Winning in Chaotic Times
Society of Petroleum
Engineers
Houston/05.21.01

“In 25 years, you’ll probably be able to get the sum total of all human knowledge on a personal device.”
Greg Blonder, VC [was Chief Technical
Adviser for Corporate Strategy @ AT&T]
[ Barron’s 11.13.2000]

<1000A.D.: paradigm shift: 1000s of years
1000: 100 years for paradigm shift
1800s: > prior 900 years
1900s: 1 st 20 years > 1800s
2000: 10 years for paradigm shift
21 st century: 1000X tech change than 20 th century (“the ‘Singularity,’ a merger between humans and computers that is so rapid and profound it represents a rupture in the fabric of human history”)
Ray Kurzweil, talk april2001

Part I: Brand Inside
Part II: Brand Outside
Part III: Brand Leadership

Forces @ Work I
The Destruction
Imperative!

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

“It used to be that the big ate the small. Now the fast eat the slow.”
Geoff Yang, IVP/ (Institutional
Venture Partners)

Read It Closely:
Peter Lewis, Progressive

Company”
John Bryan, CEO, on selling all
Sara Lee’s manufacturing

F.G.

The [New] G e
Way

The Gales of Creative Destruction
+29M
+4M

Forbes100 from 1917 to 1987: 39 members of the
Class of ’17 were alive in ’87; 18 are in ’87 F100; the
18 F100 “survivors” underperformed the market by
20%; just 2 (2%) , GE & Kodak, outperformed the market from 1917 to 1987.
S&P 500 from 1957 to 1997: 74 members of the
Class of ’57 were alive in ’97; 12 (2.4%) of 500 outperformed the market from 1957 to 1997.
Source: Dick Foster & Sarah Kaplan, Creative Destruction:
Why Companies That Are Built to Last Underperform the
Market

Brand Inside
Brand Org:
Lean, Linked,
Electronic & Malleable

108 X 5 vs.
8 X 1*
* 540 vs. 8 (-98.5%)

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

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

Automation+
75% of what we do: 40
“expert” decision rules!

80,000?

IBM’s Project Eliza!

Brand Inside
Brand Work: The
Professional Service
Firm Model & The
WOW Project

Answer: PSF!
[Professional Service Firm]
Department Head to …
Managing Partner,
HR [IS, etc.] Inc.

11 September 2000

09.11.2000: HP bids
for
PricewaterhouseCoopers
Consulting business!

[“These days, building the best server isn’t enough. That’s the price of entry.”
Ann Livermore, Hewlett-Packard]

% Rev From Service:
(80%)
(80%)

Maybe one [or more] of your “PSFs” becomes the tail that wags the dog?????
[E.g.: engineering, IS-logisticscustomer service]

The Raw Material …
The
WOW

Phil Daniels, Sydney exec

Brand Inside
Brand You:
Distinct … or
Extinct

Headline, USA Today (03.19.2001)

New World of Work
< 1 in 10 F500
#1: Manpower Inc.
Freelancers/I.C.: 16M-25M
Temps: 3M
(incl. CEOs & lawyers)
Microbusinesses: 12M-27M
Total: 31M-55M
Source: Daniel Pink , Free Agent Nation

“If there is nothing very special about your work, no matter how hard you apply yourself, you won’t get noticed, and that increasingly means you won’t get paid much either.”
Michael Goldhaber, Wired

Brand Inside
Brand Talent: The
Great War for Talent

“When land was the productive asset, nations battled over it. The same is happening now for talented people.”
Stan Davis & Christopher Meyer, futureWEALTH

“We have transitioned from an asset-based strategy to a talent-based strategy.”
Jeff Skilling, CEO, Enron

From “1, 2 or you’re out” [JW] to …
in each industry segment to build best proprietary intangibles”
[EM]
Source: Ed Michaels, War for Talent (05.17.00)

“We believe companies can increase their market cap 50 percent in 3 years. Steve
Macadam at Georgia-Pacific changed 20 of his 40 box plant managers to put more talented, higher paid managers in charge.
He increased profitability from $25 million to $80 million in 2 years.”
Ed Michaels, War for Talent (05.17.00)

Message:
Some people are better than other people.
Some people are a helluva lot better than other people.

“Top performing companies are two to four times more likely than the rest to pay what it takes to prevent losing top performers.”
Ed Michaels, War for Talent (05.17.00)

What gets measured gets done. What gets paid for gets done more.
What gets paid a lot for gets done a lot more.

“Talented people are less likely to wait their turn. We used to view young people as trainees; now they are authorities.
Arguably this is the first time the older generation can – and must – leverage the younger generation very early in their careers.”
Ed Michaels , War for Talent (05.17.00)

The Cracked Ones Let in the Light
“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

“AS LEADERS, WOMEN
RULE: New Studies find that female managers outshine their male counterparts in almost every measure”
Title, Special Report, Business Week, 11.20.00

Message:
Women are
at this “virtual organization” stuff!

Brand Inside
Brand Action:
Getting Started … a
Personal Perspective

THE IDEA
“4Fs”:
F ind a
F ellow
F reak
F araway

World’s Biggest Waste …

Heart of the Matter
F2F!/K2K!/1@T/R.F.A.*
*Freak to Freak/Kook to Kook/
One at a Time/ Ready.Fire!Aim.

“Lead” customers!
K2KK

BOTTOM LINE
The Enemy!

Joe J. Jones
1942 – 2001
HE WOULDA DONE SOME
REALLY COOL STUFF
BUT …
HIS BOSS WOULDN’T LET
HIM!

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
Reprise:
THINK WEIRD: The
High Standard
Deviation Enterprise

Saviors-in-Waiting
Disgruntled Customers
Fringe Competitors
Rogue Employees
Edge Suppliers
Wayne Burkan, Wide Angle Vision: Beat the
Competition by Focusing on Fringe Competitors,
Lost Customers, and Rogue Employees

Button-down Org H.S.D.E.
.
•
• Acquire for market share
• Suck up to biggest customers
• Pursue “strategic vendors”
• Bigger is better
• Accept assignments as given
• Hire 4.0s from “top schools”
• Promote when they’ve “paid their dues”
• Appoint a “prestigious” board
Hang out with my pals
• R.A.F.
• Be “professional” at all times/Honor thine elders
• Acquire for innovation
• Partner with cool customers
• Seek out pioneering vendors
• Break it up … to refresh
• Reframe all tasks to innovate
• Hire “intriguing,” wherever
• Promote tomorrow if the work product is weird and WOW
• Appoint an interesting, headstrong board
• Take a freak to lunch today
• F.F.F.
• Stay loose, stay cool/The hell with thine elders

“Too many companies rely on benchmarking against industry leaders. The problem is that those companies are simply catching up to what’s already been done, while the leaders are moving on to some new advantage.”
David Crane, on Michael Porter’s Canadian competitiveness study, which discovered an
Innovation Deficit (05.05)

John Roth’s “Rules” [Nortel]
1. Our strategies must be tied to leading-edge customers on the attack.
2. Time cannot be sacrificed for better quality, lower cost, or even better decisions.
3. It doesn’t matter whether you develop or acquire leading technology. Our job is to provide the technology and products our customers need.
4. Success is achieved by leading change, not waiting for it.
5. We are paranoid about our leadership – willing to cannibalize our own products to maintain our edge.
Source: Abridged from The Wall Street Journal (07.25.00)

“Our strategies must be tied to leading edge customers on the attack.
If we focus on the defensive customers, we will also become defensive.”
John Roth, CEO, Nortel

Part I: Brand Inside
Part II: Brand Outside
Part III: Brand Leadership

Forces @ Work II
The Commodity Trap

“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

Brand Outside
Strategy 1 :
Use E-Commerce to
Re-invent Everything!

Tomorrow Today: Cisco!
90% of $20B
(=$50M/day)
75% mfg. outsourced; 50% of orders routed to supplier who ships direct
Gross margin: 65%; Net margin: 28%
Annual savings in service and support from customer self-management: $550M

Enron eWorld: “Price a structured trade,” per John Arnold, 26: Early
1999: 30 times a day. Late 2000: 30 times per … minute.
Long-term gas contract. 1989: 9 months, 400+ deals. Late 90s:
2 weeks, 2 per week. Late 2000:
5 such deals per day
Source: www.ecompany.com
(1/2001)

GM/Ford/DaimlerChrysler/Renault/
Nissan/Oracle/CommerceOne
Covisint (02.2000)
$240B (+$500B)
90,000 Suppliers
$2-3,000/Car
42 to 12-18 Months
Source: Business2.0 (02.2001)

“This is the first meter of a
10-kilometer race.
Eventually, all markets will come to resemble today’s foreign exchange market.”
Hamid Biglari, Head of Corporate Strategy,
Citigroup, in “GIGATRENDS”, Wired 04.01

Tomorrow Today: Cisco!
90% of $20B; save $550M
C.Sat e >> C.Sat H
Customer Engineer
Chat Rooms/Collaborative
Design ($1B “free” consulting) (45,000 customer problems a week solved via customer collaboration)

“One cannot be tentative about this.
Excuses like ‘channel conflict’ or ‘marketing and sales aren’t ready’ cannot be allowed. Delay and you risk being cut out of your own market, perhaps not by traditional competitors but by companies you never heard of 24 months ago.”
Jack Welch [07.00/ Forbes.com
]

GE & the Web
Purchasing: 2000: $6B;
2001: $15B
Sales: 1999: $1B;
2000: $7B; 2001: $20B+
Source: Business 2.0 (05.01)

“We’ve put the word out to all of our suppliers: by the end of the year [2000] we’ll only do purchasing over the Internet.”
John Paterson, C.P.O., IBM
[$50B from 18,000 suppliers]

Nasser’s Triad: The Internet
Is the New Job 1
Brian Kelley, 40, head of global sales and service (GE appliances); first non“car guy” in the job
Karen Francis, 38, eBusiness czar
(Olds brand boss)
Marv Adams , 43, CIO (Bank One’s
IT infrastructure consolidator)

WebWorld = Everything
Web as a way to run your business’ innards
Web as connector for your entire supply-demand chain
Web as “spider’s web” which re-conceives the industry
Web /B2B as ultimate wake-up call to
“commodity producers”
Web as the scourge of slack, inefficiency, sloth, bureaucracy, poor customer data
Web as an Encompassing Way of Life
Web = Everything (P.D. to after-sales)
Web forces you to focus on what you do best
Web as entrée, at any size, to World’s Best at Everything as next door neighbor

Message: eCommerce is not a technology play! It is a relationship, partnership, organizational and communications play, made possible by new technologies.

Message: There is no such thing as an effective B2B or
Internet-supply chain strategy in a low-trust, bottleneckedcommunication, six-layer organization.

“Ebusiness is about rebuilding the organization from the ground up.
Most companies today are not built to exploit the Internet.
Their business processes, their approvals, their hierarchies, the number of people they employ … all of that is wrong for running an ebusiness.”
Ray Lane, Kleiner Perkins

“There is no use trying,” said Alice.
“One can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
Lewis Carroll

I’net …
…

Bob Nardelli,
GE Power Systems

Message 2001:
Only idiots pull in their
[investment]

Brand Outside
Strategy 2A :
Rule!

?????????
Home Furnishings … 94%
Vacations … 92%
Houses … 91%
Consumer Electronics … 51%
Cars … 60% (90%)
All consumer purchases … 83%
Bank Account … 89%
Health Care … 80%

Brand Outside
Strategy 2B :

2000-2010 Stats
18-44: -1%
55+:
(55-64:
+47%)

Aging/“Elderly”

Brand Outside
Strategy 2C :

And #3: GREEN ?????:
50% to 36%:
Protect Environment > Economic
Growth.
58% to 34%: Protect Plants &
Animals > Preserve Private
Property Rights.

“Of all the ways the company will be judged over the next decade, none will be greater than our response to the issue of climate change.”
William Clay
FORD
Jr.

Brand Outside
Strategy 3 :
It’s the

“
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

The “Experience Ladder”
Experiences
Services
Goods
Raw Materials

1940: Cake from flour, sugar (raw
materials economy): $1.00
1955: Cake from Cake mix (goods economy): $2.00
1970: Bakery-made cake (service economy): $10.00
1990: Party @ Chuck E. Cheese
( experience economy) $100.00

Message:
“Experience” is the
“last 80%.”
“Experience” applies to
all work!

Brand Outside
Strategy
4
:
POWER!

[these days]
TP to Client

1 st Law Mktg Physics: OVERT BENEFIT
(Focus: 1 or 2 > 3 or 4/“One Great Thing.”
Source #1: Personal Passion)
2 ND Law: REAL REASON TO BELIEVE
(Stand & Deliver!)
3 RD Law: DRAMATIC DIFFERENCE
(Execs Don’t Get It: “intent to purchase” – 100%;
“unique” – 0% to 5%)
Source: Jump Start Your Business Brain,
Doug Hall

“Brand Promise” Exercise: (1) Who
Are WE?
(poem/novella/song, then 25 words.)
(2) List three ways in which we are
UNIQUE … to our Clients . (3) Who are THEY
(competitors)
?
(ID, 25 words.)
(4) List 3 distinct “us”/”them” differences . (5) Try “results” on your teammates. (6) Try ’em on a friendly Client. (7) Big Enchilada:
Try ’em on a skeptical Client!

Part I: Brand Inside
Part II: Brand Outside
Part III: Brand Leadership

Brand Leadership

Steve Jobs