Tom Peters/0415.09

NOTE: To appreciate this presentation
[and ensure that it is not a mess
], you need
Microsoft fonts:
and

Managing
—broadly defined here —is an incredibly powerful way to bring about change. Moreover, it is a “change tool” that’s typically underutilized. And a change tool that’s readily available because of the fact that others are unaware of the potency of the tool or the degree to which small changes in “space management” can have enormous consequences. I thought I’d collect a few examples here, from the mundane to the grand, to make the point. And, obviously, I hope to pique your interest if you don’t happen to be a fanatic on this topic …

Oil

A story from my McKinsey days: In an oil company engagement, we were looking at variation in companies’ success in finding oil. It’s not as simple as I’m making it here, but one company did stand out—and one variable seemed to be of extraordinary importance. Throughout history, all functional organizations are at war with all other functional organizations. (The famed and ever so potent “silos problem.”) Scientists are amongst the worst actors. In oil-finding there are two particularly important scientific regimes. Geologists — who like rocks. And geophysicists —who like data about rocks.
(I greatly overstate.) At any rate they are historically warring tribes.
The “terrific” oil-finding company was the only one which co-mingled — physically —the two groups.
The “synergy”— normally a word that scares me —that came from this co-mingling was, it appeared, to the company and to us, through results and interviews, was extraordinary.

Stanford’s president says the great institution’s destiny will come via multi-disciplinary research. Such is the nature of the great problems confronting the world. Executing such a strategy has many parts. But one of the most important is a physical building which will be specifically devoted to multi-disciplinary research. Along the same lines,
GlaxoSmithKline aimed to speed up drug discovery via multi-disciplinary teams. Again, a major component was space
(a “home”) for each of the firm’s
CEDDs/Centers for Excellence in Drug Discovery.

>100 feet =
100 miles

It was the only chart we used in In Search of Excellence!
It arrived courtesy the research of Tom Allen and his colleagues at MIT. Studying communication patterns, they discovered that people more than a hundred feet apart might as well, in terms of communication frequency, be 100 miles apart!. Internet or no Internet
(these days), that is nothing short of …
And the implications are nothing short of profound!

*Disney

Space of a sort. The psychology is clear. An enormous share of our perception of something is determined by first and last impressions. “Duh,” you say. To which I say,
“Okay, I know you know that—but do you truly
OBSESS on the design and management of …
Beginnings and Endings
? The longtime master of this is Disney. Disney, in its parks, puts as much effort into the design of the “parking lot experience” as it does into their rides. In particular, the parking lot attendants are considered primo members of the “performance arts” team—selection, uniforms, training, etc of those attendants is a no-baloney
strategic issue.

x

… as a
“strategic” variable? Yup! At a round table there are more or less twice as many comments as there are at a square table —moreover, the % of people who participate shoots through the roof in the round (more equitable) environment.

If patients see
through their window, recovery time may shrink by as much as 20%.

— On Hashem Akbari’s [Lawrence Livermore labs] powerful program to significantly reduce greenhouse gas emissions; using conservative assumptions, it could reduce 44 billion tons of CO2 emissions by cooling buildings, roads, entire cities (The Guardian, 0116.09)

Okay, it’s not really space except in a convoluted way
(roof = space), but it is such a great story: In effect, a few cans of white paint would change the world. Paint (or otherwise coat) roofs, roads, etc
—and save
44 Billion Tons of CO2.

No waste baskets under individual desks leads to a jump, in fact leap
in paper recycling.

6.5
feet Away
=
*Plate size, etc, first serving dish

Amazing as it sounds, experiments suggest it’s true: If a serving plate is six-and-a-half feet away, the number of second helpings does down by almost two-thirds. And on it goes:
, less food consumed. First plate out is vegetables, and, yes, more vegetables are consumed.

Sprint, in its old incarnation, did a bunch of “little” things to enhance fitness and health. The parking lot is a quarter mile from the office —and the scheduled infrequently. The vans elevators are are maddeningly slow in a three-floor building. The food court is not centrally located —it’s as far away from as many people as possible.

Source: Wal*Mart

Wal*Mart increased shopping cart size —and saw its bigitem purchases soar by
50%.

Bag sizes = New markets:
Source: PepsiCo

Frito Lay went through a period years ago of trying to develop “blockbuster” products—to no avail. At one point the idea of changing bag sizes surfaced —hardly a blockbuster! New bag sizes were added —and revenue soared by perhaps more than a billion $$$. Turns out:
. Standard bag sales stayed the same
(no cannibalization), while the picnic-tailgate party big
bag sales“market” went through the roof!

In a new HQ in Austin, 3M designed little sitting areas near the restrooms —informal, multi-disciplinary noodling increased markedly.
Apple, in a new R&D center designed seating areas: The ones decorated formally went virtually unused; the ones with low ceilings and comfy, unimposing furniture were always beehives of activity.

“Broken windows”: Clean the streets, fix the broken windows, ticket the open-beer-can holders, etc, etc

The “broken windows” theory of policing has created no less than a revolution. To make a long story short, and a complex story simple: If you work on the “little” things that connote order — fix broken windows, clean up sidewalks
—a community’s crime rate often tumbles. Issuing citations for little things —such as an open alcohol container —adds to the potency of the idea.

vs.
x

Major recessionary issue: getting people into the stores and spending! If a government incentive comes in the form a reduced payroll tax deduction shown on a pay stub
, people tend to pay little attention and thence save the money. (Not a bad idea in most circumstances —but not right now.) If the incentive comes in the form of a check
, it’s seen as a windfall, and most of it will end up in the stores’ coffers!

401(k) active opt-in:
401(k) as default:
45%
86%
Source: New York Times , 1202.08 (research by Richard
Thaler, co-author Nudge )

Design a form one way or another … and the world is turned upside down —or not. When opting in or out of a
401(k) plan, if opting in is the default option …
86% sign up. But if one must take an action to opt in
… only
45% sign up. Hence a tiny format leads to doubling or halving an incredibly important decision regarding one’s future financial wellbeing.

Promised vs Delivered:
+15%
Source; Elgin Corrugated Box

A specialty corrugated cardboard box company, Elgin
Corrugated Box, was fanatic about finishing and delivering orders on or ahead of time. To get the most bang-for-the-buck from this obsession, they changed their invoice. After each order description, they added two columns:
ORDER DUE.
ORDER
ARRIVED
. Given their practices, the “Arrived” was unfailingly on or before the “Due” date. By the simple fact of the two columns which visibly reminded the customer of Elgin’s timeliness … revenues increased by an estimated 15%.

You want Customer Retention to become an obsession. There are a raft of ways to make that happen, including blunderbuss shots like a significantly altered incentive scheme. But there are visual ways as well. And one of the most powerful is to ensure that at every meeting on any topic —HR and IS as much as marketing—the
on the/any Agenda is
… Customer Retention. Primacy and Repetition thereof are in fact powerful beyond measure.

When Steve Jobs returned from the wilderness to Apple a few years ago, he ordered all signs of past glory removed be from the premises. The walls and halls would harbingers of tomorrow’s dreams
, not reminders of yesterday’s accomplishments. I remember years ago seeing a picture of a retired CEO in his study —walls covered with photos of the great men he’d met in the past. Not all bad, but the guy didn’t look all that old, and I remember thinking,
“How sad, no sign of tomorrow.” I think this idea is important.

SF
* F ind a F ellow F reak F araway
** F reak, Closet F reak
***San Francisco = F araway Home of F reaks
**** F reak-ish Product ( In Search of Excellence )

I call it the “4F Strategy.” Or:
Find a Fellow
Freak Faraway
. It’s nigh on impossible to get a real innovation going close to headquarters. Big League corporate politics makes a mess of things. Got a great idea as an HQ staffer?
Find a testbed (“playground,” a prominent friend calls it) a long way from the power center —and a Fellow Freak (“playmate”) and get on with it. The project that launched In Search of Excellence was conducted in San Francisco, roughly 3,000 miles away from
McKinsey’s HQ. There’s more to the story, obviously, but the several degrees of separation made a huge difference. Another moniker for all this is the
“Skunkworks” idea, pioneered by
Lockheed to hastily build such aircraft as the SR-71 spy plane, crucial to Cold War success. The point (redux): When you need something Weird & Quick —put a streamlined team of Weirdos in the boonies! While there’s more to the story, the idea of a Tight-knit,
Spartan Band of Renegades burrowed in a Distant Den has been proven to work time and time again.

MBWA

When Bob Waterman and I wrote In Search of Excellence in
1982, business was “by the numbers”—and the Americans were struggling (to put it mildly) with hands on, tactile stuff, like Japanese quality. Then, at Hewlett Packard, we were introduced to the famed “HP Way,” the centerpiece of which was intouch management. HP had a term for this …
MBWA.
Bob and I immediately fell in love. Not only was the idea per se important and cool, but it symbolized everything we were coming to cherish —enterprises where bosses-leaders were in immediate touch with and emotionally attached to workers, customers, the product. The idea is as important or more important in fast-paced 2009 as it was in 1982.

#21A

—Craig Johnson/30 yrs

Craig Johnson, a famed Venture Capitalist for three decades … refuses to invest in companies that are more than a 20minute drive from his office.
To guide them through the serpentine path ahead, he insists that he must be in constant touch as banker, advisor, friend.

#21B

Pat Carrigan was GM’s first woman assembly plant boss. She was tough as nails. Upon taking, she immediately went to the plant floor and paid a visit to the local union boss. They had to partner or lose the plant —that was her message. But the real message was the visit itself. The union chief told me in a TV interview,
“In all my years here, whenever there was an issue, I was summoned to the factory boss’ office .
Literally, Tom, in over a decade in this role, a plant boss has never walked to the shop floor, knocked on the door to my little office, and asked if they could come in for a chat.”
There’s the concept of partnership. And the reality of partnership. That visit per se was as important as the verbal message. (Obviously this act did not save GM. But a lot more like it just might have.)

#21C

The key to the dramatic strategy shift instituted by General David Petraeus in Iraq was working with neighborhoods. In his office, he had a giant poster with his four (only four) principles that marked his new
Strategy. The last was in enormous in size —and in red. Namely:
. In a world of soldiers in armed Humvees, a human-physical presence was key to a new approach.

—Billy Cox

We are what we eat … obviously. And we are who we hang out with —just as obviously. These are throw away lines —but in my opinion are truly
PROFOUND lines as well. These lines, as the Cox quote suggests, are good news or bad news —VERY good news or VERY bad news often enough. But the GREAT news is that this frequently invisible variable is
CONTROLLABLE
—and controllable from a less-thanpowerful position. Manage “hang out with” as a
strategic variable —and you can move mountains!

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

The “We are what we eat”
Axiom I: At its core, every (!!!) relationship-partnership decision (employee, vendor, customer, lunchmate, etc) is a
strategic decision about:

The “We are what we eat”
Axiom II:

Let me put it as plainly as I can:
I THINK-
INSIST THAT “HANG OUT” [ON
DAMN NEAR ANY DIMENSION] IS
THE
#1
MANAGEMENT-
LEADERSHIP TOOL IN
DETERMINING THE
INNOVATIVENESS—OR LACK
THEREOF—OF AN
ORGANIZATION!

Little =

(1) Amenable to rapid experimentation/failure “free”
(No bad “PR,” No $$)
(2) Quick to implement/Quick to
Roll out
(3) Inexpensive to implement/
Roll out
(4) Huge multiplier
(5) An “Attitude”
(6) Does not by and large require a
“power position” from which to launch experiments.

The wonder of “all this” is that it has enormous power potential , and it’s inexpensive, quick and does not require a top job from which to launch experiments! The bad news (if it is that) that it is an
“attitude” rather than a program — one needs to be convinced of the potential and must be willing to try a lot of stuff (tiny modifications to a single variable spell doom —or remarkable success).

(1) Half-day/25 ideas
(2) One week/5 experiments
(3) One month/Select best 2
(4) 60-90 days/Roll out

Inspiration: The Power of Design: A Force for
Transforming Everything, Richard Farson