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
“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
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
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 (New York, 5-99)
3. IS/ IT/ Web … “On the Bus” or “Off the Bus.”
“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.
“Dawn Meyerreicks, CTO of the Defense Intelligence Systems Agency, made one of the most fateful military calls of the 21 st 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
Impact No. 1/ Logistics & Distribution: Wal*Mart … Dell … Amazon.com … Autobytel.com … FedEx … UPS … Ryder … Cisco … Etc. … Etc. … Ad Infinitum.
“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.”
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: 1/3 rd ; 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
“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
4. The “PSF Solution”: The Professional Service Firm Model.
Sarah: “ Daddy, what do you do?” Daddy: “I’m a ‘cost center.’ ”
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 NAPM: You are the … Rock Stars of the B2B Age!
“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)
5. The Heart of the Value Added Revolution: PSFs Unbound/ The “Solutions Imperative.”
09.11.2000: HP bids $18,000,000,000 for PricewaterhouseCoopers consulting business!
“These days, building the best server isn’t enough. That’s the price of entry.” Ann Livermore, Hewlett-Packard
Gerstner’s IBM: Systems Integrator of choice. Global Services: $35B. Pledge/’99: Business Partner Charter. 72 strategic partners, aim for 200. Drop many in-house programs/products.
“We want to be the air traffic controllers of electrons.” Bob Nardelli, GE Power Systems
“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
6. A World of Scintillating/ Awesome/ WOW “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
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
The “Experience Ladder” Experiences Services Goods Raw Materials
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
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
7. The Passion Imperative: Leading in Totally Screwed- Up Times
“If Microsoft is good at anything, it’s avoiding the trap of worrying about criticism. Microsoft fails constantly. They’re eviscerated in public for lousy products. Yet they persist, through version after version, until they get something good enough. Then they leverage the power they’ve gained in other markets to enforce their standard.” Seth Godin, Zooming Seth Godin
“If things seem under control, you’re just not going fast enough.” Mario Andretti