StarwoodLeadership Forum

NYC20 June 2000

Tom Peters Seminar2000

Brand Everything:Distinct or Extinct!

Brand It! Now, More Than Ever!

“The increasing difficulty in differentiating between products and

the speed with which competitors take

up innovations will assist in the rise and rise of the brand.”

Gillian Law and Nick Grant, Management [New Zealand]

Brand Leadership!

“A key – perhaps the key – to leadership is the effective

communication of a story.”

Howard Gardner Leading Minds: An Anatomy of Leadership

“Corporate Religion is a completely new way of thinking about companies. Today, the product is still the main communication

highway in the company. When companies make the shift to selling solutions, brands and

attitudes … communicating the company’s attitudes and values

becomes the decisive parameter for success. It demands that you find out

who you are as a company.”Jesper Kunde, Corporate Religion

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

No Wiggle Room!

“Incrementalism is innovation’s worst

enemy.” Nicholas Negroponte

Just Say No …

“I don’t intend to be known as the ‘King of the

Tinkerers.’ ”CEO, large financial services company

(New York, 5-99)

“Change the rules before

somebody else does.”

Ralph Seferian, VP, Oracle

The [New] Ge Way

DYB.com

New Game!

L.A.D.T.I.R.S.*

*Life-and-death-total-industry-reinvention-struggles

Reinventing The Hospitality Industry!

Starwood Goes for It!

Brand Inside

Brand Org: Lean, Linked & Electronic

And Now the Equivalent …

White Collar Revolution!

Robert Reich on Sara Lee

“The most profitable businesses in the future will act as knowledge brokers, linking insights into what’s available

with insights into the customer’s individual needs

and preferences.”

“We want to be the air traffic controllers

of electrons.”Bob Nardelli,

GE Power Systems

Good Start

Starwood Preferred Guest

STARS/Starwood Technology and Revenue

Systems

Brand Inside

Brand Talent: The Great War for Talent

Issue Y2K

The Great War for Talent!

“When land was the scarce resource, nations battled

over it. The same is happening now for talented people.”

Stan Davis & Christopher Meyer, futureWEALTH

John Chambers “Gets it”!!

There is no “talent shortage” …

if …

you are a GPTW*

*Great Place To Work

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Brand Outside

The Commodity Trap

Quality Not Enough!

“While everything may be better, it is also increasingly

the same.”

Paul Goldberger on retail, “The Sameness of Things,” The New York Times

“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 Nordstrom and Jonas Ridderstrale, Funky Business

“When we did it ‘right’ it was still pretty

ordinary.”

Barry Gibbons on

“Nightmare No. 1”

The Character-less Hotel

Indistinguishable Rooms!/

Indistinguishable Staff!

Brand Outside

Strategy 1:

Lead the Customer!

“Wealth in this new regime flows directly from innovation, not

optimization. That is, wealth is not gained by perfecting the known,

but by imperfectly seizing the unknown.”

Kevin Kelly, New Rules for the New Economy

Amen!

“The Age of the Never Satisfied

Customer”Regis McKenna

Singapore Air: $18.5K/seat for entertainment systems

Peninsula NY: $17K/room on personal technology

Westin (Heavenly Bed) vs. Ritz Carlton (300 count Italian sheets)

vs. Four Seasons (mattress madness)

GE’s New Six Sigma Approach

Old view: Out of service 9 days. 4 days are transport, which is client

responsibility.

New view: ALL 9 DAYS ARE OUR RESPONSIBILITY! Why? 9 days =

Client’s World.Source: Steve Kerr, VP, GE

Fact:

You are responsible, in my mind,

for … THE TURNKEY TRAVEL EXPERIENCE … and I don’t discriminate among

who provides what.

Hotel in Las Vegas

MY STAY HAS BEEN LOUSY!

YOUR PROBLEM: A GROTESQUE START. To wit: 1 hour, 7 minutes in an airport cab line @ 10:30 P.M.

(1:30 A.M. EDT)

Brand Outside

Strategy 2:

Use E-Commerce

to Re-invent the Business!

???????

$35,000,000.

Dell’s Web sales … daily

Tomorrow Today: Cisco!

90% of $14.4B(Cisco Connection ONLINE)

Save $500M(service and tech support)

C.Sat e >> C.Sat HCustomer Engineer

Chat Rooms/Collaborative Design ($1B “free” consulting)

Lessons from Earth’s Richest Human

Everything [In & Out] via Internet

$1B in ’99-’00[on a cost base of $6B]

$1B in ’00-’01

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

Anne Busquet/ American Express

Not: “Age of the Internet”

Is: “Age of Customer Control”

“Where does the Internet rank in priority?

It’s No. 1, 2, 3, and 4.” Jack Welch

There are 2 Kinds of …

Defense*

vs.

Offense**

*Fend off upstarts.**Reinvent our marketspace!

Web Strategy: GE Power Systems

“Launch and Learn”(4 sites in 30 days)

“It’s better to be first with less than last with more. Success on

the Web isn’t just about time to market, it’s also about

‘time to learning.’ ”

Jeff Levy, eHatchery

Jargon Bath!

Bureaucracy free …Systemically integrated …

Internet intense …Knowledge based …

Time and location free …“Instantly” responsive …

Customer centric …Mass customization enabled.

Translation …

Bureaucracy free = Flat org, no B.S.Systemically integrated = Whole supply chain

tightly wired/ friction freeInternet intense = Do it all via the Web

Knowledge based = Open accessTime and location free = Whenever, wherever

“Instantly” responsive = Speed demonsCustomer centric = Customer calls the shotsMass customization enabled = Every product

and service rapidly tailored to client requirements

Brand Outside

Strategy 3:

Women Rule!

?????????

Home Furnishings … 94%Vacations … 92%

Houses … 91%Bank Account … 89%

Health Care … 75%Etc.

48% working wives > 50%80% checks

61% bills53% stock (mutual fund boom)

43% > $500K95% financial decisions/

29% single handed

$3.3T + $1.5T = $4.8T*

* Larger than Japan!

Yeow!

1970 … 1%

2002 … 50%

OPPORTUNITY

NO. 1!

Read This Book …

EVEolution: The Eight Truths of Marketing to Women

Faith Popcorn & Lys Marigold

The Difference Factor!

“Men and women don’t think the same way, don’t communicate the same

way, don’t buy for the same reasons.

“He simply wants the transaction to take place. She’s interested in creating a relationship. Every place women go,

they make connections.”

EVEolution: Truth No. 1

Connecting Your Female Consumers to Each

Other Connects Them to Your Brand

Weight Watchers International “Model”

“What if ExxonMobil or Shell dipped into their credit card database to help commuting women

interview and make a choice of car pool partners?”

“What if American Express made a concerted effort to connect up female empty-nesters

through on-line and off-line programs, geared to help women re-enter the workforce with today’s

skills?”

EVEolution

27 March 2000: email to TP from Shelley Rae Norbeck

“I make 1/3rd more money than my husband does. I have as much financial

‘pull’ in the relationship as he does. I’d say this is also true of most of my women

friends. Someone should wake up, smell the coffee and kiss our asses long enough

to sell us something! We have money to

spend and nobody wants it!”

Psssst! Wanna see my “porn”

collection?

Brand Outside

Strategy 4:

Design Rules!

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 Ogha

Design as Soul

“We don’t have a good language to talk about this kind of thing. In most people’s

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

Starwood

W

Brand Outside

Strategy 6:

It’s the Experience!

“Experiences are as distinct from services as services are from

goods.”Joseph Pine & James Gilmore, The

Experience Economy: Work Is Theater & Every Business a Stage

“The [Starbucks] Fix” Is on …

“We have identified a ‘third place.’ And I really believe that sets us apart. The third place is

that place that’s not work or home. It’s the place our

customers come for refuge.”Nancy Orsolini, District Manager

Experience: “Rebel Lifestyle!”

“What we sell is the ability for a 43-year-old accountant to dress in black leather, ride through small towns and have people be afraid

of him.”

Harley exec, quoted in Results-based Leadership

“Car designers need to create a story. Every car provides an

opportunity to create an adventure. …“The Prowler makes you smile. Why? Because it’s focused. It has a plot, a

reason for being, a passion.”

Freeman Thomas, co-designer VW Beetle; designer Audi TT

Hmmmm(?): “Only” Words …

StoryAdventure

Smile Focus

PlotPassion

PlotWilliams Sonoma = 6 [was 10]

Crate & Barrel = 8Sharper Image = 9+

Smith & Hawken = 8+Garnet Hill = 9

L.L. Bean = 5 [was 9+]Land’s End = 7+

Colonial Williamsburg = ?

Hotel World

Hotel Hell

No Fresh Air!Smoke Stink!

Polyester Blankets!Lousy Technology!

< 24 Hour Room Service!< 24 Hour Fitness Club!

Long check-in Line!No Taxis!

“Hotel Feel” [No Soul!]

“It was much later that I realized Dad’s secret. He gained respect by giving it. He talked and listened to the fourth-

grade kids in Spring Valley who shined shoes the same way he talked and listened to a bishop or a college

president. He was seriously interested in who you were and what you had to

say.”

Sara Lawrence-Lightfoot, Respect

“The deepest human need is

the ... NEED TO BE APPRECIATED.”

William James

Brand Outside

BRAND POWER!

Brand = You Must Care!

“Success means never letting the competition define you. Instead you have to define

yourself based on a point of view you care deeply about.”

Tom Chappell, Tom’s of Maine

“Create a Cause, not a ‘business.’ ”

Gary Hamel, Fortune (06.00), on re-inventing a company (Exemplar #1:

Charles Schwab)

Scott Bedbury/ Nike, Starbucks

“A Great Brand taps into emotions. Emotions drive most, if not all, of our decisions. A brand reaches out with a powerful connecting experience. It’s an

emotional connecting point that transcends the product.

“A Great Brand is a story that’s never completely told. A brand is a metaphorical story that

connects with something very deep - a fundamental appreciation of mythology.

Stories create the emotional context people need to locate themselves in a larger experience.”

Brand = Special = Passion = Plot =

Compelling Mythology = Cause = Connection = Caring

Rules of “Radical Marketing”

Love + Respect Your Customers!Hire only Passionate Missionaries!Create a Community of Customers!

Be insanely True to the Brand!

Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)

Reprise: Top Opportunities

Tech In & OutWomen (Etc.)Brand Power

=Reinvent “Hospitality

Business”

Part I: Brand InsidePart II: Brand Outside

Part III: Brand Leadership

Brand Leadership

Passion Rules!

“Leadership is a performance. You have to be

conscious of your behavior, because everybody else is.”

Carly Fiorina

Brand Leadership:ENTHUSIASM RULES!

“I am a dispenser of enthusiasm”/ Ben

Zander

“If things seem under control, you’re just

not going fast enough.”

Mario Andretti