Tom Peters

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Tom Peters How New Business Works Rules
for Re-invention10.10.2002
2
If you dont like change, youre going to like
irrelevance even less. General Eric Shinseki,
Chief of Staff, U. S. Army
3
There will be more confusion in the business
world in the next decade than in any decade in
history. And the current pace of change will only
accelerate.Steve Case
4
IT MAY SOMEDAY BE SAID THAT THE 21ST CENTURY
BEGAN ON SEPTEMBER 11, 2001. Al-Qaeda
represents a new and profoundly dangerous kind of
organizationone that might be called a virtual
state. On September a virtual state proved that
modern societies are vulnerable as never
before.Time/09.09.2002
5
The deadliest strength of Americas new
adversaries is their very fluidity, Defense
Secretary Donald Rumsfeld believes. Terrorist
networks, unburdened by fixed borders,
headquarters or conventional forces, are free to
study the way this nation responds to threats and
adapt themselves to prepare for what Mr. Rumsfeld
is certain will be another attack. Business
as usual wont do it, he said. His answer is to
develop swifter, more lethal ways to fight. Big
institutions arent swift on their feet in
adapting but rather ponderous and clumsy and
slow. The New York Times/09.04.2002
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From Weapon v. Weapon To
Org structure v. Org structure
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Our military structure today is essentially one
developed and designed by Napoleon.Admiral
Bill Owens, former Vice Chairman, Joint Chiefs of
Staff
8
The organizations we created have become
tyrants. They have taken control, holding us
fettered, creating barriers that hinder rather
than help our businesses. The lines that we drew
on our neat organizational diagrams have turned
into walls that no one can scale or penetrate or
even peer over. Frank Lekanne Deprez Rene
Tissen, Zero Space Moving Beyond Organization
Limits.
9
In an era when terrorists use satellite phones
and encrypted email, US gatekeepers stand armed
against them with pencils and paperwork, and
archaic computer systems that dont talk to each
other.Boston Globe (09.30.2001)
10
Dawn Meyerreicks, CTO of the Defense
Intelligence Systems Agency, made one of the most
fateful military calls of the 21st century. After
9/11 her office quickly leased all the
available transponders covering Central Asia. The
implications should change everything about U.S.
military thinking in the years ahead. The U.S.
Air Force had kicked off its fight against the
Taliban with an ineffective bombing campaign, and
Washington was anguishing over whether to send in
a few Army divisions. Donald Rumsfeld told Gen.
Tommy Franks to give the initiative to 250
Special Forces already on the ground. They used
satellite phones, Predator surveillance drones,
and GPS- and laser-based targeting systems to
make the air strikes brutally effective.In
effect, they Napsterized the battlefield by
cutting out the middlemen (much of the militarys
command and control) and working directly with
the real players. The data came in so fast that
HQ revised operating procedures to allow
intelligence analysts and attack planners to work
directly together. Their favorite tool,
incidentally, was instant messaging over a secure
network.Ned Desmond/Broadbands New Killer
App/Business 2.0/ OCT2002
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Erics ArmyFlat.Fast.Agil
e.Adaptable.Light But Lethal.Brand You/
Talent/ I Am An ARMY Of One.Info-intense.
Network-centric.
12
Uncertainty We dont know when things will get
back to normal.Ambiguity We no longer know
what normal means.
13
I Believe 1.
Change will accelerate. DRAMATICALLY.2. We will
RE-INVENT THE WORLD IN THE NEXT TWO
GENERATIONS. (Business Health Care
Politics War Education Fundamentals of
Human Interaction.)3. OPPORTUNITIES are
matchless. 4. You are either ON THE BUS
or OFF THE BUS.5. I WANT TO PLAY! AND YOU?
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I. NEW BUSINESS. NEW CONTEXT.
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All Bets Are Off.
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lt1000A.D. paradigm shift 1000s of years1000
100 years for paradigm shift1800s gt prior 900
years1900s 1st 20 years gt 1800s2000 10 years
for paradigm shift 21st century 1000X tech
change than 20th 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
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Theres going to be a fundamental change in
the global economy unlike anything we have had
since the cavemen began bartering.Arnold
Baker, Chief Economist, Sandia National
Laboratories
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NOW THATS B-I-G!The period 2000-2002 will
bring the single greatest change in worldwide
economic and business conditions since we came
down from the trees.David Schneider Grady
Means, MetaCapitalism
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In 25 years, youll 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_ ATT Barrons
11.13.2000
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I genuinely believe we are living through the
greatest intellectual moment in history.Matt
Ridley, Genome
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Yo, Bioinformatics!Researchers say they have
found a way to mate human cells with circuitry in
a bionic chip The tiny device smaller and
thinner than a strand of hair combines a
healthy human cell with an electronic circuitry
chip.AP/AOL/02-00
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We are in a brawl with no rules.Paul Allaire
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Strategy meetings held once or twice a year to
Strategy meetings needed several times a week
Source New York Times on Meg Whitman/eBay
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2. The Destruction Imperative.
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It is generally much easier to kill an
organization than change it substantially.
Kevin Kelly, Out of Control
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C.E.O. to C.D.O.
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Forbes100 from 1917 to 1987 39 members of the
Class of 17 were alive in 87 18 in 87 F100
18 F100 survivors underperformed the market by
20 just 2 (2), GE Kodak, outperformed the
market 1917 to 1987.SP 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
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Good management was the most powerful reason
leading firms failed to stay atop their
industries. Precisely because these firms
listened to their customers, invested
aggressively in technologies that would provide
their customers more and better products of the
sort they wanted, and because they carefully
studied market trends and systematically
allocated investment capital to innovations that
promised the best returns, they lost their
positions of leadership.Clayton Christensen,
The Innovators Dilemma
29
ForgetgtLearnThe problem is never how to get
new, innovative thoughts into your mind, but how
to get the old ones out.Dee Hock
30
When asked to name just one big merger that had
lived up to expectations, Leon Cooperman, former
cochairman of Goldman Sachs Investment Policy
Committee, answered Im sure there are success
stories out there, but at this moment I draw a
blank.Mark Sirower, The Synergy Trap
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Conglomerates dont work James Surowiecki, The
New Yorker (07.01,2002)
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Way to Go, Guys 2002 write downs from recent
acquisitions
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1,000,000,000,0001 trillion (Source
Harpers Index 04.2002)
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Acquisitions are about buying market share. Our
challenge is to create markets. There is a big
difference. Peter Job, CEO, Reuters
35
Active mutators in placid times tend to die off.
They are selected against. Reluctant mutators in
quickly changing times are also selected
against.Carl Sagan Ann Druyan, Shadows of
Forgotten Ancestors
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Lessons from the Bees!Since merger mania is
now the rage, what lessons can the bees teach us?
A simple one Merging is not in nature.
Natures process is the exact opposite one of
growth, fragmentation and dispersal. There is no
megalomania, no merging for mergings sake. The
point is that unlike corporations, which just get
bigger, bee colonies know when the time has come
to split up into smaller colonies which can grow
value faster. What the bees are telling us is
that the corporate world has got it all
wrong.David Lascelles, Co-director of The
Centre for the Study of Financial Innovation UK
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CEOs appointed after 1985 are 3X more likely to
be fired than CEOs appointed before 1985Warren
Bennis, MIT Sloan Management Review
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The New Ge WayDYB.com
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Change the rules before somebody else does.
Ralph Seferian, VP, Oracle
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Most of our predictions are based on very linear
thinking. Thats why they will most likely be
wrong.Vinod Khosla, in GIGATRENDS, Wired
04.01
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The Gales of Creative Destruction29M -44M
73M4M 4M - 0M
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The secret of fast progress is inefficiency,
fast and furious and numerous failures.Kevin
Kelly
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RM A lot of companies in the Valley fail.RN
Maybe not enough fail.RM What do you mean
by that?RN Whenever you fail, it means
youre trying new things.Source Fast Company
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The Silicon Valley of today is built less atop
the spires of earlier triumphs than upon the
rubble of earlier debacles.Newsweek/ Paul Saffo
(03.02)
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Silicon Valley Success Failure?
SecretsPursuit of risk 4 of 20 in V.C.
portfolio go bust 6 lose money 6 do okay 3 do
well 1 hits the jackpotSource The Economist
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Axiom (Hypothesis) We have been screwed by
Benchmarking Best Practice C.I./Kaizen.
Axiom (Hypothesis) We need Masters of
Discontinuity/ Masters of Ambiguity in
discontinuous/ambiguous times.
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In the modern military, risk is anathema to
rising stars, who cannot afford any slip-ups on
their records. Zero defects and zero
tolerance are common bywords.Newsweek/09.16.02
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Organize for performance customer
satisfaction.Disorganize for renewal
innovation.
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Rumsfeld values mavericks and tries to protect
and promote them. Newsweek/ 09.16.02
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Rose gardeners face a choice every spring how
to prune our roses. The long-term fate of a rose
garden depends on this decision. If you want to
have the largest and most glorious roses of the
neighborhood, you will prune hard. You will
reduce each rose plant to a maximum of three
stems. This represents a policy of low tolerance
and tight control. You force the plant to make
the maximum use of its available resources, by
putting them into the the roses core business.
However, if this is an unlucky year late frost,
deer, green-fly invasion, you may lose the main
stems or the whole plant! Pruning hard is a
dangerous policy in an unpredictable environment.
Thus, if you are in a spot where you know nature
may play tricks on you, you may opt for a policy
of high tolerance. You will leave more stems on
the plant. You will never have the biggest roses,
but you have a much-enhanced chance of having
roses every year. You will achieve a gradual
renewal of the plant. In short, tolerant pruning
achieves two ends (1) It makes it easier to cope
with unexpected environmental changes. (2) It
leads to a continuous restructuring of the plant.
The policy of tolerance admittedly wastes
resourcesthe extra buds drain away nutrients
from the main stem. But in an unpredictable
environment, this policy of tolerance makes the
rose healthier. Tolerance of internal weakness,
ironically, allows the rose to be stronger in the
long run.Arie De Geus, The Living Company
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Japans Science Gap Rice farming culture
uniqueness suppressed. Govt control of R D.
Promotion based on seniority. Consensus vs.
debate. (U.S. friends can be mortal enemies.)
Bias for C.I. vs. bold leaps. Lack of
competition and critical evaluation (peer
review). Syukuro Manabe What we need to create
is job insecurity rather than security to make
people compete more.Hideki Shirakawa, Nobel
laureate, chemistry
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December 2000 Swiss House for Advanced Research
Education. Cambridge, Massachusetts. Xavier
Comtesse You never hear a Swiss say, I want to
change the world. We need to take more risks.
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The Word(s) on Vitality Gary HamelSell By
jettison old crapSpin Out support
entrepreneursSpin In buy young firms
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No Wiggle Room! Incrementalism is innovations
worst enemy. Nicholas Negroponte
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Just Say No I dont intend to be known as the
King of the Tinkerers. CEO, large financial
services company (New York, 5-99)
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Jim Tom. Joined at the hip. Not.
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But what if former head of strategic planning
at Royal Dutch Shell Arie De Geus is wrong in
suggesting, in The Living Company, that firms
should aspire to live forever? Greatness is
fleeting and, for corporations, it will become
ever more fleeting. The ultimate aim of a
business organization, an artist, an athlete or a
stockbroker may be to explode in a dramatic
frenzy of value creation during a short space of
time, rather than to live forever.Kjell
Nordström and Jonas Ridderstråle, Funky Business
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Built to Last v. Built to FlipThe problem with
Built to Last is that its a romantic notion.
Large companies are incapable of ongoing
innovation, of ongoing flexibility.Increasingl
y, successful businesses will be ephemeral. They
will be built to yield something of value and
once that value has been exhausted, they will
vanish.Fast Company (03-00)
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The Futility of Size Virtualization is the
recognition that territorial size does not solve
economic problems. Economic access must become
the substitute for increasing domain.Richard
Rosecrance, The Rise of the Virtual State
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In Italy for 30 years under the Borgias they had
warfare, terror, murder, bloodshedand produced
Michelangelo, da Vinci and the Renaissance. In
Switzerland they had brotherly love, 500 years of
democracy and peace, and what did they
producethe cuckoo clock.Orson Welles, as
Harry Lime, in The Third Man
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Warren Bennis Patricia Ward Biederman/
Organizing Genius Great Groups Dont Last Very
Long!
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W.A. Mozart 1756 1791 HE CHANGED THE
WORLD AND ENRICHED HUMANITY
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The corporation as we know it, which is now 120
years old, is not likely to survive the next 25
years. Legally and financially, yes, but not
structurally and economically.Peter Drucker,
Business 2.0 (08.00)
64
The difficulties arise from the inherent
conflict between the need to control existing
operations and the need to create the kind of
environment that will permit new ideas to
flourishand old ones to die a timely death. We
believe that most corporations will find it
impossible to match or outperform the market
without abandoning the assumption of continuity.
The current apocalypsethe transition from a
state of continuity to state of discontinuityHas
the same suddenness as the trauma that beset
civilization in 1000 A.D. Richard Foster
Sarah Kaplan, Creative Destruction (The
McKinsey Quarterly)
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The Three Levels of InnovationTransformational
SubstantialIncrementalSource Dick Foster,
Business 2.0 (05.01) Note Each level requires
totally different processes!
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Jane Jacobs Exuberant Variety vs. the Great
Blight of Dullness. F.A. Hayek Spontaneous
Discovery Process. Joseph Schumpeter the
Gales of Creative Destruction.
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II. NEW BUSINESS. NEW TECH.
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3. The White Collar Revolution the Death of
Bureaucracy.
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108 X 5vs. 8 X 1 540 vs. 8 (-98.5)
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The coefficient of friction associated with the
grunge of business is amazing!Michael Schrage
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A bureaucrat is an expensive microchip.Dan
Sullivan, consultant and executive coach
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IBMs Project eLiza! Self-bootstrapping/
Artilects
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We own all the intellectual property, we farm
out all the direct labor.Jim McDonnell, VP, IBM
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Dont own nothin if you can help it. If you
can, rent your shoes.F.G.
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The virtual corporation is research,
development, design, marketing, financing, legal,
and other headquarters functions wth few or no
manufacturing capabilities a company with a
head but no body.Richard Rosecrance, The Rise
of the Virtual State
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Deep Blue Redux 2,240 EKGs 1,120 heart
attacks. Hans Ohlin (50 yr old chief of coronary
care, Univ of Lund/SW) 620. Lars Edenbrandts
software 738.Only this time it matters!
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Most physicians believe that diagnosis cant be
reduced to a set of generalizationsto a
cookbook. How often does my intuition lead me
astray? The radical implication of the Swedish
study is that the individualized, intuitive
approach that lies at the center of modern
medicine is flawedit causes more mistakes than
it prevents. Atul Gawande, Complications
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Probable parole violations Simple model (age,
of previous offenses, type of crime) beats M.D.
shrinks. 100 studies Statistical formulas gt
Human judgment. In virtually all cases,
statistical thinking equaled or surpassed human
judgment.Atul Gawande, Complications
79
Unless mankind redesigns itself by changing our
DNA through altering our genetic makeup,
computer-generated robots will take over the
world. Stephen Hawking, in the German magazine
Focus
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N.W.O./Holy Moly Unemployment up 2 real wage
growth highest since 60s productivity
soaring.Source BW/02.11.2002
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E.g. Jeff Immelt 75 of admin, back room,
finance digitalized in 3 years.Source BW
(01.28.02)
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4. IS/ IT/ Web On the Bus or Off the Bus.
83
100 square feet
84
Dells OptiPlex FacilityBig Job 6 to 8
hours.(80,000 per day)Parts Inventory 100
square feet.
85
The Real News X1,000,000TowTruckNet.com
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Impact No. 1/ Logistics Distribution
WalMart Dell Amazon.com Autobytel.com
FedEx UPS Ryder Cisco Etc. Etc. Ad
Infinitum.
87
Autobytel 400. WalMart 13.Source
BW(05.13.2002)
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? Americans on the Web/03.200250,000,00075,00
0,000100,000,000125,000,000150,000,000175,
000,000
89
157,000,000 2M/mo.Source Newsweek
(03.25.2002)
90
WebWorld Everything Web as a way to run your
businesss innardsWeb as connector for your
entire supply-demand chain Web as spiders web
which re-conceives the industryWeb/B2B as
ultimate wake-up call to commodity
producersWeb as the scourge of slack,
inefficiency, sloth, bureaucracy, poor customer
dataWeb as an Encompassing Way of LifeWeb
Everything (P.D. to after-sales)Web forces you
to focus on what you do bestWeb as entrée, at
any size, to Worlds Best at Everything as next
door neighbor
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Jargon Bath!Bureaucracy free Systemically
integrated Internet intense Knowledge based
Time and location free Instantly responsive
Customer centric Mass customization enabled.
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Translation Bureaucracy free Flat org, no
B.S.Systemically integrated Whole supply chain
tightly wired/ friction-freeInternet intense
Do it all via the WebKnowledge based Open
accessTime and location free Whenever,
whereverInstantly responsive Speed
demonsCustomer centric Customer calls the
shotsMass customization enabled Every product
and service rapidly tailored to client
requirements
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Message eCommerce is not a technology play! It
is a relationship, partnership, organizational
and communications play, made possible by new
technologies.
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Message There is no such thing as an effective
B2B or Internet-supply chain strategy in a
low-trust, bottlenecked-communication, six-layer
organization.
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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
96
Read It Closely We dont sell insurance
anymore. We sell speed. Peter Lewis,
Progressive
97
Theres no use trying, said Alice. One cant
believe impossible things. I daresay you
havent had much practice, said the Queen. When
I was your age, I always did it for half an hour
a day. Why, sometimes Ive believed as many as
six impossible things before breakfast.Lewis
Carroll
98
Inet allows you to dream dreams you could
never have dreamed before!
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Dont rebuild. Reimagine.The New York Times
Magazine on the future of the WTC space in Lower
Manhattan/09.08.2002
100
HUMANAs Dreams. Emphesys Put everything on the
Internet. CEO Mike McCallister, charge to
200-person outside Inet unit Imagine an
ideal Web-based health insurance system and then
create a product as close as possible to that
vision. Start with own employees SmartSuite.
Member employees Plan their own coverage and
shoulder more costs. Dell is model Fully
customized health for every individual.
Marketing pitch for employers Buy choice for
employees through a single sourceHumana.Source
Fortune/05.27.2002
101
Supposejust supposethat the Web is a new world
were just beginning to inhabit. Were like the
earlier European settlers in the United States,
living on the edge of the forest. We dont know
whats there and we dont know exactly what we
need to do to find out Do we pack mountain
climbing gear, desert wear, canoes, or all three?
Of course while the settlers may not have known
what the geography of the New World was going to
be, they at least knew that there was a
geography. The Web, on the other hand, has no
geography, no landscape. It has no distance. It
has nothing natural in it. It has few rules of
behavior and fewer lines of authority. Common
sense doesnt hold here, and uncommon sense
hasnt yet emerged. David Weinberger, Small
Pieces Loosely Joined
102
Words to Live By Hierarchy is an
organization with its face toward the CEO and its
ass toward the customer.Kjell Nordstrom and
Jonas Ridderstrale, Funky Business
103
Hyperlinks subvert hierarchy!The Cluetrain
Manifesto
104
Case CRM
105
Anne Busquet/ American ExpressNot Age of the
InternetIs Age of Customer Control
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Amen!The Age of the Never Satisfied
CustomerRegis McKenna
107
The Web enables total transparency. People with
access to relevant information are beginning to
challenge any type of authority. The stupid,
loyal and humble customer, employee, patient or
citizen is dead.Kjell Nordström and Jonas
Ridderstråle, Funky Business
108
Parents, doctors, stockbrokers, even military
leaders are starting to lose the authority they
once had. There are all these roles premised on
access to privileged information. What we are
witnessing is a collapse of that advantage,
prestige and authority.Michael Lewis, next
109
A seismic shift is underway in healthcare. The
Internet is delivering vast knowledge and new
choices to consumersraising their expectations
and, in many cases, handing them the controls.
Healthcare consumers are driving radical,
fundamental change.Deloitte Research, Winning
the Loyalty of the eHealth Consumer
110
Welcome to D.I.Y. Nation Changes in business
processes will emphasize self service. Your costs
as a business go down and perceived service
goes up because customers are conducting it
themselves. Ray Lane, Oracle
111
Psych 101 Strongest Force on Earth?My need to
be in perceived control of my universe!
112
UBIQUITY! Its the cars, not the tires, that
squeal NYT/Circuits/10.25.01) E-ZPass (6M in
NE), tests with McDs, gas stations and parking
lots next. OnStar (GM/1.5M). Plus black
boxes, GPS (the case of the 450 ticket), CA
smog offenders.
113
CRM has, almost universally, failed to live up
to expectations. Butler Group (UK)
114
No! No! No! FT The aim of CRM is to make
customers feel as they did in the pre-electronic
age when service was more personal. Rebuttal
(1) Service sucked in the pre-electronic age.
(2) NewGen believes in the screen! (So do I.)
115
One Persons OpinionTP to reporter Service
is MUCH better! Would you go back to bank
tellers and phone operators? Value that I place
on a smile 3 on a scale of 10. Value I place
on fast accurate digital response 11 on a
scale of 10!!
116
M. Rogers -5 defections 25 to 85 profit.
Lose 15 to 35 p.a. 69 defect as a result
of lousy sales or service experience. (QBut is
this the point???? A Yes. No.)
117
CGEY (Paul Cole) Pleasant Transaction vs.
Systemic Opportunity. Better job of what we do
today vs. Re-think overall enterprise strategy.
118
Message CRM Madness 600 CRM vendors. ???
Do it all or do something. Past
over-invest in low-value customers. Idea
better experience, not off-load work to customer.
Relationship f(dialogue knowledge
duration). Key new attitudes, DESTRUCTION of
functional barriers to info action.
119
Wells Fargo (285B) Master of BC900M since
99. 3M. 1/3rd of chk acct customers on line.
5,400 branches 4 of 5 who do product research
on line purchase at branch. Wire transfer, save
30 17 less calls. Material diff to bottom
line.Source BW Online (03.20.02)
120
The Cluetrain Manifesto
121
Hyperlinks subvert hierarchy!The Cluetrain
Manifesto
122
Corporate Resistance to ItIt all goes back
to fear of losing control!The Cluetrain
Manifesto
123
E-business is the final nail in the coffin for
bureaucracy at GE.Jack Welch/GE Annual Report
2000
124
Words to Live By Hierarchy is an
organization with its face toward the CEO and its
ass toward the customer.Kjell Nordstrom and
Jonas Ridderstrale, Funky Business
125
Richard Rosecrance, The Rise of the Virtual
State Wealth and Power in the Coming Century
126
Hong Kong Prototypical Virtual State83
Service8 Mfg.Source Richard Rosecrance,
The Rise of the Virtual State
127
The new dependence on productive assets located
within someone elses state represents an
unprecedented trust in the integrity and
peacefulness of strangers.In its pure form
an ideal model toward which many states are
tending the virtual state carries within it the
possibility of an entirely new system of world
politics.Richard Rosecrance, The Rise of the
Virtual State
128
Imagine a world where a citizen could search the
globe to assemble my government, the ultimate
in customized,customer-centric services. Health
care from the Netherlands, business incorporation
in Malaysia Don Tapscott
129
The virtual corporation is research,
development, design, marketing, financing, legal,
and other headquarters functions with few or no
manufacturing capabilities a company with a
head but no body.Richard Rosecrance, The Rise
of the Virtual State
130
We own all the intellectual property, we farm
out all the direct labor.Jim McDonnell, VP, IBM
131
The Futility of Size Regarding this issue
the new process of virtualization fully exerts
itself. Virtualization is the recognition that
territorial size does not solve economic
problems. Economic access must become the
substitute for economic domain.Richard
Rosecrance, The Rise of the Virtual State
132
TP Skill at creating, exploiting, and exiting
crucial alliances beats ownership of fixed assets.
133
At the ultimate stage, competition among nations
will be competition among educational systems,
for the most productive and richest countries
will be those with the best education and
training.Richard Rosecrance, The Rise of the
Virtual State
134
III. NEW BUSINESS. NEW VALUE PROPOSITION.
135
5. The PSF SolutionThe Professional Service
Firm Model.
136
So what will be the Basic Building Block of the
New Org?
137
Every job done in W.C.W. is also done outside
for profit!
138
Answer PSF!Professional Service
FirmDepartment Head to Managing Partner,
HR IS, etc. Inc.
139
TP to NAPM You are the Rock Stars of the
B2B Age!
140
Message You are Re-invention Evangelists!
141
ChicagoNovember 1999HRMAC
142
support function / cost center /
bureaucratic dragor
143
Are you Rock Stars of the Age of Talent
144
P.S.F. SummaryH.V.A. Projects (100)Pioneer
ClientsWOW Work (see below)Hot Talent (see
below)Adventurous cultureProprietary Point
of View (Methodology)W.W.P.F. (100)/Outside
Clients (25) When Now!
145
BMWs Designworks/USA gt50 from outside work
146
Bill of (SELECTIVE) RightsYOU HAVE THE RIGHT TO
CHOOSE YOUR CLIENTS! (Wanna be-stay-get COOL
Work With Cool Clients!) (YOU ARE YOUR CLIENT
LIST.) (LIFE IS TOO SHORT TO WORK WITH JERKS.)
(Mass marketers TARGET INNOVATION. E.g.
African-Americans Hispanics the Aging
Population Greens Women)
147
Culture Change is not Corporate.Culture Change
is not a Program.Culture Change does not take
Years.Culture Change does not start
Today.Culture Change starts Right
Now!Culture Change Lives in the Moment!Culture
Change is Entirely in Your Hands!
148
What Do I Do First?One Minute
Excellence!Thomas Watson
149
C.I.O. to C.E.F.R.N.S.
150
Chief Evangelist For Really Neat Stuff
151
G.M. The Recruitment and Development of Top
Talent. Period!V.C. Bets on Talent. Bets
on Projects. Period!
152
Dept. Head I Sports G.M.Dept. Head II V.C.
153
eHR/PCCAll HR on the WebProductivity
Consulting CenterSource E-HR A Walk through a
21st Century HR Department, John Sullivan, IHRIM
154
Model PSF
155
(1) Translate ALL departmental
activities into discrete W.W.P.F.
Products.(2) 100 go on the Web.(3)
Non-awesome are outsourced (75??).(4)
Remaining Centers of Excellence are
retained leveraged to the hilt!
156
Typically in a mortgage company or financial
services company, risk management is an
overhead, not a revenue center. Weve become more
than that. We pay for ourselves, and we actually
make money for the company.Frank Eichorn,
Director of Credit Risk Data Management Group,
Wells Fargo Home Mortgage (Source sas.com)
157
The PSF ProblemProfessionalism Arrogance
Pseudo-science. Hear no evil, see no evil,
dont rat out your peers Docs, Teachers,
Clergy (Law), Accts (Berardino)
158
6. The Heart of the Value Added Revolution PSFs
Unbound/ The Solutions Imperative.
159
Base Case The Sameness Trap
160
Companies have defined so much best practice
that they are now more or less identical.Jesper
Kunde, A Unique Moment
161
While everything may be better, it is also
increasingly the same.Paul Goldberger on
retail, The Sameness of Things, The New York
Times
162
We make over three new product announcements a
day. Can you remember them? Our customers
cant!Carly Fiorina
163
The surplus society has a surplus of similar
companies, employing similar people, with similar
educational backgrounds, coming up with similar
ideas, producing similar things, with similar
prices and similar quality.Kjell Nordström
and Jonas Ridderstråle, Funky Business
164
Funky Business To succeed we must stop being so
goddamn normal. In a winner-takes-all world,
normal nothing.
165
When we did it right it was still pretty
ordinary.Barry Gibbons on Nightmare No. 1
166
Customers will try low cost providers
because the Majors have not given them any clear
reason not to.Leading Insurance Industry
Analyst
167
SWA gt American Continental Delta Northwest
United USAirways.Source Boston Globe
(12.22.2001)
168
Getting Beyond Lip Service!No longer are we
only an insurance provider. Today, we also
offer our customers the products and services
that help them achieve their dreams, whether its
financial security, buying a car, paying for home
repairs, or even taking a dream vacation.Martin
Feinstein, CEO, Farmers Group
169
The Internet is the most effective profit-killer
on earth it stimulates a TRUE FRE MARKET and a
real free market is the most dangerous of
marketplaces for companies selling the SAME OLD
STUFF. To those with COURAGE, free markets are
greatthey help kill off the deadwood competitors
who dont have the courage to changemaking way
for them to LEVERAGE their DRAMATIC DIFFERENCE
into profitable growth.Doug Hall
170
The Big Day!
171
09.11.2000 HP bids 18,000,000,000for
PricewaterhouseCoopersconsulting business!
172
These days, building the best server isnt
enough. Thats the price of entry.Ann
Livermore, Hewlett-Packard
173
Gerstners IBM Systems Integrator of choice.
Global Services 35B. Pledge/99 Business
Partner Charter. 72 strategic partners, aim for
200. Drop many in-house programs/products.
(BW/12.01).
174
You are headed for commodity hell if you dont
have services.Lou Gerstner on IBMs coming
revolution (1997)
175
Service-Systems Paradox Cut GrowAutomate
75 of commodity service activitiesand/butA
dd value via people-intensive strategic/systems-i
ntegration activities (E.g. Could Suns
service/sysint business be 60 of revenues?)
(Hiring from PWC, etc.)
176
ATT President David Dorman Back to long
distance but with bundles of lucrative
corporate services for the likes of Merrill
Lynch, MasterCard, Hyatt. Consumer Dump 25M
subscribers (50)hold on to high
enders.Source BW/05.20.2002
177
We want to be the air traffic controllers of
electrons.Bob Nardelli, GE Power Systems
178
Customer Satisfaction to Customer
SuccessWere getting better at Six Sigma
every day. But we really need to think about the
customers profitability. Are customers bottom
lines really benefiting from what we provide
them?Bob Nardelli, GE Power Systems
179
Keep In Mind Customer Satisfaction versus
Customer Success
180
Was Big Iron Transformer Dudes Division. Is
Air Traffic Controllers of Electrons.
181
Was Bunch of Guys Who Make Circuit Breakers
Division. Is GE Industrial Systems.
182
E.g. UTC/Otis Carrier boxes to integrated
building systems
183
Nardellis goal (50B to 100B by 2005)
move Home Depot beyond selling goods to selling
home services. He wants to capture home
improvement dollars wherever and however they are
spent. E.g. house calls (At-Home Service
10B by 05?) pros shops (Pro Set) home
project management (Project Management System
a deeper selling relationship).Source USA
Today/06.14.2002
184
UPS wants to take over the sweet spot in the
endless loop of goods, information and capital
that all the packages it moves
represent.ecompany.com/06.01 (E.g., UPS
Logistics manages the logistics of 4.5M Ford
vehicles, from 21 mfg. sites to 6,000 NA dealers)
185
New Springs TurnkeyFlexible
sourcing.Collections.Packaging.Merchandising.P
romotion.Systems Site mgt.
186
No longer are we only an insurance provider.
Today, we also offer our customers the products
and services that help them achieve their dreams,
whether its financial security, buying a car,
paying for home repairs, or even taking a dream
vacation.Martin Feinstein, CEO, Farmers Group
187
Our mission is to go from being the worlds
premier timesharewhich is a large idea in a
small industryto being what we call the market
makers for global travel and leisure. We need to
enable developers to be involved in more travel
and leisure products, rather than just the
timeshare side.Ken May, RCI (Source
Developments)
188
VISIONS OF A BRAND-NAME OFFICE EMPIRE. Sam Zell
is not a man plagued by self doubt. Mr. Zell
controls public companies that own nearly 700
office buildings in the United States. Now Mr.
Zell says he will transform the real estate
market by turning those REITs into national
brands. Mr. Zell believes clients will start
to view those offices as something more than a
commodity chosen chiefly by price and location.
New York Times (12.16.2001)
189
Architecture is becoming a commodity. Winners
will be Turnkey Facilities Management
providers.SMPS Exec
190
We are a real estate facilities consulting
organization, not just an interior design
firm.Jean Bellas, founder, SPACE (from SMPS
Marketer)
191
Omnicom 57 (of 6B) from marketing services
192
Who was the number one employer of architecture
school grads in the U.S. last year?
193
Message Eat Or Be Eaten.
194
HP. Sun. IBM. GE/PS. GE/IS. (GE/AE.
GE/MD.) UTC. Farmers. Delphi. UPS/ FedEx/
Ryder. Springs. Omnicom. IDEO. Accenture.
Equity Office Properties. RCI. Etc. Etc.
195
Words Partners Value Added
Intellectual-capital Added Consultative-skills
Added Implementation Added Model PSF
Outsourcing (??) Acquisitions-led (Omnicom et
al.) Experiences- (Solutions-) (Customer
Success-) driven.
196
Core Logic (1) 108X5 to 8X1/ eLiza/ 100sf.
(2) Dept. to PSF/ WWPF. (3) V.A. via PSFs
Unbound/ Solutions/ Customer Success.
197
Model2002/3/4/5/??Dell IBM MagicCut
(ALL) the bullshitAdd (LOTSA)
soft/integrative/experiences value
198
The Seagate Exception. (Paradox? Possibility?)
199
7. The Solutions25.NO MORE SILOS. NO
MORE STOVEPIPES. (DAMN IT.)
200
1. Its the (OUR!) organization,
stupid!2. Friction free! 3. No STOVEPIPES!4.
Stovepiping is a F.O.Firing Offense.5. ALL on
the web! (ALL ALL.)6. Open access!6. Project
Managers rule! (E.g. Control the purse
strings and evals.)7. VALUE-ADDED RULES!
(Services Rule.) (Experiences Rule.) (Brand
Rules.)8. SOLUTIONS RULE! (We sell SOLUTIONS.
Period. We sell PRODUCTIVITY
PROFITABILITY. Period.)9. Solutions Our
culture. 10. Partner with B.I.C.
(Best-In-Class). Period.
201
The organizations we created have become
tyrants. They have taken control, holding us
fettered, creating barriers that hinder rather
than help our businesses. The lines that we drew
on our neat organizational diagrams have turned
into walls that no one can scale or penetrate or
even peer over. Frank Lekanne Deprez Rene
Tissen, Zero Space Moving Beyond Organization
Limits.
202
In an era when terrorists use satellite phones
and encrypted email, US gatekeepers stand armed
against them with pencils and paperwork, and
archaic computer systems that dont talk to each
other.Boston Globe (09.30.2001)
203
Once devised in Riyadh, the tasking order took
hours to get to the Navys six aircraft
carriersbecause the Navy had failed years
earlier to procure the proper communications gear
that would have connected the Navy with its Air
Force counterparts. To compensate for the lack
of communications capability, the Navy was forced
to fly a daily cargo mission from the Persian
Gulf and Red Sea to Riyadh in order to pick up a
computer printout of the air mission tasking
order, then fly back to the carriers, run
photocopy machines at full tilt, and distribute
the documents to the air wing squadrons that were
planning the next strike. Bill Owens, Lifting
the Fog of War
204
By combining powerful computer technology and
other modern information-based systems we could
make a revitalized, leaner military force that is
designed to outsee, outmaneuver and outfight any
foe. Bill Owens, Lifting the Fog of War
205
PG, Unilever and Others Are Trying an
Experiment Giving Marketing More Say Over
ResearchAdvertising Age (03.25.2002)
206
12. All functions contribute equallyIS, HR,
Finance, Purchasing, Engineering,
Logistics, Sales, Etc.13. Project Management can
come from any function.14. WE ARE ALL IN SALES.
PERIOD.15. We all invest in wiring the
customer organization.16. WE ALL LIVE THE
BRAND. (Brand Solutions. That MAKE
MONEY FOR OUR CUSTOMER- PARTNER.)17. We
use the word PARTNER until we all want to
barf!18. We NEVER BLAME other parts of our
organization for screw-ups.19. WE AIM TO
REINVENT THIS INDUSTRY!20. We hate the word-idea
COMMODITY.
207
21. We believe in High tech, High touch.22. We
are DREAMERS.23. We deliver . (PROFITS.)
(CUSTOMER SUCCESS.)24. If we play the SOLUTIONS
GAME brilliantly, no one can touch us!25.
Our TEAM needs 100 I.C.s (Imaginative
Contributors). This is the ULTIMATE All Hands
affair!
208
Q Is that all there is?A Quite
possibly.Roches New Scientific MethodFast
Company. And? X-Functional Teams (NO
STOVEPIPES!). Fail fast. The only way to
embrace a technological revolution, Roche has
discovered, is to unleash an organizational
revolution.
209
Duh??? Weve come up with a solution. Weve
begun to create a form of communications that is
much better than we had before, and thats
allowed us to gather better data. Weve finally
realized that we have an interplay with other
hospitals and with pre-hospital.Dr. Ben
Honigman, ER, U. Colorado Hospital, on diverts
(Denver Post/05.05.02)Internet Data Open
data exchange Barrier busting
210
Innovation Speeds New Basics1. XFTs
are the culture.2. Project-centric. 3. Open
talent market.4. Cause-based projects. 5.
Ubiquitous open systems ISat home
throughout supply chain. Web based.6.
F-L-A-T.7. EVP (S.O.U.B), etc.Innovation,
Speed, CRM, Experience/ Solution demand this
211
XF25 WOW Projects (100). Physical Co-location
(geologists geophysicists). Strategic firings
of turf kings (top performer goes). Bonuses
(big). Deep dipping. Job rotation (musical chairs
at the top). EVP/SOUB. Lots of kids (Instant
Messaging). Early Proj Mgt experience. Take
techies on sales calls. Symbolic stuff (black
berets).
212
Supply Chain 2000When Joe Employee at
Company X launches his browser, hes taken to
Company Xs personalized home page. He can
interact with the entire scope of Company Xs
world customers, other employees, distributors,
suppliers, manufacturers, consultants. The
browser that is, the portal resembles a My
Yahoo for Company X and hooks into every network
associated with Company X. The real trick is that
Joe Employee, business partners and customers
dont have to be in the office. They can log on
from a cell phone, Palm Pilot, pager or home
office system.Red Herring (09.2000)
213
KEY WORDS Partners with our Customers in
creating Memorable, Value-added Solutions/
Successes/ Experiences. WHICH REQUIRES Total
Enterprise Responsiveness beyond functional
walls.
214
The Real New EconomyImagine a chess game in
which, after every half dozen moves, the
arrangement of the pieces on the board stays the
same but the capabilities of the pieces randomly
change. Knights now move like bishops, bishops
like rooks Technology does that. It rubs out
boundaries that separate industries. Suddenly new
competitors with new capabilities will come at
you from new directions. Lowly truckers in brown
vans become geeky logistics experts. Business
2.0 (8.2001)
215
IV. NEW BUSINESS. NEW BRAND.
216
8. A World of Scintillating/ Awesome/ WOW
Experiences.
217
Experiences are as distinct from services as
services are from goods.Joseph Pine James
Gilmore, The Experience Economy Work Is Theatre
Every Business a Stage
218
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
219
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
thats not work or home. Its the place our
customers come for refuge.Nancy Orsolini,
District Manager
220
Club Med is more than just a resort its a
means of rediscovering oneself, of inventing an
entirely new me. Source Jean-Marie Dru,
Disruption
221
Guinness as a brand is all about community. Its
about bringing people together and sharing
stories.Ralph Ardill, Imagination, in re
Guinness Storehouse
222
WHAT CAN BROWN DO FOR YOU?
223
From Service to Cause7X. 730A-800P.
F12A.Plus WOW Department Kill a Stupid
Rule contests, etc. 2001R 34 P 29
90-00 2,048. Commerce Bank/NJ (10B).
Source FC05.02.
224
The Experience LadderExperiences
ServicesGoods Raw Materials
225
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) 10.001990
Party _at_ Chuck E. Cheese (experience economy)
100.00
226
Message Experience is the Last 80P.S.
Experience applies to all work!
227
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) 10.001990
Party _at_ Chuck E. Cheese (experience economy)
100.00
228
Bob Lutz I see us as being in the art business.
Art, entertainment and mobile sculpture, which,
coincidentally, also happens to provide
transportation. Source NYT 10.19.01
229
Lexus sells its cars as containers for our sound
systems. Its marvelous.Sidney Harman/ Harman
International
230
Its All About EXPERIENCES Trapper to
Wildlife Damage-control ProfessionalTrapper
lt20 per beaver pelt.WDCP 150/problem
beaver 750-1,000 for flood-control piping
so that beavers can stay.Source
WSJ/05.21.2002
231
Car designers need to create a story. Every car
provides an opportunity to create an adventure.
The Prowler makes you smile. Why? Because its
focused. It has a plot, a reason for being, a
passion.Freeman Thomas, co-designer VW Beetle
designer Audi TT
232
Hmmmm(?) Only Words StoryAdventureSmile
FocusPlotPassion
233
LAN Installation Co. toGeek Squad (2 to
30/Minn.)
234
First Step (?!) Hire a theater director, as a
consultant or FTE!
235
Most executives have no idea how to add value to
a market in the metaphysical world. But that is
what the market will cry out for in the future.
There is no lack of physical products to choose
between.Jesper Kunde, A Unique Moment on the
excellence of Nokia, Nike, Lego, Virgin et al.
236
Extraction Goods Male dominanceServices
Experiences Female dominance
237
Women dont buy brands. They join
them.EVEolution
238
The Experience LadderExperiences
ServicesGoods Raw Materials
239
Ladder Position MeasureSolutions
Success(Experiences)Services
SatisfactionGoods Six-sigma
240
9. Experiences Embracing the Dream Business.
241
DREAM A dream is a complete moment in the life
of a client. Important experiences that tempt the
client to commit substantial resources. The
essence of the desires of the consumer. The
opportunity to help clients become what they want
to be. Gian Luigi Longinotti-Buitoni
242
Common Products Dream ProductsMaxwell
House StarbucksBVD
Victorias SecretPayless
FerragamoHyundai
FerrariSuzuki
Harley DavidsonAtlantic City
AcapulcoNew Jersey
CaliforniaCarter
KennedyConners
PeleCNN
MillionaireSource Gian Luigi Longinotti-Buitoni
243
Building the Creative
OrganizationChoose a creator The cultural
leader who gives the company an aesthetic point
of view.Hire eclectically Hire collaborators
with different cultures and past histories in
order to balance rigor with emotion.Prepare
vertically Develop a rigorous understanding of
the product and the client.Develop horizontally
Promote curiosity in unrelated disciplines.Lead
emotionally Engender passionate dedication
through vision and freedom.Build for the long
haul Creativity requires a lifetime
commitment.Source Gian Luigi Longinotti-Buitoni
244
Emotional Design that Interprets Dreams Zero
defects Only the starting point.Love at first
sight.Design for the five senses.Develop to
expand the Main Dream.Design so as to seduce
through the peripheral senses.Source Gian
Luigi Longinotti-Buitoni
245
The marketing of Dreams (Dreamketing)Dreamketing
Touching the clients dreams.Dreamketing The
art of telling stories and entertaining.Dreamketi
ng Promote the dream, not the product.Dreamketin
g Build the brand around the main
dream.Dreamketing Build the buzz, the hype,
the cult.Source Gian Luigi Longinotti-Buitoni
246
Constantly Magnify Perceived ValueMaximize your
value-added by fulfilling the dreams of your
clients.Only invest in what is valuable for your
client.Dont let the short-term results weaken
the long-term value of your brand.Balance
rigorous control of the financial endeavor with
the emotional management of your brand.Build a
financial structure that allows risk-taking NO
RISKSNO DREAMS.Establish long-term price
power in order to avoid the trap of the
commodity product.Source Gian Luigi
Longinotti-Buitoni
247
10. The Mostly Ignored Soul of Experiences
Design Rules!
248
Design Myths.
249
Unconventional Design MessagesNot about ...
Lumpy Objects!Not about ... 79,000 objects
250
The I.D. International Design FortyAirstream
Alfred A. Knopf Apple Computer Amazon.com
Bloomberg Caterpillar CNN Disney FedEx
Gillette IBM Martha Stewart New Balance
Nickelodeon Patagonia The New York Yankees
3M Etc. List No. 1, 1999
251
Unconventional Design MessagesNot about ...
Lumpy Objects!Not about ... 79,000 objects
252
Design Transforms even the Biggest
Corporations!TARGET the champion of
Americas new design democracy (Time) Marketer
of the Year 2000 (Advertising Age)
253
Lady Sensor, Mach3, and 70M on developing
the OralB CrossAction toothbrush23 patents,
including 6 for the packagingSource
www.ecompany.com 06.00
254
Design2002LISTERENEs PocketPaksWESTINs
Heavenly
255
Westins Heavenly Bed
256
Designs place in the universe.
257
And Tomorrow Fifteen years ago companies
competed on price. Now its quality. Tomorrow
its design.Robert Hayes
258
All Equal Except At Sony we assume that all
products of our competitors have basically the
same technology, price, performance and features.
Design is the only thing that differentiates one
product from another in the marketplace.Norio
Ohga
259
Design is treated like a religion at
BMW.Fortune
260
The new Beetle fails at most categories. The
only thing it doesnt fail in is drop-dead
charm.Jerry Hirshberg, Nissan Design
International
261
Object of Desire!Every now and then, a design
comes along that radically changes the way we
think about a particular object. Case in point
the iMac. Suddenly, a computer is no longer an
anonymous box. It is a sculpture, an object of
desire, something that you look at.Katherine
McCoy Michael McCoy, Illinois Institute of
Technology
262
The good 10 percent of American product design
comes out of big-idea companies that dont
believe in talking to the customer. They're run
by passionate maniacs who make everybodys life
miserable until they get what they want.Bran
Ferren, Applied Minds/Wired 1-2001
263
We dont have a good language to talk about
this kind of thing. In most peoples
vocabularies, design means veneer. But to me,
nothing could be further from the meaning of
design. Design is the fundamental soul of a
man-made creation.Steve Jobs
264
Check Out the LanguageTomorrow its design
Design is the only thing Design is
religion ...Drop-dead charm Object of
desire Passionate maniacs Fundamental
soul
265
Bottom Line.
266
Design is WHAT WHY I LOVE. LOVE.
267
I LOVE my ZYLISS Garlic Peeler!
268
All Time No.1 (TP)Ziplocs
269
Design is WHY I GET MAD. MAD.
270
Wanted THE DESIGNER OF MY RADIO SHACK PHONE.
Major Reward!
271
Design is never neutral.
272
Hypothesis DESIGN is the principal difference
between love and hate!
273
THE BASE CASE I am a design fanatic. Though
not artistic, I love cool stuff. But it
goes much further, far beyond the personal.
Design has become a professional obsession. I
SIMPLY BELIEVE THAT DESIGN PER SE IS THE
PRINCIPAL REASON FOR EMOTIONAL ATTACHMENT or
detachment RELATIVE TO A PRODUCT OR SERVICE OR
EXPERIENCE. Design, as I see it, is arguably
the 1 DETERMINANT of whether a
product-service-experience stands out or
doesnt. Furthermore, its another one of those
things that damn few companies put
consistently on the front burner.
274
Message (?????) Men cannot design for womens
needs.
275
Perhaps the macho look can be interesting if
you want to fight dinosaurs. But now to survive
you need intelligence, not power and aggression.
Modern intelligence means intuitionits female.
Source Philippe Starck, Harvard Design
Magazine (Summer 1998)
276
11. Design Beautiful Systems.
277
Fred S.s mediocre thesis. Herb K.s napkin.
278
Great design One-page business plan (Jim Horan)
279
K.I.S.S. Gordon