$10,000,000/Day

NOTENOTE:: To appreciateTo appreciate this presentation this presentation [and [and

ensure that it is not a ensure that it is not a messmess],], you need Microsoft you need Microsoft

fonts:fonts:

“Showcard Gothic,”“Showcard Gothic,” “Ravie,”“Ravie,” “Chiller”“Chiller”

andand “Verdana”“Verdana”

$10,000,000/$10,000,000/DayDay

Mission impossible?Mission impossible?

$36B/’98$36B/’98

minus minus $675M/‘$675M/‘

0707

““Despite a decade of Despite a decade of banking mergers, there is banking mergers, there is

no evidenceno evidence that big banks that big banks are any more efficient or are any more efficient or

profitable than their smaller profitable than their smaller rivals.”rivals.” —Financial Times,—Financial Times, 0329, on 0329, on

possible Barclays-ABN Amro merger possible Barclays-ABN Amro merger (“When it (“When it comes to asking the stock market whether comes to asking the stock market whether

bigger banks are better, bigger banks are better, the current answer is the current answer is a a resounding ‘noresounding ‘no.”.” —Citigroup analysis, 2006) —Citigroup analysis, 2006)

Tom Peters’ X25*Tom Peters’ X25*

EXCELLENCEXCELLENCE. ALWAYS.E. ALWAYS.

World Knowledge ForumWorld Knowledge ForumSeoul/17 October 2007Seoul/17 October 2007

**In Search of ExcellenceIn Search of Excellence 1982-2007 1982-2007

Slides at …

tompeters.comtompeters.com

THE LOOOOONG THE LOOOOONG ODDS AGAINST ODDS AGAINST

“LASTING “LASTING EXCELLENCE.” EXCELLENCE.”

The The lastlast word: word: There There is is nono “last “last

word.”word.”

Flat as a Pancake (Or Worse)Flat as a Pancake (Or Worse)

Wal*Mart … Dell Wal*Mart … Dell ……

Intel … Yahoo … Intel … Yahoo … Home Depot … Home Depot …

Microsoft …Microsoft … GE … Citigroup GE … Citigroup

…… Time Warner Time Warner

Headline, Wall Street Journal,

3 October 2007: “Wal*Mart Era Wanes Amid Big Shifts In

Retail: Rivals Find Strategies To Defeat Low

Prices; World Has Changed”

“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 Buy a very large one very large one and just waitand just wait.”.”

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

Dick Kovacevich: You You don’t get don’t get better by better by

being being bigger. You bigger. You get worse.”get worse.”

“Forbes100” from 1917 to 1987: 3939 members members

of the Class of ’17 were alive in ’87; 18 in ’87 of the Class of ’17 were alive in ’87; 18 in ’87 F100; 18 F100 “survivors” significantly F100; 18 F100 “survivors” significantly

underunderpperformederformed the market; the market;

just just 22 (2%), (2%), GEGE & & KodakKodak, ,

outoutpperformederformed the market from the market from 1917 to 1987. 1917 to 1987.

S&P 500 from 1957 to 1997: 7474 members of the Class of ’57 were alive

in ’97; 1212 (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

““Mr. Foster and his McKinsey Mr. Foster and his McKinsey colleagues collected detailed colleagues collected detailed

performance data stretching back 40 performance data stretching back 40 years for 1,000 U.S. companies. years for 1,000 U.S. companies.

TheTheyy found that none of the found that none of the lonlongg-term survivors mana-term survivors managged ed

to outto outpperform the market. erform the market. Worse, the lonWorse, the longger companies er companies had been in the database, the had been in the database, the worse they didworse they 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: EverEveryythinthingg in existence tends in existence tends to deteriorateto deteriorate.”.”

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

Welcome to the “Club of Shattered Dreams”:

Of Korea’s Top 100Top 100 companies in 1955,

only 77 were still on the list in 2004.

Source: “KET Issue Report,” Kim Jong Nyun (14.05.2005)

THE SECRETS OF THE SECRETS OF EXCELLENCE I: EXCELLENCE I:

DECENTRALIZATION. DECENTRALIZATION.

“‘Decentralization’ is not a piece of paper. It’s not me. It’s either in

your heart, or not.”

—Brian Joffe/BIDvest

Enemy Enemy #1#1

I.C.D.I.C.D.Note 1:Note 1: Inherent/Inevitable/Inherent/Inevitable/Immutable Centralist DriftImmutable Centralist Drift

Note 2: Jim Burke’s 1-word vocabulary: “No.”Note 2: Jim Burke’s 1-word vocabulary: “No.”

THE SECRETS OF THE SECRETS OF EXCELLENCE II: EXCELLENCE II:

CHURN. CHURN.

Q4/2006Q4/2006

+500,000+500,000

Source: Source: Barron’sBarron’s 0922.07 0922.07

Q4/2006Q4/2006

+500,000+500,000 = ? = ?

Source: Source: Barron’sBarron’s 0922.07 0922.07

Q4/2006Q4/2006

+500,000+500,000 = =+7,700,000+7,700,000-7,200,000-7,200,000

Source: Source: Barron’sBarron’s 0922.07 0922.07

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

inefficiencinefficiencyy, fast , fast and furious and and furious and

numerous failures.”numerous failures.”—Kevin Kelly—Kevin Kelly

TheThe Mess Mess IsIs TheThe

Message! Message! Period!Period!

Palo Alto/30Palo Alto/30California/35California/35

*Entrepreneurial magnet*Entrepreneurial magnet*Talent in general*Talent in general*Critical mass*Critical mass*VCs (all levels)*VCs (all levels)*Immigrants-Diversity*Immigrants-Diversity*Research Universities*Research Universities*Climate-Way of life*Climate-Way of life*Attitude! *Attitude! (Everything is possible!)(Everything is possible!)

*IBM? Who cares?*IBM? Who cares?*Etc*Etc

THE SECRETS OF THE SECRETS OF EXCELLENCE III: EXCELLENCE III: THE MID-SIZED THE MID-SIZED ENTERPRISE. ENTERPRISE.

#1 Exporter?#1 Exporter?

#4 Japan#4 Japan

#4 Japan#4 Japan#3 #3 (#2/2006)(#2/2006)

USAUSA#2 #2 (#3)(#3) China China

#4 Japan#4 Japan#3 USA#3 USA

#2 China#2 China

#1 #1 GermanyGermany

Reason?Reason?

Daimler?Daimler?BASF?BASF?

Siemens?Siemens?Commerzbank?Commerzbank?

Reason!!!Reason!!!

MittelstandMittelstand

GEOBRA/PlaymobilGEOBRA/PlaymobilTrumpfTrumpf

RationalRationalGoldmann ProduktionsGoldmann Produktions

Skunk Camp #1:Skunk Camp #1:American “Mittlestand” American “Mittlestand” (F500 A.W.O.L.)(F500 A.W.O.L.)

Frank Perdue/ Frank Perdue/ Perdue FarmsPerdue Farms (“It takes(“It takes a tough man to make a tender chicken.”)a tough man to make a tender chicken.”)

Tom Malone/ Tom Malone/ Milliken and CompanyMilliken and CompanyDon Burr/ Don Burr/ People ExpressPeople Express

Tom Monaghan/ Tom Monaghan/ Dominos PizzaDominos PizzaStew Leonard/ Stew Leonard/ Stew Leonard’sStew Leonard’s

Hal Rosenbluth/ Hal Rosenbluth/ Rosenbluth InternationalRosenbluth International John Fisher/ John Fisher/ Bank One of ColumbusBank One of Columbus

John McConnell/ John McConnell/ Worthington IndustriesWorthington IndustriesBill and Vieve Gore/ Bill and Vieve Gore/ W.L. GoreW.L. Gore

Bob Buckman/ Bob Buckman/ Buckman LabsBuckman Labs (Bob almost(Bob almost single-handedly invented what we now callsingle-handedly invented what we now call

“ “knowledge management.”)knowledge management.”)

Jim’s Jim’s GroupGroup

Jim’s Mowing CanadaJim’s Mowing CanadaJim’s Mowing UKJim’s Mowing UKJim’s AntennasJim’s Antennas

Jim’s BookkeepingJim’s BookkeepingJim’s Building MaintenanceJim’s Building Maintenance

Jim’s Carpet CleaningJim’s Carpet CleaningJim’s Car CleaningJim’s Car Cleaning

Jim’s Computer ServicesJim’s Computer Services

Jim’s Dog WashJim’s Dog WashJim’s Driving SchoolJim’s Driving School

Jim’s FencingJim’s FencingJim’s FloorsJim’s Floors

Jim’s PaintingJim’s PaintingJim’s PavingJim’s Paving

Jim’s Pergolas [gazebos]Jim’s Pergolas [gazebos]Jim’s Pool CareJim’s Pool Care

Jim’s Pressure CleaningJim’s Pressure CleaningJim’s RoofingJim’s Roofing

Jim’s Security DoorsJim’s Security DoorsJim’s TreesJim’s Trees

Jim’s Window CleaningJim’s Window CleaningJim’s WindscreensJim’s Windscreens

Note: Download, free, Jim Penman’s book: What Will They Franchise Next? The Story of Jim’s Group

**Lived in same town all adult lifeLived in same town all adult life*First generation wealthy/no parental*First generation wealthy/no parental support support*“Don’t look like millionaires, don’t dress*“Don’t look like millionaires, don’t dress like millionaires, don’t eat like like millionaires, don’t eat like millionaires, don’t act like millionaires” millionaires, don’t act like millionaires”*“Many of the types of businesses [they]*“Many of the types of businesses [they] are in could be classified as ‘dull- are in could be classified as ‘dull- normal.’ normal.’ [They] are welding contractors, [They] are welding contractors, auctioneers, scrap-metal dealers, auctioneers, scrap-metal dealers, portable toilets, dry cleaners, re-builders of portable toilets, dry cleaners, re-builders of diesel engines, paving contractors …” diesel engines, paving contractors …”

Source: Source: The Millionaire Next DoorThe Millionaire Next Door,, Thomas Stanley & William Danko Thomas Stanley & William Danko

Ichiro-Ichiro-nomicsnomics

IchironomicsIchironomics““Spokane, like Minneapolis-St Paul, Spokane, like Minneapolis-St Paul,

refuses to bet the economy on one or two refuses to bet the economy on one or two industries. Rather, it practices what one industries. Rather, it practices what one city booster calls ‘Ichironomics. Like the city booster calls ‘Ichironomics. Like the Seattle Mariners’ center fielder, Ichiro Seattle Mariners’ center fielder, Ichiro

Suzuki, we try to hit singles and doubles. Suzuki, we try to hit singles and doubles. We want to improve the overall conditions We want to improve the overall conditions for small businesses, not chase the large for small businesses, not chase the large

employeremployer.’”—Rich Karlgaard, .’”—Rich Karlgaard, ForbesForbes

(NB: In 2004 Suzuki broke the all-time record for hits(NB: In 2004 Suzuki broke the all-time record for hits in a single season, with a staggering 262.)in a single season, with a staggering 262.)

(NB II: In 2007 the mayor of Lisbon reduced the amount of time to get(NB II: In 2007 the mayor of Lisbon reduced the amount of time to get a business license from weeks or months to, literally, minutes.)a business license from weeks or months to, literally, minutes.)

THE SECRETS OF THE SECRETS OF EXCELLENCE IV: EXCELLENCE IV:

UNBRIDLED UNBRIDLED IMAGINATION. IMAGINATION.

Single Single greatest actgreatest act

of pure of pure imaginationimagination

24%24%

dubaidubai

““THE FUTURE BELONGS TO … THE FUTURE BELONGS TO … SMALL POPULATIONS … WHO SMALL POPULATIONS … WHO

BUILD EMPIRES OF THE MINDBUILD EMPIRES OF THE MIND … … AND WHO IGNORE THE TEMPTATION OF—OR AND WHO IGNORE THE TEMPTATION OF—OR DO NOT HAVE THE OPTION OF—EXPLOITING DO NOT HAVE THE OPTION OF—EXPLOITING

NATURAL RESOURCES.”NATURAL RESOURCES.”

Source: Juan Enriquez/Source: Juan Enriquez/AsAs the Future Catches Youthe Future Catches You

THE SECRETS OF THE SECRETS OF EXCELLENCE V: EXCELLENCE V:

EDUCATION EDUCATION FOCUSED ON FOCUSED ON NURTUTING NURTUTING CREATIVITY.CREATIVITY.

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

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

The Rise of the Creative ClassThe Rise of the Creative Class

““It is nothing short of It is nothing short of a miracle that a miracle that

modern methods of modern methods of instruction have not instruction have not

yet entirely strangled yet entirely strangled the holy curiosity of the holy curiosity of

inquiry.”inquiry.” —Albert Einstein—Albert Einstein

““The key question isn’t ‘What fosters The key question isn’t ‘What fosters creativity?’ But it is why in God’s creativity?’ But it is why in God’s

name isn’t name isn’t evereveryyoneone creative? creative? Where Where was the human potential lost? How was the human potential lost? How was it crippled?was it crippled? I think therefore a I think therefore a

good question might be good question might be notnot why do people create? But why do why do people create? But why do people people notnot create or innovate? We create or innovate? We have got to abandon that sense of have got to abandon that sense of

amazement in theamazement in the face of creativity, as if it were a face of creativity, as if it were a

miracle if anybody created anything.”miracle if anybody created anything.” —Abe Maslow

““Every child is Every child is born an artist. born an artist. The trick is to The trick is to

remain an artistremain an artist.”.” —Picasso—Picasso

Muhammad Yunus:Muhammad Yunus: ““All human All human beings are entrepreneursbeings are entrepreneurs..

When we were in the caves we were When we were in the caves we were all self-employed . . . finding our food, all self-employed . . . finding our food,

feeding ourselves. That’s where feeding ourselves. That’s where human history began . . . As human history began . . . As

civilization came we suppressed it. We civilization came we suppressed it. We became labor because they stamped became labor because they stamped us, ‘You are labor.’ We forgot that we us, ‘You are labor.’ We forgot that we

are entrepreneurs.”are entrepreneurs.”

Source: Muhammad Yunus/The News Hour—PBS/1122.2006

THE SECRETS OF THE SECRETS OF EXCELLENCE VI: EXCELLENCE VI: THE ESSENCE OF THE ESSENCE OF

ENTERPRISE.ENTERPRISE.

CauseCause (worthy of commitment)(worthy of commitment)

SpaceSpace (room for/encouragement(room for/encouragement

for initiative) for initiative)

DecencyDecency (respect, (respect,

humane)humane)

CauseCause (worthy of commitment)(worthy of commitment)

SpaceSpace (room for/encouragement(room for/encouragement

for initiative-adventures) for initiative-adventures)

DecencyDecency (respect, grace,(respect, grace,

integrity, humane) integrity, humane)

service service (worthy of our clients’ & (worthy of our clients’ &

extended extended family’s continuing custom) family’s continuing custom)

excellenceexcellence (period) (period)

CauseCause (worthy of commitment)(worthy of commitment)

SpaceSpace (room for/encouragement for initiative-(room for/encouragement for initiative-

adventures) adventures)

DecencyDecency (respect, grace, integrity, humane)(respect, grace, integrity, humane)

service service (worthy of our clients’ & extended (worthy of our clients’ & extended

family’s continuing custom) family’s continuing custom)

excellenceexcellence (period) (period)

servant servant leadership leadership

CauseCause

SpaceSpace

DecencyDecency

serviceserviceexcellenceexcellence

servant leadership servant leadership

THE SECRETS OF THE SECRETS OF EXCELLENCE VII: EXCELLENCE VII:

SERVANT SERVANT LEADERSHIP.LEADERSHIP.

““Leaders Leaders

‘‘SERVESERVE’’ people. people. Period.”Period.”

In the spirit of Robert Greenleaf, Robert Greenleaf, The Servant LeaderThe Servant Leader

EXCELLENCE AND ENTREPRENEURIAL ENTERPRISEEXCELLENCE AND ENTREPRENEURIAL ENTERPRISE AND HUMAN FREEDOM AND GROWTH:AND HUMAN FREEDOM AND GROWTH:

Individual freedom Individual freedom ++ Creative Creative education education ++ Entrepreneurial Entrepreneurial capitalism capitalism == Good service Good service ++

Good product Good product ++ Good people Good people ++ Good Citizenship Good Citizenship ++ Room to Room to

Experiment and Fail and Grow Experiment and Fail and Grow + + Commitment to Excellence Commitment to Excellence ++ Servant leaders Servant leaders == Maximum Maximum Profit Profit ++ Economic Growth Economic Growth ++ Realized Human Potential.Realized Human Potential.

EXCELLENCE.EXCELLENCE. CIRCA 1978. CIRCA 1978.CIRCA 1982.CIRCA 1982.CIRCA 1993.CIRCA 1993.CIRCA 1996.CIRCA 1996.CIRCA 2006.CIRCA 2006.

CIRCA 2004-2007.CIRCA 2004-2007.CIRCA 2007.CIRCA 2007.

CIRCA 15 OCTOBER 2007.CIRCA 15 OCTOBER 2007.

1978.1978.

Hard Is Soft (#Hard Is Soft (#ss))Soft Is Hard (people)Soft Is Hard (people)

““The 7-S Model”The 7-S Model”

StrategyStrategyStructureStructureSystemsSystems

StyleStyleSkillsSkillsStaffStaff

Super-ordinate goalSuper-ordinate goal

1982.1982.

Excellence1982: The Bedrock “Eight Basics”Excellence1982: The Bedrock “Eight 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 Properties” Properties”

““Breakthrough” 82*Breakthrough” 82*

People! People! CustomersCustomers

! ! Action! Action! Values! Values!

**In Search of ExcellenceIn Search of Excellence

ExIn*: 1982-2002/Forbes.com

DJIA: $10,000 yields $85,000$85,000 EI: $10,000 yields $140,050$140,050

*Forbes/Excellence Index /Basket of 32 publicly traded stocks

1993.1993.

$55$55BB

1996.1996.

““Forget Forget ChinaChina, , IndiaIndia and the and the

InternetInternet: Economic : Economic Growth Is Driven Growth Is Driven

by by WomenWomen.”.” —Headline,

Economist, April 15, 2006, Leader, page 14

2006.2006.

Why in Why in the the World did World did youyou go to go to SiberiaSiberia??

EnterpriseEnterprise* ** (*at its best):* ** (*at its best): An An emotionalemotional, , vitalvital, , innovativeinnovative, , jojoyyfulful, , creativecreative, , entreentreppreneurialreneurial endeavor endeavor that elicits maximum that elicits maximum

concerted humanconcerted human potential in the potential in the wholeheartedwholehearted serviceservice of others of others.****Employees, Customers, Suppliers, Communities, Owners, Temporary partners**Employees, Customers, Suppliers, Communities, Owners, Temporary partners

2004-2004-2007.2007.

“Better By Design”: A National Strategy

NZ = DesignNZ = Design ExcellenceExcellence

““We have to move up the value We have to move up the value chain and focus increased chain and focus increased

efforts on becoming a efforts on becoming a knowledge-based, knowledge-based,

entrepreneurial economy if we entrepreneurial economy if we are to prosper in the medium are to prosper in the medium to long term.”to long term.” —Tony Dromgoole, Chief —Tony Dromgoole, Chief

Executive, Irish Management InstituteExecutive, Irish Management Institute

Taiwan, Your Taiwan, Your Partner in Partner in InnoValueInnoValue

Poster/Bucharest/03.06

2007.2007.

Organizations exist to serve. Period.Organizations exist to serve. Period.Leaders live to serve. Period.Leaders live to serve. Period.

Passionate servant leaders, determined to Passionate servant leaders, determined to create a legacy of earthshaking transformation create a legacy of earthshaking transformation in their domainin their domain create/ must create/ must necessarilynecessarily create create

organizations which are … organizations which are … no less than no less than Cathedrals in which the full and Cathedrals in which the full and

awesome power of the awesome power of the Imagination and Spirit and Imagination and Spirit and

native Entrepreneurial flairnative Entrepreneurial flair of of diverse individualsdiverse individuals is unleashedis unleashed

… In passionate pursuit of jointly perceived … In passionate pursuit of jointly perceived soaring purposesoaring purpose and personal and community and personal and community

and client service Excellence. and client service Excellence.

… … no less than Cathedrals in no less than Cathedrals in which the full and awesome which the full and awesome

power of the Imagination power of the Imagination and Spirit and native and Spirit and native

Entrepreneurial flairEntrepreneurial flair of of diverse individualsdiverse individuals is is

unleashed in passionate unleashed in passionate pursuit of … Excellencepursuit of … Excellence..

16 16

OCTOBEROCTOBER2007.2007.

““Excellence can be obtained if you:Excellence can be obtained if you: ... care more than others think is wise; ... care more than others think is wise; ... risk more than others think is safe; ... risk more than others think is safe; ... dream more than others think ... dream more than others think is practical;is practical; ... expect more than others think ... expect more than others think is possible.”is possible.”

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