a
man, ignoring the price tag is almost a sign of virility.”
Paco Underhill, Why We Buy* (*Buy this book!)
“Shopping: A Guy’s Nightmare or a Girl’s Dream Come True?”
“Buy it and be gone”vs.
“Hang out and enjoy the experience”
Source: The Charleston [WV] Gazette/06.22.2002
How Many Gigs You Got, Man?
“Hard to believe … Different criteria”
“Every research study we’ve done indicates that women really care about the relationship with their
vendor.”
Robin Sternbergh/ IBM
Women's View of Male Salespeople
Technically knowledgeable; assertive; get to the point; pushy;
condescending; insensitive to women’s needs.
Source: Judith Tingley, How to Sell to the Opposite Sex (Martha Barletta, Marketing to Women)
Women as Healthcare Decision Makers
— read vociferously— want choices
— value convenience— look for small signs of
sensitivity (gowns that close)
Source: Cheryl Stone, Rynne Marketing Group
Women and Healthcare
— Women are more dissatisfied— Women are frustrated by the way they
are treated and spoken to by physicians
— Women seek more information— Women are more pressed for time
— Women make most healthcare decisions and purchases
Source: Patricia Braus, Marketing Health Care to Women
Women and Financial Advisors
Women want ...— a plan
— to be listened to— to read about it and think about it
Women do not want ...— a high-pressure sales pitch
Source: Kathleen Boyd, SVP, Wheat First Butcher Singer
(now part of Wachovia Securities)
Read This: Barbara & Allan Pease’s
Why Men Don’t Listen & Women Can’t Read Maps
“It is obvious to a woman when another woman is upset, while a man generally has to physically witness
tears or a temper tantrum or be slapped in the face before he even has a clue that anything is going on. Like most female mammals, women are equipped with far more finely tuned
sensory skills than men.” Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps
“Resting” State: 30%, 90%: “A woman knows her children’s
friends, hopes, dreams, romances, secret fears, what they are
thinking, how they are feeling. Men are vaguely aware of some short people also living in the house.”
Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps
“As a hunter, a man needed vision that would allow him to zero in on targets in the distance … whereas a woman needed eyes
to allow a wide arc of vision so that she could monitor any predators sneaking up on the nest. This is why modern men can find their way effortlessly to a distant pub,
but can never find things in fridges, cupboards or drawers.”
Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps
“Female hearing advantage contributes significantly to what is
called ‘women’s intuition’ and is one of the reasons why a woman can read between the lines of what people say. Men, however, shouldn’t despair.
They are excellent at imitating animal sounds.”
Barbara & Allan Pease, Why Men Don’t Listen & Women Can’t Read Maps
Senses
Vision: Men, focused; Women, peripheral.
Hearing: Women’s discomfort level I/2 men’s.
Smell: Women >> Men.Touch: Most sensitive man <
Least sensitive women.
Source: Martha Barletta, Marketing to Women
Sensitivity to differences: Twice as many card stacks.
More “contextual,” “holistic.”
“People powered”: Age 3 days, baby girls 2X eye contact.
Source: Martha Barletta, Marketing to Women
“When a woman is upset, she talks emotionally to her friends; but an upset man rebuilds a motor or
fixes a leaking tap.”Barbara & Allan Pease, Why Men Don’t Listen &
Women Can’t Read Maps
Stress* ** Men: Fight or flee
Women: Seek the company of friends
*Source: UCLA, “Female Response to Stress: Tend and Befriend, Not Fight or Flight”/Psychological Review**90% of stress research: men
“Women speak and hear a language of connection and intimacy, and men
speak and hear a language of status and independence. Men communicate to obtain information, establish their
status, and show independence. Women communicate to create
relationships, encourage interaction, and exchange feelings.”
Judy Rosener, America’s Competitive Secret
??????????????
“Never sacrifice a friendship for a good column.”
v.
“Never sacrifice a good column for a friendship.”
“The Hollywood scripts that men write tend to be direct and
linear, while women’s compositions have many
conflicts, many climaxes, and many endings.”
Helen Fisher, The First Sex: The Natural Talents of Women and How They Are
Changing the World
“I only really understand myself, what I’m really thinking and
feeling, when I’ve talked it over with my circle of female friends. When days go by without that connection, I feel like a radio playing in an empty room.”
Anna Quindlen
“Women are more comfortable talking or
thinking about people and relationships, while men
prefer to contemplate things.” —research reported in the New York
Times (08.10.2003)
“Men and women have different styles of fearing. Men’s fears focus around
what we experience as our independence, and women’s around
loss of significant relationships. We fear engulfment, anything that
threatens to rob us of our power and control. Women most fear
abandonment, isolation, loss of love.” —Sam Keen, Fire in the Belly (see also Susan Rice)
Editorial/Men: Tables, rankings.*
Editorial/Women: Narratives that cohere.*
*Redwood (UK)
“Where the Girls Are: They’re Online, Solving Puzzles and Making Up Characters in Narrative-
driven Games” —Headline/WSJ/10.28
Initiate Purchase
Men: Study “facts & features.”
Women: Ask lots of people for input.
Source: Martha Barletta, Marketing to Women
Read This Book …
EVEolution: The Eight Truths of Marketing to Women
Faith Popcorn & Lys Marigold
EVEolution: Truth No. 1
Connecting Your Female Consumers to Each
Other Connects Them to Your Brand
“The ‘Connection Proclivity’ in women starts early. When asked,
‘How was school today?’ a girl usually tells her mother every
detail of what happened, while a boy might grunt, ‘Fine.’ ”
EVEolution
What If …
“What if ExxonMobil or Shell dipped into their credit card database to help commuting women
interview and make a choice of car pool partners?”
“What if American Express made a concerted effort to connect up female empty-nesters
through on-line and off-line programs, geared to help women re-enter the workforce with today’s
skills?”
EVEolution
The New New Jiffy Lube
“In the male mold, Jiffy Lube was going all out to deliver quick, efficient service. But, in the
female mold, women were being turned off by the ‘let’s get it fixed fast, no conversation
required’ experience.”
New JL: “Control over her environment. Comfort in the service setting. Trust that her car
is being serviced properly. Respect for her intelligence and ability.”
EVEolution
“Women don’t buy
brands. They join them.”
EVEolution
Purchasing Patterns
Women: Harder to convince; more loyal once convinced.
Men: Snap decision; fickle.
Source: Martha Barletta, Marketing to Women
2.6 vs. 21
Cents & Sensibility
“Our advisory sessions [with women] changed from a purely
analytical, male approach to something that starts with the heart
and ends with the figures.”
Lowe’s …
Gets it. 1989:
13%/“lumber shop” … 2002: >50%
“War has broken out over your home-improvement dollar, and Lowe’s has
superpower Home Depot on the defensive. It’s not-so-
secret ploy: Lure women.” —Forbes.com
“Home Depot is still very much a guy’s chain. But women, according to Lowe’s
research, initiate 80 percent of all home-improvement purchase decisions,
especially the big ticket orders like kitchen cabinets, flooring and bathrooms. ‘We
focused on a customer nobody in home improvement has focused on. Don’t get me
wrong, but women are far more discriminating than men,’ says CEO Robert
Tillman, 59, a Lowe’s lifer.” —Forbes.com
“Women’s Work: Do-it-yourself has become do-it-herself, and toolmakers are taking notice” —Headline/San Francisco
Chronicle/08.03
Tomboy Tools. E.g.:
smaller, lighter in weight. Tupperware “party” model.
“Darcy Winslow is a leading figure in Nike Goddess, a
companywide grassroots team whose goal is a once-and-for-all shift in how a high-testosterone outfit sells to, designs for, and
communicates with women.” —Fast
Company/08.2002
“Women weren’t comfortable in our stores. So I figured out where they would be comfortable—most likely their own homes. The [first
Nike Goddess] store has more of a residential feel. I wanted it to have furnishings, not fixtures. Above all,
I didn’t want it to be girlie.” —John Hoke, designer, Nike
Yes!: “Crest Spinoff Targets Women”—cover story,
Ad Age/06.03.02
Crest Rejuvenating Effects. “Chicks in charge” team. $50M launch. Packaging.
Taste. Features.
“Mattel Sees Untapped Market for Blocks: Little Girls”—Headline,
WSJ/04.06.02
“Last year more than 90% of Lego sets purchased were for boys. Mattel says Ello
—with interconnecting plastic squares, balls, triangles, squiggles,
flowers and sticks, in pastel colors and with rounded corners—will go beyond
Lego’s linear play patterns.”
“Volvo Teams Up to Build What Women Want:
Concept Car Goes for Great Storage, Easy
Maintenance” —headline/USA Today/12.16.2003/140-person team;80%
women
Ford Hybrid SUV Wallops Expectations
Women>$100K
College EdSource: USA Today/05.14.04
Not!“Year of the
Woman”
Enterprise Reinvention!
RecruitingHiring/Rewarding/Promoting
Structure Processes
MeasurementStrategyCulture Vision
Leadership
THE BRAND ITSELF!
“Honey, are you sure you have
the kind of money it takes to
be looking at a car like this?”
STATEMENT OF PHILOSOPHY: I am a businessperson. An analyst. A pragmatist. The enormous social good of increased women’s
power is clear to me; but it is not my bailiwick. My “game” is haranguing business leaders
about my fact-based conviction that women’s increasing power – leadership skills
and purchasing power – is the strongest and most dynamic force at work in the American
economy today. Dare I say it as a long-time Palo Alto resident … THIS IS EVEN BIGGER THAN
THE INTERNET!
Tom Peters
Not a Morality Play
“It is critical that we all understand that IBM is not marketing to
women entrepreneurs because it is the thing to do, or even the right thing to do. We’re marketing to
women entrepreneurs because it is a huge opportunity.” — Cherie Piebes
27 March 2000: email to TP from Shelley Rae Norbeck
“I make 1/3rd more money than my husband does. I have as much financial
‘pull’ in the relationship as he does. I’d say this is also true of most of my women
friends. Someone should wake up, smell the coffee and kiss our asses long enough
to sell us something! We have money to
spend and nobody wants it!”
“If we are single, they say we couldn’t catch a man. If we are
married, they say we are neglecting him. If we are divorced,
they say we couldn’t keep him. If we are widowed, they say we
killed him.”Kathleen Brown, on the joys of female political candidacy
Psssst! Wanna see my “porn” collection?
Norwegian Law: Boards must have
at least 40%
women.
Ass Of The Year2002: Maurice Greenberg, A.I.G., on the Company’s New (All Male) Leadership Team
“In a lot of countries of the world, it would be very difficult for a woman to
be a good CEO. … I have a responsibility to do the best we can for
shareholders.” * **
*Source: New York Times/05.05.02**Wouldn’t you love to watch him tell that … face-to-face
… to Margaret Thatcher or Carly Fiorina? (I would.)
Ad from Furniture /Today (04.01):“MEET WITH THE EXPERTS!: How
Retailing’s Most Successful Stay that Way”
Presenting Experts: M = 16;
F = ?? (94% = 272)
0
Stupid: “Amazing, now that I think about it. A bunch of
guys --developers, architects, contractors,
engineers, bankers--sitting around designing shopping centers. And the ‘end users’
will be overwhelmingly women!”
“Customer is King”: 4,440
“Customer is Queen”: 29
Source: Steve Farber/Google search/04.2002
F.Y.I.
“Women Beat Men at Art of Investing”
Source: Miami Herald, reporting on a study by Profs. Terrance Odean and Brad Barber, UC Davis (Cause: Guys are “in and out” of
stocks more often; women choose carefully and hold on for the long term)
Investment Club Returns
Women-only clubs 1997 … 17.9%Mixed … 17.3%
Men-only … 15.6%
Source: National Assoc. Investors
Value Line: Top State* Investment Clubs 2000
8 … All male19 … Coed
22 … All FEMALE
* VT & Maine not included; D.C. included
JBQ: Stop Treating Women Investors Like Idiots!
“Why all this focus on women and our lack of investment guts? A far greater problem, it seems to
me, is trigger-happy speculation, mostly by men. The kind of guys whose family savings went south
with the dot-coms. Imagine a list of their money mistakes: Shoot from the hip. Overtrade their
accounts. Believe they’re smarter than the market. Think with their mouse rather than their brain.
Praise their own genius when stocks go up. Hide their mistakes from their wives.”
Source: Newsweek 01.08.01
Notes to the CEO
--Women are not a “niche”; so get this out of the “Specialty Markets” group.--The competition is starting to catch on. (E.g.: Nike, Nokia, Wachovia, Ford, Harley-Davidson, Jiffy Lube, Charles Schwab, Citigroup, Aetna.)
--If you “dip your toes in the water,” what makes you think you’ll get splashy results?--Bust through the walls of the corporate silos.--Once you get her, don’t let her slip away.--Women ARE the long run!
Source: Martha Barletta, Marketing to Women
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.
“And even if they manage to get the age thing right, [Marti] Barletta says companies still tend to screw up in fairly predictable ways when they add women to the equation. Too often, their first impulse is to paint the
brand pink, lavishing their ads with flowers and bows, or, conversely, pandering with images of women
warriors and other cheesy clichés. In other cases they use language intended to be empathetic that come
across instead as borderline offensive. ‘One bank took out an ad saying, We recognize women’s special
needs,’ says Barletta. ‘No offense, but doesn’t that sound like the Special Olympics?’ ” —Fast Company/03.04
“Secrets” of Marketing to Women
1. Show her “real” women and reliable scenarios.2. Focus on connection and teamwork.3. Capture her imagination by using stories.4. Make it multisensory.5. Add the little extras.6. Tap the emotional power of music.7. Create customer evangelists.8. Form brand alliances.
Source: Lisa Johnson & Andrea Learned, Don’t Think Pink:
What Really Makes Women Buy and How to Increase Your Share of This Crucial Market
“Five Clichés of Women (as Portrayed by Advertisers) …
Perfect MumAlpha FemaleFashionista
Beauty BunnyGreat Granny”
Source: The Independent /09.29.04 (on forthcoming “First London ‘Think Pink’ Conference”)
“Unilever brand Dove’s use of six generously proportioned ‘real women’ to promote its skin-firming preparations must qualify as one of the most talked-about marketing decisions taken
this summer. It was also one of the most successful: Since the campaign broke, sales of the firming lotion have gone up 700 percent in
the UK, 300 percent in Germany and 220 percent in the Netherlands.” —Financial
Times/09.29.04
“In Dove Ads, Normal Is the New
Beautiful” —Headline,
Advertising Age/09.27.04
Must Reads!
EVEolution: The Eight Truths of Marketing to Women, Faith Popcorn
and Lys Marigold
Marketing to Women, Martha Barletta
Don’t Think Pink: What Really Makes Women Buy, Lisa Johnson and
Andrea Learned
12. Re-imagine the Customer II: Trends Worth
Trillion$$$ … Boomer Bonanza/ Godzilla
Geezer.
“It’s like a tsunami coming at you. You know
the tidal wave is going to hit, and it’s a question
of whether we’ll be ready.” —Ed Schneider, Professor of
Gerontology, USC
Subject: Marketers & Stupidity
“It’s 18-44, stupid!”
Subject: Marketers & Stupidity
Or is it: “18-44 is stupid,
stupid!”
2000-2010 Stats
18-44: -1%
55+: +21%(55-64: +47%)
“Some 350,00 people turn 50 each month in the United
States, providing an enormous and growing pool of potential buyers [of giant RVs] for at least the next decade.” —
Craig Kennison, industry analyst/Chicago Tribune/06.07.2004
44-65: “New Consumer Majority” *
*45% larger than 18-43; 60% larger by 2010Source: Ageless Marketing, David Wolfe & Robert Snyder
“The New Consumer 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
“Baby-boomer Women: The Sweetest
of Sweet Spots for Marketers” —David Wolfe and Robert
Snyder, Ageless Marketing
“For today’s emancipated, educated, high-expectation women,
the mid-forties to mid-fifties is the Age of
Mastery.” —Gail Sheehy (in More)
“Tap into a midlife woman’s renewed sense of self, and your cash registers are likely to start
ringing” —Headline/Fast Company/03.04
“BABY-BOOMER, COME HOME: Gap Hopes a New
Chain Will Bring Back Women Who Once
Bought Its Jeans” —headline/ BusinessWeek/0704
Aging/“Elderly”
$$$$$$$$$$$$“I’m in charge!”
“NOT ACTING THEIR AGE: As Baby Boomers
Zoom into Retirement, Will America Ever Be the
Same?”USN&WR Cover/06.01
“Sixty Is the New Thirty”
—Cover/AARP/11.03
50+
$7T wealth (70%)/$2T annual income50% all discretionary spending
79% own homes/40M credit card users41% new cars/48% luxury cars
$610B healthcare spending/74% prescription drugs
5% of advertising targets
Ken Dychtwald, Age Power: How the 21st Century Will Be Ruled by the New Old
“Advertisers pay more to reach the kid because they think that once someone hits
middle age he’s too set in his ways to be
susceptible to advertising. … In fact, this notion of impressionable kids
and hidebound geezers is little more than a fairy tale, a Madison
Avenue gloss on Hollywood’s cult of youth.”—James Surowiecki (The New
Yorker/04.01.2002)
Read This!
Carol Morgan & Doran Levy,
Marketing to the Mindset of Boomers
and Their Elders
“Marketers attempts at reaching those over 50 have
been miserably unsuccessful. No market’s motivations and needs are so poorly understood.”—Peter
Francese, founding publisher, American Demographics
“Households headed by someone 40 or older enjoy 91% ($9.7T) of
our population’s net worth. … The mature market is the dominant
market in the U.S. economy, making the majority of
expenditures in virtually every category.” —Carol Morgan & Doran Levy, Marketing to
the Mindset of Boomers and Their Elders
Median Household Net Worth
<35: $7K35-44: $44K45-54: $83K
55-64: $112K65-69: $114K70-74: $120K>74: $100K
Source: U.S. Census
50+
78M67% of wealth ($28T)
Source: U.S. Census/Federal Reserve/WSJ
Net Worth Household Heads
55-64
= 15X <35
Source: U.S. Census/WSJ
“The mature market cannot be dismissed as entrenched in its
brand loyalties.” —Carol Morgan &
Doran Levy, Marketing to the Mindset of Boomers and Their Elders
“Focused on assessing the marketplace based on lifetime
value (LTV), marketers may dismiss the mature market as
headed to its grave. The reality is that at 60 a person in the U.S. may enjoy 20 or 30 years of life.” —Carol
Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders
“While the average American age 12 or older watched at least five
movies per year in a theater, those 40 and older were the most
frequent moviegoers, viewing 12 or more a year.”—Carol Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders
“Women 65 and older spent $14.7 billion on apparel in 1999, almost as much as that spent by 25- to 34-year-
olds. While spending by the older women increased by 12% from the previous year, that of the younger group increased by only 0.1%. But
who in the fashion industry is currently pursuing this market?” —Carol
Morgan & Doran Levy, Marketing to the Mindset of Boomers and Their Elders
Possession Experiences /“Desires for things”/Young adulthood/to 38
Catered Experiences/ “Desires to be served by others”/Middle adulthood
Being Experiences/“Desires for transcending experiences”/Late
adulthood
Source: David Wolfe and Robert Snyder/Ageless Marketing
“Elderly”
— Purchase “experiences” more than just “things”
— Convenience / Comfort / Access / Need to be
appreciated = Top Priorities
Source: Ken Dychtwald, Age Wave
Starting to Reach Out:
Sony, Ford, Walt Disney, Target, Anheuser-Busch,
P & G
Source: WSJ
“ ‘Age Power’ will rule the 21st century, and we are woefully
unprepared.”Ken Dychtwald, Age Power: How the 21st
Century Will Be Ruled by the New Old
No: “Target Marketing”
Yes: “Target
Innovation” & “Target Delivery Systems”
“The baby-boom generation is the
first wellness generation.” —Paul Zane Pilzer/
The Wellness Revolution: The Next Trillion Dollar Industry
Wellness = $$$$$$$$
Currently $200B, $1T by 2013 (Source: Paul Zane
Pilzer, The Wellness Revolution: The Next Trillion Dollar Industry)
Boomers & Geezers
1. The numbers of people involved are ... enormous.2. The wealth of these people is ... staggering. (The 50+ group in the U.S. controls 70 percent, or $7 trillion, of our wealth.)3. This is the first “aging” group that ... refuses to “act their age”—a very cool thing for goods and services producers. (“Sixty Is the New Thirty”—AARP magazine cover in 2003.)4. The Boomer-Geezer cohort mostly wants to buy ... experiences. 5. One more time: VERY FEW FIRMS ARE AGRESSIVELY ADDRESSING THIS ISSUE-OPPORTUNITY. (“Addressing” = Re-aligning “culture” to Embrace the Boomers-Geezers.)
And ….
Hispanics: 38.5%
growth, 1990-2000, vs. 9.3% overall*
*Source: Communispace/2003
“Relative to the demand, the success
stories are pitifully few” —Andrew Nuttney, Research Director, The
Research & Advisory Group; on marketing effectively to Hispanics
“BofA Is Betting Its Future on the Hispanic Market” *
“We expect to get no less than
80 % of our future growth in
retail banking from the Hispanic market.” —Ken Lewis, CEO, BofA
*Fortune/04.2003
Duh!“We want our associate population to mirror our
customer population at every level, from the executive suite all the way to the retail floor. In the marketplace, basically what I want to do is draw a concentric circle around every one of our 2,300 stores, and I want the assortment in that store to match the ethnicity of the
neighborhood it’s in. Some neighborhoods are all Hispanic, so we can put in a full Hispanic format. That’s
what Super Saver is. All the signage is in both languages. There’s a 100 percent Spanish-speaking
staff in the store.”—Larry Johnston, CEO, Albertsons
Marketing to Women, Martha Barletta
EVEolution: The Eight Truths of Marketing to Women, Faith Popcorn & Lys Marigold
Ageless Marketing, David Wolfe & Robert Snyder
Marketing to the Mindset of Boomers and Their Elders, Carol Morgan & Doran Levy
Selling Dreams: How to Make Any Product Irresistible, Gian Luigi Longinotti-Buitoni
The Dream Society: How the Coming Shift from Information to Imagination Will Transform Your Business, Rolf Jensen
Trading Up: The New American Luxury, Michael Silverstein & Neil Fiske
Big/Mostly Missed Market OPPORTUNITIES1. Women buy everything. (Everything = A really, really lot.)2. Boomers & Geezers have all the money. (Trillions upon more trillions.)3. The Hispanic market is growing soooooo fast and is influencing styles soooooo fundamentally, it’d make your head swim … if you were paying the slightest bit of attention. (Hispanic-origin population in the U.S. grew by 39 percent from 1990 to 2000—while the population as a whole increased by 9 percent.)4. “Outside the beltway” concerns with All Things Green are growing exponentially. Green products. Green buildings. Environmental sensibilities and stewardship as a primary measure of enterprise citizenship.5. Medicine, the practice thereof, many miracle cures and the stupendous promise of biotech not withstanding, is broken. Dealing with problems before they arise is becoming “the new cool”— at least it is if you’re a patient. Hence: Wellness (products & services) is a burgeoning market. No, make that “stupendous.”6. DAMN FEW ARE PAYING ATTENTION TO ANY OF THE ABOVE—OR AT LEAST NO MORE THAN LIP SERVICE.7. To “take advantage” requires far, far more than “initiatives”—it demands fundamental strategic & cultural enterprise re-alignment. (E.g.: If you want to glom on to the “women’s market opportunity,” more or less put lots & lots of women in charge—see above.)8. So … use the new micro-segmentation tools to your heart’s desire—but don’t forget the basics.9. REPEAT AFTER ME: WOMEN BUY EVERYTHING!10. REPEAT AFTER ME: BOOMERS AND GEEZERS HAVE ALL THE MONEY!11. REPEAT AFTER ME: THERE ARE A LOT MORE HISPANICS AROUND THAN THERE WERE YESTERDAY.12. REPEAT AFTER ME: DO I HATE MONEY? AM I ASHAMED OF PROFIT? AM I AN ENEMY OF CAPITALISM? IF “NO” TO THESE QUESTIONS, THEN WHY AM I SO STUPID?
The Hunch of a Lifetime: An Emergent (Market) Nexus
I have a sense/hunch there’s an interesting nexus among several of the ideas about New Market Realities that I promote … namely Women-Boomers-Wellness-Green-Intangibles. Each one drives the Fundamental (Traditional) Economic Value Proposition toward the “softer side”: From facts- & figures-obsessed males toward relationship-oriented Women. From goods-driven youth toward “experiences”-craving Boomers. From quick-fix & pill-popping “healthcare” toward a holistically inclined “Wellness Revolution.” From mindless exploitation of the Earth’s resources toward increased awareness of the fragility and preciousness of our Environment. From “goods” and “services” toward Design- & Creativity-rich Intangibles-Experiences-Dreams Fulfilled. This so-called “softer side”—as the disparate likes of IBM’s Sam Palmisano and Harley-Davidson’s Rich Teerlink teach us—is now & increasingly “where the loot is,” damn near all the loot. That is, the “softer side” has become the Prime Driver of tomorrow’s “hard” economic value. Furthermore, each of the Five Key Ideas (Women-Boomers-Wellness-Green-Intangibles) feeds off and complements the other four. Dare I use the word “synergy”? Perhaps. (Or: Of course!) I can imagine an enterprise defining its raison d’etre in terms of these Five Complementary Key Ideas. (HINT: DAMN FEW DO TODAY.)
An Emergent Nexus
Men …………………………….……………….... WomenYouth ………………………………… Boomers/Geezers“Fix It”Healthcare………………... Wellness/PreventionExploit-the-Earth ……...... Preserve/Cherish the PlanetTangibles ……………………………………… Intangibles
WomenBoomersWellness
GreenIntangibles