World Innovation Forum

EVERYTHING YOU THOUGHT YOU KNEW

ABOUT INNOVATION IS WRONG

Tom Peters/New York/0524.2006/Inno.NEW.short.0524

World Innovation Forum: Alt Title

YOU ONLY FIND OIL IF YOU

DRILL WELLS

“In Italy for 30 years under the Borgias they

had warfare, terror, murder, bloodshed—and produced Michelangelo,

da Vinci and the Renaissance. In

Switzerland they had brotherly love,

500 years of democracy and peace, and what did they

produce—Source: Orson Welles, as Harry Lime, in The Third Man

—the cuckoo clock.”

Case: Perceived

Rommel invents Blitzkrieg.Germans kick the crap out of

the French in two weeks.Q.E.D.

Case: Lesson Learned

Planned innovation (P.I., not C.I.) is possible, is cool, is

effective. (Write it up. Publish.)

Case: RealityGermans cross Meuse into France.

Whoops: French intelligence completely drops the ball. (Loses track of the Germans—no kidding.)

Germans keep advancing; outrun supply lines; no land-air co-ordination.

Hitler orders advance stopped.General Guderian never gets the word.

Guderian marches to Paris, virtually unopposed.

Germans as shocked as French at what transpired.

After the fact, Germans label it “Blitzkrieg.”

Case: Lesson Learned

Do something.Get lucky.

Attribute luck to superior planning.

Get medals.*

*P-E-A-S-E read Fooled By Randomness: The Hidden Role Of Chance In Life And Markets, by Nassim Taleb

TP “Lessons Learned”

Innovation = DisDis (Disciplined Disorganization)

Luck is a very good thing.* **

(*More “lessons” later: E.g., If you hire a bunch of disciplined weirdos and try a lot of weird stuff, the odds of getting lucky go up remarkably.) (**Career success depends on convincing others that you knew what the hell you were doing all along. Good news: Say it long enough and you—and “they”—will believe it. Great news:

Keep saying it and you, too, can become a “guru.”)

Smashing Conventional Wisdom

“Blitzkrieg in fact emerged in a rather haphazard way from the experience of the French campaign,

whose success surprised the Germans as much as the French. Why otherwise did the High Command try on various occasions, with Hitler’s backing, to slow the panzers down? The victory in France* came about

partly because the German High Command temporarily lost control of the battle. The decisive moment in this process was Guderian’s decision to move immediately westward on 14 May, the day

after the Meuse crossing, wrenching the whole of the rest of the army along behind him.”

*messed up traffic, little close air support, random heroics by some small bits of Guderian’s forces, Guderian not a disciple of

the WWI-derived “strategy of indirect approach”

Source: Julian Jackson, The Fall of France

Lessons: Containerization

Need-drivenA thousand “parents”

MessyEvolutionary

“Trivial”Experimentation

Trial & ERRORLoooong time for systemic adaptation/s

(many innovations) (bill of lading, standard time)

Not …

“Plan-driven”The product of “Strategic Thinking/Planning”

The product of “focus groups”

First-level Scientific Success

FanaticismPersistence-Dogged Tenacity

Patience (long haul/decades)-Impatience (in a hurry/”do it yesterday”)

PassionEnergy

Relentlessness (Grant-ian)

EnthusiasmDriven (nuts!)

(Brutal?) CompetitivenessEntrepreneurialPragmatic (R.F!A.)

Scrounge (“gets” the logistics-infrastructure bit)

Master of Politics (internal-external)Tactical Genius

Pursuit of (Oceanic) Excellence!High EQ/Skillful in Attracting + Keeping Talent/Magnetic

Prolific (“ground up more pig brains”)

Egocentric

Sense of History-DestinyFuturistic-In the Moment

Mono-dimensional (“Work-life balance”? Ha!)

Exceptionally IntelligentExceptionally Clever (methodological shortcuts/methodological genius)

Luck

PREVIEW.

“It is not the strongest of the

species that survives, nor the most intelligent, but the one most

responsive to change.” —Charles Darwin

“The most successful

people are those who

are good at plan B.”

—James Yorke, mathematician, on chaos theory in The New Scientist

“We are in a brawl with

no rules.” —Paul Allaire

S.A.V.

Sam’s Secret

#1!

“Reward excellent failures.

Punish mediocre

successes.”Phil Daniels, Sydney exec

What “We” Know “For Sure” About Innovation

Big mergers [by & large] don’t workScale is over-rated

Strategic planning is the last refuge of scoundrelsFocus groups are counter-productive“Built to last” is a chimera (stupid)

Success kills“Forgetting” is impossible

Re-imagine is a charming idea“Orderly innovation process” is an oxymoronic phrase

(= Believed only by morons with ox-like brains)“Tipping points” are easy to identify … long after they will do you any good

“Facts” aren’tAll information making it to the top is filtered

to the point of danger and hilarity“Success stories” are the illusions of egomaniacs (and “gurus”)

If you believe the “cause & effect” memoirs of CEOs you should be institutionalized

“Herd behavior” (XYZ is “hot”) is ubiquitous … and amusing“Top teams” are “Dittoheads”

Statistically, CEOs have little effect on performance“Expert” prediction is rarely better than rolling the dice

Pathetic!

“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.

S&P 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

“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 large one and just wait.”

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

“Not a single company that qualified as having made a sustained transformation ignited its leap with a big

acquisition or merger. Moreover, comparison companies—those that failed to

make a leap or, if they did, failed to sustain it—often tried to make themselves great with a

big acquisition or merger. They failed to grasp the simple truth that while you can buy

your way to growth, you cannot buy your way

to greatness.” —Jim Collins/Time/2004

“Almost every personal friend I have in the world works on Wall Street. You can buy and sell the same company six times and everybody makes

money, but I’m not sure we’re actually

innovating. … Our challenge is

to take nanotechnology into the future, to do

personalized medicine …” —Jeff Immelt/2005

“I don’t believe in

economies of scale. You don’t get better by being bigger. You get worse.” —

Dick Kovacevich/Wells Fargo/Forbes/08.04 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%;

J.P. Morgan Chase, 0.9%)

Scale?

“Microsoft’s Struggle With

Scale” —Headline, FT, 09.2005

“Troubling Exits at Microsoft” —Cover Story, BW, 09.2005

“Too Big to Move Fast?” —Headline, BW, 09.2005

More than $$$$

#1 R&D spending,

last 25 years?

GM

“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

EXCELLENCE.

4/40.

4/40

De-cent-ral-iz-a-tion!

Ex-e-cu-

tion!

“Ninety percent of what we call

‘management’ consists of making

it difficult for people to get

things done.” – Peter Drucker

“Execution is the job of

the business leader.” —Larry Bossidy & Ram

Charan/ Execution: The Discipline of Getting Things Done

“Execution is a

systematic process of rigorously

discussing hows and whats, tenaciously following through, and

ensuring accountability.” —Larry Bossidy & Ram Charan/ Execution: The Discipline of Getting Things Done

“We have a ‘strategic plan.’ It’s

called doing things.” — Herb Kelleher

“This is so simple it sounds stupid, but it is amazing how few oil people really

understand that you only find oil if you drill wells. You may

think you’re finding it when you’re drawing maps and

studying logs, but you have to drill.”

Source: The Hunters, by John Masters, Canadian O & G wildcatter

“While many people big oil finds with big

companies, over the years about 80 percent of the oil found in the United States has been brought in by

wildcatters such as Mr Findley, says Larry Nation, spokesman for the American Association of Petroleum

Geologists.” —WSJ, “Wildcat Producer Sparks Oil Boom

in Montana,” 0405.2006

Ac-count-a-bil-ity!

“GE has set a standard of candor.

… There is no puffery. … There isn’t an ounce of

denial in the place.” —

Kevin Sharer, CEO Amgen, on the “GE mystique” (Fortune)

6:15A.M.

????????

Work Hard > Work Smart

FLASH!

Innovation

is easy!

“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

We become who we hang

out with!

Measure “Strangeness”/Portfolio Quality

StaffConsultants

VendorsOut-sourcing Partners (#, Quality)

Innovation Alliance PartnersCustomers

Competitors (who we “benchmark” against)

Strategic Initiatives Product Portfolio (LineEx v. Leap)

IS/IT ProjectsHQ LocationLunch Mates

LanguageBoard

“The Bottleneck

Is at the Top of the

Bottle”“Where are you likely to find people with the least diversity of

experience, the largest investment in the past, and the greatest reverence for industry dogma:

At the top!”

— Gary Hamel/Harvard Business Review

“Beware of the tyranny of making

Small Changes to Small

Things. Rather,

make Big Changes

to Big Things.”

—Roger Enrico, former Chairman, PepsiCo

Five MYTHS About Changing Behavior

*Crisis is a powerful impetus for change*Change is motivated by fear*The facts will set us free

*Small, gradual changes are always easier to make and sustain*We can’t change because our brains become “hardwired” early in life

Source: Fast Company/05.2005

Line Extensions:

86 percent of new

products. 62 percent of revenues.

39 percent of profit.

Source: Blue Ocean Strategy, Chan Kim and Renee Mauborgne

Innovation Index: How many of your Top 5 Strategic

Initiatives/Key Projects score 8 or higher (out of 10) on a

“Weird”/ “Profound”/ “Wow”/“Game- changer”

Scale?

EXCELLENCE. THE WORD.

Synonyms

PurityTranscendence

VirtueEleganceMajesty

Antonyms

Mediocrity

ExIn*: 1982-2002/Forbes.com

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

*Excellence Index /Basket of 32 publicly traded stocks

EXCELLENCE.

ALWAYS.

“Why in the world did you go to Siberia?”

The Peters Principles: Enthusiasm.

Emotion. Excellence. Energy. Excitement. Service. Growth.

Creativity. Imagination. Vitality. Joy. Surprise. Independence. Spirit. Community. Limitless human potential. Diversity. Profit. Innovation. Design.

Quality. Entrepreneurialism. Wow.

Business* ** (*at its best): An emotional, vital, innovative, joyful,

creative, entrepreneurial endeavor that elicits

maximum concerted human potential in the

wholehearted service of others.***

**Excellence. Always.***Employees, Customers, Suppliers, Communities, Owners, Temporary partners

Business: The Ultimate Creative

Endeavor.

Business: The Ultimate Personal

Development-Growth

Experience.

Business: The Ultimate

Transcendent Service

Opportunity.

EXCELLENCE.

BEDROCK.

Brand =

Talent.

Organizing Genius / Warren Bennis and Patricia Ward Biederman

“Groups become great only when everyone in them, leaders and

members alike, is free to do his or her absolute best.”

“The best thing a leader can do for a

Great Group is to allow its members to discover their

greatness.”

Leadership’s Mt Everest/Mt Excellence

“free to do his or her absolute best” …

“allow its members to discover their

greatness.”

“The role of the Director is to create a

space where the actor or actress can become more than they’ve ever been before, more than

they’ve dreamed of being.” —Robert Altman, Oscar

acceptance

Our Mission

To develop and manage talent;

to apply that talent,throughout the world,

for the benefit of clients;to do so in partnership;

to do so with profit.

WPP

EXCELLENCE.

LEADING.

Leadership23

Leadership23

1. Enthusiasm. Energy. Exuberance.2. Action. Execution.3. Tempo. Metabolism.4. Relentless.5. Master of Plan B.6. Accountability.7. Meritocracy.8. Leaders “do” people. Mentor. (“Success creation business.”)9. Women. Diversity.10. Integrity. Credibility. Humanity. Grace.11. Realism.12. Cause. Adventures. Quests.13. Legacy.14. Best story wins.15. On the edge. (“Wildest chimera of a moonstruck mind.”)16. “Reward excellent failures. Punish mediocre successes.”17. Different > Better. (“Only ones who do what we do.”)18. MBWA. Customer MBWA.19. Laughs.20. Repot. Curiosity. Why?21. You = Calendar. “To Don’t.” Two.22. Excellence. Always.23. Nelsonian! (“Other admirals more afraid of losing than anxious to win.”)

EXCELLENCE.

TRANSCENDENCE.THRILLS.

Insanely Great Language!

“Insanely Great.”

—Steve Jobs

Radically Thrilling Language!

“Radically Thrilling.”

—BMW Z4 (ad)

CTO**Chief Thrills Officer

Synonyms

PurityTranscendence

VirtueEleganceMajesty

Antonyms

Mediocrity

CTO**Chief Transcendence Officer

Gaspworthy!

CGM**Chief Gasp Master

CRO*

*Chief Revenue Officer

Inno.0524.06

What “We” Know “For Sure” About Innovation

Big mergers [by & large] don’t workScale is over-rated

Strategic planning is the last refuge of scoundrelsFocus groups are counter-productive“Built to last” is a chimera (stupid)

Success kills“Forgetting” is impossible

Re-imagine is a charming idea“Orderly innovation process” is an oxymoronic phrase

(= Believed only by morons with ox-like brains)“Tipping points” are easy to identify … long after they will do you any good

“Facts” aren’tAll information making it to the top is filtered

to the point of danger and hilarity“Success stories” are the illusions of egomaniacs (and “gurus”)

If you believe the “cause & effect” memoirs of CEOs you should be institutionalized

“Herd behavior” (XYZ is “hot”) is ubiquitous … and amusing“Top teams” are “Dittoheads”

Statistically, CEOs have little effect on performance“Expert” prediction is rarely better than rolling the dice

Parallel universe/Exec Ed v res MBAEnd run regnant powers/JKCFind done deals-practicing mavericks/ Stone-ReGoBell curves/2016 in 2006Non-industry benchmarkingEverything = PortfolioV.C.s all!Hot language/Wow-Astonish me-Insanely great-immortal-Make something greatLead customers/PW-EmbraerLead suppliers /Top decile R&DWeird alliancesMottos/Paul Arden (“Whatever You Think Think the Opposite”)Hire freaks/Enough weird people?Weird Boards!!!

CEO track record of Innovation (nobody starts at 45!)System/GE-Immelt“Strategic thrust overlay”CalendarBig Delta easier than Small DeltaMBWA with freaks-weirdos/JKCMBWA/Boonies’ labsV.C.-formal/IntelAcquire weirdChildren’s crusadeOld farts crusadeWomen’s crusadeGo Global at any sizeStop listening to customers Talent!/Unusual sources-Hire innovators-V.C.sEschew giant mergers

Remember: scale economies max out earlyAssisted suicide! (“Built to last” = Chimera-snare-delusion)Burn your press clippings“Forgetting” “strategy”Fire all strategic plannersTempo!Final product bears little relation to starting notionDesign! Design! Design! (“culture,” not program)All innovation: Pissed-off peopleGut feel rules!Focus groups suckWeird focus groups okayBe-Do philosophy

CelebrationsCulture-little as well as big Inno (“everyone-an-innovator”)Life = Wow ProjectsAcknowledge messiness-pursue serendipity (Blitzkrieg-Containers-Science-Jim Utterback)R.F.A.Culture of execution4/40: decentralization, execution, accountability, 615AMEVP (S.O.U.B.)/Systems-process “un-design”Diversity for diversity’s sakeWomen-Women-Women/customers (they “are the market,” not a “segment”)-leadersBoomers-Geezers (“all the money”)

CRO (Chief Revenue Officer) “culture”/top-line obsessedCIO (Chief INNOVATION Officer)LaughterFacility-space configurationExperiments-prototypes“Reward excellent failures. Punish mediocre successes.”Bizarrely high incentives (& penalties)We are what we eat/We are who we hang out with (E.g.: Staff-Consultants-Vendors-Out-sourcing Partners/#, Quality-Innovation Alliance Partners-Customers-Competitors/who we “benchmark” against -Strategic Initiatives -Product Portfolio/LineEx v. Leap-IS/IT Projects-HQ Location-Lunch Mates-Language-Board)

Stay Hungry.

Stay Foolish.

Steve Jobs