LONG VERSIONLONG VERSION

Tom Peters’Tom Peters’

Excellence.Excellence.(Or What?)(Or What?)

Annual Managers ConventionAnnual Managers ConventionTel Aviv/26 June 2012Tel Aviv/26 June 2012

(slides @ tompeters.com and excellencenow.com)(slides @ tompeters.com and excellencenow.com)

1.1.

ConradConrad HiltonHilton, at a gala celebrating his , at a gala celebrating his career, was called to the podium and career, was called to the podium and

asked,asked, “What were the most important

lessons you learned in your long and

distinguished career?” His answer …His answer …

““remember remember to tuck the to tuck the

shower curtain shower curtain inside the inside the bathtubbathtub.”.”

You get ’em You get ’em inin the door the door with “location, location, with “location, location,

location.” location.” You keepYou keep ’em ’em comincoming g backback with the tucked in with the tucked in shower curtain.shower curtain.**

*Profit rarely comes from transaction #1; *Profit rarely comes from transaction #1; it is a byproduct of transaction it is a byproduct of transaction #2, #3, #4#2, #3, #4 … …

““Execution Execution isis strategy.”strategy.”

—Fred Malek—Fred Malek

Sports:Sports: You beat You beat yourself!yourself!

““Costco figured out the Costco figured out the

bigbig,, simplesimple things things

and and executedexecuted with with

total total fanaticismfanaticism.”.” —Charles Munger, Berkshire Hathaway—Charles Munger, Berkshire Hathaway

““In real life, strategyIn real life, strategy is actually very is actually very

straightforward. Pickstraightforward. Pick a general direction a general direction … … andand imimpplementlement likelike hellhell.”.” —Jack Welch—Jack Welch

““ExecutionExecution is is thethe jobjob of the of the

businessbusiness leaderleader.”.”—Larry Bossidy—Larry Bossidy & Ram

Charan/ Execution: The Discipline of Getting Things Done

““Execution isExecution is aa

systematic systematic processprocess of rigorously of rigorously

discussing hows and whats, discussing hows and whats, tenaciously following through, and tenaciously following through, and

ensuring accountability.”ensuring accountability.” —Larry Bossidy & Ram Charan/ —Larry Bossidy & Ram Charan/ Execution: Execution:

The The DisciDiscipplineline of Getting Things Done of Getting Things Done

““When assessing candidates, the When assessing candidates, the first thing I looked for was energy first thing I looked for was energy

and enthusiasm for execution. and enthusiasm for execution. Does she talk about the thrill Does she talk about the thrill of of ggettinettingg thin thinggs done, the s done, the

obstacles overcome, the role obstacles overcome, the role her her ppeople eople pplayedlayed —or does she —or does she keep wandering back to strategy keep wandering back to strategy

or philosophy?”or philosophy?” —Larry Bossidy, —Larry Bossidy, ExecutionExecution

2.2.

Excellence1982: The Bedrock “EiExcellence1982: The Bedrock “Eigght Basics”ht Basics”

1. A Bias for 1. A Bias for ActionAction2. Close to the 2. Close to the CustomerCustomer3. 3. AutonomAutonomyy and and EntreEntreppreneurshireneurshipp4. Productivity Through 4. Productivity Through PeoPeopplele5. 5. Hands OnHands On, , Value-DrivenValue-Driven6. 6. Stick toStick to the Knitting the Knitting7. 7. SimSimpplele Form, Form, LeanLean Staff Staff8. Simultaneous 8. Simultaneous Loose-TightLoose-Tight PropertiesProperties

ExIn*: 1982-2002/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 I am often asked how the “Excellent companies” have fared. Some, to be sure, were bombs. But, on the 20fared. Some, to be sure, were bombs. But, on the 20thth anniversary of the book’s publication, Forbes.com anniversary of the book’s publication, Forbes.com analyzed the stock market performance of the firms. analyzed the stock market performance of the firms.

The results, FYI, are on the prior slide.The results, FYI, are on the prior slide.

(In addition to the satisfactory performance, Forbes (In addition to the satisfactory performance, Forbes noted that, unlike the real world of stock-picker indices, noted that, unlike the real world of stock-picker indices, this analysis precluded selling off stocks that were this analysis precluded selling off stocks that were tanking—hence the Index is at a big disadvantage to tanking—hence the Index is at a big disadvantage to standard indices; yet it had still done very well.) (For no standard indices; yet it had still done very well.) (For no particular reason, neither I nor anyone else seems to particular reason, neither I nor anyone else seems to have done a subsequent analysis. Personally, I’m not have done a subsequent analysis. Personally, I’m not keen, as a matter of ingrained habit, about dwelling on keen, as a matter of ingrained habit, about dwelling on the past.)the past.)

Organizations Organizations existexist to to serveserve. .

Period.Period.

Leaders Leaders livelive to to serveserve. Period.. Period.

““I start with the I start with the premise that the premise that the

function of leadership function of leadership

is tois to pproduceroduce more more leadersleaders,, not more not more followers.”followers.” ——Ralph NaderRalph Nader

Hard is Soft.Hard is Soft.Soft is Hard.Soft is Hard.

People.People.Customers.Customers.Values.Values.

Some—most?—call these ideas “soft”—where Some—most?—call these ideas “soft”—where are the numbers and the plans?are the numbers and the plans?

Surely there is room for the numbers.Surely there is room for the numbers.But they are the real “soft stuff”—malleable But they are the real “soft stuff”—malleable and manipulable. (As we’ve seen again and and manipulable. (As we’ve seen again and again during the current economic crisis.)again during the current economic crisis.)

The truly “hard stuff”—which can’t be faked or The truly “hard stuff”—which can’t be faked or exaggerated—are the relationships with, for exaggerated—are the relationships with, for instance, our customers and our own people.instance, our customers and our own people.

“‘“‘Hard’ is ‘soft.’Hard’ is ‘soft.’‘‘Soft’ is ‘hard.’”Soft’ is ‘hard.’”Mantra #1 from Mantra #1 from In Search of EXCELLENCE.In Search of EXCELLENCE.

3.3.

“I am often asked by would-I am often asked by would-be entrepreneurs seeking be entrepreneurs seeking

escape from life within huge escape from life within huge

corporate structures, corporate structures, ‘How do I build a small firm for myself?’

The answer seems obviousThe answer seems obvious ……

Source: Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

“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 Buy a very largelarge

one and just one and just waitwait.”.” —Paul Ormerod, Why Most Things

Fail: Evolution, Extinction and Economics

““Mr. Foster and his McKinsey colleagues Mr. Foster and his McKinsey colleagues collected detailed performance data stretching collected detailed performance data stretching

back back 4040 years for years for 1,0001,000 U.S. companies. U.S. companies.

TheTheyy found that found that nonenone ofof

the lon the longg-term survivors mana-term survivors managged ed to outto outpperform the market. Worse, erform the market. Worse, the lonthe longger comer comppanies had been in anies had been in

the database, the worse thethe database, the worse theyy did did.”.”

—Financial Times—Financial Times

““Data drawn from the real world Data drawn from the real world attest to a fact that is beyond attest to a fact that is beyond

our control:our control: Everything in existence tends to deteriorate.”

—Norberto Odebrecht, —Norberto Odebrecht, Education Through WorkEducation Through Work

““When asked to name just one big When asked to name just one big merger that had lived up to merger that had lived up to

expectations, Leon Cooperman, expectations, Leon Cooperman, former cochairman of Goldman Sachs’ former cochairman of Goldman Sachs’

Investment Policy Committee, Investment Policy Committee,

answered:answered: I’m sure there are success stories out

there, but at this moment I draw a

blank.” —Mark Sirower, —Mark Sirower, The Synergy TrapThe Synergy Trap

“Not a single company that qualified as having made a sustained transformation ignited its leap with a big

acquisition or merger. Moreover, Moreover, comparison companies—those that failed to make a comparison companies—those that failed to make a leap or, if they did, failed to sustain it—often tried to leap or, if they did, failed to sustain it—often tried to

make themselves great with a big acquisition or make themselves great with a big acquisition or merger. They failed to grasp the simple truth that while merger. They failed to grasp the simple truth that while you can buy your way to growth, you cannot buy your you can buy your way to growth, you cannot buy your

way to greatness.”way to greatness.” —Jim Collins/—Jim Collins/TimeTime

MittELstandMittELstand* * ****

**““aaggile creatures dartinile creatures dartingg between the between the leleggssof the multinational monstersof the multinational monsters””((Bloomberg Bloomberg BusinessWeekBusinessWeek))

**E.g. Goldmann Produktion**E.g. Goldmann Produktion

The long-term strength of the German The long-term strength of the German economy can be captured in one word, and economy can be captured in one word, and

that word is not BASF. Try … that word is not BASF. Try … MittelstandMittelstand. . That is, Germany’s middle-sized, often high-That is, Germany’s middle-sized, often high-tech firms that tend to dominate this or that tech firms that tend to dominate this or that well-defined global market niche.well-defined global market niche.

My simple point here is that you My simple point here is that you cancan have a have a dominant economy that is dominant economy that is notnot led by or led by or overly dependent upon enormous firms.overly dependent upon enormous firms.

(I am one of the very few Americans to have (I am one of the very few Americans to have extensively studied the Mittelstand—Mittlestand extensively studied the Mittelstand—Mittlestand companies were a principal feature of my 1992 book, companies were a principal feature of my 1992 book, Liberation ManagementLiberation Management. Typical was Goldmann . Typical was Goldmann Produktion, a truly teensy tiny chemical company, with Produktion, a truly teensy tiny chemical company, with a cast of a couple of dozen, that dominated a truly tiny a cast of a couple of dozen, that dominated a truly tiny global niche associated with candle coloring.)global niche associated with candle coloring.)

““Be the best. Be the best. It’s the only It’s the only

market that’s market that’s not crowded.”not crowded.”

From: From: Retail Superstars: Inside the 25 BestRetail Superstars: Inside the 25 Best Independent Stores in America,Independent Stores in America, George Whalin George Whalin

Jungle Jim’s International Market, Jungle Jim’s International Market, FairfieldFairfield, , OhioOhio:: “An “An

adventure in adventure in ‘‘shoshoppppertainmentertainment,’,’ as as Jungle Jim’s Jungle Jim’s calls it, begins in the parking lot calls it, begins in the parking lot and goes on to and goes on to

1,600 cheeses1,600 cheeses and, yes, and, yes, 1,400 varieties of 1,400 varieties of hot saucehot sauce —not to mention —not to mention 12,000 wines 12,000 wines priced from $8 to $8,000priced from $8 to $8,000 a bottle; all this is a bottle; all this is

brought to you by brought to you by 4,000 vendors4,000 vendors.. Customers Customers come from every corner of the globe.” come from every corner of the globe.”

Bronner’s Christmas Wonderland, Bronner’s Christmas Wonderland, FrankenmuthFrankenmuth, ,

MichiMichigganan, pop 5,000:, pop 5,000: 98,000-square-foot98,000-square-foot

“shop” features the likes of “shop” features the likes of 6,000 Christmas 6,000 Christmas ornaments, 50,000 trimsornaments, 50,000 trims, and anything else , and anything else you can name if it pertains to Christmas.you can name if it pertains to Christmas.

Source: George Whalin, Source: George Whalin, Retail SuperstarsRetail Superstars

Retail Superstars: Retail Superstars: Inside the 25 Best Inside the 25 Best

Independent StoresIndependent Storesin Americain America —by George Whalin—by George Whalin

Small Giants: Small Giants: Companies That Choose to Be Companies That Choose to Be

Great Instead of BigGreat Instead of Big

Small Giants: Companies that Chose to Be Great Instead of Big (Bo Burlingham)

““They cultivated They cultivated exceptionally intimate relationships with exceptionally intimate relationships with customers and supplierscustomers and suppliers, , based on personal contact, one-based on personal contact, one-on-one interaction, and mutual commitment to delivering on on-one interaction, and mutual commitment to delivering on promises.promises.

“Each company had an ach company had an extraordinarily intimate relationship extraordinarily intimate relationship with the local city, town, or countywith the local city, town, or county in which it did business in which it did business ——a relationship that went well beyond the usual concept of a relationship that went well beyond the usual concept of `giving back.’ `giving back.’

““The companies had what struck me asThe companies had what struck me as unusually unusually intimate intimate workplacesworkplaces..

““I noticed theI noticed the passionpassion that the leaders brought to what the that the leaders brought to what the company did.company did. They loved the subject matterThey loved the subject matter, , whether it be whether it be music, safety lighting, food, special effects, constant torque music, safety lighting, food, special effects, constant torque hinges, beer, records storage, construction, dining, or hinges, beer, records storage, construction, dining, or fashion.”fashion.”

4.4.

1/41/466

Lesson46:Lesson46: WTTMSWTTMS

WW

WhoeverWhoeverTriesTriesTheTheMostMostStuffStuffWinsWins

Lesson46+:Lesson46+: WTTMSWTTMSTFTF

WW

WhoeverWhoeverTriesTriesTheTheMostMostThingsThingsTheTheFastestFastestWinsWins

READY.READY.FIRE.FIRE.AIM.AIM.

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

H. Ross Perot sold EDS to GM in the H. Ross Perot sold EDS to GM in the 1980s, and went on the car giant’s 1980s, and went on the car giant’s Board. A few years later he was asked Board. A few years later he was asked to explain the difference between the to explain the difference between the two companies. two companies.

He said that at EDS the strategy was He said that at EDS the strategy was “Ready. Fire. Aim.”“Ready. Fire. Aim.” I.e., get on with it I.e., get on with it—now. —now.

At GM the “strategy” was At GM the “strategy” was “Ready. Aim. “Ready. Aim. Aim. Aim. Aim. …”Aim. Aim. Aim. …” (Alas, well into the (Alas, well into the 11stst decade of the new century GM’s decade of the new century GM’s problems/unwieldy bureaucracy problems/unwieldy bureaucracy remained pretty much unchanged.)remained pretty much unchanged.)

““We made mistakes, of course. Most of them were We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the omissions we didn’t think of when we initially wrote the

software. software. We fixed them by doing it over and over, We fixed them by doing it over and over, again and again.again and again. We do the same today. While our We do the same today. While our competitors are still sucking their thumbs trying to competitors are still sucking their thumbs trying to

make the design perfect, we’re already on prototype make the design perfect, we’re already on prototype

versionversion ##55.. By the time our rivals are ready By the time our rivals are ready

with wires and screws, we are on version with wires and screws, we are on version

##1010.. It gets back to It gets back to planning versus actingplanning versus acting: : We act We act from day onefrom day one; ; others plan how others plan how

toto planplan——for monthsfor months.”.”

——Bloomberg by BloombergBloomberg by Bloomberg

““Burt Rutan wasn’t a fighter jock; he was an engineer who had been 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 asked to figure out why the F-4 Phantom was flying pilots into the ground in Vietnam. While his fellow engineers attacked such tasks ground in Vietnam. While his fellow engineers attacked such tasks with calculators, Rutan insisted on considering the problem in the 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 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 also confirmed for Rutan a notion he had held ever since he had

built model airplanes as a child.built model airplanes as a child. The waThe wayy to to make a better aircraft wasn’t make a better aircraft wasn’t

to sit around to sit around pperfectinerfectingg a a design, it was to design, it was to gget et

somethinsomethingg u upp in the air and in the air and see what hasee what happppensens, , then trthen tryy to to fix whatever fix whatever ggoes wronoes wrong.”g.” —Eric —Eric

Abrahamson & David Freedman, Chapter 8, Abrahamson & David Freedman, Chapter 8, ““Messy Leadership,”Messy Leadership,” fromfrom A Perfect Mess: The Hidden Benefits of Disorder A Perfect Mess: The Hidden Benefits of Disorder

Culture of PrototypingCulture of Prototyping

“Effective prototyping may “Effective prototyping may

be be thethe most most valuablevaluable core core competencecompetence an an

innovative organization can innovative organization can hope to have.”hope to have.” —Michael Schrage—Michael Schrage

Think about It!?Think about It!?

Innovation Innovation = = Reaction to the Reaction to the

PrototypePrototype

Source: Michael SchrageSource: Michael Schrage

““DemoDemo or die!” or die!”

Source: This was the approach championed by Source: This was the approach championed by NicholasNicholas NeNeggroropponteonte which vaulted his which vaulted his MITMIT MediaMedia LabLab to the forefront of IT-multimedia to the forefront of IT-multimedia

innovation. It was his successful alternative to the traditional innovation. It was his successful alternative to the traditional MIT-academic MIT-academic “publish or perish.”“publish or perish.” Negroponte’s rapid-prototyping Negroponte’s rapid-prototyping

version was emblematic of the times and the pace and the enormityversion was emblematic of the times and the pace and the enormity of the opportunity. (of the opportunity. (NYTimesNYTimes/0426.11)/0426.11)

WctqpWWctqpW

Whoever creates the quickest Whoever creates the quickest prototypes wins!prototypes wins!

““Experiment Experiment fearlessly”fearlessly”

Source: Bloomberg BusinessWeek, “Type A Organization Strategies:

How to Hit a Moving Target”—Tactic #1Tactic #1

“relentless trial“relentless trial and error” and error”

Source: Source: Wall Street JournalWall Street Journal, cornerstone of effective approach to “rebalancing” company, cornerstone of effective approach to “rebalancing” company portfolios in the face of changing and uncertain global economic conditions (11.08.10) portfolios in the face of changing and uncertain global economic conditions (11.08.10)

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

““The difference between Bach and his forgotten peers The difference between Bach and his forgotten peers isn’t necessarily that he had a better ratio of hits to isn’t necessarily that he had a better ratio of hits to

misses. The difference is that the mediocre might have a misses. The difference is that the mediocre might have a dozen ideas, while Bach, in his lifetime, created more dozen ideas, while Bach, in his lifetime, created more than a thousand full-fledged musical compositions. A than a thousand full-fledged musical compositions. A

genius is a genius, psychologist Paul Simonton maintains, genius is a genius, psychologist Paul Simonton maintains, because he can put together such a staggering number of because he can put together such a staggering number of

insights, ideas, theories, random observations, and insights, ideas, theories, random observations, and unexpected connections that he almost inevitably ends unexpected connections that he almost inevitably ends

up with something great. up with something great. ‘Quality,’‘Quality,’ Simonton Simonton

writes,writes, ‘is a probabilistic ‘is a probabilistic function of quantity.’”function of quantity.’”

—Malcolm Gladwell, “Creation Myth,” —Malcolm Gladwell, “Creation Myth,” New YorkerNew Yorker, 0516.11, 0516.11

““Rose gardeners face a choice every spring. The long-term fate of a rose garden 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 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 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 control. You force the plant to make the maximum use of its available resources, by

putting them into the the rose’s ‘core business.’ putting them into the the rose’s ‘core business.’ Pruning hard is a Pruning hard is a dangerous policy in an unpredictable environment. Thus, dangerous policy in an unpredictable environment. Thus, if you are in a spot where you know nature may play tricks 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 on you, you may opt for a policy of high tolerance. You will

never have the biggest roses, but you have a much-never have the biggest roses, but you have a much-enhanced chance of having roses every year. You will enhanced chance of having roses every year. You will

achieve a gradual renewal of the plant. In short, tolerant achieve a gradual renewal of the plant. In short, tolerant pruning achieves two ends: (1) pruning achieves two ends: (1) It makes it easier to cope It makes it easier to cope with unexpected environmental changeswith unexpected environmental changes. (2) . (2) It leads to a It leads to a

continuous restructuring of the plantcontinuous restructuring of the plant. The policy of . The policy of tolerance admittedly wastes resources—the extra buds tolerance admittedly wastes resources—the extra buds

drain away nutrients from the main stem. But in an drain away nutrients from the main stem. But in an unpredictable environment, this policy of tolerance makes unpredictable environment, this policy of tolerance makes the rose healthier in the long run.”the rose healthier in the long run.” —Arie De Geus, —Arie De Geus, The Living CompanyThe Living Company

5.5.

Read ItRead It

Richard Farson & Ralph Keyes:Richard Farson & Ralph Keyes:

Whoever MakesWhoever Makes the Most Mistakes the Most Mistakes Wins: The ParadoxWins: The Paradox

of Innovation of Innovation

““Fail.Fail. Forward. Forward.

Fast.”Fast.”High Tech CEO, Pennsylvania

““Fail faster. Fail faster. Succeed Succeed Sooner.”Sooner.”

David Kelley/IDEO

““No matter. No matter. Try again. Fail Try again. Fail

again. Fail again. Fail better.”better.”

—Samuel Beckett—Samuel Beckett

““RewardReward excellent failures.

PunishPunish mediocre successes.”

—Phil Daniels, Sydney exec

““In business, you In business, you rewardreward people for taking people for taking risksrisks..

When it When it doesn’tdoesn’t workwork outout you you ppromoteromote them them——because because they were willing to try new they were willing to try new

things. If people tell me things. If people tell me they skied all day and never they skied all day and never fell down, I tell them to tryfell down, I tell them to try

a different mountain.” a different mountain.” —Michael Bloomberg (—Michael Bloomberg (BWBW/0625.07)/0625.07)

““The secret of fast The secret of fast progress is progress is

inefficiency, fast , fast and furious and and furious and

numerous failures.”numerous failures.”—Kevin Kelly

““The Silicon Valley of The Silicon Valley of today is built less today is built less atop the spires of atop the spires of

earlier triumphs than earlier triumphs than upon the rubble of upon the rubble of earlier debacles.”earlier debacles.”

——Paul Saffo, tech futurist, Palo AltoPaul 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++:Lesson46++: WTTMSWTTMSASTMSUASTMSUTFWTFW

WhoeverWhoeverTriesTriesTheTheMostMostStuffStuff((AndAndScrews Screws The The Most Most Stuff Stuff UpUp)) TheTheFastestFastestWinsWins

““You miss You miss

100100%%

of the shots of the shots you never you never

take.”take.” —Wayne—Wayne GretzkyGretzky

6.6.

The “Hang Out Axiom I”:The “Hang Out Axiom I”: We We are are What We What We

Eat/WeEat/We Are Are the the companycompany we keepwe keep

““You will become You will become like the five people like the five people you associate with you associate with the most—this can the most—this can

be either a blessing be either a blessing or a curse.”or a curse.” —Billy Cox—Billy Cox

EMPLOYEES:EMPLOYEES: “Are there“Are there enough weird people in the lab in the lab

these days?”these days?”Source: V. Chmn., pharmaceutical house, to a lab directorSource: V. Chmn., pharmaceutical house, to a lab director

The “We are what we eat”/ The “We are what we eat”/ “We are who we hang out with”“We are who we hang out with”

Axiom: Axiom: At its core, At its core, evereveryy (!!!) (!!!) relationship-partnership decision relationship-partnership decision

(employee, vendor, customer, etc., (employee, vendor, customer, etc., etc.) is a etc.) is a stratestrateggicic decision about: decision about:

“Innovate,“Innovate, ‘ ‘YesYes’ ’ oror ‘No’ ” ”

Measure “Strangeness”/Portfolio QualityMeasure “Strangeness”/Portfolio Quality

StaffStaffConsultantsConsultants

VendorsVendorsOut-sourcing Partners Out-sourcing Partners (#, Quality)(#, Quality)

Innovation Alliance PartnersInnovation Alliance PartnersCustomersCustomers

Competitors Competitors (who we “benchmark” against)(who we “benchmark” against)

Strategic Initiatives Strategic Initiatives Product Portfolio Product Portfolio (LineEx v. Leap)(LineEx v. Leap)

IS/IT ProjectsIS/IT ProjectsHQ LocationHQ LocationLunch MatesLunch Mates

LanguageLanguageBoardBoard

CUSTOMERS:CUSTOMERS: “Future-“Future-defining customers may defining customers may account for only account for only 2%2% to to 3%3% of your total, of your total, but but

thetheyy re reppresent a resent a crucial window on the crucial window on the futurefuture.”.” —Adrian Slywotzky, Mercer Consultants—Adrian Slywotzky, Mercer Consultants

““[CEO A.G.] Lafley has shifted [CEO A.G.] Lafley has shifted P&G’sP&G’s focus onfocus on

inventing all its own products to developing … inventing all its own products to developing …

others’ others’ inventions at inventions at least half the least half the

timetime.. One successfulOne successful

example, Mr. Clean Magic Eraser, is based on a product example, Mr. Clean Magic Eraser, is based on a product found in an Osaka market.” found in an Osaka market.” ——FortuneFortune

Wow!Wow!Wow!Wow!

And: And: Wow!Wow!

P&G had long been inward looking P&G had long been inward looking when it came to new product when it came to new product development—their product development—their product developers were best-in-class, so why developers were best-in-class, so why look elsewhere? look elsewhere?

This This “half-from-the-outside”“half-from-the-outside” demand demand caused an atomic-size explosion in the caused an atomic-size explosion in the ranks. But, boy, did it ever work—ranks. But, boy, did it ever work—and and Mr. Lafley made it stickMr. Lafley made it stick! !

““Don’t Don’t benchmark, benchmark,

futuremark!”futuremark!” Impetus: “The future is already here; it’s just

not evenly distributed” —William Gibson

““Don’t Don’t benchmark,benchmark,

‘Other’ ‘Other’ markmark!!””

A variation on the theme. Not only do we A variation on the theme. Not only do we want to seek out/learn from those “living want to seek out/learn from those “living tomorrow today”—tomorrow today”—but we want to learn but we want to learn from/evaluate against others in entirely from/evaluate against others in entirely different worldsdifferent worlds. .

That is, the head of a 32-person finance That is, the head of a 32-person finance department can usefully “benchmark” department can usefully “benchmark” [“other”-mark][“other”-mark] against the best hardware against the best hardware store in town on the dimension of customer store in town on the dimension of customer service. (And finance departments have service. (And finance departments have customers every bit as much as hardware customers every bit as much as hardware stores do!) And so on. If your mindset is stores do!) And so on. If your mindset is “right”/encompassing, you’ll find ways to “right”/encompassing, you’ll find ways to learn from anybody and everybody in learn from anybody and everybody in whatever endeavor. whatever endeavor.

COMPETITORS:COMPETITORS: “The best swordsman “The best swordsman in the world doesn’t need to in the world doesn’t need to

fear the second best fear the second best swordsman in the world;swordsman in the world; no, the no, the

person for him to be afraid of is some ignorant person for him to be afraid of is some ignorant antagonist who has never had a sword in his antagonist who has never had a sword in his

hand before; he doesn’t do the thing he ought hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; to do, and so the expert isn’t prepared for him; he does the thing he ought not to do and often he does the thing he ought not to do and often it catches the expert out and ends him on the it catches the expert out and ends him on the

spot.”spot.”

—Mark Twain—Mark Twain

““Diverse groups of problem solvers—groupsDiverse groups of problem solvers—groups of people with diverse tools—consistently of people with diverse tools—consistently outperformed groups of the best and the outperformed groups of the best and the

brightest. If I formed two groups, one brightest. If I formed two groups, one randomrandom (and therefore diverse) and one (and therefore diverse) and one

consisting of the consisting of the bestbest individual performers, individual performers, the first group almost always did better. …the first group almost always did better. …

DiversityDiversity trumped trumped abilityability.”.” —Scott Page, —Scott Page, The Difference: The Difference:

How the Power of Diversity Creates Better Groups,How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies Firms, Schools, and Societies

I’d urge you to read the prior slide a couple of times.I’d urge you to read the prior slide a couple of times.Or three times. Or three times. Or four. Or four.

(And, of course, I’d urge you to check the book out as well. (And, of course, I’d urge you to check the book out as well. Fact is, there’s a pretty significant and growing literature Fact is, there’s a pretty significant and growing literature that supports this point in a variety of settings—including that supports this point in a variety of settings—including the likes of foreign policy making at the highest levels.) the likes of foreign policy making at the highest levels.)

The notion is profound: The notion is profound: DiversitDiversity … py … per er sese … … is a keis a keyy, ma, mayybe the kebe the keyy, , to effective and innovative to effective and innovative decision makindecision making.g. (And pay close (And pay close attention to the delusion of “greatest group of experts attention to the delusion of “greatest group of experts looking at it”—sounds good, results not so clear.)looking at it”—sounds good, results not so clear.)

Think about it: This idea … Think about it: This idea … “changes everything.”“changes everything.” Truly.Truly.

Diversity … Diversity … perper sese … is a key … … is a key …

maybemaybe thethe keykey … … to effective and to effective and

innovative innovative decision making.decision making.

““Who’s the most Who’s the most interesting person interesting person you’ve met in the you’ve met in the last 90 days? How last 90 days? How do I get in touch do I get in touch

with them?”with them?” —Fred Smith—Fred Smith

We’ll now take the innovation-enhancing portfolio idea We’ll now take the innovation-enhancing portfolio idea to the individual level. to the individual level.

FedEx founder Fred Smith and I were together on an FedEx founder Fred Smith and I were together on an economic predictions panel, and he turned to me at one economic predictions panel, and he turned to me at one point and “popped the question”—that is, the question point and “popped the question”—that is, the question on the prior slide about the most interesting person I’d on the prior slide about the most interesting person I’d recently met. recently met.

I’m afraid I didn’t have a very good answer—which I’m afraid I didn’t have a very good answer—which bugged me, not only out of embarrassment but because bugged me, not only out of embarrassment but because I should have been able to reel off a half-dozen truly I should have been able to reel off a half-dozen truly interesting people.interesting people.

So imagine you were asked this question.So imagine you were asked this question.Right now! Right now!

How scintillating would your answer be?How scintillating would your answer be?

(And: What a great question! And: In a (And: What a great question! And: In a fashion, key to the continuing vitality of fashion, key to the continuing vitality of FedEx in a merciless market!)FedEx in a merciless market!)

Vanity Fair:Vanity Fair: “What is your most marked“What is your most marked characteristic?”characteristic?”

Mike Bloomberg:Mike Bloomberg:

“Curiosity.”“Curiosity.”

7.7.

“The The Bottleneck Bottleneck

……

“The Bottleneck The Bottleneck … Is at … Is at

the Top of the the Top of the Bottle”Bottle”

“Where are you likely to find people “Where are you likely to find people with the with the least diversitleast diversityy of ex of expperienceerience, ,

the the larlarggest investment in the est investment in the ppastast,, and the g and the greatest reverence for reatest reverence for

industrindustryy do doggmama … …

AtAt thethe totop!”p!”

— Gary Hamel/— Gary Hamel/Harvard Business ReviewHarvard Business Review

8.8.

““There’s a fundamental There’s a fundamental shift in power happening. shift in power happening. Everywhere, people are Everywhere, people are getting together and, getting together and,

using the Internet, using the Internet, disrupting whatever disrupting whatever

activities they’re activities they’re involved in.”involved in.” —Pierre Omidyar, —Pierre Omidyar,

founder, eBayfounder, eBay

““The Billion-man The Billion-man Research Team: Research Team:

Companies offering Companies offering work to online work to online

communities are communities are reaping the benefits of reaping the benefits of

‘crowdsourcing.’”‘crowdsourcing.’” —Headline, —Headline, FTFT

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

9.9.

14,00014,00020,00020,000

3030

14,000/14,000/eeBayBay20,000/Amazon20,000/Amazon

3030/Craigslist/Craigslist

““Unless mankind Unless mankind redesigns itself by redesigns itself by changing our DNAchanging our DNA

through altering our through altering our genetic makeup, genetic makeup,

comcompputeruter-g-generated enerated robots will take overrobots will take over

the worldthe world.”.” – Stephen Hawking– Stephen Hawking

““A bureaucrat is A bureaucrat is an expensive an expensive microchip.”microchip.”

——Dan Sullivan, consultant and executive coachDan Sullivan, consultant and executive coach

““In some sense you can In some sense you can argue that the science argue that the science

fiction scenario is already fiction scenario is already starting to happen. starting to happen. The The computers are in control. computers are in control.

We We jjust live in their ust live in their worldworld.”.” —Danny Hillis, Thinking —Danny Hillis, Thinking

Machines Machines

Q3 2011/BLSQ3 2011/BLS

+3.1/+3.1/Non-farm productivity growthNon-farm productivity growth

+3.8/+3.8/Non-farm outputNon-farm output

+0.6/+0.6/Non-farm hours workedNon-farm hours worked

+5.4/+5.4/Manufacturing productivityManufacturing productivity

++4.74.7//Manufacturing outputManufacturing output

-0.6//Manufacturing hours workedManufacturing hours worked

Source: Bureau of Labor Statistics/03 November 2011Source: Bureau of Labor Statistics/03 November 2011

Kevin Roberts’ CredoKevin Roberts’ Credo

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

10. Avoid moderationAvoid moderation!!

10.10.

2525

MBWMBWAA

MManaginganaging

BBy y

WWanderingandering

AAroundround

You = Your You = Your calendarcalendar**

*The calendar *The calendar nevernever lies.lies.

5050

““Most managers spend a great deal of time thinking about what they plan to 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 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 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 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 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 perspective of Marcus Aurelius: avoid busyness, free up your time, stay focused

on what really matters.on what really matters. Let me Let me pput it bluntlut it bluntly: y: EverEveryy leader should routinel leader should routinelyy kee keepp a substantial a substantial pportion of his or her ortion of his or her timetime——I would saI would sayy as much as 50 as much as 50 ppercentercent——unscheduledunscheduled.. … Only when you have … Only when you have

substantial ‘slop’ in your schedule—unscheduled time—will you have the space 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 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 inevitable mistakes. Leaders without such free time end up tackling issues only when there is an immediate or visible problem. Managers’ typical response to 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 my argument about free time is, ‘That’s all well and good, but there are things I

have to do.’have to do.’ Yet we waste so much time in unYet we waste so much time in unpproductive roductive activitactivity—y—it takes an enormous effort on the it takes an enormous effort on the ppart of the art of the

leader to keeleader to keepp free time for the trul free time for the trulyy im impportant thinortant thinggss.”.” —Dov Frohman (& Robert Howard—Dov Frohman (& Robert Howard), Leadership The Hard Way: Why Leadership ), Leadership The Hard Way: Why Leadership

Can’t Be Taught—And How YouCan’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”)

11

““If there is any If there is any oneone ‘secret’ ‘secret’ to effectiveness, it is to effectiveness, it is

concentration. Effective concentration. Effective executives do first things first executives do first things first

… … and theand theyy do do one thinone thingg at a at a

timetime.”.” —Peter Drucker—Peter Drucker

““The doctor The doctor interruptsinterrupts after …*after …*

*Source: Jerome Groopman, *Source: Jerome Groopman, How Doctors ThinkHow Doctors Think

1818

18 … 18 … secondsseconds!!

[An [An obsessionobsession with] Listening is ... the ultimate mark with] Listening is ... the ultimate mark

of of RespectRespect..

Listening is ... the heart and soul of Listening is ... the heart and soul of EngagementEngagement..Listening is ... the heart and soul of Listening is ... the heart and soul of KindnessKindness..Listening is ... the heart and soul of Listening is ... the heart and soul of ThoughtfulnessThoughtfulness..Listening is ... the basis for true Listening is ... the basis for true CollaborationCollaboration..Listening is ... the basis for true Listening is ... the basis for true PartnershipPartnership..Listening is ... a Listening is ... a Team SportTeam Sport..Listening is ... a Listening is ... a Developable Individual SkillDevelopable Individual Skill.* .* (*Though women (*Though women are are farfar better at it than men.) better at it than men.)

Listening is ... the basis forListening is ... the basis for CommunityCommunity..Listening is ... the bedrock of Listening is ... the bedrock of Joint Ventures that workJoint Ventures that work..Listening is ... the bedrock of Listening is ... the bedrock of Joint Ventures thatJoint Ventures that growgrow..Listening is ... the core of Listening is ... the core of effective Cross-functional effective Cross-functional CommunicationCommunication* * (*Which is in turn Attribute #1 of (*Which is in turn Attribute #1 of organizational effectiveness.)organizational effectiveness.)

[cont.][cont.]

Listening is ... the engine of Listening is ... the engine of superior superior EXECUTIONEXECUTION..Listening is ... the key to Listening is ... the key to making the making the SaleSale..Listening is ... the key to Listening is ... the key to Keeping the Customer’s BusinessKeeping the Customer’s Business..Listening is ... Listening is ... ServiceService..Listening is ... the engine of Listening is ... the engine of Network developmentNetwork development..Listening is ... the engine of Listening is ... the engine of Network maintenanceNetwork maintenance..Listening is ... the engine of Listening is ... the engine of Network expansionNetwork expansion..Listening is ... Listening is ... Social Networking’s “secret weapon.”Social Networking’s “secret weapon.”Listening is ... Listening is ... LearningLearning..Listening is ... the Listening is ... the sine qua non of sine qua non of RenewalRenewal..Listening is ... the Listening is ... the sine qua non of sine qua non of CreativityCreativity..Listening is ... the Listening is ... the sine qua non of sine qua non of InnovationInnovation..Listening is ... the core of Listening is ... the core of taking diverse opinions aboardtaking diverse opinions aboard..Listening is ... Listening is ... StrategyStrategy..Listening is ... Listening is ... Source #1 of “Value-addedSource #1 of “Value-added.”.”Listening is ... Listening is ... Differentiator #1Differentiator #1..Listening is ... Listening is ... ProfitableProfitable.*.* (*The “R.O.I.” from listening is higher than(*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 Listening is … the bedrock which underpins a Commitment toCommitment to EXCELLENCEEXCELLENCE

““It was much later that I realized It was much later that I realized Dad’s secret. He gained respect by Dad’s secret. He gained respect by giving it. He talked and listened to giving it. He talked and listened to

the fourth-grade kids in Spring Valley the fourth-grade kids in Spring Valley who shined shoes the same way he who shined shoes the same way he talked and listened to a bishop or a talked and listened to a bishop or a

college president.college president. He was He was seriously interested in seriously interested in

who you were and what who you were and what you had to say.”you had to say.”

—Sara Lawrence-Lightfoot, Respect

11.11.

““Business has to give people enriching, Business has to give people enriching,

rewarding lives … rewarding lives … or it's or it's simply not simply not

worth worth doingdoing.”.”

——Richard BransonRichard Branson

““You have to You have to treat your treat your

employees like employees like customers.”customers.” —Herb —Herb

Kelleher, upon being asked his “secret to success”Kelleher, upon being asked his “secret to success”

Source: Joe Nocera, Source: Joe Nocera, NYTNYT, “Parting Words of an Airline Pioneer,” , “Parting Words of an Airline Pioneer,” on the occasion of Herb Kelleher’s retirement after 37 years at on the occasion of Herb Kelleher’s retirement after 37 years at

Southwest Airlines Southwest Airlines (SWA’s pilots union took out a full-page ad in USA (SWA’s pilots union took out a full-page ad in USA Today Today

thanking HK for all he had done) thanking HK for all he had done) ; across the way in Dallas, American ; across the way in Dallas, American Airlines’ pilots were Airlines’ pilots were picketingpicketing AA’s Annual Meeting)AA’s Annual Meeting)

Herb Kelleher is the founding CEO of that extraordinary Herb Kelleher is the founding CEO of that extraordinary American institution, the profitable-for-38-years-in-a-row American institution, the profitable-for-38-years-in-a-row Southwest Airlines. SWA and its cross-town competitor, Southwest Airlines. SWA and its cross-town competitor, American Airlines, had their annual meetings in Dallas on American Airlines, had their annual meetings in Dallas on the same day a couple of years ago. American’s meeting the same day a couple of years ago. American’s meeting was picketed by members of its pilots union. The SWA was picketed by members of its pilots union. The SWA meeting celebrated Mr Kelleher’s retirement after 37 meeting celebrated Mr Kelleher’s retirement after 37

years. years. The SWA pilots union—by way of The SWA pilots union—by way of contrast—took out and paid for a full-page contrast—took out and paid for a full-page ad in ad in USA TodayUSA Today thanking Kelleher for his thanking Kelleher for his service!service!

Partial explanation: Herb Kelleher has been asked a Partial explanation: Herb Kelleher has been asked a thousand times, probably more, what his success secrets thousand times, probably more, what his success secrets are. He’s always given the same answer. ONE secret only: are. He’s always given the same answer. ONE secret only: “You have to treat your employees like customers.”“You have to treat your employees like customers.” There’s more to it than that, but Kelleher is adamant about There’s more to it than that, but Kelleher is adamant about

emphasizing … just the one thing.emphasizing … just the one thing.

"When I hire "When I hire someone, that's someone, that's when when I I ggo to o to

work for work for themthem.”.” —John DiJulius,—John DiJulius, "What's the Secret to Providing "What's the Secret to Providing

a World-class Customer Experience"a World-class Customer Experience"

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

I love this!I love this!(Please take 3 deep breaths—and re-read.)(Please take 3 deep breaths—and re-read.)

Zingerman’s is one of the companies Zingerman’s is one of the companies featured in Bo Burlingham’s marvelous featured in Bo Burlingham’s marvelous Small Giants: Companies that Chose to Be Small Giants: Companies that Chose to Be Great Instead Great Instead of Big. of Big.

The idea here is a carbon copy of Kelleher’s The idea here is a carbon copy of Kelleher’s axiom. And this one uses the wonderword … axiom. And this one uses the wonderword … SERVICESERVICE. .

Leader Life Lesson #1: Leader Life Lesson #1: Effective bosses Effective bosses are are “in service”“in service” to their to their employees!employees! (And they are well aware (And they are well aware thereof. And in fact relish that role—i.e., thereof. And in fact relish that role—i.e., Servant Leader.) Servant Leader.)

If you want to If you want to WOW your WOW your

customers then customers then you must you must firstfirst

WOW those who WOW those who WOW the WOW the

customers!customers!

My versions … for what it’s worth. My versions … for what it’s worth.

EMPLOYEES FIRST, CUSTOMERS SECOND:EMPLOYEES FIRST, CUSTOMERS SECOND:Turning Conventional Management Upside Turning Conventional Management Upside

DownDownVineet Nayar/CEO/HCL TechnologiesVineet Nayar/CEO/HCL Technologies

Oath of Office:Oath of Office: Managers/Servant Leaders Managers/Servant Leaders

Our goal is to serve our customers brilliantly and profitably Our goal is to serve our customers brilliantly and profitably overover the long haul.the long haul.Serving our customers brilliantly and profitably over the longServing our customers brilliantly and profitably over the long haul is a product of brilliantly serving, over the long haul, haul is a product of brilliantly serving, over the long haul, thethe people who serve the customer.people who serve the customer.

Hence, our job as leaders—the alpha and the omega andHence, our job as leaders—the alpha and the omega and everything in between—is abetting the sustained growth everything in between—is abetting the sustained growth andand success and engagement and enthusiasm and commitment success and engagement and enthusiasm and commitment toto Excellence of those, one at a time, who directly or indirectlyExcellence 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 andWe—leaders of every stripe—are in the “Human Growth and Development and Success and Aspiration to ExcellenceDevelopment and Success and Aspiration to Excellence business.”business.”““We” We” [leaders][leaders] only grow when “they” only grow when “they” [each and every one of our colleagues][each and every one of our colleagues] areare growing.growing.““We” We” [leaders][leaders] only succeed when “they” only succeed when “they” [each and every one of our [each and every one of our colleagues]colleagues]

are succeeding.are succeeding.““We” We” [leaders][leaders] only energetically march toward Excellence when only energetically march toward Excellence when “ “they” they” [each and every one of our colleagues][each and every one of our colleagues] are energetically marching are energetically marching toward Excellence.toward Excellence.Period.Period.

Our Mission

To develop and manage To develop and manage talent;talent;

to apply that talent,to apply that talent,throughout the world, throughout the world,

for the benefit of clients;for the benefit of clients;to do so in partnership; to do so in partnership;

to do so with profit.to do so with profit.

WPP

I’m an unabashed enemy of 9 out of 9.01 I’m an unabashed enemy of 9 out of 9.01 mission statements—they are such pap (or mission statements—they are such pap (or is it crap?). But I love this one from the is it crap?). But I love this one from the giant London-based marketing services firm giant London-based marketing services firm WPP. WPP.

Profit is indeed on the agenda. Profit is indeed on the agenda. But profit is a … But profit is a … DERIVATIVE CONCEPTDERIVATIVE CONCEPT..

The path to profit unequivocally begins with The path to profit unequivocally begins with the quality of and commitment to “talent.”the quality of and commitment to “talent.”

““The The ONEONE Question”: Question”: “In the last year [3 years, current job], “In the last year [3 years, current job],

name the … name the … threethree ppeoeopplele … whose growth you’ve … whose growth you’ve

most contributed to. Please explain where they were at the most contributed to. Please explain where they were at the beginning of the year, where they are today, and where they are beginning of the year, where they are today, and where they are heading in the next 12 months. heading in the next 12 months. Please explain … in painstakingPlease explain … in painstaking

detail … your development strategy in each case. detail … your development strategy in each case. Please tell me Please tell me your biggest development disappointment—looking back, could you your biggest development disappointment—looking back, could you or would you have done anything differently? Please tell me about or would you have done anything differently? Please tell me about your greatest development triumph—and disaster—in the last five your greatest development triumph—and disaster—in the last five

years. What are the ‘three big things’ you’ve learned about helping years. What are the ‘three big things’ you’ve learned about helping

people grow along the way?”people grow along the way?”

I was talking with a general in the I was talking with a general in the Indian Army. The topic was promotion to Indian Army. The topic was promotion to the rank of general officer. I said, and the rank of general officer. I said, and he pretty much agreed, that the acid he pretty much agreed, that the acid test among the, say, six colonels test among the, say, six colonels contending for one spot at the next contending for one spot at the next level would be their respective “people level would be their respective “people development” track records. development” track records.

To put numbers to it, as is my want, To put numbers to it, as is my want, I’d insist that each of those candidates I’d insist that each of those candidates lay out—lay out—in exacting detailin exacting detail—the —the unexpurgated story of the three people unexpurgated story of the three people they have most significantly helped they have most significantly helped grow in the last, say, three years. The grow in the last, say, three years. The [confirmed] [confirmed] “stories” of their “stories” of their developed stars are primary data in developed stars are primary data in determining promotion to general determining promotion to general officer. officer.

2/year 2/year = =

legacy.legacy.

To continue, your legacy, as a mid-level or To continue, your legacy, as a mid-level or higher boss, is by and large determined by the higher boss, is by and large determined by the key promotions you’ve made during your, say, key promotions you’ve made during your, say, five years on the job. five years on the job.

On average, there are two such promotions On average, there are two such promotions per year. per year. Hence your 10 promotion Hence your 10 promotion decisions in 5 years are the most decisions in 5 years are the most important decisions you’ll make! important decisions you’ll make!

Doubtless you take promotion decisions Doubtless you take promotion decisions seriously, but do you take them … seriously, but do you take them … SERIOUSLY SERIOUSLY ENOUGHENOUGH??

((Are those Are those ppromotion decisions taken as romotion decisions taken as carefullcarefullyy as, sa as, sayy, decisions to , decisions to pproceed, or notroceed, or not,, with mawith majjor strategic caor strategic cappital investments/ ital investments/ acacqquisitionsuisitions?)?)

Promotion DecisionsPromotion Decisions

“life and “life and death death

decisions”decisions”Source: Peter Drucker, Source: Peter Drucker, The Practice of ManagementThe Practice of Management

The Memories That MatterThe Memories That Matter

The people you developed who went on toThe people you developed who went on to stellar accomplishments inside or outsidestellar accomplishments inside or outside the company.the company. The (no more than) two or three people you developed who went on The (no more than) two or three people you developed who went on toto create create stellar institutions of their own.stellar institutions of their own.The longshots (people with “a certain something”) you bet on whoThe longshots (people with “a certain something”) you bet on who surprised themselves—surprised themselves—andand your peers. your peers.

The people of all stripes who 2/5/10/20 yearsThe people of all stripes who 2/5/10/20 years later say later say “You made a difference in my “You made a difference in my life,”life,” “ “Your belief in me changed everything.”Your belief in me changed everything.”The sort of/character of people you hired in general. (The sort of/character of people you hired in general. (And And the bad 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 A handful of projects (a half dozen at most) you doggedly pursued thatthat still make you smile and which fundamentally changed the waystill 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 The supercharged camaraderie of a handful of Great Teams aiming toto “ “change the world.”change the world.”

Les WexnerLes Wexner:: From From sweaters to sweaters to

people!*people!*

*Limited Brands founder Les Wexner queried on astounding *Limited Brands founder Les Wexner queried on astounding long-term success—said, in effect, it happened because he gotlong-term success—said, in effect, it happened because he got

as excited about developing people as he had been about as excited about developing people as he had been about

predicting fashion trends in his early yearspredicting fashion trends in his early years

““The leaders of Great The leaders of Great

Groups … Groups … lovelove talent talent … and know where to find … and know where to find

it. They … it. They … revelrevel inin …… the talent of the talent of

others.”others.” —Warren Bennis & Patricia Ward —Warren Bennis & Patricia Ward

Biederman, Biederman, Organizing GeniusOrganizing Genius

7 Steps to Sustaining Success7 Steps to Sustaining Success

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

7 Steps to Sustaining Success: And it starts with …7 Steps to Sustaining Success: And it starts with …

YouYou take take care of the care of the people. people.

"Leadership is a "Leadership is a gift. It's given by gift. It's given by those who follow. those who follow.

You have to be You have to be worthy of it.”worthy of it.”

——General Mark Welsh, Commander, U.S. Air Forces Europe General Mark Welsh, Commander, U.S. Air Forces Europe

12.12.

If the regimental commander lost most of his If the regimental commander lost most of his 2nd lieutenants and 1st lieutenants and 2nd lieutenants and 1st lieutenants and

captains and majors, it would be a tragedy. captains and majors, it would be a tragedy.

If he lost his If he lost his serserggeants it would eants it would be a catastrobe a catastropphehe. . The The

Army and the Navy are fully aware that Army and the Navy are fully aware that success on the battlefield is dependent to an success on the battlefield is dependent to an extraordinary degree on its Sergeants and extraordinary degree on its Sergeants and Chief Petty Officers. Does industry have the Chief Petty Officers. Does industry have the

same awareness?same awareness?

Employee retention & satisfaction & productivity:Employee retention & satisfaction & productivity: OverwhelminOverwhelminggllyy

based on the based on the first-line first-line manamanagger!er!

Source: Marcus Buckingham & Curt Coffman, Source: Marcus Buckingham & Curt Coffman, First, Break All the Rules:First, Break All the Rules: What the World’s Greatest Managers Do Differently What the World’s Greatest Managers Do Differently

““People People leave leave

managers not managers not companies.”companies.”

——Dave WheelerDave Wheeler

13.13.

““Development can help great Development can help great

people be even better—people be even better—but if but if I had a dollar to I had a dollar to

spend, I’d spend 70 spend, I’d spend 70 cents getting the cents getting the

right person in the right person in the doordoor.”.” ——Paul Russell, Director, Leadership and Development, Paul Russell, Director, Leadership and Development,

GoogleGoogle

““In short, hiring is In short, hiring is the the most immost impportant ortant

asasppect of businessect of business

and yet remainsand yet remains woefully woefully misunderstoodmisunderstood..””

Source: Source: Wall Street JournalWall Street Journal, 10.29.08,, 10.29.08,

review of review of Who: The A Method for Hiring, Who: The A Method for Hiring, Geoff Smart and Randy StreetGeoff Smart and Randy Street

““I can’t tell I can’t tell yyou how manou how manyy times we times we ppassed uassed upp hotshots for hotshots for gguuyys we s we thouthougght were better ht were better ppeoeopplele, and , and

watched our guys do a lot better than watched our guys do a lot better than the big names, not just in the the big names, not just in the

classroom, but on the field—and, classroom, but on the field—and, naturally, after they graduated, too. naturally, after they graduated, too.

Again and again, the blue chips faded Again and again, the blue chips faded out, and our little up-and-comers out, and our little up-and-comers clawed their way to all-conference clawed their way to all-conference

and All-America teams.”and All-America teams.” —Bo Schembechler —Bo Schembechler (and John Bacon), “Recruit for Character,” (and John Bacon), “Recruit for Character,”

Bo’s Lasting LessonsBo’s Lasting Lessons

In the end, the effective hirinIn the end, the effective hiringg pprocess will rocess will focus on the moral character of the focus on the moral character of the candidatescandidates..

Which is not to dismiss the technical skills Which is not to dismiss the technical skills requirements; but the winning team—requirements; but the winning team—the the team that laststeam that lasts—will more than match those —will more than match those quantifiable skills with heart and passion and quantifiable skills with heart and passion and resilience and integrity. resilience and integrity.

(And in uncertain times like these, the (And in uncertain times like these, the apparently “soft” attributes are in fact the apparently “soft” attributes are in fact the true “hard” attributes which engender a true “hard” attributes which engender a culture of organizational Excellence, culture of organizational Excellence, especially when the chips are down.) (To state especially when the chips are down.) (To state the, I hope, obvious—this applies to 100% of the, I hope, obvious—this applies to 100% of jobs. jobs. Stellar organizations have no “bit Stellar organizations have no “bit players.”players.” ) )

14.14.

In the Army, In the Army, 44--star star ggeneralsenerals* obsess * obsess about training. In about training. In

most businesses, it's most businesses, it's a “ho hum” mid-level a “ho hum” mid-level

staff function.staff function.

*and admirals and symphony conductors and sports coaches and police chiefs and fire chiefs …*and admirals and symphony conductors and sports coaches and police chiefs and fire chiefs …

““training, TRAINING training, TRAINING and M-O-R-E and M-O-R-E

T-R-A-I-N-I-N-G”T-R-A-I-N-I-N-G” ——CINCPAC Nimitz to CNO KingCINCPAC Nimitz to CNO King/1943/1943

15.15.

““The The fourfour most most imimpportantortant wordswords in any in any

organization are …organization are …

The four most important words in any organizationThe four most important words in any organization

are …are … “What “What do do youyou think?”think?”

Source: courtesy Dave Wheeler, posted at tompeters.com Source: courtesy Dave Wheeler, posted at tompeters.com

““Employees who Employees who don't feel significant don't feel significant

rarely make rarely make significant significant

contributions.”contributions.” —Mark Sanborn—Mark Sanborn

““The deepest The deepest principal in human principal in human

nature is the nature is the cravincraving* to be g* to be appreciated.”appreciated.”

—William James—William James

*“Craving,”*“Craving,” not “wish” or “desire” or “longing” —Dale not “wish” or “desire” or “longing” —Dale Carnegie, Carnegie, How to Win Friends and Influence People How to Win Friends and Influence People (“The (“The

BIG Secret of Dealing With People”)BIG Secret of Dealing With People”)

““Society is a vehicle for Society is a vehicle for earthly heroism. Man earthly heroism. Man

transcends death bt finding transcends death bt finding meaning for his life. It is the meaning for his life. It is the

burning desire for the burning desire for the creature to count. What man creature to count. What man really fears is not extinction, really fears is not extinction,

but extinction with but extinction with insiinsiggnificancenificance.”.” —Ernest Becker, —Ernest Becker, Denial of DeathDenial of Death

““PeoPeopple want to be le want to be ppartart of somethinof somethingg lar largger than er than

themselvesthemselves.. They want They want to be part of something to be part of something

they’re really they’re really pproudroud of, that of, that they’ll they’ll fifigght ht forfor,, sacrifice sacrifice

forfor , , trusttrust.”.” —Howard Schultz, Starbucks

Could It Be … ???Could It Be … ???

How to Win How to Win Friends and Friends and

Influence Influence PeoplePeople —Dale Carnegie—Dale Carnegie

16.16.

A 15-PointA 15-Point Human Capital Human Capital

Asset Development Asset Development ManifestoManifesto““Re-framing Capitalism”Re-framing Capitalism”World Strategy ForumWorld Strategy Forum

Seoul/15 June 2012Seoul/15 June 2012

““Re-framing Capitalism”: Re-framing Capitalism”: A 15-PointA 15-Point Human Capital Development ManifestoHuman Capital Development Manifesto

1.1. “Corporate social responsibility” “Corporate social responsibility” starts at home—i.e., inside the starts at home—i.e., inside the enterprise!enterprise! MAXIMIZING MAXIMIZING GDD/Gross Domestic Development GDD/Gross Domestic Development of the workforce is the primary of the workforce is the primary source of mid-term and beyond source of mid-term and beyond growth and profitability—growth and profitability—andand maximizes national productivity and maximizes national productivity and wealth and security.wealth and security. (Re profitability: (Re profitability: If you If you want to serve the customer with uniform Excellence, then you want to serve the customer with uniform Excellence, then you must FIRST effectivelmust FIRST effectivelyy and faithfull and faithfullyy serve those who serve the serve those who serve the customecustomer—r—i.e. our emploi.e. our employyees, via maximizinees, via maximizingg tools and tools and pprofessional develorofessional developpmentment.).)

3. 3. Four-star generals and admirals (and symphony Four-star generals and admirals (and symphony conductors and sports coaches and police chiefs and fire conductors and sports coaches and police chiefs and fire chiefs) OBSESS about training.chiefs) OBSESS about training. Why is it an almost dead Why is it an almost dead certainty that in a random 30-minute interview you are certainty that in a random 30-minute interview you are

unlikely to hear a CEO touch upon this topic? unlikely to hear a CEO touch upon this topic? ((I would I would hazard a hazard a gguess that most CEOs see IT uess that most CEOs see IT investments as a “strateinvestments as a “strateggic necessitic necessityy,” ,” but see traininbut see trainingg ex exppenses as “a enses as “a necessarnecessaryy evil evil.”).”)

4. 4. Proposition/axiom: Proposition/axiom: The CTO/Chief TRAINING The CTO/Chief TRAINING Officer is arOfficer is argguabluablyy the #1 staff the #1 staff jjob in the ob in the enterenterppriserise, , at least on a par with, say, the CFO or CIO at least on a par with, say, the CFO or CIO or head of R&D.or head of R&D. (Again, external circumstances—see (Again, external circumstances—see immediately above—are forcing our hand.)immediately above—are forcing our hand.)

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

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

““I speak to you with a feminine voice. I speak to you with a feminine voice.

It’s the voice of democracy, of equality. It’s the voice of democracy, of equality. I I am certain, ladies and am certain, ladies and

ggentlemen, that this will be entlemen, that this will be the women’s centurthe women’s century.y. In the In the

Portuguese language, words such as life, Portuguese language, words such as life, soul, and hope are of the feminine soul, and hope are of the feminine

gender, as are other words like courage gender, as are other words like courage and sincerity,”and sincerity,” —President —President Dilma Rousseff Dilma Rousseff

of Brazil, 2011, of Brazil, 2011, 1st1st womanwoman opening keynote, opening keynote, United Nations General AssemblyUnited Nations General Assembly

““AS AS LEADERS, LEADERS, WOMEN WOMEN

RULERULE:: New Studies find New Studies find

that female managers outshine their male that female managers outshine their male counterparts in almost every measure”counterparts in almost every measure”

TITLE/ Special Report/ TITLE/ Special Report/ BusinessWeekBusinessWeek

““Forget Forget ChinaChina, , IndiaIndia and the and the InternetInternet: :

Economic Growth Is Economic Growth Is Driven by Driven by

Women.Women.”*”*

Source: Headline, Economist

**W/$28T > 2X (C + I)W/$28T > 2X (C + I)

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

““Human creativity Human creativity is the ultimate is the ultimate

economic economic resource.”resource.” —Richard Florida—Richard Florida

APPLEAPPLE market market capcap

> Exxon Mobil* > Exxon Mobil*

*August 2011*August 2011

17.17.

Excellence.Excellence. Always. Always.

If notIf not Excellence,Excellence, what?what?

If notIf not ExcellenceExcellence now, when?now, when?

““Excellence …Excellence … can be obtained if you:can be obtained if you:

... ... carecare more than others think more than others think is wise;is wise; ... ... riskrisk more than others think more than others think is safe;is safe; ... ... dreamdream more than others think more than others think is practical;is practical; ... ... exexppectect more than others think more than others think is possible.”is possible.”

Source: Anon.Source: Anon. (Posted @ tompeters.com by K.Sriram, November 27, 2006 1:17 AM) (Posted @ tompeters.com by K.Sriram, November 27, 2006 1:17 AM)

EXCELLENCE is EXCELLENCE is notnot an "aspiration.”an "aspiration.”

EXCELLENCE EXCELLENCE isis … … THE NEXT FIVE THE NEXT FIVE

MINUTES.MINUTES.

EXCELLENCE is EXCELLENCE is a a ppersonalersonal

choice … choice … notnot an institutional an institutional

choice!choice!