Tom Peters’ X25* EXCELLENCE. ALWAYS. 13 th Annual World Islamic Banking Conference Kingdom of Bahrain.11 December 2006 *In Search of Excellence

tompeters.com Slides* at … tompeters.com *also “long”

EXCELLENCE. THE MANDATE FOR CHANGE.

Buy a very large one and just wait.” “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

Low Risk 41% 13% High Risk35% 73% S&P Stability Ratings* Low Risk 41% 13% Average Risk 24% 14% High Risk 35% 73% *Likelihood of stable long-term earnings growth Source: Fortune (2 October 2006)

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

EXCELLENCE. STARTERS. BASICS.

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

Enthusiasm. Emotion. Excellence. Energy. Excitement. Service. Growth. Creativity. Imagination. Vitality. Joy. Surprise. Independence. Spirit. Community. Limitless human potential. Diversity. Profit. Innovation. Design. Quality. Entrepreneurialism. Wow. The Peters Principles: Enthusiasm. Emotion. Excellence. Energy. Excitement. Service. Growth. Creativity. Imagination. Vitality. Joy. Surprise. Independence. Spirit. Community. Limitless human potential. Diversity. Profit. Innovation. Design. Quality. Entrepreneurialism. Wow.

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” Properties”

EXCELLENCE. DEFINED. X06

X.06.23: Whole Foods Markets … Starbucks … Wegmans … Commerce Bank … John Laing Homes … Apple … London Drugs … Griffin Hospital/ Planetree Alliance … The Met School/Big Picture … Carl Sewell … Progressive Insurance … Stanford women’s sports … Stanford D-School … HSM … Washington Speakers Bureau … Build-A-Bear … RE/MAX … Donnelly’s Weather Strip Service … Jim’s Group … Cirque du Soleil … (U.S. Grant) … (Horatio Nelson)

Commerce Bank

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

Commerce Bank: From “Service” to “Experience” 7X. 730A- 800P. F12A.* *’93-’03/10 yr annual return: CB: 29%; WM: 17%; HD: 16%. Mkt Cap: 48% p.a.

8,000 Radio City Music Hall … J.D. Power/Customer service/Bank/NYC/1 st in 5 of 6; 2 nd in #6 … Inspired by Ray Kroc … $36B ($100B in 6 years); +$750M per month/373 branches in 7 states/900 in 6 years … player piano … Penny Arcade/$25K per machine … 9M lollipops, 2M dog biscuits … stupid rule (red) button … call center not “cost center,” but opportunity/human by second operation … over-invest in real estate … design- experience fanaticism … Red!/Red Friday/Hot music … deposits available next day (vs ½ on 3 rd ; ½ on 5 th ; focus on 99%, not 1%) … LONG HOURS!!!! (7/week/12 hours/Fridays/15 minutes before) … “Do whacky things for customers” (VH) … “create magical moments of surprise and delight for employees” (VH) … “Hire for attitude. Train for skills.” (VH) … Chinatown/10K first day; 28K first week … Commerce U in ’93 (“underlying theme is fun”—VH)

Source: Vernon Hill “ … cut costs at most banks. ‘We have to push them out of the branches.’ ‘We have to push them to machines.’ We have to push them to the Internet.” Source: Vernon Hill

TP: Experience-Design … Top-line fanaticism (vs Cost-fanaticism) … Deposits … Drive ’em to the branch … Experience/Wow! … little touches … no stupid rules … Talent/Attitude/Recognition

The Power of WOW! How Commerce Bank Created a Super- Growth Business in a No-Growth Industry Vernon W. Hill, II

John Laing Homes

“Soft Skills, Hard Dollars” Source: Headline, BigBuilder, September 2006

“Builder of the Year”/Professional Builder … Experience … Communities/ Family values/ Relationships/After-sale “ …talk to our customers …” J.D. Power awards … Warranties … Price premiums … Design!!!! (all Divisions winners) (Top “names”) … Data/market research … Top company to work for … Team development … “I just love being a home builder.” (LW) … Brand … Emaar Properties* (Robert Booth/Int’l: “They have a tremendous focus on the customer, and that is hugely important to us.”) *Pay premium for Excellence. Invest for the longterm.

sewell

Customers for Life

FLOWERPOWERFLOWERPOWERFLOWERPOWERFLOWERPOWER

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. 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

* Focused on growth and revenue and “offense,” not defense and cost containment. not defense and cost containment. *People-talent obsession. *Provide mind-bending experiences. (Driven by design primacy.) by design primacy.) *Love affair with customers. *Happy to use words like “Wow.” *Pretty close to the high end of the market. [*Ability to make silk purses filled with gold out of sows’ ears: Wegmans-Whole Foods-Stew Leonard’s sows’ ears: Wegmans-Whole Foods-Stew Leonard’s and groceries; Jim’s Group and dog-walking; and groceries; Jim’s Group and dog-walking; Donnelly and weather strip installation; DeMar Donnelly and weather strip installation; DeMar and plumbing.] and plumbing.] * Execution!

Cirque du Soleil

“Every time we come to a comfort zone, we will find a way out.” “No Cloning.” “‘Reinvent the brand’ with each new show.” “A typical day at the office for me begins by asking, ‘What is impossible that I am going to do today?’” —Daniel Lamarre, president, Cirque du Soleil

Apple

“Insanely Great”

EXCELLENCE. INNOVATE. OR. DIE.

You don’t get better by being bigger. You get worse.” “ I don’t believe in economies of scale. You don’t get better by being bigger. You get worse.” —Dick Kovacevich/Wells Fargo

I’m sure there are success stories out there, but at this moment I draw a blank.” “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

Spinoffs “freed from the confines of the parent … more entrepreneurial, more nimble 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

InnoTacs

We become who we spend time with!

Staff Consultants Vendors Out-sourcing Partners (#, Quality) Innovation Alliance Partners Customers Competitors (who we “benchmark” against) Strategic Initiatives Product Portfolio (LineEx v. Leap) IS/IT Projects HQ Location Lunch Mates Language Board Measure “Strangeness”/Portfolio Quality Staff Consultants Vendors Out-sourcing Partners (#, Quality) Innovation Alliance Partners Customers Competitors (who we “benchmark” against) Strategic Initiatives Product Portfolio (LineEx v. Leap) IS/IT Projects HQ Location Lunch Mates Language Board

“ To grow, companies need to break out of a vicious cycle of competitive benchmarking and imitation.” “ To grow, companies need to break out of a vicious cycle of competitive benchmarking and imitation.” —W. Chan Kim & Renée Mauborgne, “Think for Yourself —Stop Copying a Rival,” Financial Times/2003

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. try it. Try it. Try it. try it. Try it. Try it. Try it. Try it. Try it.

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

“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 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 # 10. It gets back to planning versus acting: We act from day one; others plan how to plan— for months.” —Bloomberg by Bloomberg

tolerate [encourage?] failure

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

focus

“We will not, I repeat not, pretend to be ‘all things to all people.’” “We will not, I repeat not, pretend to be ‘all things to all people.’” —CEO, Investec (03.06)

Private Equity-financed Firm, Best *Case * Focus! Focus! Focus! *In a [Big] hurry *CEO/Top team, “skin in the game” *CEO, 100% of time on the biz *Merit! Merit! *Motivated oversight Private Equity-financed Firm, Best *Case * Focus! Focus! Focus! *In a [Big] hurry *CEO/Top team, “skin in the game” *CEO, 100% of time on the biz *Merit! Merit! *Motivated oversight *Worst case: Rape & Pillage

EXCELLENCE

4/40

De-centralization execution accountability 6:15a.m.

“If if feels painful and scary—that’s real delegation” “If if feels painful and scary—that’s real delegation” —Caspian Woods, small biz owner

De-centralization execution accountability 6:15a.m.

“ Execution is the job of the business leader.” —Larry Bossidy “ Execution is the job of the business leader.” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

De-centralization execution accountability 6:15a.m.

“GE has set a standard of candor. … There is no puffery. … There isn’t an ounce of denial in the place.” “GE has set a standard of candor. … There is no puffery. … There isn’t an ounce of denial in the place.” —Kevin Sharer, CEO Amgen, on the “GE mystique” (Fortune)

De-centralization execution accountability 6:15a.m.

EXCELLENCE. BEDROCK. TALENT.

Hire very good people!

20 40 $25$802 “We believe companies can increase their market cap 50 percent in 3 years. Steve Macadam at Georgia- Pacific … changed 20 of his 40 box plant managers to put more talented, higher paid managers in charge. He increased profitability from $25 million to $80 million in 2 years.” —Ed Michaels, War for Talent

EMPHASIZE THE “SOFT SKILLS.”

PUT HR AT THE HEAD OF THE HEAD TABLE. BEST PEOPLE. NOBLEST MISSION.

A review of Jack and Suzy Welch’s Winning claims there are but two key differentiators that set GE “culture” apart from the herd: First: Separating financial forecasting and performance measurement. Performance measurement based, as it usually is, on budgeting leads to an epidemic of gaming the system. GE’s performance measurement is divorced from budgeting—and instead reflects how you do relative to your past performance and relative to competitors’ performance; i.e., it’s about how you actually do in the context of what happened in the real world, not as compared to a gamed-abstract plan developed last year. Putting HR on a par with finance and marketing. Second: Putting HR on a par with finance and marketing.

LIVE FOR TALENT!

To develop and manage talent; to apply that talent, throughout the world, for the benefit of clients; to do so in partnership; to do so with profit. Our Mission To develop and manage talent; to apply that talent, throughout the world, for the benefit of clients; to do so in partnership; to do so with profit. WPP

People! People!

Brand = Talent.

EXCELLENCE. BEDROCK. LEADERSHIP. 9Ps.

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

“People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, trust.” “People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, trust.” — Howard Schultz, Starbucks (IBD/09.05)

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

“ Nothing is so contagious as enthusiasm.” “ Nothing is so contagious as enthusiasm.” —Samuel Taylor Coleridge

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

become more than they’ve ever been before, more than they’ve dreamed of being.” “The role of the Director is to create a space where the actors and actresses can become more than they’ve ever been before, more than they’ve dreamed of being.” —Robert Altman, Oscar acceptance speech

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

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

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

“ Success seems to be largely a matter of hanging on after others have let go.” “ Success seems to be largely a matter of hanging on after others have let go.” —William Feather, author

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

“Leaders ‘do’ people. Period.” “Leaders ‘do’ people. Period.” —Anon.

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

Big Big “ Beware of the tyranny of making Small Changes to Small Things. Rather, make Big Changes to Big Things.” —Roger Enrico, former Chairman, PepsiCo

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

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

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

“Excellence can be obtained if you:... care more than others think is wise;... risk more than others think is safe;... dream more than others think is practical;... expect more than others think is practical;... expect more than others think is possible.” is possible.” Source: Anon. tompeters.com by K.Sriram, November 27, :17 AM)

EXCELLE ALWAYS.