NAPM International Purchasing Conference & Educational Exhibit New Orleans 30 April 2000

WOW!

Larry > Bill = Your Moment!

No Wiggle Room! “Incrementalism is innovation’s worst enemy.” Nicholas Negroponte

“It means nothing less than the total reinvention of this company.”

Jacques’ New New Ford Ford + MSN CarPoint Ford + Yahoo! Ford + Oracle Ford + HP/MCIWorldcom Etc. Etc.

NAPM: Not “Purchasing”! NAPM: Not “Supply Chain Mgt.” NAPM = TE/IR!* * T otal E nterprise/ I ndustry R einvention!

Work The Destruction Imperative!

Forget > Learn “The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.” Dee Hock

“Steve Ross had a wonderful philosophy: People get fired for not making mistakes.” Bob Pittman

The Gales of Creative Destruction +29M = -44M + 73M +4M = +4M - 0M

Brand Inside Brand Org!

108 X 5 vs. 8 X 1* * 540 vs. 8

And Now the Equivalent … White Collar Revolution!

The Pincer 5 “Destructive” entrepreneurs/ Global Competition “White Collar Robots” THE INTERNET! [E.g.: GM + Ford + DaimlerChrysler] Global Outsourcing [E.g.: India, Mexico] Speed!!

RR on Sara Lee “The most profitable businesses in the future will act as knowledge brokers, linking insights into what’s available with insights into the customer’s individual needs and preferences.”

The “&-!!+#$% in the middle”* Jim Clark on Healtheon/WebMD * ’twixt docs, patients, insurers and providers; $275B of $400B in waste; source: Michael Lewis, The New New Thing

[ Incidentally … CEO Jeff Arnold Age: 30 First Start-up: Age 24]

“We want to be the air traffic controllers of electrons.” Bob Nardelli, GE Power Systems

Buzzsaw.com Builders, Owners, Architects, Contractors, Suppliers $4T industry 5,300 commercial bldg.-project specs on-line; +70 per day

Message … “Supply Chain Integration demands total reinvention of the corporate structure, systems … and “culture.” E.g. …

“E-business is the final nail in the coffin for bureaucracy at GE.” Jack Welch/ GE Annual Report 2000

Magic! [Inter]networked Markets meet … [Intra]networked Workers Source: The Cluetrain Manifesto: The End of Business as Usual

“Hyperlinks subvert hierarchy!” The Cluetrain Manifesto

GET IT? The Character of the Web, per The Cluetrain Manifesto … Hyperlinked Decentralized Hypertime Open, direct access Rich data Broken [no one owns it or controls it] Borderless

[ Words to Live By … “Hierarchy is an organization with its face toward the CEO and its ass toward the customer.” Kjell Nordstrom and Jonas Ridderstrale, Funky Business]

Brand Inside Brand Work!

Why are there no books on how to create a “Cool, Rocking, WOW-producing Purchasing Department”?

You are the Rock Stars of the B2B Age!

[I.e.: Welcome to the Y2K New Orleans Jazz and Real Cool Purchasing Dudes Festival!]

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

“You really got to me. So many of our information technology projects take on a life of their own, and I know they’ll never end up as more than ‘mediocre successes.’ ” CEO, F100 financial services company (10-98)

“Every project we take on starts with a question: How can we do what’s never been done before?” Stuart Hornery, CEO, Lend Lease

The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it. Michelangelo

Brand Inside Brand Talent!

Issue Y2K The Great War for Talent!

There is no “talent shortage” … if … you are a GPTW* *Great Place To Work

“Our business needs a massive transfusion of talent. And talent, I believe, is most likely to be found among non-conformists, dissenters and rebels.” David Ogilvy

The NAESP …

Attributes of Those Who “Made” the 10th Grade History Book –Committed! –Determined to make a difference! –Focused! –Passionate! –Irrational about their life’s project! –Ahead of their time / Paradigm busters! –Impatient! / Action Obsessed

Attributes of Those Who “Made” the 10 th Grade History Book –Made lots of people mad! –Flouted the chain of command! –Creative / Quirky / Peculiar! / Rebels! / Irreverent! –Masters of improv / Thrive on chaos / Exploit chaos!

Attributes of Those Who “Made” the 10 th Grade History Book –Forgiveness > Permission –Bone honest! –Flawed as the dickens! – “In touch” with their followers’ aspirations –Damn good at what they do!

?????????????????? “He grew his hair long, played guitar in a rock band, chased girls, got into trouble. At age 17 he was flogged by his house master, who described him as ‘the most difficult boy I’ve ever had to deal with.’ ”

Tony Blair* *talk/May 2000

Brand Outside Context: No “Commodities”!

“The ‘surplus society’ has a surplus of similar companies, employing similar people, with similar educational backgrounds, working in similar jobs, coming up with similar ideas, producing similar things, with similar prices and similar quality.” Kjell Nordstrom and Jonas Ridderstrale, Funky Business

“We make over three new product announcements a day. Can you remember them? Our customers can’t!” Carly Fiorina

“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

Message (Bud): The “distributor” is dead. Long live the … value-added, knowledge-intensive “business partner.”

Brand Outside Strategy 1 : Lead the Customer!

“Wealth in this new regime flows directly from innovation, not optimization. That is, wealth is not gained by perfecting the known, but by imperfectly seizing the unknown.” Kevin Kelly, New Rules for the New Economy

My NAPM Message … LEADERSHIP! PERIOD!

Brand Outside Strategy 2 : Use E-Commerce to Re-invent the Business!

“In the network economy, the website becomes the company’s primary interface to the customer. The user interface becomes the marketing materials, store front, store interior, sales staff and post- sales support all rolled into one.” Jakob Nielsen, Designing Web Usability

Tomorrow Today: Cisco!* 70% Save $500M (service and tech support) Customer Engineer Chat Rooms ($1B?) C.Sat e >> C.Sat H *Earth’s MVC

Cherry Picking Vertical Markets Plasticsnet.com: $370B; sellers pay $5K to $8K for “storefront”; 5% to 10% cut Hook: community services (database, catalogs, forums, industry job bank, etc.)

Message … COMMUNITY!/ COMMUNITY SERVICES!

“Begin by filling the stadium. Then offer more and more services. Hopefully, as you add more on top, the site becomes more integrated with the work process, until it is invaluable.” Carl Bass, CEO, Buzzsaw.com

Community … Somewhat mediated, segmented chat rooms (must be “managed”/ seeded) User-friendly technical/ professional info Industry “intelligence” Some very timely stuff/ attractors Hotlinks by the gazillion (to professional and unrelated stuff) Expert/ advisor opinions (info, chats, etc.) Opportunity for users to build own Web page

Message … B2B is not the “cost cutting” program du jour!

Message … Remember the “Soft stuff”!* *Soft = Hard [Waterman & Peters]

Message [Paradox] … TRUST RULES!

Speaking of paradoxes …

B2B 1999 – 2004: 50X 2004: $7.4 Source: GartnerGroup (per Reuters ) T

GM/Ford/DaimlerChrysler (02-27) Auto parts supply “Co.” $240B (+$500B) I.P.O.

Goal? Drive profits to zero!* *Remember AMR and “dynamic pricing.”

Anne Busquet/ American Express Not: “Age of the Internet” Is: “Age of Customer Control”

Jack on the Web’s “Naked Truth” “You desperately want to have enough technology in your product offering, so that you don’t end up being in a commodity situation.”

“Where does the Internet rank in priority? It’s No. 1, 2, 3, and 4.” Jack Welch

Web Strategy: GE Power Systems “Launch and Learn” (4 sites in 30 days)

There are 2 Kinds of … Defense* vs. Offense** *Fend off upstarts. ** Reinvent our marketspace!

Jargon Bath! Bureaucracy free … Systemically integrated … Internet intense … Knowledge based … Time and location free … “Instantly” responsive … Customer centric … Mass customization enabled.

Translation … Bureaucracy free = Flat org, no B.S. Systemically integrated = Whole supply chain tightly wired/ friction free Internet intense = Do it all via the Web Knowledge based = Open access Time and location free = Whenever, wherever “Instantly” responsive = Speed demons Customer centric = Customer calls the shots Mass customization enabled = Every product and service rapidly tailored to client requirements

Brand Outside Strategy 3 : It’s the Experience!

“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

“The [Starbucks] Fix” Is on … “We have identified a ‘third place.’ And I really believe that sets us apart. The third place is that place that’s not work or home. It’s the place our customers come for refuge.” Nancy Orsolini, District Manager

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

Mantra: “Any good can be ing -ed” the driv ing experience the pump ing experience the sitt ing experience the read ing experience the wash ing experience the cook ing experience Joseph Pine & James Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage

Think … Supply Chain- ing B2B- ing

“This is the end of the pure product era. For instance, car makers are beginning to understand that the car is a platform for delivering services that drive the customer experience.” Carly Fiorina, Comdex ’99

Brand Leadership Passion Rules!

Brand Leadership! “A key – perhaps the key – to leadership is the effective communication of a story.” Howard Gardner Leading Minds: An Anatomy of Leadership

Brand Leadership: ENTHUSIASM RULES! “I am a dispenser of enthusiasm.”/ Ben Zander

Message to NAPM: You are Re-invention Evangelists!

Ann Richards’ Dogma Show up! Know your message! PUT YOURSELF AT RISK EVERY DAY!

This is your moment. This is your game to lose … or WIN. Now!