Long Excellence ! Tom Peters/16 August 2013 Institute of Internal Auditors/Orlando

LongLong

ExcellenceExcellence!!

Tom Peters/16 August 2013Tom Peters/16 August 2013Institute of Internal Auditors/OrlandoInstitute of Internal Auditors/Orlando

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

““At a party given by a billionaire At a party given by a billionaire on Shelter Island, Kurt Vonnegut on Shelter Island, Kurt Vonnegut

informs his pal, Joseph Heller, informs his pal, Joseph Heller, that their host, a hedge fund that their host, a hedge fund

manager, had made more money manager, had made more money in a single day than Heller had in a single day than Heller had earned from his wildly popular earned from his wildly popular novel novel Catch-22Catch-22 over its whole over its whole

history. Heller responds …history. Heller responds …

““At a party given by a billionaire on Shelter Island, Kurt Vonnegut At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller … that their host, a hedge fund informs his pal, Joseph Heller … that their host, a hedge fund

manager, had made more money in a single day than Heller had manager, had made more money in a single day than Heller had earned from his wildly popular novel earned from his wildly popular novel Catch-22Catch-22 over its whole over its whole

history. Heller responds …history. Heller responds … ‘Yes, but I ‘Yes, but I have something have something

he will never he will never have …have …

Source: John Bogle, Source: John Bogle, Enough. The Measures of Money, Business, Enough. The Measures of Money, Business, and Lifeand Life (Bogle is founder of the Vanguard Mutual Fund Group) (Bogle is founder of the Vanguard Mutual Fund Group)

At a party given by a billionaire on Shelter Island, Kurt Vonnegut At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller … that their host, a hedge fund informs his pal, Joseph Heller … that their host, a hedge fund

manager, had made more money in a single day than Heller had manager, had made more money in a single day than Heller had earned from his wildly popular novel earned from his wildly popular novel Catch-22Catch-22 over its whole over its whole

history. Heller responds … Yes, but I have something he will never history. Heller responds … Yes, but I have something he will never have …have …

enough.enough.

Source: John Bogle, Source: John Bogle, Enough. The Measures of Money, Business, and Enough. The Measures of Money, Business, and LifeLife (Bogle is founder of the Vanguard Mutual Fund Group) (Bogle is founder of the Vanguard Mutual Fund Group)

““Too Much Cost, Not Enough Value”Too Much Cost, Not Enough Value”““Too Much Speculation, Not Enough Too Much Speculation, Not Enough

Investment”Investment”““Too Much Complexity, Not Enough Simplicity”Too Much Complexity, Not Enough Simplicity”

““Too Much Counting, Not Enough Trust”Too Much Counting, Not Enough Trust”““Too Much Business Conduct, Not Enough Too Much Business Conduct, Not Enough

Professional Conduct”Professional Conduct”““Too Much Salesmanship, Not Enough Too Much Salesmanship, Not Enough

Stewardship”Stewardship”““Too Much Focus on Things, Not Enough Focus Too Much Focus on Things, Not Enough Focus

on Commitment”on Commitment”““Too Many Twenty-first Century Values, Not Too Many Twenty-first Century Values, Not

Enough Eighteenth-Century Values”Enough Eighteenth-Century Values”““Too Much ‘Success,’ Not Enough Character”Too Much ‘Success,’ Not Enough Character”

Source: Chapter titles from Jack Bogle, Source: Chapter titles from Jack Bogle, Enough. Enough.

““Managers have lost dignity over the Managers have lost dignity over the past decade in the face of wide spread past decade in the face of wide spread institutional breakdown of trust and institutional breakdown of trust and self-policing in business. To regain self-policing in business. To regain

society’s trust, we believe that society’s trust, we believe that business leaders must embrace a way business leaders must embrace a way

of looking at their role that goes of looking at their role that goes beyond their responsibility to the beyond their responsibility to the shareholders to include a civic and shareholders to include a civic and

personal commitment to their duty as personal commitment to their duty as institutional custodians. In other words, institutional custodians. In other words,

it is time that management became a it is time that management became a profession.”profession.” —Rakesh Khurana & Nitin Nohria, “It’s Time To Make —Rakesh Khurana & Nitin Nohria, “It’s Time To Make

Management a True Profession,” HBR/10.08Management a True Profession,” HBR/10.08

Really First Really First Things Before Things Before First ThingsFirst Things

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

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

18 …18 …

18 … 18 … secondsseconds!!

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

of of RespectRespect..Listening is ... the heart and soul of Listening is ... the heart and soul of EngagementEngagement..Listening is ... the heart and soul of Listening is ... the heart and soul of KindnessKindness..Listening is ... the heart and soul of Listening is ... the heart and soul of ThoughtfulnessThoughtfulness..Listening is ... the basis for true Listening is ... the basis for true CollaborationCollaboration..Listening is ... the basis for true Listening is ... the basis for true PartnershipPartnership..Listening is ... a Listening is ... a Team SportTeam Sport..Listening is ... a Listening is ... a Developable Individual SkillDevelopable Individual Skill.* .* (*Though women (*Though women are are farfar better at it than men.) better at it than men.)Listening is ... the basis forListening is ... the basis for CommunityCommunity..Listening is ... the bedrock of Listening is ... the bedrock of Joint Ventures that workJoint Ventures that work..Listening is ... the bedrock of Listening is ... the bedrock of Joint Ventures thatJoint Ventures that growgrow..Listening is ... the core of Listening is ... the core of effective Cross-functional effective Cross-functional CommunicationCommunication* * (*Which is in turn Attribute #1 of (*Which is in turn Attribute #1 of organization effectiveness.)organization effectiveness.)

[cont.][cont.]

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

IfIf you agree with the above, shouldn’t listening be ... a Core you agree with the above, shouldn’t listening be ... a Core Value?Value?If you agree with the above, shouldn’t listening be ... perhaps If you agree with the above, shouldn’t listening be ... perhaps Core Value #1?* Core Value #1?* (*“We are Effective Listeners—we treat (*“We are Effective Listeners—we treat Listening EXCELLENCE as the Centerpiece of our Commitment Listening EXCELLENCE as the Centerpiece of our Commitment to Respect and Engagement and Community and Growth.”)to Respect and Engagement and Community and Growth.”)If you agree, shouldn’t listening be ... a Core Competence?If you agree, shouldn’t listening be ... a Core Competence?If you agree, shouldn’t listening be ... Core Competence #1?If you agree, shouldn’t listening be ... Core Competence #1?If you agree, shouldn’t listening be ... an explicit “agenda item” If you agree, shouldn’t listening be ... an explicit “agenda item” at every Meeting?at every Meeting?If you agree, shouldn’t listening be ... our Strategy—per se? If you agree, shouldn’t listening be ... our Strategy—per se? (Listening = Strategy.)(Listening = Strategy.)If you agree, shouldn’t listening be ... the #1 skill we look for in If you agree, shouldn’t listening be ... the #1 skill we look for in Hiring (for every job)?Hiring (for every job)?

Suggested addition to your statement of Core Suggested addition to your statement of Core

Values: Values: “We are Effective “We are Effective Listeners—we treat Listening Listeners—we treat Listening

EXCELLENCEEXCELLENCE as the as the Centerpiece of our Centerpiece of our

Commitment to Respect and Commitment to Respect and Engagement and Community Engagement and Community

and Growth.”and Growth.”

Listen = “Profession” = Study

= practice = evaluation =

Enterprise value

““EverEveryyoneone has a has a story to tell, if only story to tell, if only

you have the you have the patience to wait for patience to wait for it and not get in the it and not get in the

way of it.”way of it.” —Charles McCarry,—Charles McCarry, Christopher’s GhostsChristopher’s Ghosts

““It’s amazing how this It’s amazing how this seemingly small thing— seemingly small thing—

simsimppllyy pa payyiningg fierce fierce attention to another, reallattention to another, reallyy

askinaskingg, reall, reallyy listenin listening,g, even durineven duringg a brief a brief

conversationconversation—can evoke —can evoke such a wholehearted such a wholehearted

response.”response.” —Susan Scott, —Susan Scott, Fierce Conversations: Fierce Conversations: Achieving Success at Work and in Life, One Conversation at a TimeAchieving Success at Work and in Life, One Conversation at a Time

““Let SilenceLet Silence Do the Heavy Do the Heavy Lifting”Lifting” —chapter title from Susan —chapter title from Susan

Scott, Scott, Fierce Conversations: Achieving Success at Work and in Fierce Conversations: Achieving Success at Work and in Life,Life,

One Conversation at a Time One Conversation at a Time

Really First Really First Things Before Things Before First ThingsFirst Things

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

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

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

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

same awareness?same awareness?

Really First Really First Things Before Things Before First ThingsFirst Things

XFX = XFX = #1#1**

*Cross-Functional *Cross-Functional eXcellence eXcellence

% XF % XF

lunches*lunches***MeasureMeasure!! Monthly! Part of Monthly! Part of

evaluation! [The PAs Club.]evaluation! [The PAs Club.]

Formal evaluations. Formal evaluations. EverEveryyoneone, , starting with the starting with the

receptionist, should have a receptionist, should have a sisiggnificantnificant XFX rating XFX rating

component in their component in their evaluation. (The “XFX evaluation. (The “XFX

Performance” should be Performance” should be among the Top 3 items in among the Top 3 items in

allall managers’ evaluations.) managers’ evaluations.)

““Success doesn’t depend on the number of Success doesn’t depend on the number of people you know; it depends on the number people you know; it depends on the number

of people you know in of people you know in hihigghh places!”places!”

oror

“Success doesn’t depend on the number of “Success doesn’t depend on the number of people you know; it depends on the number people you know; it depends on the number

of people you know in of people you know in lowlow places!” places!”

Loser:Loser: “He’s such a“He’s such a suck-up!” suck-up!”Winner:Winner: “He’s such a“He’s such a suck-down.” suck-down.”

George Crile George Crile (Charlie Wilson’s War)(Charlie Wilson’s War) on Gust on Gust

Avarkotos’ strategy:Avarkotos’ strategy: “He had “He had become something of a become something of a

legend with these legend with these ppeoeopple who manned the le who manned the

underbellunderbelly of the y of the Agency [CIA].”Agency [CIA].”

““I got to know his I got to know his [Icahn’s][Icahn’s] secretaries. They are always secretaries. They are always the keepers of everything.”the keepers of everything.”

—Dick Parsons, then CEO Time Warner,—Dick Parsons, then CEO Time Warner, on dealing with an Icahn threat to his company on dealing with an Icahn threat to his company

“Parsons is not a visionary. “Parsons is not a visionary. He is, instead, a master in He is, instead, a master in the art of relationship.”the art of relationship.”

—Bloomberg BusinessWeek (03.11)—Bloomberg BusinessWeek (03.11)

S = ƒ(#&DR; -2L, -3L, -4L, I&E)S = ƒ(#&DR; -2L, -3L, -4L, I&E)Success is a function of: Number and depth of relationships Success is a function of: Number and depth of relationships 2, 3, and 4 levels down inside and outside the organization2, 3, and 4 levels down inside and outside the organization

S = ƒ(SD>SU)S = ƒ(SD>SU)Sucking down is more important than sucking up—the idea Sucking down is more important than sucking up—the idea is to have the [your] entire organization working for youis to have the [your] entire organization working for you

S = ƒ(#non-FF, #non-FL)S = ƒ(#non-FF, #non-FL)Number of friends, number of lunches with people not in my Number of friends, number of lunches with people not in my function function

S = ƒ(#XFL/m)S = ƒ(#XFL/m)Number of lunches with colleagues in otherNumber of lunches with colleagues in otherfunctions per monthfunctions per month

S = ƒ(#FF)S = ƒ(#FF)Number of friends in the finance organizationNumber of friends in the finance organization

CaseCase

William Mayo, William Mayo, 19101910, on the Clinic’s , on the Clinic’s Two Core Values:Two Core Values:

Patient-centered carePatient-centered careTeam medicine Team medicine

(“medicine as a co-(“medicine as a co-operative science”)operative science”)

Source: Leonard Berry & Kent Seltman, “Orchestrating the Clues of Quality,” Chapter 7 from Source: Leonard Berry & Kent Seltman, “Orchestrating the Clues of Quality,” Chapter 7 from Management Lessons From Mayo ClinicManagement Lessons From Mayo Clinic

““I am I am hundreds of hundreds of times better heretimes better here [than[than

in my prior hospital assignment]in my prior hospital assignment] because of because of the support system. the support system. It’s like It’s like

yyou are workinou are workingg in an in an ororgganism; anism; yyou are not a ou are not a

sinsinggle cell when le cell when yyou are out ou are out there there ppracticinracticingg.”.” —quote from Dr. Nina Schwenk, in —quote from Dr. Nina Schwenk, in

Chapter 3, “Practicing Team Medicine,” from Leonard Berry & Kent Seltman, Chapter 3, “Practicing Team Medicine,” from Leonard Berry & Kent Seltman, from from Management Lessons From Mayo ClinicManagement Lessons From Mayo Clinic

Really First Really First Things Before Things Before First ThingsFirst Things

““If I could have chosen not to tackle the IBM culture head-If I could have chosen not to tackle the IBM culture head-on, I probably wouldn’t have. My bias coming in was toward on, I probably wouldn’t have. My bias coming in was toward

strategy, analysis and measurement. In comparison, strategy, analysis and measurement. In comparison, changing the attitude and behaviors of hundreds of changing the attitude and behaviors of hundreds of

thousands of people is very, very hard.thousands of people is very, very hard. [Yet] I came to see in my time at IBM that culture isn’t just one aspect of the game ——it is the gameit is the game.”.” ——Lou Gerstner, Lou Gerstner, Who Says Elephants Can’t DanceWho Says Elephants Can’t Dance

“… “… IT IT ISIS THE THE

GAME.”GAME.”

Systems Have Their Place SECOND PlaceSystems Have Their Place SECOND Place

Case #1/United States Air Force Tactical Air Command/ Case #1/United States Air Force Tactical Air Command/ GEN Bill Creech/“Drive bys” GEN Bill Creech/“Drive bys” Case #2/Milliken & Company/CEO Roger Milliken/the 45-Case #2/Milliken & Company/CEO Roger Milliken/the 45-minute grilling minute grilling Case #3/Johns Hopkins/Dr. Peter Pronovost/The (real) Case #3/Johns Hopkins/Dr. Peter Pronovost/The (real) roots of checklist power roots of checklist power Case #4/Commerce Bank/CEO Vernon Hill/The RED Case #4/Commerce Bank/CEO Vernon Hill/The RED button commitmentbutton commitmentCase #5/Veterans Administration/Abrogating the Case #5/Veterans Administration/Abrogating the “culture of hiding”“culture of hiding”Case #6/Mayo Clinic/Dr. William Mayo/Teamwork makes Case #6/Mayo Clinic/Dr. William Mayo/Teamwork makes me “100 times better”me “100 times better”Case #7/IBM/CEO Lou Gerstner flummoxed by ingrained Case #7/IBM/CEO Lou Gerstner flummoxed by ingrained beliefsbeliefsCase #8/Germany’s Mittelstand/excellence-in-the-genesCase #8/Germany’s Mittelstand/excellence-in-the-genesCase #9/Department of Defense/DASD Bob Case #9/Department of Defense/DASD Bob Stone/tracking down the extantStone/tracking down the extant ”Model Installation” ”Model Installation” superstarssuperstarsCase #10/Matthew Kelly/Housekeepers’ dreams Case #10/Matthew Kelly/Housekeepers’ dreams Case #11/Toyota/Growth or bustCase #11/Toyota/Growth or bust

Really First Really First Things Before Things Before First ThingsFirst Things

Meetings Meetings #1#1:: EverEveryy meetin meetingg that does not stir the that does not stir the

imaimaggination and curiosity of ination and curiosity of attendees and increase attendees and increase

bondinbondingg and co-o and co-opperation and eration and enenggaaggement and sense of ement and sense of worth and motivate raworth and motivate rappid id

action and enhance action and enhance enthusiasm is a enthusiasm is a ppermanentlermanentlyy

lost olost opppportunitortunity.y.

ExcellenceExcellence!!

Tom Peters/16 August 2013Tom Peters/16 August 2013Institute of Internal Auditors/OrlandoInstitute of Internal Auditors/Orlando

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

1.1.

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

Hard Hard [numbers, plans][numbers, plans] is Soft. is Soft.Soft Soft [people/relationships][people/relationships] is Hard. is Hard.

““Why in the Why in the World did youWorld did you

go to go to SiberiaSiberia?”?”

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

concerted humanconcerted human potential in thepotential in the wholehearted pursuit of wholehearted pursuit of EXCELLENCE inEXCELLENCE in serviceservice of others of others.**

**Employees, Customers, Suppliers, Communities, Owners, Temporary partners**Employees, Customers, Suppliers, Communities, Owners, Temporary partners

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

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

““Breakthrough” 82*Breakthrough” 82*

People! People! CustomersCustomers

! ! Action! Action! Values! Values!

**In Search of ExcellenceIn Search of Excellence

““The notion that corporate law The notion that corporate law requires directors, executives, and requires directors, executives, and employees to maximize shareholder employees to maximize shareholder wealth simply isn’t true. wealth simply isn’t true. There is no There is no

solid lesolid leggal sual supppport for the claim ort for the claim that directors and executives in that directors and executives in U.S. U.S. ppublic corublic corpporations have an orations have an

enforceable leenforceable leggal dutal dutyy to maximize to maximize shareholder wealthshareholder wealth. The idea is . The idea is

fable.”fable.” —Lynn Stout, professor of corporate and business law, —Lynn Stout, professor of corporate and business law, Cornell Law school, in Cornell Law school, in The Shareholder Value Myth: How Putting The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the PublicShareholders First Harms Investors, Corporations, and the Public

““Courts uniformly refuse to actually Courts uniformly refuse to actually impose sanctions on directors or impose sanctions on directors or

executives for failing to pursue one executives for failing to pursue one purpose over another. In particular, purpose over another. In particular, courts refuse to hold directors of courts refuse to hold directors of

public corporations legally public corporations legally accountable for failing to maximize accountable for failing to maximize

shareholder wealth.”shareholder wealth.” —Lynn Stout,—Lynn Stout, professor of corporate and business law, Cornell Law school, professor of corporate and business law, Cornell Law school,

in in The Shareholder Value Myth: How Putting Shareholders FirstThe Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public Harms Investors, Corporations, and the Public

““[a corporation] can be [a corporation] can be formed to conduct or formed to conduct or promote any lawful promote any lawful

business or purpose”business or purpose” —from Delaware corporate code (no mandate—from Delaware corporate code (no mandate

for shareholder primacy), for shareholder primacy), perper Lynn Stout, Lynn Stout, professor of corporate and business law, professor of corporate and business law,

Cornell Law school, in Cornell Law school, in The Shareholder Value Myth:The Shareholder Value Myth: How Putting Shareholders First Harms Investors, How Putting Shareholders First Harms Investors,

Corporations, and the PublicCorporations, and the Public

““On the face of it, On the face of it, shareholder value is the shareholder value is the

dumbest idea in the world. dumbest idea in the world. Shareholder value is a Shareholder value is a

result, not a strategy. … result, not a strategy. … Your main constituenciesYour main constituencies are are yyour emour empploloyyees, ees, yyour our

customers and customers and yyour our pproductsroducts.”.” —Jack Welch, —Jack Welch, FTFT, 0313.09, page 1 , 0313.09, page 1

2.2.

1/4,096: excellencenow.com1/4,096: excellencenow.com

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

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

worth worth doindoing.”g.”

——Richard BransonRichard Branson

Oath of Office:Oath of Office: Managers/Servant Leaders Managers/Servant LeadersOur goal is to serve our customers brilliantly and profitably Our goal is to serve our customers brilliantly and profitably overover the long haul.the long haul.Serving our customers brilliantly and profitably over the longServing our customers brilliantly and profitably over the long haul is a product of brilliantly serving, over the long haul, haul is a product of brilliantly serving, over the long haul, thethe people who serve the customer.people who serve the customer.Hence, our job as leaders—the alpha and the omega andHence, our job as leaders—the alpha and the omega and everything in between—is abetting the sustained growth everything in between—is abetting the sustained growth andand success and engagement and enthusiasm and commitment success and engagement and enthusiasm and commitment toto Excellence of those, one at a time, who directly or indirectlyExcellence of those, one at a time, who directly or indirectly serve the ultimate customer.serve the ultimate customer.

We—leaders of every stripe—are in the “Human Growth andWe—leaders of every stripe—are in the “Human Growth and Development and Success and Aspiration to ExcellenceDevelopment and Success and Aspiration to Excellence business.”business.”““We” We” [leaders][leaders] only grow when “they” only grow when “they” [each and every one of our colleagues][each and every one of our colleagues] areare growing.growing.““We” We” [leaders][leaders] only succeed when “they” only succeed when “they” [each and every one of our [each and every one of our colleagues]colleagues] are succeeding.are succeeding.““We” We” [leaders][leaders] only energetically march toward Excellence when only energetically march toward Excellence when “ “they” they” [each and every one of our colleagues][each and every one of our colleagues] are energetically marching are energetically marching toward Excellence.toward Excellence.Period.Period.

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

Promotion DecisionsPromotion Decisions

“life and “life and death death

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

““Development can help great Development can help great people be even people be even better—better—but if but if

I had a dollar to spend, I had a dollar to spend, I’d spend 70 cents I’d spend 70 cents getting the right getting the right

person in the doorperson in the door.”.” ——Paul Paul Russell, Director, Leadership and Development, GoogleRussell, Director, Leadership and Development, Google

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

asasppect of businessect of business and yet remainsand yet remains woefully woefully

misunderstoodmisunderstood..””

Source: Source: Wall Street JournalWall Street Journal, 10.29.08,, 10.29.08, review of review of Who: The A Method for Hiring, Who: The A Method for Hiring,

Geoff Smart and Randy StreetGeoff Smart and Randy Street

In the Army, In the Army, 33--star star ggeneralsenerals worry about worry about

training. In most training. In most businesses, it's a “ho businesses, it's a “ho hum” mid-level staff hum” mid-level staff

function.function.

The Memories The Memories That That MatterMatter..

The Memories That MatterThe Memories That Matter

The people you developed who went on toThe people you developed who went on to stellar accomplishments inside or outsidestellar accomplishments inside or outside the company.the company. The (no more than) two or three people you developed who went on The (no more than) two or three people you developed who went on toto create create stellar institutions of their own.stellar institutions of their own.The long shots (people with “a certain something”) you bet on whoThe long shots (people with “a certain something”) you bet on who surprised themselves—surprised themselves—andand your peers. your peers.The people of all stripes who 2/5/10/20 yearsThe people of all stripes who 2/5/10/20 years later say later say “You made a difference in my “You made a difference in my life,”life,” “ “Your belief in me changed everything.”Your belief in me changed everything.”The sort of/character of people you hired in general. (The sort of/character of people you hired in general. (And And the bad the bad apples you chucked out despite some stellar traits.)apples you chucked out despite some stellar traits.)A handful of projects (a half dozen at most) you doggedly pursued A handful of projects (a half dozen at most) you doggedly pursued thatthat still make you smile and which fundamentally changed the waystill make you smile and which fundamentally changed the way things are done inside or outside the company/industry.things are done inside or outside the company/industry. The supercharged camaraderie of a handful of Great Teams aiming The supercharged camaraderie of a handful of Great Teams aiming toto “ “change the world.”change the world.”

3.3.

Lesson47:Lesson47: WTTMSWTTMS

WW

WHOEVERWHOEVERTRIESTRIESTHETHEMOSTMOSTSTUFFSTUFFWINSWINS

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

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

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

versionversion ##55.. By the time our rivals are ready By the time our rivals are ready with wires and screws, we are on version with wires and screws, we are on version

##1010.. It It ggets back to ets back to pplanninlanningg versus actin versus acting: g: We act We act from day onefrom day one; ; others others pplan how lan how

toto p planlan——for monthsfor months.”.” ——Bloomberg by BloombergBloomberg by Bloomberg

““FAIL.FAIL. FORWARD. FORWARD.

FAST.”FAST.”High Tech CEO, Pennsylvania

In Search of ExcellenceIn Search of Excellence /1982: /1982: The Bedrock “Eight Basics”The Bedrock “Eight Basics”

1. 1. A Bias for ActionA Bias for Action2. Close to the Customer2. Close to the Customer3. Autonomy and Entrepreneurship3. Autonomy and Entrepreneurship4. Productivity Through People4. Productivity Through People5. Hands On, Value-Driven5. Hands On, Value-Driven6. Stick to the Knitting6. Stick to the Knitting7. Simple Form, Lean Staff7. Simple Form, Lean Staff8. Simultaneous Loose-Tight8. Simultaneous Loose-Tight Properties Properties

4.4.

LITTLE =LITTLE =

BIGBIG

Big carts =Big carts =

1.5X1.5XSource: Wal*MartSource: Wal*Mart

Bag sizes = New markets:Bag sizes = New markets:

$B$BSource: PepsiCoSource: PepsiCo

Glaring Eyes:Glaring Eyes:

-62%-62%Source: PLOS ONE (via Source: PLOS ONE (via The Atlantic CITIESThe Atlantic CITIES /0429.13) /0429.13)

5.5.

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

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

The “Hang Out Axiom”:The “Hang Out Axiom”: WE WE ARE ARE WHAT WE WHAT WE EAT/WE EAT/WE AREARE

THE COMPANYTHE COMPANY WE KEEPWE KEEP

The “We are what we eat”/ The “We are what we eat”/ “We are who we hang out with”“We are who we hang out with” Axiom: Axiom: At its core, At its core, evereveryy (!!!) (!!!)

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

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

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

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

2255

MBWMBWAA

Managing By Wandering Around/Managing By Wandering Around/HPHP

6.6.

Predictive Analytics: Predictive Analytics: The Power to The Power to

Predict Who Will Predict Who Will Click, Buy, Lie, or Click, Buy, Lie, or

DieDie —Eric Siegel—Eric Siegel

Big Data: A Big Data: A Revolution That Revolution That Will Transform Will Transform How We Live, How We Live,

Work, and ThinkWork, and Think——Viktor Mayer-Schonberger and Kenneth CukierViktor Mayer-Schonberger and Kenneth Cukier

Automate This: Automate This: How Algorithms How Algorithms

Came to Rule Came to Rule Our WorldOur World —Christopher —Christopher

SteinerSteiner

The Filter Bubble: The Filter Bubble: How the New, How the New,

Personalized Web Is Personalized Web Is Changing What We Changing What We Read and How We Read and How We

ThinkThink —Eli Pariser—Eli Pariser

Robot Robot FuturesFutures

——Illah Reza Nourbakhsh, Illah Reza Nourbakhsh, Professor of Robotics, Carnegie MellonProfessor of Robotics, Carnegie Mellon

Race AGAINST The Machine: Race AGAINST The Machine: How the Digital Revolution Is How the Digital Revolution Is

Accelerating Innovation, Accelerating Innovation, Driving Productivity, and Driving Productivity, and Irreversibly Transforming Irreversibly Transforming

Employment and the Employment and the EconomyEconomy —Erik Brynjolfsson and Andrew McAfee —Erik Brynjolfsson and Andrew McAfee

Legal industry/Pattern Legal industry/Pattern Recognition/Discovery (e-Recognition/Discovery (e-

discovery algorithms):discovery algorithms):

500500 lawyers to … lawyers to …

ONEONESource:Source: Race AGAINST the Machine, Race AGAINST the Machine, Erik Brynjolfsson and Andrew McAfeeErik Brynjolfsson and Andrew McAfee

““The root of our problem is notThe root of our problem is not that we’re in a Great Recessionthat we’re in a Great Recession

or a Great Stagnation, but ratheror a Great Stagnation, but rather that we are in the early that we are in the early

throes of a throes of a Great Restructuring. Our . Our

technologies are racing ahead,technologies are racing ahead, but our skills and organizationsbut our skills and organizations

are lagging behind.”are lagging behind.”Source:Source: Race AGAINST the Machine, Race AGAINST the Machine, Erik Brynjolfsson and Andrew McAfeeErik Brynjolfsson and Andrew McAfee

+400,000+400,000*/*/-2,000,000-2,000,000****“new computing technologies “new computing technologies

that destroy middle-class that destroy middle-class [white-collar] jobs even as they [white-collar] jobs even as they

create jobs for highly skilled create jobs for highly skilled workers who can exploit them”workers who can exploit them”

**ManufacturinManufacturingg jobs jobs addedadded USA 2007-2012 USA 2007-2012****WhiteWhite--collarcollar jobs jobs llostost USA 2007-2012USA 2007-2012

Source: Source: Financial TimesFinancial Times, page 1, 0402.13 , page 1, 0402.13 (“Clerical Staff Bears Brunt of US Jobs Crisis”)(“Clerical Staff Bears Brunt of US Jobs Crisis”)

”… ”… breakage of the historic link breakage of the historic link between value creation and job between value creation and job

creation”:creation”: “The median “The median worker is losing the race worker is losing the race against the machine.”/ against the machine.”/

Great Recession: “lack of Great Recession: “lack of hiring rather than hiring rather than

increase in layoffs”increase in layoffs”Source:Source: Race AGAINST the Machine, Race AGAINST the Machine, Erik Brynjolfsson and Andrew McAfeeErik Brynjolfsson and Andrew McAfee

““Algorithms have already written symphonies Algorithms have already written symphonies as moving as those composed by as moving as those composed by

Beethoven, picked through legalese , picked through legalese

with the deftness of a senior with the deftness of a senior law partner, diagnosed patients with more , diagnosed patients with more

accuracy than a accuracy than a doctor, written news , written news articles with the smooth hand of a seasonedarticles with the smooth hand of a seasoned reporter, and driven vehicles on urban , and driven vehicles on urban

highways with far better control than a human highways with far better control than a human driver.”.”

——Christopher Steiner,Christopher Steiner, Automate This: How Algorithms Came to Rule Our World

“ … “ … The audience then voted on The audience then voted on the identity of each composition.* the identity of each composition.*

[Music theory professor and [Music theory professor and contest organizer] Larson’s pride contest organizer] Larson’s pride took a ding when his piece was took a ding when his piece was

fingered as that belonging to the fingered as that belonging to the computer. When the crowd computer. When the crowd

decided that [algorithm] Emmy’s decided that [algorithm] Emmy’s piece was the true product of the piece was the true product of the

late musician [Bach], Larson late musician [Bach], Larson winced.” winced.” —Christopher Steiner, —Christopher Steiner,

Automate This: How Algorithms Came to Rule Our WorldAutomate This: How Algorithms Came to Rule Our World

*There were three: Bach/Larson/Emmy-the-algorithm.*There were three: Bach/Larson/Emmy-the-algorithm.

““Human level Human level capability has not capability has not turned out to be a turned out to be a special stopping special stopping

point from an point from an engineering engineering

perspective. ….”perspective. ….” Source: Illah Reza Nourbakhsh, Professor of Robotics, Carnegie Mellon, Source: Illah Reza Nourbakhsh, Professor of Robotics, Carnegie Mellon, Robot Robot

FuturesFutures

““[Michael Vassar/[Michael Vassar/MetaMedMetaMed founder] is creating a founder] is creating a better information system and new class of people to better information system and new class of people to

manage it. manage it. ‘Almost all healthcare people get ‘Almost all healthcare people get is going to be done—hopefully—by is going to be done—hopefully—by

algorithms within a decade or two.algorithms within a decade or two. We used We used to rely on doctors to be experts, and we’ve crowded them to rely on doctors to be experts, and we’ve crowded them into being something like factory workers, where their job into being something like factory workers, where their job is to see one patient every 8 to 11 minutes and implement is to see one patient every 8 to 11 minutes and implement

a by-the-book solution. a by-the-book solution. I’m talking about I’m talking about creating a new expert profession’—creating a new expert profession’—

medical quants, almost like hedgefund medical quants, almost like hedgefund managers, who could do the high-level managers, who could do the high-level

analytical work of directing all the analytical work of directing all the information that flows into the world’s information that flows into the world’s

hard drives.hard drives. Doctors would now be aided by Vassar’s Doctors would now be aided by Vassar’s new information experts who would be aided by advanced new information experts who would be aided by advanced

artificial intelligence.”artificial intelligence.”——New YorkNew York /0624.13 /0624.13

““Doctors struggle to keep up with a vast and Doctors struggle to keep up with a vast and growing body of research, much of which is growing body of research, much of which is

wrong. wrong. The result is that patients have a 50-50 The result is that patients have a 50-50 chance of getting the right treatment, and the chance of getting the right treatment, and the healthcare system itself has become a leading healthcare system itself has become a leading

cause of premature death, by some reports cause of premature death, by some reports ranking just behind cancer and heart diseaseranking just behind cancer and heart disease. .

Doctors are ill-equipped to analyze failed Doctors are ill-equipped to analyze failed methodology, much less to apply what good methodology, much less to apply what good

data there is to the needs of individual clients. data there is to the needs of individual clients. MetaMed will fill that gap. MetaMed co-founder MetaMed will fill that gap. MetaMed co-founder Michael Vasser says, ‘People don’t normally hire Michael Vasser says, ‘People don’t normally hire

domain experts in epistemology. It turns out domain experts in epistemology. It turns out that those skills are useful.’ ”that those skills are useful.’ ”

Source: Source: New YorkNew York /0624.13/on /0624.13/on MetaMedMetaMed

““A score produced by any predictive A score produced by any predictive model must be taken with a very special model must be taken with a very special grain of salt. Scores speak to trends and grain of salt. Scores speak to trends and probabilities across a large group; one probabilities across a large group; one

individual probability by its nature individual probability by its nature oversimplifies the real-world thing it oversimplifies the real-world thing it

describes. describes. If I miss a single credit-card If I miss a single credit-card payment, the probability I’ll miss another payment, the probability I’ll miss another this year may quadruple, based on that this year may quadruple, based on that factor alone. But if you also take into factor alone. But if you also take into

account that my roof caved in that account that my roof caved in that month, your view will changemonth, your view will change.”.” —Eric Siegel,—Eric Siegel,

Predictive Analytics: Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or DieThe Power to Predict Who Will Click, Buy, Lie, or Die

““Aviva, a large insurance firm, has studied the Aviva, a large insurance firm, has studied the idea of using credit reports and consumer-idea of using credit reports and consumer-

marketing data as proxies for the analysis of marketing data as proxies for the analysis of blood and urine samples for certain blood and urine samples for certain

applicants. The intent is to identify those who applicants. The intent is to identify those who may be at higher risk of illnesses like high may be at higher risk of illnesses like high

blood pressure, diabetes, or depression. The blood pressure, diabetes, or depression. The method uses lifestyle data that includes method uses lifestyle data that includes

hundreds of variables such as hobbies, the hundreds of variables such as hobbies, the websites people visit, and the amount of websites people visit, and the amount of

television they watch, as well as estimates of television they watch, as well as estimates of their income. Aviva’s predictive model, their income. Aviva’s predictive model, developed by Deloitte Consulting, was developed by Deloitte Consulting, was

considered successful at identifying health considered successful at identifying health risks.”risks.”

Source:Source: Big Data: A Revolution That Will Transform How We Live, Big Data: A Revolution That Will Transform How We Live, Work, and Think, by Viktor Mayer-Schonberger and Kenneth CukierWork, and Think, by Viktor Mayer-Schonberger and Kenneth Cukier

““Flash forward to dystopia. You work in a chic Flash forward to dystopia. You work in a chic cubicle, sucking chicken-flavor sustenance fromcubicle, sucking chicken-flavor sustenance from

a tube. You’re furiously maneuvering with a a tube. You’re furiously maneuvering with a joystick … Your boss stops by and gives you a joystick … Your boss stops by and gives you a

look. look. ‘We need to talk about your loyalty to this ‘We need to talk about your loyalty to this company.’company.’ The organization you work The organization you work

for has deduced that you are for has deduced that you are considering quitting. It predicts considering quitting. It predicts

your plans and intentions, pyour plans and intentions, possiblossiblyy before before yyou have even conceived ou have even conceived

themthem.”.” —Eric Siegel,—Eric Siegel, Predictive Analytics: The Power to Predict Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die Who Will Click, Buy, Lie, or Die (based on(based on

a real case, an HP “Flight risk” PA model developed by HR, with a real case, an HP “Flight risk” PA model developed by HR, with astronomical savings potential)astronomical savings potential)

““[These HP] pioneers may not realize just [These HP] pioneers may not realize just how big a shift this practice is from a how big a shift this practice is from a cultural standpoint. The computer is cultural standpoint. The computer is doing more than obeying the usual doing more than obeying the usual

mechanical orders to retain facts and mechanical orders to retain facts and figures. It’s producing new information figures. It’s producing new information that’s so powerful, it must be handled that’s so powerful, it must be handled with a new kind of care. We’re in a new with a new kind of care. We’re in a new world in which systems not onlydivine world in which systems not onlydivine new, important information, but must new, important information, but must carefully manage it as well.” carefully manage it as well.” —Eric Siegel,—Eric Siegel,

Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die (based on a real case, an HP “Flight risk” PA model developed by HR, (based on a real case, an HP “Flight risk” PA model developed by HR,

with astronomical savings potential)with astronomical savings potential)

““1-800-FLOWERS 1-800-FLOWERS improved its ability to improved its ability to

detect fraud by detect fraud by considering the social considering the social connections between connections between

prospective prospective perpetrators.”perpetrators.” —Eric Siegel,—Eric Siegel, Predictive Predictive

Analytics: The Power to Predict Who Will Click, Buy, Lie, or DieAnalytics: The Power to Predict Who Will Click, Buy, Lie, or Die

7.7.

14,00014,00020,00020,000

3030

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

3030/Craigslist/Craigslist

Dov Frohman:Dov Frohman: The “50% The “50% Rule” Rule” Dov Frohman:Dov Frohman: “Daydream!” “Daydream!”

8.8.

“I am often asked by I am often asked by would-be entrepreneurs would-be entrepreneurs seeking escape from life seeking escape from life within huge corporate within huge corporate structures, structures, ‘How do I build a small firm for myself?’ The answer The answer

seems obviousseems obvious … … Source: Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How

do I build a small firm for myself?’ The answer seems

obvious: BUY A VERY BUY A VERY LARGELARGE

ONE AND JUST ONE AND JUST WAITWAIT.”.” —Paul Ormerod, Why Most Things

Fail: Evolution, Extinction and Economics

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

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

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

the database, the worse thethe database, the worse theyy did did.”.” —Financial Times—Financial Times

MITTELSTANDMITTELSTAND* *** **

**“agile creatures darting between the legs of“agile creatures darting between the legs of the multinational monsters”the multinational monsters” ((Bloomberg BusinessWeek, Bloomberg BusinessWeek, 10.10)10.10)

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

THE RED THE RED CARPET CARPET STORESTORE

(Joel Resnick/Flemington NJ)(Joel Resnick/Flemington NJ)

Basement Systems Inc.

Motueka, New ZealandMotueka, New Zealand

Coppins Sea Coppins Sea Anchors*Anchors*

**PSA/Para-sea anchorsPSA/Para-sea anchorsSource: Source: Kia OraKia Ora/Air New Zealand magazine/Air New Zealand magazine

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

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

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

adventure in adventure in ‘‘shoshoppppertainmentertainment,’,’ as as Jungle Jim’s Jungle Jim’s calls it, begins in the parking lot calls it, begins in the parking lot and goes on to and goes on to 1,600 cheeses1,600 cheeses and, yes, and, yes, 1,400 varieties of 1,400 varieties of hot saucehot sauce —not to mention —not to mention 12,000 wines 12,000 wines priced from $8 to $8,000priced from $8 to $8,000 a bottle; all this is a bottle; all this is brought to you by brought to you by 4,000 vendors4,000 vendors.. Customers Customers come from every corner of the globe.” come from every corner of the globe.”

Bronner’s Christmas Wonderland, Bronner’s Christmas Wonderland, FrankenmuthFrankenmuth, , MichiMichigganan, pop 5,000:, pop 5,000: 98,000-square-foot98,000-square-foot “shop” features the likes of “shop” features the likes of 6,000 Christmas 6,000 Christmas ornaments, 50,000 trimsornaments, 50,000 trims, and anything else , and anything else you can name if it pertains to Christmas.you can name if it pertains to Christmas.

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

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

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

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

9.9.

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

EXCELLENCE EXCELLENCE isis … … THE NEXT FIVE THE NEXT FIVE

MINUTES.MINUTES.

Or not.