NOTE: To appreciate this presentation [and insure that it is not a mess], you need Microsoft fonts: “Showcard Gothic,” “Ravie,” “Chiller” and “Verdana”

Part 1.1 Tom Peters’ EXCELLENCE. ALWAYS. NEW MASTER/21 August 2008

Slides at … tompeters.com

Ten Parts P1.1, P1.2, P1.3, P1.4/Generic P2/Leadership P3/Talent P4/“Value-added Ladder” P5/“New” Markets P6/“The Equations” P7.1/Implementation P7.2/Action P8/13 “Guru Gaffes” P9/Health“care” P10/“The Lists”

Part 1.1

The “model” for my MASTER presentation has historically been Linear—consistent with my engineering background and perhaps my 50% or so of German genetic material. (Peters, for heaven's sake—Granddad Peters, a contractor-engineer, came to the U.S. in the 1870s.) But in my oral presentations I found I often never got around to the punchline. So in November 2007, preparing for a speech in Madrid, I decided, “The hell with it, I’m going to organize by importance of the topic by my reckoning, and put first things first”—and the heck with linearity. That in turn coincided with my decision to re-emphasize “the basics” that often go missing but which are the bedrock for getting things done in the real world. The result, for now, seven months later, is this New Annotated Master. All yours …

“We Have … Thank you, Howard (Starbucks)!

Starbucks, more or less for the first time, and before the Recession, began to have some significant problems. The “good news,” as it were, is that Howard Schultz’s S’bucks has no new competition; hence we are left with only one possible cause for Starbucks’ slump—Starbucks!

Sports: You beat yourself!

Sure, your opponent in sports can be having a “lucky day”—but mostly, when one stinks up, say, the presentation … one beats oneself! Principal diagnostic tool for Starbucks or you and me? Spend $2.95, and buy a mirror.

Internal organizational excellence* ** = Deepest “Blue Ocean”

*A “Blue ocean” is by definition very profitable … and will be quickly copied. “sustainable blue” (Internal organizational excellence) is far more difficult to copy.

**Internal organizational excellence = “Brand inside”

B(I) > B(O)

Sure, I am well aware of internally focused organizations
Sure, I am well aware of internally focused organizations. Nonetheless, I still (mostly) cast my vote for XX … eXcellence in eXecution.

When The “Enemy” Really Wins
“Lose Your Nemesis”: “Obsessing about your competitors, trying to match or best their offerings, spending time each day wanting to know what they are doing, and/or measuring your company against them—these activities have no great or winning outcome. Instead you are simply prohibiting your company from finding its own way to be truly meaningful to its clients, staff and prospects. You block your company from finding its own identity and engaging with the people who pay the bills. … Your competitors have never paid your bills and they never will.” —Howard Mann, Your Business Brickyard: Getting Back to the Basics to Make Your Business More Fun to Run* *Mr Mann also quotes Mike McCue, former VP/Technology at Netscape: “At Netscape the competition with Microsoft was so severe, we’d wake up in the morning thinking about how we were going to deal with them instead of how we would build something great for our customers. What I realize now is that you can never, ever take your eye off the customer. Even in the face of massive competition, don’t think about the competition. Literally don’t think about them.”

Thank you , Michael (sorta)

“New technology, by itself, has little economic benefit
“New technology, by itself, has little economic benefit. … The economic benefits arise not from innovation itself, but from the entrepreneurs who eventually discover ways to put innovation to practical use— and, most critically, from the organizational changes through which businesses reshape themselves to take advantage of new technology.” —Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

Thank you ,Lou

“… it is the game.”

Who Says Elephants Can’t Dance
“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. [Yet] 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

Thank you ,Herb

“You have to treat your employees like customers
“You have to treat your employees like customers.” —Herb Kelleher, upon being asked his “secret to success” Source: Joe Nocera, NYT, “Parting Words of an Airline Pioneer,” on the occasion of Herb Kelleher’s retirement after 37 years at Southwest Airlines (SWA’s pilots union took out a full-page ad in USA Today thanking HK for all he had done; across the way in Dallas American Airlines’ pilots were picketing the Annual Meeting)

Consistent with the idea that underscoring Brand Inside is the best way to keep the ocean deep & blue, the Sole Secret (he says) of Southwest Airlines founder Herb Kelleher is putting his people First—making them his principal customers. The likes of Dave Liniger (RE/MAX founder) and Hal Rosenbluth (superstar boss of travel giant Rosenbluth International) spout and live this same idea, using practically the same words—e.g., Hal’s book Putting the Customer Second.

Thank you Ben, Norm, Ike and Delaware

Give good tea!

“In the same bitter winter of 1776 that Gen
“In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a simple brown suit and a fur cap. … Franklin’s miracle was that armed only with his canny personal charm and reputation as a scientist and philosopher, he was able to cajole a wary French government into lending the fledgling American nation an enormous fortune. … The enduring image of Franklin in Paris tends to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue affairs of state as rigorously as John Adams. When Adams joined Franklin in Paris in 1779, he was scandalized by the late hours and French lifestyle his colleague had adopted, says [Stacy Schiff, in A Great Improvisation] Adams was clueless that it was through the dropped hints and seemingly offhand remarks at these salons that so much of French diplomacy was conducted. … Like the Beatles arriving in America, Franklin aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …” Source: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin Talked the French into Forming a Crucial Alliance,” U.S. News & World Report,

The ragtag and victory-less Continental Army was retreating, George Washington notwithstanding. For the Americans, finding an ally was a life or death proposition. Short, fat old Benjamin Franklin was our man in Paris. Short, fat and old though he may have been, he was a Charmer. He won the hearts and devotion of the ladies of high society with his mastery of Tea & Flattery. The Americans eked out a success at Saratoga which Franklin turned into an epic victory—and the besotted ladies convinced their mighty husbands to get behind the Americans. The rest, as they say, is history. The launchpad for Gulf War I was Saudi Arabia. Despite the Saudis need to have Iraq’s Kuwaiti incursion reversed, the Kingdom was touchy about the massive American military presence on their Holy soil. Allied supreme commander Norm Schwarzkopf says, tongue only half in cheek, that his principal contribution to the war effort was nightly marathon sessions sipping tea with the Crown Prince. The point: No matter how weighty the cause, “giving good tea”—an incredible and expensive (in terms of time) investment in key relationships is typically invaluable and of decisive strategic importance. Message: Master the Art of Tea—metaphorically at least—and make it in to the history books.

“Allied commands depend on mutual confidence [and this confidence]
is gained, above all through the development of friendships.” —General D.D. Eisenhower, Armchair General* (05.08) *“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his future coalition command

Do tea. Make friends. Could it be that simple? At some level, the answer is yes. You need the troops. And you need the guns. But as D-Day approached in 1944, you mostly needed to have a modicum of peace among Churchill, Montgomery, Patton, Bradley and Roosevelt. As Schwarzkopf kept the Saudis on board through tea, Ike’s affability, for which he was often criticized or dismissed or disdained, kept the British and Americans from killing each other long enough to kill the Germans.

“eighty percent of success is showing up.”
—Woody Allen

“See How Simple What You Cannot Do Is”: The 320% Factor!
Woody Allen/“Eighty percent of success is showing up” was the topic of a recent Post. Rob (Comment, tompeters.com): “And I reckon a large part of the remaining 20% is Refusing to Go Away Again.” Ernest Hemmingway’s The Garden of Eden: “ … Finishing is what you have to do. If you don’t finish, nothing is worth a damn.” “ … Write the hardest story there is to write that you know. Start it tomorrow. The hell with tomorrow. Go and start it now. He sat down and wrote the first paragraph of the new story that he had always put off writing. … The very beginning was written and all he had to do was go on. That’s all, he said. See how simple what you cannot do is?” Message-Lesson/s: The first 80% of success is showing up! The second 80% is starting … now. The third 80% is sticking around and refusing to leave! The final 80% is finishing! (“See how simple what you cannot do is?”)

Delaware was the smallest state in the Union in 1787 as the process of writing the Constitution got underway. For a number of reasons, some states, such as New Hampshire, were absent from the Convention, members of various delegations were away as much as present (e.g., Alexander Hamilton). In any event, about thirty Delegates were present and at work at any point in time. States could decide on the size of their delegations, and Delaware chose five—a very large number. Moreover, wee Delaware’s five never missed a day’s work and were in their seats gavel to gavel. Needless to say, wee Delaware had a wildly disproportionate impact on the Convention and the document itself. In a nutshell, Delaware’s secret: Show up! (I like this example because it illustrates the impact of this “trivial” idea-tactic-strategy, available to all of us all of the time, in the most Monumental of affairs.)

Do tea! Make friends! Show up!

On the basis of such apparently humble “basics,” the world turns—the American Revolution, Gulf War I, D-Day and the fate of the world, the U.S. Constitution. Think about it!

Thank you Rich!

“Mapping your competitive position”* or … *Rich D’Aveni/HBR

The “Have you …” 50* *See Appendix One

While waiting last week [early December 2007] in the Albany airport to board a Southwest Airlines flight to Reagan/DCA, I happened across the latest Harvard Business Review, on the cover of which was a yellow sticker. The sticker had on it the words “Mapping your competitive position.” It referred to a feature article by my friend Rich D’Aveni. His work is uniformly good—and I have said as much publicly on several occasions dating back 15 years. I’m sure this article is good, too—though I didn’t read it. In fact it triggered a furious negative “Tom reaction” as my wife calls it. Of course I believe you should worry about your “competitive position”! (I do.) But instead of obsessing on competitive position and other abstractions, as the B-schools and consultants would always have us do, I instead wondered about some “practical stuff” which I believe is more important to the short- and long-term health of the enterprise, tiny or enormous. E.g. …

1. Have you in the last 10 days … visited a customer. 2
1. Have you in the last 10 days … visited a customer? 2. Have you called a customer … TODAY? * * *

Want to “map” your “competitive position”
Want to “map” your “competitive position”? Start by going to visit a customer … ASAP! Or at least calling! You’ll find the other 48 items on the “Have you … ?” list at #5.2.2.

Thank you Dr. Groopman

In How Doctors Think, Harvard Med doc Jerome Groopman tells us that the best way to get a fix on what ails a patient is to get the patient talking openly about his-her problem. Great. But the research shows that docs, on average, leap to a conclusion and interrupt their patients after … 18 seconds. (Docs are hardly alone. This is a disease present in almost all specialists and professionals. “Listening” for a professional invariably means … talking.)

Thank you Dick & Dan

Dick (Build!) Dan (Report on what not built—tangible v. palpable)

Thank you “Great One” (and Phil)

“You miss 100% of the shots you never take.” —Wayne Gretzky

“Reward excellent failures. Punish mediocre successes
“Reward excellent failures. Punish mediocre successes.” Phil Daniels, Sydney exec

Thank you Walter

Politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics politics

??????? “Success doesn’t depend on the number of people you know; it depends on the number of people you know in high places!” or “Success doesn’t depend on the number of people you know; it depends on the number of people you know in low places!”

Matter of implementation.
All success is a Matter of implementation. All implementation is a matter of politics.

Thank you Heather

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

full of senior ‘leaders.’ ”
Big bank CEO, summarizing to his top-management team his notes from TP’s presentation: “Tom’s made a great point; he let us know that our customer base will be different and more diverse in the future.” Tom: “With all due respect, that’s not what Tom said. Though I am an unabashed supporter of ‘diversity’ in general, what I said was ‘She is your customer—and has been for a long time and will be forever.’ And ‘she’ is notably AWOL in this [meeting] room full of senior ‘leaders.’ ”

Thank you Sheik Mohammad

Single greatest act of pure imagination

dubai 60

Thank you Horst

“I [will] not accept the explanation of a recession negatively affecting the [new] business. There are still people traveling. We just have to get them to stay in our hotel.” —Horst Schulze, on his new chain, Capella, from Prestige (06.08) “The Return of History and the End of Dreams”

Thank you Steve

“You know a design is good when you want to lick it.” —Steve Jobs
Source: Design: Intelligence Made Visible, Stephen Bayley & Terence Conran

Thank you Kevin, Eleanor (and Steve)

Kevin Roberts’ Credo 1. Ready. Fire. Aim. 2. If it ain’t broke
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 Avoid moderation!

“Do one thing every day that scares you.” —Eleanor Roosevelt

Stay Hungry. Stay Foolish. Steve Jobs

Thank you Bob

3. Autonomy and Entrepreneurship 4. Productivity Through People
Excellence1982: The Bedrock “Eight Basics” 1. A Bias for Action 2. Close to the Customer 3. Autonomy and Entrepreneurship 4. Productivity Through People 5. Hands On, Value-Driven 6. Stick to the Knitting 7. Simple Form, Lean Staff 8. Simultaneous Loose-Tight Properties”

*In Search of Excellence
“Breakthrough” 82* People! Customers! Action! Values! *In Search of Excellence

Thank you Siberia …in May!

Why in the World did you go to Siberia?

Enterprise* ** (*at its best): An emotional, vital, innovative, joyful, creative, entrepreneurial endeavor that elicits maximum concerted human potential in the wholehearted service of others.** **Employees, Customers, Suppliers, Communities, Owners, Temporary partners 74

Thank you Mssrs. Easterly, Yunus and Wheeler!

“trust the World Bank experts”
"Trust the development experts—all seven billion of them.” —headline, Financial Times, , to an article by development guru William Easterly, commenting negatively on the World Bank Growth Commission’s recent report that concludes, in effect, “trust the World Bank experts”

“The four most important words in any organization
are … ‘What do you think?’ ” Source: courtesy Dave Wheeler, posted at tompeters.com, source of original unknown ( )

New Opener

The … “Last 98%”

30-fold!

“National Center for Patient Safety Ann Arbor”
Ken Kizer/VA 1997: “culture of cover-up that pervades healthcare” “Patient Safety Event Registry” … “looking for systemic solutions, not seeking to fix blame on individuals except in the most egregious cases. The good news was a thirty-fold increase in the number of medical mistakes and adverse events that got reported.” “National Center for Patient Safety Ann Arbor”

Thank you Ike , Charlie, Ben & Norm, Gust, George, Nelson, and Ben …

“Allied commands depend on mutual confidence [and this confidence]
is gained, above all through the development of friendships.” —General D.D. Eisenhower, Armchair General * (05.08) *“Perhaps his most outstanding ability [at West Point] was the ease with which he made friends and earned the trust of fellow cadets who came from widely varied backgrounds; it was a quality that would pay great dividends during his future coalition command.”

George Crile (Charlie Wilson’s War) on Charlie Wilson: “The way things normally work, if you’re not Jewish you don’t get into the Jewish caucus, but Charlie did. And if you’re not black you don’t get into the black caucus. But Charlie plays poker with the black caucus; they had a game, and he’s the only white guy in it. The House, like any human institution, is moved by friendships, and no matter what people might think about Wilson’s antics, they tend to like him and enjoy his company.”

Give good tea!

“In the same bitter winter of 1776 that Gen
“In the same bitter winter of 1776 that Gen. George Washington led his beleaguered troops across the Delaware River to safety, Benjamin Franklin sailed across the Atlantic to Paris to engage in an equally crucial campaign, this one diplomatic. A lot depended on the bespectacled and decidedly unfashionable 70-year-old as he entered the world’s fashion capitol sporting a simple brown suit and a fur cap. … Franklin’s miracle was that armed only with his canny personal charm and reputation as a scientist and philosopher, he was able to cajole a wary French government into lending the fledgling American nation an enormous fortune. … The enduring image of Franklin in Paris tends to be that of a flirtatious old man, too busy visiting the city’s fashionable salons to pursue affairs of state as rigorously as John Adams. When Adams joined Franklin in Paris in 1779, he was scandalized by the late hours and French lifestyle his colleague had adopted, says [Stacy Schiff, in A Great Improvisation] Adams was clueless that it was through the dropped hints and seemingly offhand remarks at these salons that so much of French diplomacy was conducted. … Like the Beatles arriving in America, Franklin aroused a fervor—his face appeared on prints, teacups and chamber pots. The extraordinary popularity served Franklin’s diplomatic purposes splendidly. Not even King Louis XVI could ignore the enthusiasm that had won over both the nobility and the bourgeoisie. …” Source: “In Paris, Taking the Salons By Storm: How the Canny Ben Franklin Talked the French into Forming a Crucial Alliance,” U.S. News & World Report,

George Crile (Charlie Wilson’s War) on Gust Avrakotos’ strategy: “He had become something of a legend with these people who manned the underbelly of the Agency [CIA].”

The 95% Factor: “What I learned from my years as a hostage negotiator is that we do not have to feel powerless—and that bonding is the antidote to the hostage situation.” —George Kohlrieser, Hostage at the Table

“I am a dispenser of enthusiasm.” —Ben Zander

Hard Is Soft Soft Is Hard

Hard Is Soft (Plans, #s) Soft Is Hard (people, customers, values, relationships))

R.O.I.R. 99

Return On Investment In Relationships
100

Relationships (of all varieties): THERE ONCE WAS A TIME WHEN A THREE-MINUTE PHONE CALL WOULD HAVE AVOIDED SETTING OFF THE DOWNWARD SPIRAL THAT RESULTED IN A COMPLETE RUPTURE.

“Courtesies of a small and trivial character are the ones which strike deepest in the grateful and appreciating heart.” —Henry Clay

X =XFX* *Excellence = Cross-functional Excellence

The “XF-50”: 50 Ways to Enhance Cross-Functional Effectiveness and Deliver Speed, “Service Excellence” and “Value-added Customer ‘Solutions’”* *Entire “XF-50” List is an Appendix to the LONG version of this presentation, posted at tompeters.com

Never waste a lunch!

???? % XF lunches* *Measure!

CIO Question: % Doc lunches* *Last 30 days

George Crile (Charlie Wilson’s War) on Charlie Wilson: “The way things normally work, if you’re not Jewish you don’t get into the Jewish caucus, but Charlie did. And if you’re not black you don’t get into the black caucus. But Charlie plays poker with the black caucus; they had a game, and he’s the only white guy in it. The House, like any human institution, is moved by friendships, and no matter what people might think about Wilson’s antics, they tend to like him and enjoy his company.”

??????? “Success doesn’t depend on the number of people you know; it depends on the number of people you know in high places!” or “Success doesn’t depend on the number of people you know; it depends on the number of people you know in low places!”

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

George Crile (Charlie Wilson’s War) on Gust Avrakotos’ strategy: “He had become something of a legend with these people who manned the underbelly of the Agency [CIA].”

William Easterly, The White Man’s Burden: Why the West’s Effort to Aid the Rest Have Done So Much Ill and so Little Good: “The West spent … $2.3 trillion on foreign aid over the last five decades and still has not managed to get twelve-cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still not managed to get three dollars to each new mother to prevent five million child deaths. … But I and many other like-minded people keep trying, not to abandon aid to the poor, but to make sure it reaches them.”

Lesson: Show up. Lesson: Listen to the “locals.” Lesson: Hear the Lesson: Engage the locals. Lesson: Try a lot of stuff.

“Ninety percent of success is showing up.”
—Woody Allen

Source: How Doctors Think, Jerome Groopman
18” Source: How Doctors Think, Jerome Groopman

Noth-ing is “scalable”!*

Nothing is “scalable”!* *Every replication must exude the perception of uniqueness—even if it means a half-step backwards. (“It wouldn’t have worked if we hadn’t done it our way.”)

cent medicines to community members.
Easterly, maligned by many, is the arch-enemy of the Big Plan [his capital letters, not mine—for once] sent from afar; and the vociferous fan of practical activities of those he calls “Searchers” … who learn the ins and outs of the culture, politics and local conditions “on the ground” in order to use local levers and local players, and get those 12- cent medicines to community members. Read on, “Planners” vs “Searchers” …

“Buy in”- “Ownership”-Authorial bragging rights-“Born again” Champion = One Line of Code!

Life’s Little Secret. One line of code
Life’s Little Secret **One line of code **Caudill’s table in the rural library **Hair on the woman’s arm **EJW’s scissors to the perfect draft

They own it. They saved it and saved your (rather uninformed) butt
**They own it. **They saved it and saved your (rather uninformed) butt. **You must tolerate a smidgeon of sub-optimization. **You must show appropriate humility and appreciation. **You must be willing (eager) to cover the exact same ground again and again and again.

ready with wires and screws, we are on version
“We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version #5. By the time our rivals are ready with wires and screws, we are on version #10. It gets back to planning versus acting: We act from day one; others plan how to plan—for months.” —Bloomberg by Bloomberg

1/40 126

Culture of Prototyping “Effective prototyping may be the most valuable core competence an innovative organization can hope to have.” —Michael Schrage I am an unabashed Michael Schrage fan. I admit it. AND HIS … UNABASHED … OBSESSION … WITH PROTOTYPING MATCHES MINE! In short: It ain’t real ’til we’ve done something … REAL. Good news [per Schrage and me]: You CAN do “something real” in short order … if your head is screwed on right.

“Experiment fearlessly” Source: BW0821
“Experiment fearlessly” Source: BW , Type A Organization Strategies/ “How to Hit a Moving Target”—Tactic #1

“This is so simple it sounds stupid, but it is amazing how few oil people really understand that you only find oil if you drill wells. You may think you’re finding it when you’re drawing maps and studying logs, but you have to drill.” Source: The Hunters, by John Masters, Canadian O & G wildcatter

Lesson: Talk to the “locals.”
Lesson: Listen to the “locals.” Lesson: Hear the “locals.” Lesson: Hear to the “locals.” Lesson: Respect the “locals.” Lesson: Empathize with the “locals.”

For projects involving children or health or education or community development or sustainable small-business growth (most projects), women are by far the most reliable and most central and most indirectly powerful local players even in the most chauvinist settings.

“Forget China, India and the Internet: Economic Growth Is Driven by Women.” —Headline, Economist, April 15, 2006, Leader, page 14

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

TP: “How to flush $500,000 down the toilet in one easy lesson!!”

< CAPEX > People!

… no less than Cathedrals in which the full and awesome power of the Imagination and Spirit and native Entrepreneurial flair of diverse individuals is unleashed in passionate pursuit of … Excellence.

#1 cause of Dis-satisfaction?

2 per Year = Excellence + Legacy

EXCELLENCE. BEDROCK. LEADERSHIP. THE 10Ps.

PURPOSE. PASSION. Potential. Presence. Personal. PERSISTENCE. PEOPLE
PURPOSE. PASSION. Potential. Presence. Personal. PERSISTENCE. PEOPLE. Promotion. Potent. Positive.

“I am a … Dispenser of Enthusiasm!” —Ben Zander

“You must be the change you wish to see in the world.” Gandhi

Relentless: “One of my superstitions had always been when I started to go anywhere or to do anything, not to turn back , or stop, until the thing intended was accomplished.” —Grant

Kevin Roberts’ Credo 1. Ready. Fire. Aim. 2. If it ain’t broke
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 Avoid moderation!

“Leaders ‘do’ people. Period.” —Anon.

On NELSON: “[other] admirals more frightened of losing than anxious to win”

2 per Year/ 20 per Decade = Excellence + Legacy

“Most managers spend a great deal of time thinking about what they plan to do, but relatively little time thinking about what they plan not to do.. As a result, they become so caught up … in fighting the fires of the moment that they cannot really attend to the longterm threats and risks facing the organization. So the first soft skill of leadership the hard way is to cultivate the perspective of Marcus Aurelius: avoid busyness, free up your time, stat focused on what really matters. Let me put it bluntly: every leader should routinely keep a substantial portion of his or her time—I would say as much as 50 percent—unscheduled. … Only when you have substantial ‘slop’ in your schedule—unscheduled time—will you have the space to reflect on what you are doing, learn from experience, and recover from your inevitable mistakes. Leaders without such free time end up tackling issues only when there is an immediate or visible problem. Managers’ typical response to my argument about free time is, ‘That’s all well and good, but there are things I have to do.’ Yet we waste so much time in unproductive activity—it takes an enormous effort on the part of the leader to keep free time for the truly important things.” —Dov Frohman (& Robert Howard), Leadership The Hard Way: Why Leadership Can’t Be Taught—And How You Can Learn It Anyway (Chapter 5, “The Soft Skills Of Hard Leadership”)

“The Discipline Of Daydreaming”: “Nearly every major decision of my business career was, to some degree, the result of daydreaming. … To be sure, in every case I had to collect a lot of data, do detailed analysis, and make a data-based argument to convince superiors, colleagues and business partners. But that all came later. In the beginning, there was the daydream. By daydreaming, I mean loose, unstructured thinking with no particular goal in mind. … In fact, I think daydreaming is a distinctive mode of cognition especially well suited to the complex, ‘fuzzy’ problems that characterize a more turbulent business environment. … Daydreaming is an effective way of coping with complexity. When a problem has a high degree of complexity, the level of detail can be overwhelming. The more one focuses on the details, the more one risks being lost in them.. … Every child knows how to daydream. But many, perhaps most, lose the capacity as they grow up. …” —Dov Frohman (& Robert Howard), Leadership The Hard Way: Why Leadership Can’t Be Taught—And How You Can Learn It Anyway (Chapter 5, “The Soft Skills Of Hard Leadership”)

Nudge. Sway. K.I.S.S. *Keep It Simple, Stupid

90K in U. S. A. ICUs on any given day; 178 steps/day in ICU
90K in U.S.A. ICUs on any given day; 178 steps/day in ICU. 50% stays result in “serious complication” Source: Atul Gawande, “The Checklist” (New Yorker, )

Peter Pronovost, Johns Hopkins, 2001. Checklist, line infections
**Peter Pronovost, Johns Hopkins, 2001 **Checklist, line infections **1/3rd at least one error when he started **Nurses/permission to stop procedure if doc, other not following checklist **In 1 year, 10-day line-infection rate: 11% to … 0% Source: Atul Gawande, “The Checklist” (New Yorker, )

**Docs, nurses make own checklists on whatever process-procedure they choose **Within weeks, average stay in ICU down 50% Source: Atul Gawande, “The Checklist” (New Yorker, )

reduces “spillage” by 80%, Schiphol Airport
“Everything matters” -80% Source: Nudge, Richard Thaler and Cass Sunstein, etching of fly in the urinal reduces “spillage” by 80%, Schiphol Airport

“Experiences are as distinct from services as services are from goods
“Experiences are as distinct from services as services are from goods.” —Joe Pine & Jim Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage

<TGW vs. >TGR

2-cent candy

End New Opener

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The answer seems obvious: Buy a very large one and just wait.” —Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics 168

“Forbes100” from 1917 to 1987: 39 members of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly underperformed the market; just 2 (2%), GE & Kodak, outperformed the market from to 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 Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market

GE Decentralization to the point of failure to pursue synergies Accountability (extreme, merciless, all levels) Profitability Metric madness (not portable—the Nardelli case Six-sigma religion (limits innovation? 3M, Boeing?) Execution (Bossidy) Truth-telling Decentralized staff except for financial integrity, risk, management, management development Operational excellence Centralized major initiatives with teeth, but not to the detriment of decentralization, accountability (e.g., via best practices Management development (Deep) Succession effectiveness (Jones, Welch, Immelt) (universal) Up or out Targeted acquisitions

“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

$10,000,000/Day 172

Mission impossible? $36B/’98 minus $675M/‘07
173

$10,000,000/Day 174

“Citigroup merger a mistake ” “sad story” “The stockholders have not benefited. The employees certainly have not benefited and I don’t think the customers have benefited because our franchises are weaker than they have been.” Source: Financial Times, (All quotes courtesy John Reed, who crafted the Citi- Travelers merger in 1998 in a $166B deal)

“Despite a decade of banking mergers, there is no evidence that big banks are any more efficient or profitable than their smaller rivals.” —Financial Times, 0329, on possible Barclays-ABN Amro merger (“When it comes to asking the stock market whether bigger banks are better, the current answer is a resounding ‘no.” —Citigroup analysis, 2006)

“Not a single company that qualified as having made a sustained transformation ignited its leap with a big acquisition or merger. Moreover, comparison companies—those that failed to make a leap or, if they did, failed to sustain it—often tried to make themselves great with a big acquisition or merger. They failed to grasp the simple truth that while you can buy your way to growth, you cannot buy your way to greatness.” —Jim Collins/Time/2004

“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 178

Dick Kovacevich: You don’t get better by being bigger. You get worse.”

There’s “A” and then there’s “A.”

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/ / David Harding & Sam Rovit, Bain & Co./re Comcast-Disney

GE aims at Pratt & Whitney in the turboprop market.
My Kind of Acquisition GE aims at Pratt & Whitney in the turboprop market. GE acquires Walter Engines, an 85-year old firm from the Czech Republic (“earned a reputation … for building rugged propeller engines used heavily in Eastern Europe and niche markets such as agriculture and cargo planes.”) Bingo: Fill a need-hole by paying top dollar for a superb, well-regarded firm of modest size that complements your main business. (Bingo, more or less: Melding of the desirable practices of a non-bureaucratic, independent and proud firm into a Big Dog’s corporate culture is very hard and delicate work—the failure rate is high; still, the practice makes sense if you are willing to work patiently with such acquired companies.) Source: Wall Street Journal,

Spinoffs systematically perform better than IPOs … track record, profits … “freed from the confines of the parent … more entrepreneurial, more nimble” —Jerry Knight/ Washington Post/ 08.05

The last word: There is no “last word.”

Flat as a Pancake (Or Worse) Wal
Flat as a Pancake (Or Worse) Wal*Mart … Dell … Intel … Yahoo … Home Depot … Microsoft … GE

“Data drawn from the real world attest to a fact that is beyond our control: Everything in existence tends to deteriorate.” —Norberto Odebrecht, Education Through Work

Built to last?

“But what if [former head of strategic planner 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

Built to Last vs Built to Change/Rock the World

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” —Charles Darwin 191

—Jim Utterback, Mastering the Dynamics of Innovation
“A pattern emphasized in the case studies in this book is the degree to which powerful competitors not only resist innovative threats, but actually resist all efforts to understand them, preferring to further their positions in older products. This results in a surge of productivity and performance that may take the old technology to unheard of heights. But in most cases this is a sign of impending death.” —Jim Utterback, Mastering the Dynamics of Innovation

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

C.E.O. to C.D.O.

Chief Destruction Officer

#1.1.1

Q4/ , Source: Barron’s

Q4/ ,000 = ? Source: Barron’s

Q4/2006 +500,000 = +7,700,000 -7,200,000 Source: Barron’s 0922.07

#1.1.2

“… and, most critically, from the organizational changes through which businesses reshape themselves to take advantage of new technology.” —Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

“New technology, by itself, has little economic benefit
“New technology, by itself, has little economic benefit. … The economic benefits arise not from innovation itself, but from the entrepreneurs who eventually discover ways to put innovation to practical use—and, most critically, from the organizational changes through which businesses reshape themselves to take advantage of new technology.” —Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

#1.1.3

Ha: “By impressive examples and incontrovertible argument [Norman] Angel [in his book, The Great Illusion] showed that given the present financial and economic interdependence of nations, the victor [in a war] would suffer equally with the vanquished; therefore war had become unprofitable; therefore no one would be so foolish as to start one.” [NB: Tuchman reports that Angel’s book was published in 1910, four years before the Great War, translated into numerous languages, and studied by the highest level statesmen from the UK and all of Europe to Japan, with almost uniform nods of agreement.] “New economic factors clearly prove the inanity of aggressive wars. … Because of the interlacing of nations, war becomes every day more difficult and improbable.” Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Commission” and senior advisor on foreign policy and the military; he believed that the Angel doctrine was as accepted in Germany as in the UK. Master source: The Guns of August, Barbara Tuchman, 1962

Economic Growth Insulates Against International Violence
Economic Growth Insulates Against International Violence? “The hundred years after 1900 were a time of unparalleled progress. In real terms, it has been estimated [that] average per capita global domestic product increased by little more than 50 percent between 1500 and Between 1870 and 1998, however, it increased by a factor of more than six and a half.” —Niall Ferguson, The War of the World

L(+21) = L(-21)

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

“… Time and space are annihilated by steam
“… Time and space are annihilated by steam. … Oh, this constant locomotion, my body & everything in motion. Steamboats, Cars, & hotels all crammed & crowded full the whole population seems in motion & in fact as I pass along with Lightening speed & cast my eye on the distant objects, they all seem in a whirl nothing appearing permanent even the trees are waltzing, the mind too goes with all this, it speculates, theorizes, & measures all things by locomotive speed, where will it end.” —Asa Whitney, first to formally propose transcontinental railroad to Congress, diary entry, 1844, from David Hayward Bain, Empire Express: Building the First Transcontinental Railroad

“[The railways] turned the known universe upside down
“[The railways] turned the known universe upside down. They made a greater and more immediate impact than any other innovation before or since. … The shock was both sudden and universal … With the railways came the development of modern capitalism, of modern nations, the creation of new regions from the American Midwest, from Lake Victoria to the pampas in Argentina.” —Nicholas Faith, The World the Railways Made

The First Internet? Songlines/ Bruce Chatwin

“For Real Globalization, Look at Ancient Rome” “There is nothing new about a global world. We were living in one 2,000 years ago. … The Roman in the street ate bread baked with wheat grown in North Africa or Egypt, and fish that had been caught and dried near Gibraltar, He cooked with North African oil in pots and pans of cooper mined in Spain, ate off dishes fired in French kilns, drank wine from Spain or France. … The Roman of wealth dressed in garments of wool from Miletus or linen from Egypt; his wife wore silks from China, adorned herself with diamonds and pearls from India, and made up with cosmetics from South Arabia. … He lived in a house whose walls were covered with colored marble veneer quarried in Asia Minor; his furniture was of Indian ebony or teak inlaid with African ivory.” —Peter Jones and Lionel Casson, The Spectator,

#1 Exporter?

#4 Japan #3 USA #2 China #1 Germany

Reason? Daimler? BASF? Siemens?

Reason!!! Mittelstand

Or … Goldmann Produktions (11/50%/$5M/”dip and coat,” expensive pigments vs “through coloring,” fades Bekro Chemie)

Bavaria: Mittelstand within Mittelstand “Place to start over” post-WWII 13 million 6th in EU if stand-alone (CA #5) 4% unemployment Munich government pro-business 30 universities (3 of 3 leading in R&D, with Baden-Wuerttemberg) 50% German patents (with Baden-Wuerttemberg) SMEs & Big Cos “Hot” finance communities “lion’s share” of German startups Media startups (SF: tech + media) Source: CNBC European Business, November 2007

City-states: Global Mittelstand
City-states: Global Mittelstand? Athens Venice Florence Rome Antwerp Amsterdam London New York Singapore Hong Kong Singapore Silicon Valley (California) Dubai (et al)

Focus: “A recent study by [Stanford] Business School faculty shows that producers whose offerings or expertise are more clearly associated with one or two product categories have better sales than those whose goods or professional identity span multiple categories. More focused producers throw off subtle hints that they know their stuff, which is not lost on customers. In short, says professor Michael Hannan, ‘The jack of all trades is the master of none governs consumer choices of whose goodies to buy.’ ” —Stanford Business, 0208

“No Need for Economies of Scale: Illinois Tool Revs Up Innovation by Keeping Its 655 Units Separate and Focused” Source: Headline, BW, (“commodity” producer; R&D = 1%; Top 100 patent recipient—66th in ’04) ($12B rev in ’04; CEO David Speer: focus, lean, customer intimacy, entrepreneurial, employee participation)

—Title/ Bruce Greenwald & Judd Kahn/HBR09.05
Focus: “All Strategy Is Local: True competitive advantages are harder to find and maintain than people realize. The odds are best in tightly drawn markets, not big, sprawling ones” —Title/ Bruce Greenwald & Judd Kahn/HBR09.05

Jim’s Group

Jim’s Dog Wash Jim’s Mowing Canada Jim’s Mowing UK Jim’s Antennas
Jim’s Bookkeeping Jim’s Building Maintenance Jim’s Carpet Cleaning Jim’s Car Cleaning Jim’s Computer Services Jim’s Dog Wash Jim’s Driving School Jim’s Fencing Jim’s Floors Jim’s Painting Jim’s Paving Jim’s Pergolas [gazebos] Jim’s Pool Care Jim’s Pressure Cleaning Jim’s Roofing Jim’s Security Doors Jim’s Trees Jim’s Window Cleaning Jim’s Windscreens Note: Download, free, Jim Penman’s book: What Will They Franchise Next? The Story of Jim’s Group 229

Jim’s Group: Jim Penman. 1984: Jim’s Mowing. 2006: Jim’s Group
Jim’s Group: Jim Penman.* 1984: Jim’s Mowing. 2006: Jim’s Group. 2,600 franchisees (Australia, NZ, UK). Cleaning. Dog washing. Handyman. Fencing. Paving. Pool care. Etc. “People first.” Private. Small staff. Franchisees can leave at will. 0-1 complaint per year is norm; cut bad ones quickly. *Ph.D. cross-cultural anthropology; mowing on the side Source: MT/Management Today (Australia), Jan-Feb 2006

Basement Systems Inc.

Basement Systems Inc. Larry Janesky. Dry Basement Science (115,000. )
*Basement Systems Inc. *Larry Janesky *Dry Basement Science (115,000!) *1990: $0; 2003: $13M; : $62,000,000

etc. PRSX/ Paragon Railcar Salvage* *Salvaged railcars into bridges, etc.

Joel Resnick/Flemington NJ (referenced in Fame Junkies)
The Red Carpet Store Joel Resnick/Flemington NJ (referenced in Fame Junkies)

“gurugate”: The Gurus’ fixation with “the wrong stuff”
“gurugate”: The Gurus’ fixation with “the wrong stuff”* *Not “they,” but “us.”

Over-rated: Big companies. Public companies. “Cool” industries
Over-rated: Big companies! Public companies! “Cool” industries! Stability (“Built to last”)! Famous CEOs!

Dick Kovacevich: You don’t get better by being bigger. You get worse.”

#4 Japan #2T china #2t USA #1 Germany

Family Businesses Two-thirds of total #s of companies One-half of biggest companies >One-half GDP >One-half employment 6% more profitable 7% better ROA Higher income growth Higher revenue growth Source: John Davis, HBS

Jim’s Group

“Natural selection is death
“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

Mission impossible? $36B/’98 minus $675M/‘07
248

Lived in same town all adult life
*Lived in same town all adult life *First generation that’s wealthy/ no parental support *“Don’t look like millionaires, don’t dress like millionaires, don’t eat like millionaires, don’t act like millionaires” *“Many of the types of businesses [they] are in could be classified as ‘dull-normal.’ [They] are welding contractors, auctioneers, scrap-metal dealers, lessors of portable toilets, dry cleaners, re-builders of diesel engines, paving contractors …” Source: The Millionaire Next Door, Thomas Stanley & William Danko

The “Fabulous Five”:. SMEs. Private companies. “Dull” industries
The “Fabulous Five”: *SMEs! *Private companies! *“Dull” industries! *Productive churn: Built to Rock the World! *Laudable CEOs!

The black swan

1982 (-) = 200 Years (+)

1982/Default Latin America = 200 years [Total historical earnings]
The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb

Career = 1 or 2 black swans

Black Swan: This is how you earn your pay
Black Swan: This is how you earn your pay!* ** *See: The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb **WSC: “When the seas are calm all ships alike show mastership in sailing.”

Resilience. Hiring: CEO, 100% Training Structure Systems (e. g
Resilience! Hiring: CEO, 100% Training Structure Systems (e.g. IS/IT) “Culture”

“Character is more crucial now than ever, because in times of great uncertainty past performance is no indicator of future performance. Experience falls away and all you’re left with is character.” —David Rothkopf, founder of a firm that helps chief executives manage risks

Attributes of resilient people: Inner calm (Buddhist
Attributes of resilient people: Inner calm (Buddhist?) High self-knowledge (“comfortable in own skin”) Breadth of experience—drove a cab, worked construction, ran Alaska tours … as well as more traditional stuff Sense of, “Ah, my moment” (Giuliani) Lover of modestly controlled chaos (bored amidst calm—FDR) Reach out effortlessly Reach out effortlessly to a wide variety of people Bizarrely energetic Known for integrity, in the sense of “straight shooter” Hires resilient people per se in key positions! (All senior leadership roles?) Maintains sense of humor Empathy (“I feel your pain”) “Cruelty” (Must make tough decisions instantaneously, without looking back; not “confident,” but overwhelming sense of urgency to press ahead) Decisive but not rigid Strong individual, equally strong team player Knows herself, himself Understands the chain of command—and evades it as necessary Comfortable being challenged by thinkers, but a strong “doer” bias overall A person of Hope (religious or “religious-like”?) Not necessarily: ex-college QB, comeback rep (Why: All within the rules, with in the context of that which has been practiced) Better: Ocean sailboat racer; ER doc; public health doc; astronaut; combat experience as NCO; hostage negotiator; survived in hopeless circumstances through guile and grit; seeks “independent duty” Tests: lights go out during interview, followed by fire alarm, etc; focus on per se in reference checks

Attributes of resilient organizations: Hire resilient folks at all levels and in all functions—explicit about so doing Promote resilience—explicit about so doing Decentralization!!!!!!!!! (organization structure, physical configuration, systems) Shadow “emergency organization” Redundancy!!!!!!!!!!!!!!! Culture of (1) self-starting, (2) caring and respect, (3) Execution is Priority #1, (4) Accountability-responsibility—100% of folks Culture of Resilience (as explicit “plank” of values set) Talk it up!! MBWA—e.g., great communication all the time about everything Transparency (all in the know, none in the dark) Financial padding Excellent equipment Training >>>>> Equipment Ability to get by for quite a while without IS-IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Test in uncomfortable situations Promote an unusually high share of mavericks Diversity per se!!!!!!!!!!!!!!!!!!!!

Exec: But you can’t let this run your life on a day-to-day basis.
TP: Are you sure?

“Diverse groups of problem solvers—groups of people with diverse tools—consistently outperformed groups of the best and the brightest. If I formed two groups, one random (and therefore diverse) and one consisting of the best individual performers, the first group almost always did better. … Diversity trumped ability.” —Scott Page, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies Diversity

Fooled by Randomness: The Hidden Role of Chance in Life and the Markets, Nassim Nicholas Taleb
The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb Expert Political Judgment: How Good Is It? How Can We know? Philip Tetlock The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, Scott Page The Wisdom of Crowds, James Surowiecki Full House: The Spread of Excellence from Plato to Darwin, Stephen Jay Gould Judgment under Uncertainty: Heuristics and Biases, Daniel Kahneman, Paul Slovic, and Amos Tversky A Mind of Its Own: How Your Brain Distorts and Deceives, Cordelia Fine

generally precise reason.”
Fooled by Randomness: The Hidden Role of Chance in Life and the Markets, Nassim Nicholas Taleb “This book is about luck disguised and perceived as non-luck (that is, skills) and more generally randomness disguised and perceived as non-randomness. It manifests itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributed his success to some other, generally precise reason.” The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb Expert Political Judgment: How Good Is It? How Can We know? Philip Tetlock “A fox, the thinker who knows many little things, draws from an eclectic array of disciplines, and is better able to improvise in response to changing events, is more successful in predicting the future than the hedgehog, who knows one big thing, toils devotedly within one tradition, and imposes formulaic solutions on ill defined problems.” The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, Scott Page “Diverse groups of problem solvers—groups of people with diverse tools—consistently outperformed groups of the best and the brightest. If I formed two groups, one random (and therefore diverse) and one consisting of the best individual performers, the first group almost always did better. … Diversity trumped ability.” The Wisdom of Crowds, James Surowiecki Full House: The Spread of Excellence from Plato to Darwin, Stephen Jay Gould Judgment under Uncertainty: Heuristics and Biases, Daniel Kahneman, Paul Slovic, and Amos Tversky A Mind of Its Own: How Your Brain Distorts and Deceives, Cordelia Fine “Your brain has some shifty habits that leave the truth distorted and disguised. Your brain is vainglorious. It’s emotional and immoral. It deludes you. It is pigheaded, secretive and weak willed. Oh, and it’s also a bigot.”

Ha: “By impressive examples and incontrovertible argument [Norman] Angel [in his book, The Great Illusion] showed that given the present financial and economic interdependence of nations, the victor [in a war] would suffer equally with the vanquished; therefore war had become unprofitable; therefore no one would be so foolish as to start one.” [NB: Tuchman reports that Angel’s book was published in 1910, four years before the Great War, translated into numerous languages, and studied by the highest level statesmen from the UK and all of Europe to Japan, with almost uniform nods of agreement.] “New economic factors clearly prove the inanity of aggressive wars. … Because of the interlacing of nations, war becomes every day more difficult and improbable.” Source: Lectures in 1910 by Viscount Esher, chairman of the UK’s “War Commission” and senior advisor on foreign policy and the military; he believed that the Angel doctrine was as accepted in Germany as in the UK. Master source: The Guns of August, Barbara Tuchman, 1962

Economic Growth Insulates Against International Violence
Economic Growth Insulates Against International Violence? “The hundred years after 1900 were a time of unparalleled progress. In real terms, it has been estimated [that] average per capita global domestic product increased by little more than 50 percent between 1500 and Between 1870 and 1998, however, it increased by a factor of more than six and a half.” —Niall Ferguson, The War of the World

Walk.*” General David Petraeus’ “White lines along the road”:
“Secure and serve the population. Live among the people. Promote reconciliation. Move mounted, work dismounted; situational awareness can only be achieved by operating face-to-face, not separated by ballistic glass. Walk.*” —David Petraeus, Men’s Journal (06.08) * “I love that last one for its simplicity.” —DP

5,000 miles for a 5-minute face-to -face meeting

“A body can pretend to care, but they can’t pretend to be there
“A body can pretend to care, but they can’t pretend to be there.” — Texas Bix Bender

“I call 60 CEOs [in the first week of the year] to wish them happy New Year. …” —Hank Paulson, former CEO, Goldman Sachs Source: Fortune, “Secrets of Greatness,”

MBWA, Grameen Style! “Conventional banks ask their clients to come to their office. It’s a terrifying place for the poor and illiterate. … The entire Grameen Bank system runs on the principle that people should not come to the bank, the bank should go to the people. … If any staff member is seen in the office, it should be taken as a violation of the rules of the Grameen Bank. … It is essential that [those setting up a new village Branch] have no office and no place to stay. The reason is to make us as different as possible from government officials.” Source: Muhammad Yunus, Banker to the Poor

You = Your calendar* *Calendars never lie

“It’s always showtime.” —David D’Alessandro, Career Warfare

“An actor in his youth, [Pope] John Paul was a master of grand gestures.” —USA Today
“It is necessary for the President to be the nation’s number one actor.” —FDR

Leader Job 1 Paint Portraits of Excellence!

#5.1.1

“The one thing you need to know about sustained individual success: Discover what you don’t like doing and stop doing it.” —Marcus Buckingham, The One Thing You Need to Know

“I used to have a rule for myself that at any point in time I wanted to have in mind — as it so happens, also in writing, on a little card I carried around with me — the three big things I was trying to get done. Three. Not two. Not four. Not five. Not ten. Three.” — Richard Haass, The Power to Persuade

“Dennis, you need a … ‘To-don’t ’ List !”

“Really Important Stuff”: Roger’s Rule of Three!

The “Have you …” 50

“Mapping your competitive position”* or … *Rich D’Aveni/HBR

While waiting last week [early December 2007] in the Albany airport to board a Southwest Airlines flight to Reagan, I happened across the latest Harvard Business Review, on the cover of which was a yellow sticker. The sticker had on it the words “Mapping your competitive position.” It referred to a feature article by my friend Rich D’Aveni. His work is uniformly good—and I have said as much publicly on several occasions dating back 15 years. I’m sure this article is good, too—though I didn’t read it. In fact it triggered a furious negative “Tom reaction” as my wife calls it. Of course I believe you should worry about your “competitive position.” But instead of obsessing on competitive position and other abstractions, as the B-schools and consultants would always have us do, I instead wondered about some “practical stuff” which I believe is more important to the short- and long-term health of the enterprise, tiny or enormous.

“Unfortunately many leaders of major companies believe their job is to create the strategy, organization and organization processes—remaining aloof from the people doing the work.” —George Kohlrieser, Hostage at the Table (GK is, among other things, a hostage negotiator with a 95% success rate)

1. Have you in the last 10 days … visited a customer?
2. Have you called a customer … TODAY? 3. Have you in the last days … had a seminar in which several folks from the customer’s operation (different levels, different functions, different divisions) interacted, via facilitator, with various of your folks? 4. Have you thanked a front-line employee for a small act of helpfulness … in the last three days? 5. Have you thanked a front-line employee for a small act of helpfulness … in the last three hours? 6. Have you thanked a frontline employee for carrying around a great attitude … today? 7. Have you in the last week recognized—publicly—one of your folks for a small act of cross-functional co-operation? 8. Have you in the last week recognized—publicly—one of “their” folks (another function) for a small act of cross-functional co-operation? 9. Have you invited in the last month a leader of another function to your weekly team priorities meeting? 10. Have you personally in the last week-month called-visited an internal or external customer to sort out, inquire, or apologize for some little or big thing that went awry? (No reason for doing so? If true—in your mind—then you’re more out of touch than I dared imagine.)

1. Have you in the last 10 days … visited a customer. 2
1. Have you in the last 10 days … visited a customer? 2. Have you called a customer … TODAY?

11. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project’s next steps? 12. Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project’s next steps … and what specifically you can do to remove a hurdle? (“Ninety percent of what we call management consists of making it difficult for people to get things done.”—Peter “His eminence” Drucker.) 13. Have you celebrated in the last week a “small” (or large!) milestone reached? (I.e., are you a milestone fanatic?) 14. Have you in the last week or month revised some estimate in the “wrong” direction and apologized for making a lousy estimate? (Somehow you must publicly reward the telling of difficult truths.) 15. Have you installed in your tenure a very comprehensive customer satisfaction scheme for all internal customers? (With major consequences for hitting or missing the mark.) 16. Have you in the last six months had a week-long, visible, very intensive visit-“tour” of external customers? 17. Have you in the last 60 days called an abrupt halt to a meeting and “ordered” everyone to get out of the office, and “into the field” and in the next eight hours, after asking those involved, fixed (f-i-x-e-d!) a nagging “small” problem through practical action? 18. Have you in the last week had a rather thorough discussion of a “cool design thing” someone has come across—away from your industry or function—at a Web site, in a product or its packaging? 19. Have you in the last two weeks had an informal meeting—at least an hour long—with a frontline employee to discuss things we do right, things we do wrong, what it would take to meet your mid- to long-term aspirations? 20. Have you had in the last 60 days had a general meeting to discuss “things we do wrong” … that we can fix in the next fourteen days?

UniCredit Group/ UniCredito Italiano
UniCredit Group/ UniCredito Italiano* ** —3rd party measurement —Customer-initiated measurement —Primary $$$$ incentives —“Factories” —Primary Corporate Initiative —Etc *#13 **TP/#1

The director of staff services at the giant financial services firm, UniCredit Group, installed the most thorough internal customer satisfaction measures scheme I have seen—with exceptional rewards for those who make the grade with their internal customers.

21. Have you had in the last year a one-day, intense offsite with each (?) of your internal customers—followed by a big celebration of “things gone right”? 22. Have you in the last week pushed someone to do some family thing that you fear might be overwhelmed by deadline pressure? 23. Have you learned the names of the children of everyone who reports to you? (If not, you have six months to fix it.) 24. Have you taken in the last month an interesting-weird outsider to lunch? 25. Have you in the last month invited an interesting-weird outsider to sit in on an important meeting? 26. Have you in the last three days discussed something interesting, beyond your industry, that you ran across in a meeting, reading, etc? 27. Have you in the last 24 hours injected into a meeting “I ran across this interesting idea in [strange place]”? 28. Have you in the last two weeks asked someone to report on something, anything that constitutes an act of brilliant service rendered in a “trivial” situation—restaurant, car wash, etc? (And then discussed the relevance to your work.) 29. Have you in the last 30 days examined in detail (hour by hour) your calendar to evaluate the degree “time actually spent” mirrors your “espoused priorities”? (And repeated this exercise with everyone on team.) 30. Have you in the last two months had a presentation to the group by a “weird” outsider?

31. Have you in the last two months had a presentation to the group by a customer, internal customer, vendor featuring “working folks” 3 or 4 levels down in the vendor organization? 32. Have you in the last two months had a presentation to the group of a cool, beyond-our-industry ideas by two of your folks? 33. Have you at every meeting today (and forever more) re-directed the conversation to the practicalities of implementation concerning some issue before the group? 34. Have you at every meeting today (and forever more) had an end-of-meeting discussion on “action items to be dealt with in the next 4, 48 hours? (And then made this list public—and followed up in 48 hours.) And made sure everyone has at least one such item.) 35. Have you had a discussion in the last six months about what it would take to get recognition in local-national poll of “best places to work”? 36. Have you in the last month approved a cool-different training course for one of your folks? 37. Have you in the last month taught a front-line training course? 38. Have you in the last week discussed the idea of Excellence? (What it means, how to get there.) 39. Have you in the last week discussed the idea of “Wow”? (What it means, how to inject it into an ongoing “routine” project.) 40. Have you in the last 45 days assessed some major process in terms of the details of the “experience,” as well as results, it provides to its external or internal customers?

41. Have you in the last month had one of your folks attend a meeting you were supposed to go to which gives them unusual exposure to senior folks? 42. Have you in the last 60 (30?) days sat with a trusted friend or “coach” to discuss your “management style”—and its long- and short-term impact on the group? 43. Have you in the last three days considered a professional relationship that was a little rocky and made a call to the person involved to discuss issues and smooth the waters? (Taking the “blame,” fully deserved or not, for letting the thing-issue fester.) 44. Have you in the last … two hours … stopped by someone’s (two-levels “down") office-workspace for 5 minutes to ask “What do you think?” about an issue that arose at a more or less just completed meeting? (And then stuck around for 10 or so minutes to listen—and visibly taken notes.) 45. Have you … in the last day … looked around you to assess whether the diversity pretty accurately maps the diversity of the market being served? (And …) 46. Have you in the last day at some meeting gone out of your way to make sure that a normally reticent person was engaged in a conversation—and then thanked him or her, perhaps privately, for their contribution? 47. Have you during your tenure instituted very public (visible) presentations of performance? 48. Have you in the last four months had a session specifically aimed at checking on the “corporate culture” and the degree we are true to it—with all presentations by relatively junior folks, including front-line folks? (And with a determined effort to keep the conversation restricted to “real world” “small” cases—not theory.) 49. Have you in the last six months talked about the Internal Brand Promise? 50. Have you in the last year had a full-day off site to talk about individual (and group) aspirations?

Sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell sell

Presentation Skills. Repetition I (Practice-Give a lot of speeches. )
Presentation Skills **Repetition I (Practice-Give a lot of speeches!) **Repetition II (Keep selling: Button-hole anyone-everyone, groups of 5, groups of 500) **Stories I (Stories, stories, stories …) **Stories II (Human scale—that people can identify with and get inside) **Stories III (Emotional) **Stories IV (Heroic—can be “small heroism,” but stories of “ordinary” folks bucking conventional wisdom) **Stories V (Actionable-doable-basis for their “small wins”) **Homework (“Content,” audience, hook to the moment) **Passion (You must care!!!!!!!!!!!!!!!!!! And it must show!) **Enthusiasm! **Energy! **Joy! (Obviously love the subject matter, transmit your joy to others) **Intensity! (“Nothing in my life matters more than being here with you”) **Integrity **Credibility!

Presentation Skills **Self-effacement I (own up to your limitations: “We are fellow explorers”—I don’t have all the answers; I’m here to talk about our journey together.”) **Self-effacement II (I stand on the shoulders of giants—this is no solo egotrip) **Purpose (Determined to move the mountain—and imply you’ll keep punching until that happens) **Limits (Don’t try to get too much done—confusion of purpose or expected path is unsatisfactory) **Humor (If “tough love” message, must make ’em laugh if they are to accept) **Commitment (Demonstrated) **Empathy (!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!) **Eye-contact (“I’m here for you and you alone, Dick, Jane, Jose.”) **“Listening” (Read body language … “or else”) **Need I (“I must connect”) **Need II (“I must sell-convince”) **Curiosity (Obvious fascination with the topic)

Listen. Talk.

– Robert Louis Stevenson
. “Everyone lives by selling something.” – Robert Louis Stevenson

The Commerce Bank Model “cost cutting is a death spiral.” Source: Fans! Not customers. How Commerce Bank Created a Super-growth Business in a No-growth Industry, Vernon Hill & Bob Andelman

“Our whole story is growing revenue
“Our whole story is growing revenue.” —Vernon Hill (Top-line driven; standard is bottom-line driven by cost cutting)

CRO* *Chief Revenue Officer

Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned in your long and distinguished career?” His immediate answer … 313

“remember to tuck the shower curtain inside the bathtub.”
314

3h = LTS* *Long-term success

Howard Hilton Herb

Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned in your long and distinguished career?” His immediate answer: “remember to tuck the shower curtain inside the bathtub” 319

3H: Howard, Hilton, Herb. Stay in touch. Sweat the details
3H: Howard, Hilton, Herb **Stay in touch! **Sweat the details! **It’s the people, stupid!

The “6h Manifesto” = ANTKLTS
The “6h Manifesto” = ANTKLTS* *All you need to know for long-term success

Howard Hilton Herb Henry HRH Herb

Starbucks boss Howard Schultz visits 25 shops a week.

Conrad Hilton, at a gala celebrating his life, was asked, “What was the most important lesson you’ve learned in your long and distinguished career?” His immediate answer: “remember to tuck the shower curtain inside the bathtub” 326

Conrad Hilton shares his foremost key to success.

Herb Kelleher (Southwest Airlines) says this is his only success “secret.”

Relationships. Relationships. Relationships. Relationships
Relationships! Relationships! Relationships! Relationships! Relationships! Relationships! Relationships! Relationships! 330

Tom Peters, writing under the nom de plume of “Henry,” reveals his singular recipe for success.

Single greatest act of pure imagination

HRH Sheik Mohammad has turned a flyspeck—Dubai—in to a breathtaking display of the impossible made possible.

“We have a ‘strategic plan. ’ It’s called doing things
“We have a ‘strategic plan.’ It’s called doing things.” — Herb Kelleher

More from SWA’s Mr Kelleher, action fanatic.

try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it
try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Screw it up. Try it. Try it. Try it. Try it. Try it. Try it. Screw it up. it. Try it. Try it. try it. Try it. Screw it up. Try it. Try it. Try it.

Ditto from “Henry.”

6H: Howard, Hilton, Herb, Henry, HRH, Herb. Stay in touch
6H: Howard, Hilton, Herb, Henry, HRH, Herb **Stay in touch! **Sweat the details! **It’s the people, stupid! **“Best relationships wins”! **Let your imagination go berserk! **Do It!

2-cent candy

<TGW vs. >TGR

Master of “TGR” Cont. Granite Rock Co
Master of “TGR” Cont. Granite Rock Co. (Cross it out if you think we did it poorly)

END Part 1.1

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NOTE: To appreciate this presentation [and insure that it is not a mess], you need Microsoft fonts: “Showcard Gothic,” “Ravie,” “Chiller” and “Verdana”

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