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This article explores the concept of excellence and its impact on long-term growth in the banking industry. It draws insights from Tom Peters' principles of excellence and highlights successful companies that have achieved growth through a focus on customer experience, employee engagement, and innovation.
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Tom Peters’ X25*EXCELLENCE. ALWAYS.13th Annual World Islamic Banking ConferenceKingdom of Bahrain.11 December 2006*In Search of Excellence 1982-2007
“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
S&P Stability Ratings*19852006Low Risk 41% 13%Average Risk 24% 14%High Risk35% 73%*Likelihood of stable long-term earnings growthSource: Fortune (2 October 2006)
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”—Charles Darwin
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.
Excellence1982: The Bedrock “Eight Basics” 1. A Bias for Action 2. Close to the Customer 3. Autonomy and Entrepreneurship 4. Productivity Through People 5. Hands On, Value-Driven 6. Stick to the Knitting 7. Simple Form, Lean Staff 8. Simultaneous Loose-Tight Properties”
X.06.23:Whole Foods Markets…Starbucks… Wegmans…Commerce Bank…John Laing Homes… Apple …London Drugs… Griffin Hospital/ Planetree Alliance … The Met School/Big Picture …Carl Sewell…Progressive Insurance… Stanford women’s sports … Stanford D-School … HSM … Washington Speakers Bureau … Build-A-Bear … RE/MAX … Donnelly’s Weather Strip Service … Jim’s Group…Cirque du Soleil … (U.S. Grant)…(Horatio Nelson)
“Our whole story is growing revenue.”—Vernon Hills (Top-line driven; standard is bottom-line driven by cost cutting)
Commerce Bank: From “Service” to “Experience”7X. 730A-800P. F12A.**’93-’03/10 yr annual return: CB: 29%; WM: 17%; HD: 16%. Mkt Cap: 48% p.a.
8,000 Radio City Music Hall… J.D. Power/Customer service/Bank/NYC/1st in 5 of 6; 2nd in #6 … Inspired by Ray Kroc … $36B ($100B in 6 years); +$750M per month/373 branches in 7 states/900 in 6 years … player piano … Penny Arcade/$25K per machine … 9M lollipops, 2M dog biscuits … stupid rule (red) button … call center not “cost center,” but opportunity/human by second operation … over-invest in real estate … design-experience fanaticism … Red!/Red Friday/Hot music … deposits available next day (vs ½ on 3rd; ½ on 5th; focus on 99%, not 1%)… LONG HOURS!!!! (7/week/12 hours/Fridays/15 minutes before) … “Do whacky things forcustomers” (VH) … “create magical moments of surprise and delight for employees” (VH) … “Hire for attitude. Train for skills.” (VH) … Chinatown/10K first day; 28K first week … Commerce U in ’93 (“underlying theme is fun”—VH)
“ … cut costs at most banks. ‘We have to push them out of the branches.’ ‘We have to push them to machines.’ We have to push them to the Internet.”Source: Vernon Hill
TP:Experience-Design … Top-line fanaticism (vs Cost-fanaticism) … Deposits … Drive ’em to the branch … Experience/Wow! … little touches … no stupid rules … Talent/Attitude/Recognition
The Power of WOW!How Commerce Bank Created a Super-Growth Business in a No-Growth IndustryVernon W. Hill, II
“Soft Skills, Hard Dollars”Source: Headline, BigBuilder, September 2006
“Builder of the Year”/Professional Builder… Experience … Communities/ Family values/ Relationships/After-sale “ …talk to our customers …” J.D. Power awards … Warranties … Price premiums … Design!!!! (all Divisions winners) (Top “names”) … Data/market research … Top company to work for … Team development … “I just love being a home builder.” (LW) … Brand … Emaar Properties* (Robert Booth/Int’l: “They have a tremendous focus on the customer, and that is hugely important to us.”) *Pay premium for Excellence. Invest for the longterm.
Jim’s Group:Jim Penman.* 1984: Jim’s Mowing. 2006: Jim’s Group. 2,600 franchisees (Australia, NZ, UK). Cleaning. Dog washing. Handyman. Fencing. Paving. Pool care. Etc.“People first.” Private. Small staff. Franchisees can leave at will. 0-1 complaint per year is norm; cut bad ones quickly.*Ph.D. cross-cultural anthropology; mowing on the sideSource: MT/Management Today (Australia), Jan-Feb 2006
*Focused on growth and revenue and “offense,” not defense and cost containment. *People-talent obsession. *Provide mind-bending experiences. (Driven by design primacy.) *Love affair with customers. *Happy to use words like “Wow.” *Pretty close to the high end of the market. [*Ability to make silk purses filled with gold out of sows’ ears: Wegmans-Whole Foods-Stew Leonard’s and groceries; Jim’s Group and dog-walking; Donnelly and weather strip installation; DeMar and plumbing.] *Execution!
“Every time we come to a comfort zone, we will find a way out.” “No Cloning.” “‘Reinvent the brand’ with each new show.” “A typical day at the office for me begins by asking,‘What is impossible that I am going to do today?’”—Daniel Lamarre, president, Cirque du Soleil
“I don’t believe in economies of scale.You don’t get better by being bigger. You get worse.”—Dick Kovacevich/Wells Fargo
“When asked to name just one big merger that had lived up to expectations, Leon Cooperman, former cochairman of Goldman Sachs’ Investment Policy Committee, answered:I’m sure there are success stories out there, but at this moment I draw a blank.”—Mark Sirower, The Synergy Trap
Spinoffs systematically perform better than IPOs … track record, profits … “freed from the confines of the parent … more entrepreneurial, more nimble”—Jerry Knight/ Washington Post/ 08.05
Measure “Strangeness”/Portfolio QualityStaffConsultantsVendorsOut-sourcing Partners (#, Quality)Innovation Alliance PartnersCustomersCompetitors (who we “benchmark” against)Strategic Initiatives Product Portfolio (LineEx v. Leap)IS/IT ProjectsHQ LocationLunch MatesLanguageBoard
“To grow, companies need to break out of a vicious cycle of competitive benchmarking and imitation.”—W. Chan Kim & Renée Mauborgne,“Think for Yourself —Stop Copying a Rival,” Financial Times/2003
try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. Try it. try it. Try it. Try it. try it. Try it.Try it. Try it. Try it. Try it.
“Experiment fearlessly”Source: BW0821.06, Type A Organization Strategies/ “How to Hit a Moving Target”—Tactic #1
“We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version#5.By the time our rivals are ready with wires and screws, we are on version #10.It gets back to planning versus acting: We act from day one; others plan how toplan—for months.”—Bloomberg by Bloomberg
“Rewardexcellent failures. Punishmediocre successes.”Phil Daniels, Sydney exec
“We will not, I repeat not, pretend to be ‘all things to all people.’”—CEO, Investec (03.06)
Private Equity-financed Firm, Best *Case*Focus! Focus! Focus!*In a [Big] hurry*CEO/Top team, “skin in the game”*CEO, 100% of time on the biz*Merit! Merit!*Motivated oversight*Worst case: Rape & Pillage