Project05

Project05
"PSFs" Are "Everything," CEOs Are Idiots,
MBAs Should Be Abolished, Lord Nelson Had
All the Answers, and More
Tom Peters Rants
Summer 2005
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e!paper X f D /38tompeters Es n UCopyright Info
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e!paper X f D 3/38tompeters Es n UContents
Here lies the mighty gentleman Intro/P05.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5who rose to such heights of valor
that death itself did not triumphover his life with his death.The PSF" Is Everything!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
He did not esteem the world; he was the frightening threat CEOs Are Idiots19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
to the world, in this respect, SE17: Origins of Sustainable Entrepreneurship. . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
to live a madman, and die sane. Re-Imagine Tomorrow's Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163for it was his great good fortune
Epitaph, Don Quixote The Nelson Baker's Dozen (and Admiral Fisher).. . . . . . . . . . . . . . . . . . . . . . . . . . . 168
New Economy, New Biz Degrees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
The Hunch of a Lifetime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
"C-Level/s: Revisited!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
e!paper X f D /38tompeters Es n UIntro/P05
More rants! Every now and again Ive had it! And the byproduct is a rant. Every
now and again I collect the written rants and foist them on you. This is one of
those times.
Ive been ranting about the PSF (Professional Service Firm) idea for over 10 years
(see Liberation Management, 1992). Nobody listened/is listening. (More or less.)
Arrogant as I know it is, I indeed believethe title of the keynote and longest rant in
this collectionthat the PSF Is Everything the answer to all our professional/eco-
nomic prayers!
2005. China. India. Outsourcing. Automation. White collar jobsat all pricesying
out the door. More to come! White collar security D.O.A.
Answer (there is only one!) ADD VALUE BY RECRUITING STUPENDOUS TALENT
AND THEN DEVELOPING AND APPLYING AND CONSTANTLY RE-IMAGINING CREATIVE
INTELLECTUAL CAPITAL.
Duh! That¶s what the best real PSFs have done for eonslaw rms, accountan-
cies, nancial advisors, real estate agents/agencies, PR and ad agencies, consultan-
cies. Now this idea must become universal for survivors. Anonymous Badge #129
in the Purchasing or Engineering or IS or HR Department in BigCo (or MediumCo,
for that matter) wont last out the day. Scott Adams (Dilbertian) cubicle slaves/ci-
phers/bedraggled & bitchy bureaucrats are DOOMED.
e!paper X f D /38tompeters Es n UAdd to the PSF Idea/Mix two other old friends Brand You, WOW Projects
and youve got the Survival Trifecta: Wow People (Brand Yous), WOW Work (WOW
Projects), Olympian Value Added (PSFs). Read about it. Implement it. On the one
hand, nothing new. On the other hand, more urgent than ever. And on the third
hand, still the exception to the rule. (And I do indeed contend that there are NO
OTHER VALID ANSWERS.)
I went to Portugal early in 2005. Addressed retail CEOs. Impolitely (understatement)
in somebody elses country, I called said CEOs idiots. I repeated myself 19 times.
Hence the CEOs Are Idiots19. Nothing new. But very compact & in your face. Read
it! Steal it! (See if you can piss off as many people as I did.)
And on it goes, ending with a plea for more bureaucracy, a rash of new C-Level
jobs that underscore the New Competitive Imperatives such as the CCO/Chief
Conversations Ofcer (all markets are conversations), the real CEO/Chief
Experiences Ofcer, and, yes (thanks, Kevin Roberts of Saatchi & Saatchi), the saintly
CLO/Chief Lovemarks Ofcer.
Read on
Tom Peters/West Tinmouth VT/07.25.2005
e!paper X f D /38tompeters Es n UThef"PSF"ff
IsfEverything!
(or:iMakingitheiProfessionaliServiceiFirmiai"Lovemark"ii
inianiAgeiofi"ManagediAssetiRefation")
i
Project05:iTomiPetersiRants
to r X s n U f Cmpetersie!papeProject0Thei"PSF"iIsiEverythingf
ThePSFbedrockconsists Itfisfnotfyourffather'sfworldf...
ofoneandonlyonething:
Superior,Animated, A billion (or so) Chinese knock at (pound on) our door. A foreign-owned factory is
CreativeTALENT opened in China every 26 minutes! A foreign-owned R&D laboratory is opened
dedicatedtoEXCELLENCE. in China every 43 hours! The Chinese are making baseball hats and luxury
yachts and discovering the new drugs that will save our lives while also, cer-
tainly, making this the Opening Gong of the Asian Century. Keep moving West.
Some 70 companies have achieved the highest quality certication in software
design, according to the gold-standard measure provided by the Carnegie Mellon
Software Institute. Thirty-ve of those companies come from India! Those of
us who are not Indian or Chineseand, to be sure, the Indians and Chinese them-
selvesare scrambling. Trying almost desperately to nd New Bases for Adding
Value, separating oneself from the herd-horde. And mores to come. Each day, it
seems, brings headlines like this one from the McKinsey Quarterly: Asias Next
Export: Innovation.* (*Go to your closest Borders or B&N betcha can-t nd a sin
gle book on how to run an R&D Lab. Does that seem as odd to you as it does to me?)
"The"fAnswer
Arrogant as it sounds, I think I have found the answer. (Or some part thereof.)
And it's been idling nearby all along! It is, in short, the Professional Service Firm.
PSFs, as I call them, sell one and only one thing: Creative Intellectual Capital.
(Always have!) (Always will!) PSFs depend on one and only one thing: Superb
Client Relationships. (Always have! Always will!) The PSF bedrock consists of
one and only one thing: Superior, Animated, Creative TALENT dedicated to
EXCELLENCE. (Always have!) (Always will!)
e!paper X f D 8/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
THEfPROFESSIONALfSERVICEfFIRM.f
The damned accountants.
The bloody consultants.
The bloodthirsty headhunters.
The aky ad types.
But now the PSF/PSF Idea/PSFfATTITUDE has become must become
EVERYTHING.
The dramatically changing global economy admits but one answer: More & More &
More Value Added. Fast. Value-added based on the development and deployment
of scintillating intellectual capital alone, as I see it, will make me/you/us better
than the next guy. (For a coupla days, anyway.) The answer: the PSF. That PSF
is that's right EVERYTHING! Such is the Fundamental Proposition Guiding
Hypothesis Irrevocable Axiom that Animates (& Justies) this paper.
* * * *
You quickly say, Grotesque overstatement. I say, Maybe. But heres my point:
In the last 10 years, weve been quite keen on a new pair of ideas, viewing
them as the answers to the likes of the Chinese and Indian competitiveness chal-
lenges. They are: 1. Accumulation & Deployment of Intellectual Capital. 2. Virtual
Organization.
Well, pardon me: What else is a PSF/Professional Service Firm if not on-the-y
Intellectual Capital, working in Hot Teams, Partnering with any Cool Talent they can
scrounge up, usually on the Client's Premises*? (*One sign of PSF excellence
e!paper X f D /38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
AN EMPTY OFFICE everybodys Out Making/Doing SuperCoolShit/SCS at the
Client's House!)
To be sure, there are good, bad, and indifferent PSFs. And they come XS, S, M, L,
XL, and recently XXL (think EDS, Accenture). Furthermore, I aim here to push this
PSF Idea way beyond its current incarnation, way up a ladder of value creation
toward Dynamic, Startling, Disruptive, Gasp-worthy Value-added. (Think Indias
Infosys.) (Americas Friedman Billings Ramsey.) (Or, oddly UPS.)
But the Core Idea will remain the PSF. Historically unstudied. Historically unloved.
And waiting, I think, to be discovered and hoisted upon a PLINTH that reaches
to the heavens.
AnfAfternoonfinf1990:fIDEOfRocks!
Oneisunnyiafternooniini1990i...
I journey a scant couple of blocks from my 555 Hamilton Avenue/Palo Alto of¿ce to
learn a bit more about one of my neighbors, David Kelley, head of David Kelley Design.
We spend a terri¿c afternoon together, and I am bowled over by the « ene-rgy, enthu
siasm, creativity, and playfulness I observe. At one point, though, David rounds on me,
allowing as how he was annoyed that "you McKinsey guys [I trained at McKinsey, years
before] take home big bucks for all your so-called 'strategic pronouncements,' while
we working stiffs [industrial designers] get, effectively, the leavings." That was about
15 years ago. What a change a decade-and-a-half makes! Today, David¶s ¿rm, now
IDEO, still takes award after award for industrial product design–but its claim to fame
increasingly is its ³strategic consulting´ role in helping giant companies of all Àavors
become more innovative & creative in general²become, more speci¿cally, more IDEO-
like. (I.e., more "PSF"-like!)
tersi e!paper X f D10/38tompe Es n UProject0Thei"PSF"iIsiEverythingf
IDEOs story is a marvelous tale of reinvention (or REfIMAGINATION) as I prefer
to call it), of Racing-Soaring Up The Value-Added Chain to make more & more (&
more) of its intellectual capital! IDEO.2005 is clearly at the Head Tableperhaps at
the Head Seat thereofin the burgeoning world of you guessed it
Professional Service Firms.
* * * *
Intriguingly to this line of argument, one of IDEOs biggest innovation-as-core-
competence Clients is Steelcase.
Steelcase.
Michigan.
(Midwest.)
(Industrial.)
Furniture maker.
(Manufacturer.)
You see, as I see it, IDEO itself a PSF (scrambling up the Value Added-Creativity
Game-changer Ladder), is helping Steelcase (Midwest, Manufacturer) become in and
of itself also a PSF!
NICE.
NutfCasefNo.1
You see, I am a professionalfserviceflrmfnut! It's what I do. And what Ive
done for over 30 years. Close to 40 years or more, if you count (as I DO) my days
tersi e!paper X f D11/38tompe Es n UProject0Thei"PSF"iIsiEverythingf
Thiswasthemoment, as engineering ofcer for a Navy Seabee battalion in Vietnam (the Seabee stands
givebutasecondortwo, for Construction Battalion, more formally). My contention, as clear as I can make it,
thattheAmericans is a simple one: The Professional Services are at the Epicenter of the Global Value-
werebeginningtoworry Added Revolution-Race for Survival. To understand the Creation of Economic
aboutOurProblem¨ Value, circa 2005 YOU MUST UNDERSTAND the ins, outs, and ethos of the
professional services.
OUTSOURCING.
Let me go even further: The Professional Services are EVERYTHING! We
ALL (would-be survivors) LIVE IN MUST EMBRACE IDEOs WORLD! (Even
manufacturer Steelcase.)
AfStoryfinfthefStraits Times
To understand my bold assertions contained herein we rst need to come to grips
with an apparently innocent story in Singapores leading newspaper, the Straits
Times. Well, actually, two stories in the Straits Times.
On my way to Australia, August 2003. Pass through Singapore. Pick up a copy of the
Straits Times, on August 18 to be precise. Front page, news section, story. Includes a
table:
One Singaporean worker costs as much as
3 in Malaysia
8 in Thailand
13 in China
18 in India
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
This was the moment, give but a second or two, that the Americans were begin-
ning to worry about Our Problem OUTSOURCING. Well, it turns out were far
from alone! Singapore achieved preeminent status in Southeast Asia over a period
of about a quarter of a century, becoming Southeast Asias place that worked.
Efciency! Operational excellence! That was their signature, which led to ex- cep
tional wealth accumulation for the small island and its energetic citizens. But now
Singapore was entering the real world. (New real world.) The giant neighbor next
door, the Chinese of course, were exing their muscles. And Singapore, in short,
needed DESPERATELY to FINDfAfNEWfACT. How, in a word (or three),
was Singapore going to add more value in an environment where the Malaysians
ThaisChineseIndians were increasingly doing, for far less per hour, what the
Singaporeans had gotten rich doing?
Skip ahead seven months. To 4 March 2004. Im back in Singapore.
And again I pick up a copy of the Straits Times. Segue back to that rst newspaper
article, the one that said that One Singaporean worker costs as much as, among
other things, eight in Thailand. Well, now in March 2004, Im reading about
Thailand. Because the Thais have a problem! Name thereof: China) Thailand makes
silk. (You knew that.) China makes silk. (Perhaps you didnt know that.) Chinese
silk and surely you could have guessed this is cheaper than Thai silk.
SofwhatfmustfThailandftryftofdo? Theres only one answer, of course: RACE UP
THE DAMNED VALUE-ADDED CHAIN! Hence the story that I read on 4 March 2004:
Thailands Prime Minister, a businessman, Thaksin Shinawatra, on the day before
had just opened "BangkokfFashionfCity." It's a monster facility that aims to
help make Thailand cool to create Thai LEADERSHIP IN FASHION! (Fashionf
=fCoolf=fValuefAdded.) Economists have a way of sterilizing everything. And
tersi e!paper X f D13/38tompe Es n UProject0Thei"PSF"iIsiEverythingf
they managed to sterilize this one, too. The PMs new economic approach (dubbed
Thaksinomics, after Reaganomics) amounted to what the local economists dubbed
"MANAGEDfASSETfREFLATION.f
Oddly enough, and you¶ll ¿nd out for better or for worse in the following pages, I fell
in love with that absurd term. Yes, I fell in love with … MANAGED ASSET REFLATION.
Because what it meant, in this instance, is that the Thais were hell-bent and deter-
mined to add "brand value" (or some such) to Thai textiles by demonstrating their
³Àair and design excellence,´ as that articSltrea iitsn Ttimhee s put it. Translation:
HOWfINfTHEfHELLfCANfWEfCHARGEfMOREfMONEYfFORfOURfSILKfINfAf
WORLDfWHEREfCHINESEfSILKfISfPRODUCEDfATfAfLOWERfCOST-PRICE?f
THEfONLYfANSWERfISf…fMAKEfITf"FASHIONABLE"f…fADDf"DESIGNf
EXCELLENCE"f…f"BRANDfEXCELLENCE"f…f"COOL."
(SCS.) (Seriously Cool Shit.)
Hint: And whose provenance is Adding Cool? Who are the Masters of Adding
Cool?
Answer:fPSFs)
Answers:fIDEO.fAdflrms.fEtc.
Right?
So "all this" is a "story," short and sweet, about "intellectual capital added" (brand val-
ue, design excellence, cool … in this instance). There's a special irony to this particular
story: Why was I back in Singapore in March 2004? Answer: to speak at Singapore's
(lrstfever)) "global branding conference," sponsored by the Singaporean government
and ad giant/PSF Ogilvy & Mather. The point of that conference is the point of this
paper: Singapore, as I observed earlier, needed to … Race Up The Value-Added Chain.
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
OneAndOnlyOneThing And the answer, at least in part, is becoming … BrandfSingapore, "Cool Singapore,
ADDENORMOUSVALUE or some such. Hence the conference.
THROUGHINCREASED
INTELLECTUAL/CREATIVE Senior Minister K.Y. Lee (former PM Lee), architect of Singapores awesome transfor-
CAPITAL. mation, addressed our group, and acknowledged that Singapore had achieved its ex-
alted status by becoming Southeast Asias hub of operational excellence. Singapore
does it right! (Or some such.) But he also acknowledged, the reason for his invitation
and presence at the conference, that Singapore, now, had to be and he almost
cringed as he said it "COOL." Thence the Brand Singapore conference.
NB 1: A world conference in Singapore 20 years before would have featured Dr.
Edwards Deming (Mr. Quality) and a parade of experts on operational efciency.
Who were the sorts of speakers at the conference I attended: DamefAnitafRoddick
(Body Shop), Narayana Murthy (Infosys), DeepakfChopra, Tom Kelley (brother of
David, expert on creating cultures of innovation.) (And me.)
NB 2: And the next time I passed through Singapore, I picked up the Straits Times
yet again, and discovered that the Singaporeans were celebrating because they had
just won hosting rights to the 2005 CyberGamefOlympics. And that, to them
(and to me, too), substantiated the momentum behind their movement in the direc-
tion of you guessed it COOL.
My reason for dwelling on the Thai and Singaporean stories is to suggest that the
Issue Im addressing in this paper is UNIVERSAL. All of us are scrambling
to do One And Only One Thing ADDfENORMOUSfVALUEf…fTHROUGHf
INCREASEDfINTELLECTUAL/fCREATIVEfCAPITAL. And I, of course, have my so-
lution: the Professional Service Attitude. fRemember: PSFf=fEVERYTHING.if
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
Think China.
Think Singapore.
Think Thailand.
Think India.
Think the United States.
(Think Singapore.)
(Think Thailand.)
Think outsourcing.
Think you.
Think me.
Think value added.
Think revolution.
(Think PSF.)
"Them":fCirquefdufSoleil
What constitutes a PSF winner?
Heres my list:
1. Audacity of vision.
2. Innovation/Insane commitment to R&D/Insane commitment to Design.
3. Relentless Talent Acquisition & Development."
4. INCREDIBLE experience."
5. Masters of Strategic Alliances."
6. Masters of Mundane Operations.
7. Financial Management!
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
8. Overall/Sustaining EXCELLENCE.
9. WOW!"
10. Lovemark! (More later!)
EXCELLENCE. Sometimes, I almost think I invented the word, along with Bob
Waterman, back in 1982, when we penned In Search of Excellence. It became
soooooooo much of a Hula Hoop that I shied away from the word excellence (un-
derstatement!) for almost 20 years. But now Im realizing how pivotal it is particu-
larly in a World where Exceptionalism must become our SIGNATURE. Or we
lose out to the Chinese-Indians (among others). And so Im ON THE PROWL for
EXCELLENCE.
And the/my winner is? The company/organization/PSF which embodies all 10 of
those ideas mentioned above?
Answer?
The Ultimate Professional Service Firm!
Montreal knows! I.e.: CIRQUEfDUfSOLEIL)
I am MESMERIZED by Cirque du Soleil. A CIRQUE DU SOLEIL
PERFORMANCE is MAGNIFICENT LIFE CHANGING!
(That's my take.)
tersi e!paper X f D17/38tompe Es n UProject0Thei"PSF"iIsiEverythingf
Isummarizeditwhen And then I think, ever so humbly (I hope), about me. A guy who makes speeches,
Ispoketothemwith who gets paid, truth be known, an insane amount of money for giving speeches. A
justthreewords:FOCUS. one-person PROFESSIONAL SERVICE FIRM. Do I have any right, any right at all, to
DIFFERENCE.CULTURE. perform in a fashion that is less extraordinary than CIRQUE DU SOLEIL?
* * * *
Final prep. Speech to 500 or so voice technology experts/SpeechTEK2005. I'mf
tryingftofgetfpumped. Two hours before game time. My nal act of preparation
before leaving my hotel room. Slip a DVD into my computer. What? One of my half
dozen or so Cirque du Soleil DVDs. I watch for only 5 or 10 minutes, then say to
myself (truly): "Youfowefthisfaudiencefnofless))" Call me the Cirque du Soleil of
Biz Speakers and youll make my year!
Back to that turgid economist¶s term Managed Asset Reation. (The savior of
Thailand?) Isnt the whole point CIRQUE DU SOLEIL? Doesnt Thailand aim to make
Thai silk, among other things the CIRQUE DU SOLEIL of SILK? Isnt that the
WHOLE IDEA? Isnt that the entire way that the entire Thai Economy is attempting to
transform itself? So, too, Singapore? So, too, the United States?
Yes, I admit it, I love CIRQUE DU SOLEIL. I love their performances. But mostly
I love them as METAPHOR. We must all become Cirque du Soleil. The
Ultimate PSF.
(Or die, professionally, trying.)
* * * *
tersi e!paper X f D18/38tompe Es n UProject0Thei"PSF"iIsiEverythingf
Think PSF, and most think accountants. Think PSF and I think THEfARTS)
Opera!
Theater!
Ballet!
They provide professional services."
Right?
Based solely on Creative Capital.
Right?
Their Signature is Creativity.
Right?
Their aim is WOW/Brand.
Right?
Their bedrock is their Roster (Towering Talent).
Right?
They are MMARs/Masters of Managed Asset Reation (think Ticket Prices).
Right?
You say Purchasing Department."
My Rorschach Answer: Cirque du Soleil!
MyfFavoritefTerm!
In this section we are going to talk (MORE) about PSFs. Specically, about
Professional Service Firms I have met. (And LOVED.)
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
FBRf
I made a speech last November. (2004.) I fell in love. (Again.) YES IfFELLfINf
LOVEfWITHfANfINVESTMENTfBANKINGfFIRM) Namely: Friedman Billings
Ramsey.
Who are they? A regional investment banking rm. (Washington, D.C., area.) And
suddenly the operative word is SUDDENLY they nd themselves among the
Top 10 investment bankers!
WHY? IN MY TERMS, THEY ARE A PSF WHO DARED TO BE DRAMATICALLY
DIFFERENT!
The truth is, and Im an old curmudgeon who isnt turned on easily, I was
TURNED ON by these guys. Their secret: THEYfAREfDIFFERENT. I summarized it
when I spoke to them with just three words: FOCUS. DIFFERENCE. CULTURE.
FOCUS. They know precisely what theyre up to! They have chosen to serve the
underserved middle market (mid-cap) companies. They have further chosen
to limit their approach to a relatively small number of sectors where they have
TRUE EXPERTISE. Their goal AND THIS IS IMPORTANT is enduring relationships
with companies that have the potential to be great. (You may call that pap, but I
call it AWESOME.*) (*I.e., they are investment bankers not aiming for the quick
take out, but instead, an enduring protable relationship.) They aim to MAKE
A DIFFERENCE. They aim to ADD EXCEPTIONAL VALUE. That's their FOCUS
MANTRA REASON FOR BEING. (Not unlike, to me CIRQUE DU SOLEIL.)
e!paper X f D0/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
As to this "DIFFERENCE"? They actually do have a different (proprietary)
analytic approach. They call it Unique Analytic Process. Or, Highly Disciplined
Fundamental Intrinsic Value Analysis.
I call it: THE REAL THING. Im an analyst by training been there, done that and
I know a phoney when I see it and the Real Thing when I see it. FBR looks at
things Dramatically Differently.
Youll hear more from me: DRAMATIC DIFFERENCE. A PSF that means something
Thrives On/Lives Off/Grooves On DRAMATIC DIFFERENCE!
And then theres the FBR CULTURE. These guys are ENTHUSIASTS! (I wasnt
born yesterday; I was born 62 years ago. I know ENTHUSIASM when I see it.
And I know, alas, even better, the absence thereof!) They dont live on Wall Street
and theyre proud of it; me too, for them. They live in a Different Place, they have a
DIFFERENT STORY.
My overriding point: FBR is to "Investment Banking" as … Cirque du Soleil is to
³entertainment.´ Both are ³professional service ¿rms.´ Both are « PHENOMENALLY±
DRAMATICALLY DIFFERENT.
Infosys
Did I tell you about my trip to JAPAN in July 2004? American management
guru is invited to Japan in the summer of 2004. He [me!] is to address a client
conference of the leaders of Japanese Industry. (THE REALLY, REALLY BIG GUYS.)
He (me!) is there, in the pay of WHAT ELSE an Indian information services com-
pany. If Cirque du Soleil is my favorite Professional Service Firm OVERALL, Infosys
e!paper X f D1/38tompetersi Es n UProject0Thei"PSF"iIsiEverythingf
may be my FAVORITE STANDARD PROFESSIONAL SERVICE FIRM. (Along with
FBR.)
These guys are amazing! Their Quest for Talent is Limitless! Their quest for
AWESOME VALUE ADDED is Limitless. A McKinsey mentor urged me to pay atten-
tion to Annual Reports. It's one of the few things, he said, that the CEO really puts
his Heart & Soul into. So Ive always taken him at his word, mostly to my benet.
Now I want to provide a short excerpt from the Chairmans Letter in the Infosys
Annual Report 2003. The extraordinaryfNarayanafMurthy talks about what
Professional Service Firms can be. In short: GAMECHANGERS!
So heres the quote from Chairman M: By making the Global Delivery Model
[Infosys prime product/promise] both legitimate and mainstream, we have brought
the battle to our territory. That is, after all, the purpose of strategy. We have be-
come the leaders, and incumbents [IBM, Accenture] are followers, forever playing
catch-up. However, creating a new business innovation is not enough for rules to be
changed. The innovation must impact clients, competitors, investors, and society. We
have seen all this in spades. Clients have embraced the Model and are demanding it
in ever greater measure. The acuteness of their circumstances, coupled with the ca-
pability and the value of our solution, has made the choice not a choice. Competitors
have been dragged, kicking and screaming, to replicate what we do. They face
trauma and disruption, but the game has changed forever. Investorsfhavefgraspedf
thatfthisfisfnotfafpassingffancy,fbutfafpotentialfrestructuringfoffthefwayfthef
worldfoperatesfandfhowfvaluefwillfbefcreatedfinftheffuture.
Perhaps youre a skeptic, a cynic. (Ordinarily I am, too.) But I think these guys are
the real deal. Will they achieve their Transforming Goal 100 percent of the time?
Of course not! And, fact is, I really dont care. What I care about is the: AWESOMEf
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NATUREfOFfTHEfCHALLENGEfTHATfTHEYfHAVEfLAIDfDOWN) They aim TO
CHANGE THE WORLD ...
ff"RESTRUCTURINGfOFfTHEfWAYfTHEfWORLDfOPERATES."i
Who could ask for more?
(Im not stupid. Im not arguing that Infosys is perfection, Cirque du Soleils peer. I
am arguing that I LOVE THE AUDACITY OF THIS TRANSFORMATIVE VISION. Im
also arguing hard, cold facts. It seems to be working for them. For example, dur-
ing the third quarter of 2004 Infosys, about a $1 billion company, reported revenue
growth of 52 percent, prot growth of 49 percent. NOT BAD, eh?)
DennisfInc.,forfHDfTalentfInc.:fAndfHe'sfWorthfIt!
He asked me to join him for breakfast at the Black Dog Caf in Vineyard Haven,
on Marthas Vineyard. I was intrigued and said Yes."
About 24 months later, while ying to London, I read that hed made $21fmillionf f
the prior year. That made him the second highest paid person at giant Home Depot
(behind Chairman Bob Nardelli @ $24M), and surely the highest paid HR Guy in
history.
Funny thing, I think he deserved it. And probably more!
Dennis Donovan, son of a Gardner, Mass., ironmonger, was a teammate of Nardellis
at GE, where he learned and practiced and mastered the absurdly effective GE Way
of developing people. When Nardelli went to Home Depot, he recruited DD to be his
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Mypoint:SIMPLE. EVP for HR. Home Depot had grown like Topsy. It was a great company, a vital
Oncemore:Itsnotyour behemoth behind only Wal-Mart; but to say it had less than great infrastructure is
fathersworld. understatement. And in the people arena the BigfHurt was on.
Denniss work is worthy of a book. But that's not the point here. The point THEf
POINT is that in most companies folks cringe when the HR person takes her
or his place at the table. At Home Depot they Genuect. In short, HR at HD is
no Cost Center. It arguably rivals or surpasses merchandising and systems as
the PremierfEnginefforfValuefAdded. In the language of this paper, Dennis
Donovan, per me, has created internally at Home Depot One of the Top Ten
Professional Service Firms on Earth. ITfISfTHATfSIMPLE)
HD Talent (Home Depot Talent, my term, not theirs) is "the" PSF that drives the
fBIGi joint! It is feared & revered & damn good at what it does.
Dennis Donovan is the HR guy who made $21 million. Hes worth it! To me, DD is
the guy who conrmed the value of an Internal PSF light years, entire galaxies,
beyond an effective department."
* * * *
This short tour, the warm-up act:
IDEO
Cirque du Soleil
FBR
Infosys
Dennis Donovan
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Stand-alone, Standard PSFs with a twist. (IDEO.) The Mother of All PSFs. (Cirque
du Soleil.) An investment banker exhibiting Dramatic Difference. (FBR.) A crazy
bunch of Indian game-changers. (Infosys.) A department that Leads with Cool.
(Dennis Donovan.)
ThefCasefWritfLarge
Considerii
Posting at Slashdot, February 2004, reported by Dan Pink: About a year ago, I
hired a developer in India to do my job. I pay him $12,000 to do the job I get paid
$67,300 for. He is happy to have the work. I am happy that I only have to work
about 90 minutes per day. (I still have to attend meetings myself, and I spend a few
minutes every day talking code with my Indian counterpart.) The rest of my time, my
employer thinks Im telecommuting. They are happy to let me telecommute because
my output is higher than most of my coworkers. Now Im considering getting a sec-
ond job and doing the same thing with it. That may be pushing my luck though. The
extra money would be nice, but that could push my work day over ve hours.
True?
Maybe.
Apocryphal?
Perhaps.
A symbol of the times?
No doubt.
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Headline:
New York Times, 13 June 2004.
Short on Priests, U.S. Catholics Outsource Prayer to Indian Clergy."
Im not Catholic, so I dont entirely understand Special Intentions. But I mostly
understand that they are a prayer for someone in need. At any rate, with the priest-
hood facing dire shortages of new recruits, some of those Special Intentions have
been OUTSOURCED. And the Indians are no fools! An Indian charges an Indian
$0.90 for a special intention prayer, but the price for Americans $5.00.
My point: SIMPLE. Once more: It's not your father's world. IBM peddles its personal
computer division to CHINA'S Lenovo. And then theres that new foreign factory
opened in China every 26 minutes, the new foreign R&D lab opened in China every
43 hours. And the response [in Thailand]: MANAGED ASSET REFLATION.
There is only one answer. It was the answer when the farm morphed into the factory,
the factory into the white-collar tower: MOVEfUPfTHEfDAMNEDfVALUE-ADDEDf
CHAIN)
Dan Muzyka is Dean of the Sauder School of Business at the University of British
Columbia. A focus on cost-cutting and efciency has helped many organizations
weather the downturn, Dean Muzyka writes, but this approach will ultimately ren-
der them obsolete. Only the constant pursuit of innovation can ensure a long-term
success. A few months ago, InterContinental Hotels Group red its CEO. The guy
was an accountant. He doubtless served his masters well in an era where cost-cut-
ting and operational efciency (remember Singapore) were paramount. But the game
changed. David Webster, the chairman, explained the ring: Were now entering a
new phase of business where the group will be a franchisingfandfmanagement
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company, where brand management is central. James Dawson, an analyst who
follows InterContinental, said about the same thing: InterContinental will now have
far more to do with brand ownership than hotel ownership.
My BIG ARGUMENT for the Preeminence/Ubiquity of the PROFESSIONAL
SERVICE FIRM IDEA is foreseen here. Whether it's Singapore or Thailand, the in-
vestment banking world (FBR) or an information systems consultancy (Infosys) or
the world of hotels (InterContinental), the story is: ADD VALUE BIGTIMEf...
OR DIE. (Professionally.)
ThefWhite-collarfTsunamifandfthef
ProfessionalfServicefFirmf("PSF")fImperative
They called me an IDIOT)
I said: "Ninetyfpercentfoffwhite-collarfjobsfasfwefknowfthemftodayf[whichf
aref90fpercentfoffallfjobsfinfthefdevelopedfcountries]fwillf'disappear'fand/
orfbef'reconlguredfbeyondfrecognition'fwithinf…f10ftof15fyears.f
Yes, they called me an idiot. And then Jack Welch left GE. And then Jeff Immelt
took over. And he gave his rst major press interviewBusinessWeek, with in early
2002. He told us that SEVENTY-FIVE PERCENT of admin, back-room, nance
jobs will be digitized in THREE YEARS. That is, Im an idiot for saying that 90
percent of white-collar jobs (which are 90 percent of all jobs) will be transformedbe-
yondmeasurein15years, and Jeff (THE MAN) says about the same thing BUTf
INfTHREEfYEARS.
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Nobody is immune! I'm not immune! "Online training" (WHO NEEDS PEOPLE?) is
usurping live bodies (ME!). And the lawyers are in trouble, too. My friend Mr. Pink
(author of Free Agent Nation and A Whole New Mind), trained as a lawyer, reminds us
that it costs about 3,000 bucks to go to a lawyer to get a divorce done. Yet virtually no
divorces are contended. (They are invariably "boiler-plate" divorces.) So now we have
… CompleteCase.com. Get a divorce, pay $249 … rather than $3,000. EASY CHOICE,
EH? USLegalForms.com. TurboTax.com. And (medical world) YourDiagnosis.com.
Let me be clear: NOBODY IS IMMUNE!
So whos going to take your job? Indians? Chinese? Microprocessors?
(Take your pick!)
Let's go back. AGAIN.
LETS CONSIDER HOW MOST PEOPLE SPEND THEIR WORKING LIVES. THEY ARE
WHITE-COLLAR EMPLOYEES. RIGHT? (RIGHT!)
SO
Allen (age 42) has but one child, daughter Sarah. She is the LOVE OF HIS LIFE.
She has a Show & Tell at school tomorrow. The topic: What does my Dad/Mom do?
And so, Dad comes home, after another days (grueling) work. And Sarah corners
him: Papa, what do you do?
Papa hesitates. Then he responds: "I'mfoverhead."
Or perhaps he says: I manage a cost center.
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Of course he doesnt say that! But IN EFFECT he does say that. Hes a serious
professional. He works hard. He cares about his family. He especially cares about
Sarah. But, truth be known, he is OVERHEAD. A COST CENTER.
And all Im suggestingand it's a BIG ALLis that DEAR DADDY (OF
SARAH) is in DEEPfDOGGYfDOO-DOO.
It's just not gonna work!
Therefhasftofbefmore)f
There has to be a better and more clearly dened VALUE-ADDED EQUATION!
Daddy MUST posthaste FIGURE OUT SOMETHING (BIG) DIFFERENT TO DO!
(And Ive got an answer!!)
IT'Sf("THE")fANSWER.
Daddy dearOUR DADDYused to be a COST CENTER. a BUREAUCRAT
OVERHEAD.
But now
BUTfNOWf…
But now DADDY! is YES: "ManagingfPartner,fHRf[IS,fetc.]fInc."
That is Daddy heads his own ta-da ...
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PROFESSIONALfSERVICEfFIRM)f
Let's segue to FRANK EICHORN. Frank is, well, the ultimate bureaucrat.
Consider: His job title is Director of Credit Risk Data Management Group at Wells
Fargo Home Mortgage. If that aint a bureaucrat, I dont know what is!
About a year ago the extraordinary, sophisticated software company SAS invited
me to speak to their users. (That means, for those of us who speak English,
CUSTOMERS.) I went to their Website, and found several case studies about the
transformations that they had contrived. One was our very own FRANK. Frank
Eichorn at Wells Fargo. And so this ULTIMATE BUREAUCRAT this Director of
Credit Risk Data Management Group at Wells Fargo Home Mortgage said: Typically
in a mortgage company or nancial services company, risk management is an
overhead, not a REVENUE CENTER. We have become more than that. WE PAY FOR
OURSELVES, AND WE ACTUALLY MAKE MONEY FOR THE COMPANY.
I FELL IN LOVE!
Fell in love with Frank Eichorn. And now Ive developed a series of FRANK
MANTRAS. That is, doing it Franks way:
f"EICHORNfIT)"f"WE'REfEICHORNING)f
Presumably, you "get the idea. That one is not/need not be a "mere" "Director of
Credit Risk Data Management Group at Wells Fargo," but one is/becomes a … NO BULL,
SCINTILLATING, SUPER-COOL, VALUE-ADDING PROFESSIONAL SERVICE FIRM MAVEN!
RIGHT?
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(This is important to me.)
(This should be important to you.) (As in professional LIFE or DEATH.) (Eh?)
(Thisfisfwhatflifef…fALLfLIFEf…fYOURfLIFEf…fMYfLIFEf…fisfabout.)f(Eh?)
EICHORNfIT)
(Are you EICHORNING?)
More. I spoke in 2002 to a human resources association that aims to get HR
ONLINE. I read an article in their journal by John Sullivan. He talks about: "eHR/PCC.
What the bloody hell does that mean? It means that … ALL … HR goes on the Web.
It means that "HR" "gives up" its "trivial pursuits" of bureaucratic stuff (the gang that
"just says 'no'") and focuses on becoming a … "Productivity Consulting Center.
REDUX:fIfLOVEfTHAT)
Reading John Sullivans story led me to imagine my own Model PSF. Namely:
1. Translate ALL Departmental Activities into discrete W.W.P.F. (Work Worth
Paying For) products.
2. 100 percent of said products go on the Web.
3. Non-awesome activities are outsourced. (90 percent?)
4. Remaining stuff gets organized as CENTERS OF EXCELLENCE which are
Retained and Leveraged TO THE HILT!
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It's a simple idea.
NO BULL.
Moreover: What choice do we have?
Turn what you do into VALUE-ADDEDfEXCELLENCE
Or else?
(RIGHT?)
What Organization?
In order to deal effectively with all this (Toms Magical PSF World remember) I
think we must rst come to terms with what the basic idea of organization will be
all about. (THATS WHAT I THINK!) (I wish it werent so tough. But it is.)
Consider Charles Handy. Charles is the guru to gurus in the UK. (And everywhere,
if you have but a grain of good sense.) Charles says: Organizations will still be criti-
cally important in the world, but as organizers, not as employers! When I went
to Nagano in the Summer of 2004 they called me a RADICAL. Heres what I said
(you be the judge): I said that I imagined myself as the CEO of a $10 billion, global
pharmaceutical company. This company had one FTE [Full-Time Employee].
Namely ME. That is, I would organize this global concern, but I would ship out
the R&D to the best-of-the-best Biotech-startups. I would ship out the marketing to
the members of the Club called BigPharma. Etc.
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Idecidedacoupleofyears That is THE WHOLE POINT OF THIS EXERCISE. Ifimaginedfmyselffasfafone-per-
agothatorganizations sonf"PSF"f…fwhofwasf"OrganizingfthefWholefDamnfThing"fwhilefallowingf
wereNOTWHATTHEY thef…f"BEST-OF-THE-BEST"ftofdofthef"restfoffthefwork." To add fuel to the
HADBEEN.Theywerenot re, I noted that I am a Forrest Gump fan: Dont own nothin if you can help it. If
¨enterprisestodostuffas you can, rent your shoes.
wedalwaysknown.² Admission. I was hired to do this gig by Infosys, an Indian company whod hired an
"American management guru. But nonetheless, I spoke the truth (as I see it) when
I said: Not outsourcing. Not offshoring. Not nearshoring. Not insourcing. But
'BESTfSOURCING.'"
That is THIS IS WHAT I AIM TO SAY:
IfINTENDf…fNOfBULLf…fNEVERfAGAINfTOfWORKf…fWITHfANYONEf…fWHOf
ISfNOTf…fBESTfINfWORLDf…fATfWHATfTHEYfDO.f
Okay?
* * * *
IfWANT:
To be a GreatfPSF.
(One person is ne.)
To be an Infosys Chief (recall Narayana Murthy) GAME-CHANGER.
I am to ally with KILLERfTALENT. (Best-in-world.)
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Add KillerfValue.
I Tom Peters the Cirque du Soleil of Whatever.
One-man PSF. World beater.
* * * *
The future belongs to Small Populations who build Empires of the Mind."
–Juan Enriquez
The Heart of Celera[Genomics] is powered by a Dozen Great Minds."
–Juan Enriquez
* * * *
The point: NOT THAT IM RIGHT."
The point: WE NEED (ALL OF US) TO THINK THIS WAY!
And if we do: THE PSF IS FRONT & CENTER!?
fPSFf=fEVERYTHING.fQ.E.D.i
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