LONG VERSION Tom Peters’ Excellence. (Or What?) Annual Managers Convention Tel Aviv/26 June 2012 tompeters.com and excellencenow.com)

1.

Conrad Hilton, at a gala celebrating his career, was called to the podium and asked, His answer … Conrad Hilton, at a gala celebrating his career, was called to the podium and asked, “What were the most important lessons you learned in your long and distinguished career?” His answer …

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

You get ’em in the door with “location, location, location.” You keep ’em coming back with the tucked in shower curtain.* *Profit rarely comes from transaction #1; it is a byproduct of transaction #2, #3, #4 …

“Execution is strategy.” —Fred Malek

Sports: You beat yourself!

“Costco figured out the big, simple things and executed with total fanaticism.” —Charles Munger, Berkshire Hathaway

“In real life, strategy is actually very straightforward. Pick a general direction … and implement like hell.” —Jack Welch

“ 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

“Execution is a systematic process of rigorously discussing hows and whats, tenaciously following through, and ensuring accountability.” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“ When assessing candidates, the first thing I looked for was energy and enthusiasm for execution. Does she talk about the thrill of getting things done, the obstacles overcome, the role her people played —or does she keep wandering back to strategy or philosophy?” —Larry Bossidy, Execution

2.

Excellence1982: The Bedrock “Eight Basics” 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

ExIn*: /Forbes.com DJIA: $10,000 yields $85,000 EI: $10,000 yields $140,050 * “Excellence Index”/Basket of 32 publicly traded stocks from the “excellent companies”/In Search of Excellence

I am often asked how the “Excellent companies” have fared. Some, to be sure, were bombs. But, on the 20 th anniversary of the book’s publication, Forbes.com analyzed the stock market performance of the firms. The results, FYI, are on the prior slide. (In addition to the satisfactory performance, Forbes noted that, unlike the real world of stock-picker indices, this analysis precluded selling off stocks that were tanking—hence the Index is at a big disadvantage to standard indices; yet it had still done very well.) (For no particular reason, neither I nor anyone else seems to have done a subsequent analysis. Personally, I’m not keen, as a matter of ingrained habit, about dwelling on the past.)

Organizations exist to serve. Period. Leaders live to serve. Period. serve. Period.

“I start with the premise that the function of leadership is to produce more leaders, not more followers.” — Ralph Nader

Hard is Soft. Soft is Hard.

People.Customers.Values. Some—most?—call these ideas “soft”—where are the numbers and the plans? Surely there is room for the numbers. But they are the real “soft stuff”—malleable and manipulable. (As we’ve seen again and again during the current economic crisis.) The truly “hard stuff”—which can’t be faked or exaggerated—are the relationships with, for instance, our customers and our own people. “‘Hard’ is ‘soft.’ ‘Soft’ is ‘hard.’” Mantra #1 from In Search of EXCELLENCE.

3.

I am often asked by would- be entrepreneurs seeking escape from life within huge corporate structures, The answer seems obvious … “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 … Source: Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

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

“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

“Data drawn from the real world attest to a fact that is beyond our control: —Norberto Odebrecht, Education Through Work “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

“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: —Mark Sirower, The Synergy Trap “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

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 “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

MittELstand* ** MittELstand* ** *“agile creatures darting between the legs of the multinational monsters” (Bloomberg BusinessWeek) **E.g. Goldmann Produktion

The long-term strength of the German economy can be captured in one word, and that word is not BASF. Try … Mittelstand. That is, Germany’s middle-sized, often high-tech firms that tend to dominate this or that well-defined global market niche. My simple point here is that you can have a dominant economy that is not led by or overly dependent upon enormous firms. (I am one of the very few Americans to have extensively studied the Mittelstand—Mittlestand companies were a principal feature of my 1992 book, Liberation Management. Typical was Goldmann Produktion, a truly teensy tiny chemical company, with a cast of a couple of dozen, that dominated a truly tiny global niche associated with candle coloring.)

“Be the best. It’s the only market that’s not crowded.” From: Retail Superstars: Inside the 25 Best Independent Stores in America, George Whalin Independent Stores in America, George Whalin

Jungle Jim’s International Market, Fairfield, Ohio: “An adventure in ‘ shoppertainment,’ as Jungle Jim’s calls it, begins in the parking lot and goes on to 1,600 cheeses and, yes, 1,400 varieties of hot sauce —not to mention 12,000 wines priced from $8 to $8,000 a bottle; all this is brought to you by 4,000 vendors. Customers come from every corner of the globe.” Bronner’s Christmas Wonderland, Frankenmuth, Michigan, pop 5,000: 98,000-square-foot “shop” features the likes of 6,000 Christmas ornaments, 50,000 trims, and anything else you can name if it pertains to Christmas. Source: George Whalin, Retail Superstars

Retail Superstars: Inside the 25 Best Independent Stores in America —by George Whalin

Small Giants: Companies That Choose to Be Great Instead of Big

Small Giants: Companies that Chose to Be Great Instead of Big (Bo Burlingham) “They cultivated exceptionally intimate relationships with customers and suppliers, based on personal contact, one-on- one interaction, and mutual commitment to delivering on promises. ach company had an extraordinarily intimate relationship with the local city, town, or county in which it did business — a relationship that went well beyond the usual concept of `giving back.’ “Each company had an extraordinarily intimate relationship with the local city, town, or county in which it did business — a relationship that went well beyond the usual concept of `giving back.’ “The companies had what struck me as unusually intimate workplaces. “I noticed the passion that the leaders brought to what the company did. They loved the subject matter, whether it be music, safety lighting, food, special effects, constant torque hinges, beer, records storage, construction, dining, or fashion.”

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1/46

Lesson46: WTTMSW

WhoeverTriesTheMostStuffWins

Lesson46+: WTTMSTFW

WhoeverTriesTheMostThingsTheFastestWins

READY. FIRE. AIM. H. Ross Perot (vs “ Aim! Aim! Aim!” /EDS vs GM/1985)

H. Ross Perot sold EDS to GM in the 1980s, and went on the car giant’s Board. A few years later he was asked to explain the difference between the two companies. He said that at EDS the strategy was “Ready. Fire. Aim.” I.e., get on with it— now. At GM the “strategy” was “Ready. Aim. Aim. Aim. Aim. …” (Alas, well into the 1 st decade of the new century GM’s problems/unwieldy bureaucracy remained pretty much unchanged.)

“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

“Burt Rutan wasn’t a fighter jock; he was an engineer who had been asked to figure out why the F-4 Phantom was flying pilots into the ground in Vietnam. While his fellow engineers attacked such tasks with calculators, Rutan insisted on considering the problem in the air. A near-fatal flight not only led to a critical F-4 modification, it also confirmed for Rutan a notion he had held ever since he had built model airplanes as a child. The way to make a better aircraft wasn’t to sit around perfecting a design, it was to get something up in the air and see what happens, then try to fix whatever goes wrong.” —Eric Abrahamson & David Freedman, Chapter 8, “Messy Leadership,” from A Perfect Mess: The Hidden Benefits of Disorder

Culture of Prototyping “Effective prototyping may be the most valuable core competence an innovative organization can hope to have.” —Michael Schrage

Think about It!? Innovation = Reaction to the Prototype Source: Michael Schrage

“Demo or die!” or die!” Source: This was the approach championed by Nicholas Negroponte which vaulted his MIT Media Lab to the forefront of IT-multimedia innovation. It was his successful alternative to the traditional MIT-academic “publish or perish.” Negroponte’s rapid-prototyping version was emblematic of the times and the pace and the enormity of the opportunity. (NYTimes/ ) of the opportunity. (NYTimes/ )

WctqpW

Whoever creates the quickest prototypes wins!

“Experiment fearlessly” Tactic #1 “relentless trial and error” Source: Wall Street Journal, cornerstone of effective approach to “rebalancing” company portfolios in the face of changing and uncertain global economic conditions ( ) “Experiment fearlessly” Source: Bloomberg BusinessWeek, “Type A Organization Strategies: How to Hit a Moving Target”— Tactic #1 “relentless trial and error” Source: Wall Street Journal, cornerstone of effective approach to “rebalancing” company portfolios in the face of changing and uncertain global economic conditions ( )

“The secret to having good ideas is to have a lot of ideas, then throw the bad ones away.” —Nobel Laureate Linus Pauling

“The difference between Bach and his forgotten peers isn’t necessarily that he had a better ratio of hits to misses. The difference is that the mediocre might have a dozen ideas, while Bach, in his lifetime, created more than a thousand full-fledged musical compositions. A genius is a genius, psychologist Paul Simonton maintains, because he can put together such a staggering number of insights, ideas, theories, random observations, and unexpected connections that he almost inevitably ends up with something great. ‘Quality,’ Simonton writes, ‘is a probabilistic function of quantity.’” —Malcolm Gladwell, “Creation Myth,” New Yorker,

“Rose gardeners face a choice every spring. The long-term fate of a rose garden depends on this decision. If you want to have the largest and most glorious roses of the neighborhood, you will prune hard. This represents a policy of low tolerance and tight control. You force the plant to make the maximum use of its available resources, by putting them into the the rose’s ‘core business.’ Pruning hard is a dangerous policy in an unpredictable environment. Thus, if you are in a spot where you know nature may play tricks on you, you may opt for a policy of high tolerance. You will never have the biggest roses, but you have a much- enhanced chance of having roses every year. You will achieve a gradual renewal of the plant. In short, tolerant pruning achieves two ends: (1) It makes it easier to cope with unexpected environmental changes. (2) It leads to a continuous restructuring of the plant. The policy of tolerance admittedly wastes resources—the extra buds drain away nutrients from the main stem. But in an unpredictable environment, this policy of tolerance makes the rose healthier in the long run.” —Arie De Geus, The Living Company

5.

Read It Richard Farson & Ralph Keyes: Whoever Makes the Most Mistakes Wins: The Paradox of Innovation

“Fail. Forward. Fast.” “Fail. Forward. Fast.” High Tech CEO, Pennsylvania

“Fail faster. Succeed Sooner.” “Fail faster. Succeed Sooner.” David Kelley/IDEO

“No matter. Try again. Fail again. Fail better.” —Samuel Beckett

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

“In business, you reward people for taking risks. When it doesn’t work out you promote them — because they were willing to try new things. If people tell me they skied all day and never fell down, I tell them to try a different mountain.” —Michael Bloomberg (BW/ )

“The secret of fast progress is, fast and furious and numerous failures.” “The secret of fast progress is inefficiency, fast and furious and numerous failures.” —Kevin Kelly

“The Silicon Valley of today is built less atop the spires of earlier triumphs than upon the rubble of earlier debacles.” —Paul Saffo, tech futurist, Palo Alto

Regis McKenna*: “A lot of companies in the Valley fail.” Robert Noyce**: “Maybe not enough fail.” RM: “What do you mean by that?” RN: “Whenever you fail, it means you’re trying new things.” *McKenna was the original Silicon Valley “marketing guru” **Robert Noyce was an Intel co-founder and one of the fathers of the modern information industry. Source: Fast Company

Lesson46++: WTTMSASTMSUTFW

WhoeverTriesTheMostStuff (And ScrewsTheMostStuff Up) TheFastestWins

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

6.

The “Hang Out Axiom I”: We are What We Eat/We Are the company we keep we keep

“You will become like the five people you associate with the most—this can be either a blessing or a curse.” —Billy Cox “You will become like the five people you associate with the most—this can be either a blessing or a curse.” —Billy Cox

EMPLOYEES: “Are there in the lab these days?” Source: V. Chmn., pharmaceutical house, to a lab director EMPLOYEES: “Are there enough weird people in the lab these days?” Source: V. Chmn., pharmaceutical house, to a lab director

The “We are what we eat”/ “We are who we hang out with” Axiom: At its core, every (!!!) relationship-partnership decision (employee, vendor, customer, etc., etc.) is a strategic decision about: “Innovate, ‘Yes’ or ” The “We are what we eat”/ “We are who we hang out with” Axiom: At its core, every (!!!) relationship-partnership decision (employee, vendor, customer, etc., etc.) is a strategic decision about: “Innovate, ‘Yes’ or ‘No’ ”

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

CUSTOMERS: “Future- defining customers may account for only 2% to 3% of your total, but they represent a crucial window on the future.” —Adrian Slywotzky, Mercer Consultants

“[CEO A.G.] Lafley has shifted P&G’s focus on inventing all its own products to developing … others’ inventions at least half the time. One successful example, Mr. Clean Magic Eraser, is based on a product found in an Osaka market.” — Fortune

Wow!Wow! And: Wow! P&G had long been inward looking when it came to new product development— their product developers were best-in- class, so why look elsewhere? This “half-from-the-outside” demand caused an atomic-size explosion in the ranks. But, boy, did it ever work—and Mr. Lafley made it stick!

“Don’t benchmark, futuremark!” “Don’t benchmark, futuremark!” Impetus: “The future is already here; it’s just not evenly distributed” —William Gibson

“Don’t benchmark, ‘Other’ mark!”

A variation on the theme. Not only do we want to seek out/learn from those “living tomorrow today”—but we want to learn from/evaluate against others in entirely different worlds. That is, the head of a 32-person finance department can usefully “benchmark” [“other”-mark] against the best hardware store in town on the dimension of customer service. (And finance departments have customers every bit as much as hardware stores do!) And so on. If your mindset is “right”/encompassing, you’ll find ways to learn from anybody and everybody in whatever endeavor.

COMPETITORS: “The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; he does the thing he ought not to do and often it catches the expert out and ends him on the spot.” —Mark Twain

“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

I’d urge you to read the prior slide a couple of times. Or three times. Or four. (And, of course, I’d urge you to check the book out as well. Fact is, there’s a pretty significant and growing literature that supports this point in a variety of settings—including the likes of foreign policy making at the highest levels.) The notion is profound: Diversity … per se … is a key, maybe the key, to effective and innovative decision making. (And pay close attention to the delusion of “greatest group of experts looking at it”—sounds good, results not so clear.) Think about it: This idea … “changes everything.” Truly.

Diversity … per se … is a key … maybe the key … to effective and innovative decision making.

“Who’s the most interesting person you’ve met in the last 90 days? How do I get in touch with them?” —Fred Smith

We’ll now take the innovation-enhancing portfolio idea to the individual level. FedEx founder Fred Smith and I were together on an economic predictions panel, and he turned to me at one point and “popped the question”—that is, the question on the prior slide about the most interesting person I’d recently met. I’m afraid I didn’t have a very good answer—which bugged me, not only out of embarrassment but because I should have been able to reel off a half-dozen truly interesting people. So imagine you were asked this question. Right now! How scintillating would your answer be? (And: What a great question! And: In a fashion, key to the continuing vitality of FedEx in a merciless market!)

Vanity Fair: “What is your most marked characteristic?” characteristic?” Mike Bloomberg: “Curiosity.”

7.

The Bottleneck … “ The Bottleneck …

The Bottleneck … Is at the Top of the Bottle” “Where are you likely to find people with the least diversity of experience, the largest investment in the past, and the greatest reverence for industry dogma … At the top!” — Gary Hamel/Harvard Business Review “ The Bottleneck … Is at the Top of the Bottle” “Where are you likely to find people with the least diversity of experience, the largest investment in the past, and the greatest reverence for industry dogma … At the top!” — Gary Hamel/Harvard Business Review

8.

“There’s a fundamental shift in power happening. Everywhere, people are getting together and, using the Internet, disrupting whatever activities they’re involved in.” —Pierre Omidyar, founder, eBay

“The Billion-man Research Team: Companies offering work to online communities are reaping the benefits of ‘crowdsourcing.’” —Headline, FT

At my blog, tompeters.com, I called this the “Business Book of the Year.” Moreover, it consists of virtually no theory, but, instead … cases after case after pragmatic case.

9.

14,000 20,000 30

14,000/ e Bay 20,000/Amazon 30/Craigslist

“Unless mankind redesigns itself by changing our DNA through altering our genetic makeup, computer-generated robots will take over the world.” – Stephen Hawking

“A bureaucrat is an expensive microchip.” —Dan Sullivan, consultant and executive coach

“In some sense you can argue that the science fiction scenario is already starting to happen. The computers are in control. We just live in their world.” —Danny Hillis, Thinking Machines

Q3 2011/BLS +3.1/ Non-farm productivity growth +3.8/ Non-farm output +0.6/ Non-farm hours worked +5.4/ Manufacturing productivity +4.7/ Manufacturing output / Manufacturing hours worked Source: Bureau of Labor Statistics/03 November 2011 Q3 2011/BLS +3.1/ Non-farm productivity growth +3.8/ Non-farm output +0.6/ Non-farm hours worked +5.4/ Manufacturing productivity +4.7/ Manufacturing output - 0.6/ Manufacturing hours worked Source: Bureau of Labor Statistics/03 November 2011

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! Kevin Roberts’ Credo 1. Ready. Fire! Aim. 2. If it ain’t broke... Break it! 3. Hire crazies. 4. Ask dumb questions. 5. Pursue failure. 6. Lead, follow... or get out of the way! 7. Spread confusion. 8. Ditch your office. 9. Read odd stuff. 10. Avoid moderation!

10.

25

MBWA

M anaging B y W andering A round

You = Your calendar* *The calendar never lies.

50

“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 long-term 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, stay 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”) Can Learn It Anyway (Chapter 5, “The Soft Skills Of Hard Leadership”)

1

“If there is any one ‘secret’ to effectiveness, it is concentration. Effective executives do first things first … and they do one thing at a time.” —Peter Drucker

“The doctor interrupts after …* after …* *Source: Jerome Groopman, How Doctors Think

18

18 … seconds!

[An obsession with] Listening is... the ultimate mark of Respect. of Respect. Listening is... the heart and soul of Engagement. Listening is... the heart and soul of Kindness. Listening is... the heart and soul of Thoughtfulness. Listening is... the basis for true Collaboration. Listening is... the basis for true Partnership. Listening is... a Team Sport. Listening is... a Developable Individual Skill.* (*Though women are far better at it than men.) are far better at it than men.) Listening is... the basis for Community. Listening is... the bedrock of Joint Ventures that work. Listening is... the bedrock of Joint Ventures that grow. Listening is... the core of effective Cross-functional Communication* (*Which is in turn Attribute #1 of Communication* (*Which is in turn Attribute #1 of organizational effectiveness.) organizational effectiveness.)[cont.]

Listening is... the engine of superior EXECUTION. Listening is... the key to making the Sale. Listening is... the key to Keeping the Customer’s Business. Listening is... Service. Listening is... the engine of Network development. Listening is... the engine of Network maintenance. Listening is... the engine of Network expansion. Listening is... Social Networking’s “secret weapon.” Listening is... Learning. Listening is... the sine qua non of Renewal. Listening is... the sine qua non of Creativity. Listening is... the sine qua non of Innovation. Listening is... the core of taking diverse opinions aboard. Listening is... Strategy. Listening is... Source #1 of “Value-added.” Listening is... Differentiator #1. Listening is... Profitable.* (*The “R.O.I.” from listening is higher than from any other single activity.) from any other single activity.) Listening is … the bedrock which underpins a Commitment to EXCELLENCE EXCELLENCE

“It was much later that I realized Dad’s secret. He gained respect by giving it. He talked and listened to the fourth-grade kids in Spring Valley who shined shoes the same way he talked and listened to a bishop or a college president. He was seriously interested in who you were and what you had to say.” —Sara Lawrence-Lightfoot, Respect

11.

“Business has to give people enriching, rewarding lives … or it's simply not worth doing.” —Richard Branson

“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 AA’s Annual Meeting)

Herb Kelleher is the founding CEO of that extraordinary American institution, the profitable-for-38-years-in-a-row Southwest Airlines. SWA and its cross-town competitor, American Airlines, had their annual meetings in Dallas on the same day a couple of years ago. American’s meeting was picketed by members of its pilots union. The SWA meeting celebrated Mr Kelleher’s retirement after 37 years. The SWA pilots union—by way of contrast—took out and paid for a full-page ad in USA Today thanking Kelleher for his service! Partial explanation: Herb Kelleher has been asked a thousand times, probably more, what his success secrets are. He’s always given the same answer. ONE secret only: “You have to treat your employees like customers.” There’s more to it than that, but Kelleher is adamant about emphasizing … just the one thing.

"When I hire someone, that's when I go to work for them.” —John DiJulius, "What's the Secret to Providing a World-class Customer Experience"

"If you want staff to give great service, give great service to staff." "If you want staff to give great service, give great service to staff." —Ari Weinzweig, Zingerman's

I love this! (Please take 3 deep breaths—and re-read.) Zingerman’s is one of the companies featured in Bo Burlingham’s marvelous Small Giants: Companies that Chose to Be Great Instead of Big. The idea here is a carbon copy of Kelleher’s axiom. And this one uses the wonderword … SERVICE. Leader Life Lesson #1: Effective bosses are “in service” to their employees! (And they are well aware thereof. And in fact relish that role—i.e., Servant Leader.)

If you want to WOW your customers then you must first WOW those who WOW the customers! If you want to WOW your customers then you must first WOW those who WOW the customers!

My versions … for what it’s worth.

EMPLOYEES FIRST, CUSTOMERS SECOND: Turning Conventional Management Upside Down Vineet Nayar/CEO/HCL Technologies

Oath of Office: Managers/Servant Leaders Oath of Office: Managers/Servant Leaders Our goal is to serve our customers brilliantly and profitably over the long haul. the long haul. Serving our customers brilliantly and profitably over the long haul is a product of brilliantly serving, over the long haul, the haul is a product of brilliantly serving, over the long haul, the people who serve the customer. people who serve the customer. Hence, our job as leaders—the alpha and the omega and everything in between—is abetting the sustained growth and everything in between—is abetting the sustained growth and success and engagement and enthusiasm and commitment to success and engagement and enthusiasm and commitment to Excellence of those, one at a time, who directly or indirectly Excellence of those, one at a time, who directly or indirectly serve the ultimate customer. serve the ultimate customer. We—leaders of every stripe—are in the “Human Growth and Development and Success and Aspiration to Excellence Development and Success and Aspiration to Excellence business.” business.” “We” [leaders] only grow when “they” [each and every one of our colleagues] are growing. growing. “We” [leaders] only succeed when “they” [each and every one of our colleagues] are succeeding. are succeeding. “We” [leaders] only energetically march toward Excellence when “they” [each and every one of our colleagues] are energetically marching “they” [each and every one of our colleagues] are energetically marching toward Excellence. toward Excellence.Period.

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

I’m an unabashed enemy of 9 out of 9.01 mission statements—they are such pap (or is it crap?). But I love this one from the giant London-based marketing services firm WPP. Profit is indeed on the agenda. But profit is a … DERIVATIVE CONCEPT. The path to profit unequivocally begins with the quality of and commitment to “talent.”

“The ONE Question”: “In the last year [3 years, current job], name the … three people … whose growth you’ve most contributed to. Please explain where they were at the beginning of the year, where they are today, and where they are heading in the next 12 months. Please explain … in painstaking detail … your development strategy in each case. Please tell me your biggest development disappointment—looking back, could you or would you have done anything differently? Please tell me about your greatest development triumph—and disaster—in the last five years. What are the ‘three big things’ you’ve learned about helping people grow along the way?”

I was talking with a general in the Indian Army. The topic was promotion to the rank of general officer. I said, and he pretty much agreed, that the acid test among the, say, six colonels contending for one spot at the next level would be their respective “people development” track records. To put numbers to it, as is my want, I’d insist that each of those candidates lay out—in exacting detail—the unexpurgated story of the three people they have most significantly helped grow in the last, say, three years. The [confirmed] “stories” of their developed stars are primary data in determining promotion to general officer.

2/year = legacy.

To continue, your legacy, as a mid-level or higher boss, is by and large determined by the key promotions you’ve made during your, say, five years on the job. On average, there are two such promotions per year. Hence your 10 promotion decisions in 5 years are the most important decisions you’ll make! Doubtless you take promotion decisions seriously, but do you take them … SERIOUSLY ENOUGH ? (Are those promotion decisions taken as carefully as, say, decisions to proceed, or not, with major strategic capital investments/ acquisitions?)

Promotion Decisions “life and death decisions” Source: Peter Drucker, The Practice of Management

The Memories That Matter The Memories That Matter The people you developed who went on to stellar accomplishments inside or outside stellar accomplishments inside or outside the company. the company. The (no more than) two or three people you developed who went on to create stellar institutions of their own. create stellar institutions of their own. The longshots (people with “a certain something”) you bet on who surprised themselves—and your peers. surprised themselves—and your peers. The people of all stripes who 2/5/10/20 years later say “You made a difference in my life,” later say “You made a difference in my life,” “Your belief in me changed everything.” “Your belief in me changed everything.” The sort of/character of people you hired in general. (And the bad apples you chucked out despite some stellar traits.) apples you chucked out despite some stellar traits.) A handful of projects (a half dozen at most) you doggedly pursued that still make you smile and which fundamentally changed the way still make you smile and which fundamentally changed the way things are done inside or outside the company/industry. things are done inside or outside the company/industry. The supercharged camaraderie of a handful of Great Teams aiming to The supercharged camaraderie of a handful of Great Teams aiming to “change the world.” “change the world.”

Les Wexner: From sweaters to people!* *Limited Brands founder Les Wexner queried on astounding long- term success—said, in effect, it happened because he got as excited about developing people as he had been about predicting fashion trends in his early years as excited about developing people as he had been about predicting fashion trends in his early years

“The leaders of Great Groups … love talent … and know where to find it. They … revel in … the talent of others.” —Warren Bennis & Patricia Ward Biederman, Organizing Genius

7 Steps to Sustaining Success You take care of the people. The people take care of the service. The service takes care of the customer. The customer takes care of the profit. The profit takes care of the re-investment. The re-investment takes care of the re-invention. The re-invention takes care of the future. (And at every step the only measure is EXCELLENCE.)

7 Steps to Sustaining Success: And it starts with … You take care of the people.

"Leadership is a gift. It's given by those who follow. You have to be worthy of it.” —General Mark Welsh, Commander, U.S. Air Forces Europe

12.

If the regimental commander lost most of his 2nd lieutenants and 1st lieutenants and captains and majors, it would be a tragedy. If he lost his sergeants it would be a catastrophe. The Army and the Navy are fully aware that success on the battlefield is dependent to an extraordinary degree on its Sergeants and Chief Petty Officers. Does industry have the same awareness?

Employee retention & satisfaction & productivity: Overwhelmingly based on the first-line manager! Source: Marcus Buckingham & Curt Coffman, First, Break All the Rules: What the World’s Greatest Managers Do Differently

“People leave managers not companies.” —Dave Wheeler

13.

“ Development can help great people be even better— but if I had a dollar to spend, I’d spend 70 cents getting the right person in the door.” — Paul Russell, Director, Leadership and Development, Google

“In short, hiring is the most important aspect of business and yet remains woefully misunderstood. ” “In short, hiring is the most important aspect of business and yet remains woefully misunderstood. ” Source: Wall Street Journal, , review of Who: The A Method for Hiring, review of Who: The A Method for Hiring, Geoff Smart and Randy Street

“I can’t tell you how many times we passed up hotshots for guys we thought were better people, and watched our guys do a lot better than the big names, not just in the classroom, but on the field—and, naturally, after they graduated, too. Again and again, the blue chips faded out, and our little up-and-comers clawed their way to all-conference and All-America teams.” —Bo Schembechler (and John Bacon), “Recruit for Character,” Bo’s Lasting Lessons

In the end, the effective hiring process will focus on the moral character of the candidates. Which is not to dismiss the technical skills requirements; but the winning team—the team that lasts—will more than match those quantifiable skills with heart and passion and resilience and integrity. (And in uncertain times like these, the apparently “soft” attributes are in fact the true “hard” attributes which engender a culture of organizational Excellence, especially when the chips are down.) (To state the, I hope, obvious—this applies to 100% of jobs. Stellar organizations have no “bit players.” )

14.

In the Army, 4-star generals* obsess about training. In most businesses, it's a “ho hum” mid-level staff function. *and admirals and symphony conductors and sports coaches and police chiefs and fire chiefs …

“training, TRAINING and M-O-R-E T-R-A-I-N-I-N-G” —CINCPAC Nimitz to CNO King /1943

15.

“The four most important words in any organization are …

The four most important words in any organization are … “What do you think?” are … “What do you think?” Source: courtesy Dave Wheeler, posted at tompeters.com

“Employees who don't feel significant rarely make significant contributions.” —Mark Sanborn

“The deepest principal in human nature is the craving* to be appreciated.” —William James *“Craving,” not “wish” or “desire” or “longing” —Dale Carnegie, How to Win Friends and Influence People (“The BIG Secret of Dealing With People”)

“Society is a vehicle for earthly heroism. Man transcends death bt finding meaning for his life. It is the burning desire for the creature to count. What man really fears is not extinction, but extinction with insignificance.” —Ernest Becker, Denial of Death

“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

Could It Be … ??? How to Win Friends and Influence People —Dale Carnegie

16.

A 15-Point Human Capital Asset Development Manifesto Human Capital Asset Development Manifesto “Re-framing Capitalism” World Strategy Forum Seoul/15 June 2012

“Re-framing Capitalism”: A 15-Point “Re-framing Capitalism”: A 15-Point Human Capital Development Manifesto Human Capital Development Manifesto 1. “Corporate social responsibility” starts at home—i.e., inside the enterprise! MAXIMIZING GDD/Gross Domestic Development of the workforce is the primary source of mid-term and beyond growth and profitability—and maximizes national productivity and wealth and security. (Re profitability: If you want to serve the customer with uniform Excellence, then you must FIRST effectively and faithfully serve those who serve the customer—i.e. our employees, via maximizing tools and professional development.)

3. Four-star generals and admirals (and symphony conductors and sports coaches and police chiefs and fire chiefs) OBSESS about training. Why is it an almost dead certainty that in a random 30-minute interview you are unlikely to hear a CEO touch upon this topic? (I would hazard a guess that most CEOs see IT investments as a “strategic necessity,” but see training expenses as “a necessary evil.”) 4. Proposition/axiom: The CTO/Chief TRAINING Officer is arguably the #1 staff job in the enterprise, at least on a par with, say, the CFO or CIO or head of R&D. (Again, external circumstances—see immediately above—are forcing our hand.)

7. Every individual on the payroll should have a benchmarked professional growth strategy. Every leader at every level should be evaluated in no small measure on the collective effectiveness of individual growth strategies— that is, each individual’s absolute growth is of direct relevance to every leader’s assessed performance.

8. Given that we ceaselessly lament the “leadership deficit,” it is imperative, and just plain vanilla common sense, that we maximize the rate of development of women leaders at every level—little if anything has a higher priority. (It is an outrage that this has not been the case until now—and is still not the case in far too many institutions.) (And, while there are no guarantees, women are more likely dispositionally to take a shine to the imperative of maximizing human asset development.)

“I speak to you with a feminine voice. It’s the voice of democracy, of equality. I am certain, ladies and gentlemen, that this will be the women’s century. In the Portuguese language, words such as life, soul, and hope are of the feminine gender, as are other words like courage and sincerity,” —President Dilma Rousseff “I speak to you with a feminine voice. It’s the voice of democracy, of equality. I am certain, ladies and gentlemen, that this will be the women’s century. In the Portuguese language, words such as life, soul, and hope are of the feminine gender, as are other words like courage and sincerity,” —President Dilma Rousseff of Brazil, 2011, 1st woman opening keynote, United Nations General Assembly United Nations General Assembly

“AS LEADERS, WOMEN RULE: New Studies find that female managers outshine their male counterparts in almost every measure” TITLE/ Special Report/ BusinessWeek

“Forget China, India and the Internet : Economic Growth Is Driven by Women.”* Source: Headline, Economist *W/$28T > 2X (C + I)

11. The national education infrastructure—from kindergarten to continuing adult education—may well be National Priority #1. Moreover, the educational infrastructure must be altered radically to underpin support for the creative jobs that will be more or less the sole basis of future employment and national growth and wealth creation.

“Human creativity is the ultimate economic resource.” —Richard Florida

APPLE market cap > Exxon Mobil* *August 2011

17.

Excellence. Always. If not Excellence, what? If not Excellence now, when?

“Excellence … can be obtained if you: can be obtained if you:... care more than others think... care more than others think is wise;... risk more than others think is wise;... risk more than others think is safe;... dream 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)

EXCELLENCE is not an "aspiration.” EXCELLENCE is … THE NEXT FIVE MINUTES.

EXCELLENCE is a personal choice … not an institutional choice!