1 Excellence! Tom Peters’ Dignity Health 2017 Operations COO/CEO Retreat09 May/San Francisco (This presentation/10+ years of presentation slides at tompeters.com; also see our annotated 23-part Monster-Master at excellencenow.com) 1 1

2 Hello humankindness! Excellence: Tom Peters’ Dignity Health2017 Operations COO/CEO Retreat 09 May/San Francisco (This presentation/10+ years of presentation slides at tompeters.com; also see our annotated 23-part Monster-Master at excellencenow.com) 2 2

3 Happy National Nurses Week 2017!* *H-in-C [Healer-in-Chief]

4 Conveyance: Kingfisher AirLocation: Approach to New Delhi

5 clean your glasses, sir?”“May I clean your glasses, sir?”

6 “Courtesies of a small and trivial character are the ones which strike deepest in the grateful and appreciating heart.” —Henry Clay "Let's not forget that small emotions are the great captains of our lives." –—van Gogh

7 1/80* *Post-interview “Thank you” notes7

8 !!!!!! Small >>> Big

9 EXCELLENCE! 9 9

10

11 Joe J. Jones 1/3/39 – 3/23/17 Net Worth $21,543,672. 48. (Joe J. Jones 1/3/39 – 3/23/17 Net Worth $21,543,672.48* (*When the NYSE closed on 3/22/17)

12 “In a way, the world is a great liar.It shows you it worships and admires money, but at the end of the day it doesn’t. It says it adores fame and celebrity, but it doesn’t, not really. The world admires, and wants to hold on to, and not lose, goodness. It admires virtue. At the end it gives its greatest tributes to generosity, honesty, courage, mercy, talents well used, talents that, brought into the world, make it better. That’s what it really admires. That’s what we talk about in eulogies, because that’s what’s important. We don’t say, ‘The thing about Joe was he was rich!’ We say, if we can … 12

13 ‘The thing about Joe was he took good care of people.’”“ … We say, if we can … ‘The thing about Joe was he took good care of people.’” —Peggy Noonan, “A Life’s Lesson,” on the astounding response to the passing of journalist Tim Russert, The Wall Street Journal, June 21-22, 2008 13

14 EXCELLENCE is not a “long-term” "aspiration.”EXCELLENCE is the ultimate short-term strategy. EXCELLENCE is … THE NEXT 5 MINUTES.* (*Or NOT.) 14

15 EXCELLENCE is not an "aspiration." EXCELLENCE is … THE NEXT FIVE MINUTES. EXCELLENCE is your next conversation. Or not. EXCELLENCE is your next meeting. EXCELLENCE is shutting up and listening—really listening. EXCELLENCE is your next customer contact. EXCELLENCE is saying “Thank you” for something “small.” EXCELLENCE is the next time you shoulder responsibility and apologize. EXCELLENCE is waaay over-reacting to a screw-up. EXCELLENCE is the flowers you brought to work today. EXCELLENCE is lending a hand to an “outsider” who’s fallen behind schedule. EXCELLENCE is bothering to learn the way folks in finance [or IS or HR] think. EXCELLENCE is waaay “over”-preparing for a 3-minute presentation. EXCELLENCE is turning “insignificant” tasks into models of … EXCELLENCE. 15

16 Step Up To Creating/ Living/ Maintaining a Vibrant Culture16 16

17 Wall Street Journal: “What matters most to a company over timeWall Street Journal: “What matters most to a company over time? Strategy or culture?” Dominic Barton, Managing director, McKinsey: “Culture.” Ed Schein, MIT: “Culture eats strategy for breakfast.”

18 “If I could have chosen not to tackle the IBM culture head-on,I probably wouldn’t have. My bias coming in was toward strategy, analysis and measurement. In comparison, changing the attitude and behaviors of hundreds of 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 GAME.” —Lou Gerstner, Who Says Elephants Can’t Dance 18 18

19 “What’s remarkable is how fast a culture can be torn apart.”—top 3M scientist Source: “3M’s Innovation Crisis: How SixSigma Almost Smothered Its Idea Culture,” Cover story, BusinessWeek

20 “Starbucks had become operationally driven, about efficiency as opposed to the romance. We’d lost the soul of the company.” —Howard Schultz on Starbucks’ problems which caused Him to reclaim the CEO job (Shultz calls his association with Starbucks “a love story.”)

21 “Shareholders very seldom love the brands they have invested in“Shareholders very seldom love the brands they have invested in. And the last thing they want is an intimate relationship. They want measurability, increasing returns (always) and no surprises (ever). Imagine a relationship with someone like that! “No wonder so many brands lost the emotional thread that had led them to their extraordinary success and turned them instead into metric-munchers of the lowest kind. Watch for the sign: ‘Heads, not hearts, at work here.’ ” Source: Kevin Roberts, Saatchi & Saatchi, Lovemarks: The Future Beyond Brands

22 “The notion that corporate law requires directors, executives, and employees to maximize shareholder wealth simply is not true. There is no solid legal support for the claim that directors and executives in U.S. public corporations have an enforceable legal duty to maximize shareholder wealth. The idea is fable.” —Lynn Stout, professor of corporate and business law, Cornell Law school, in The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public

23 “On the face of it, shareholder value is the dumbest idea in the world“On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. … Your main constituencies are your employees, your customers and your products.” —Jack Welch, FT, , page 1

24 “1. The hard edge is easier to quantify. Under-emphasizing the Soft Edge “Far too many companies invest too little time and money in their soft-edge excellence. … The three main reasons for this mistake are: “1. The hard edge is easier to quantify. “2. Successful hard-edge investment provides a faster return on investment. “3. CEOs, CFO, chief operating officers, boards of directors, and shareholders speak the language of finance.” Source: The Soft Edge, Rich Karlgaard

25 “1. Soft-edge strength leads to greater Soft-Edge Advantages “1. Soft-edge strength leads to greater brand recognition, higher profit margins, … [It] is the ticket out of Commodityville. “2. Companies strong in the soft edge are better prepared to survive a big strategic mistake or cataclysmic disruption … “3. Hard-edge strength is absolutely necessary to compete, but it provides only a fleeting advantage.” Source: The Soft Edge, Rich Karlgaard

26 "When I was in medical school, I spent hundreds of hours looking into a microscope—a skill I never needed to know or ever use. Yet I didn't have a single class that taught me communication or teamwork skills—something I need every day I walk into the hospital.” —Peter Pronovost, Safe Patients, Smart Hospitals (Pronovost is the principal instigator of the checklist movement. FYI: Checklists virtually useless without massive culture change.)

27 Putting People [REALLY] First/ People Before Strategy27 27

28 “PEOPLE BEFORE STRATEGY”—Lead article, Harvard Business Review. July-August 2015, by McKinnsey MD Dominic Barton, Ram Charan, and Dennis Carey 28 28

29 “You have to treat your employees like customers.”—Herb Kelleher, Southwest Airlines, upon being asked his “secret to success” “If you want staff to give great service, give great service to staff.” —Ari Weinzweig, Zingerman’s, in Bo Burlingham’s Small Giants: Companies That Choose to Be Great Instead of Big “What employees experience, Customers will. The best marketing is happy, engaged employees. YOUR CUSTOMERS WILL NEVER BE ANY HAPPIER THAN YOUR EMPLOYEES.” —John DiJulius, The Customer Service Revolution: Overthrow Conventional Business, Inspire Employees, and Change the World 29 29

30 “Nobody comes home after a surgery saying, ‘Man, that was the best suturing I’ve ever seen!’ or ‘Sweet, they took out the correct kidney!’ Instead, we talk about the people who took care of us, the ones who co-ordinated the whole procedure—everyone from the receptionist to the nurses to the surgeon. And we don’t just tell stories around the dinner table. We share our experiences through conversations with friends and colleagues and via social media sites.” — Paul Spiegelman and Britt Berrett, PATIENTS COME SECOND: Leading Change By Changing the Way You Lead

31 Press Ganey Assoc: 139,380 former patients from 225 hospitals: NONE OF THE TOP 15 FACTORS DETERMINING PATIENT SATISFACTION REFERRED TO PATIENT’S HEALTH OUTCOME PSat directly related to Staff Interaction PSat directly correlated with Employee Satisfaction Source: Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel

32 —Richard Sheridan, Joy, Inc.: How We Built a Workplace People Love“It may sound radical, unconventional, and bordering on being a crazy business idea. However— as ridiculous as it sounds—joy is the core belief of our workplace. Joy is the reason my company, Menlo Innovations, a customer software design and development firm in Ann Arbor, exists. It defines what we do and how we do it. It is the single shared belief of our entire team.” —Richard Sheridan, Joy, Inc.: How We Built a Workplace People Love

33 Hiring 33 33

34 Conveyance: Southwest Airlines Location: Albany, NY; boarding flight to BWI34 34

35 “May I help you down the jetway. …”1/9,000 (!) “May I help you down the jetway. …” 35

36 “We look for ... listening, caring, smiling, saying ‘Thank you,’ being warm.” — Colleen Barrett, former President, Southwest Airlines 36

37 —Peter Miller, CEO Optinose (pharmaceuticals)“The ultimate filter we use [in the hiring process] is that we only hire nice people. … When we finish assessing skills, we do something called ‘running the gauntlet.’ We have them interact with 15 or 20 people, and everyone of them have what I call a ‘blackball vote,’ which means they can say if we should not hire that person. I believe in culture so strongly and that one bad apple can spoil the bunch. There are enough really talented people out there who are nice, you don’t really need to put up with people who act like jerks.” —Peter Miller, CEO Optinose (pharmaceuticals)

38 job interview. Observed closely: The use of “I” or “We” during aSource: Leonard Berry & Kent Seltman, chapter 6, “Hiring for Values,” Management Lessons From Mayo Clinic 38

39 “I am hundreds of times better here [than in my prior hospital assignment] because of the support system. It’s like you were working in an organism; you are not a single cell when you are out there practicing.’” —quote from Dr. Nina Schwenk, in Chapter 3, “Practicing Team Medicine,” from Leonard Berry & Kent Seltman, from Management Lessons From Mayo Clinic 39

40 —Leonard Barry & Kent Seltman, Management Lessons from Mayo Clinic"The personnel committees on all three campuses have become aggressive in addressing the issue of physicians who are not living the Mayo value of exhibiting respectful, collegial behavior to all team members. Some physicians have been suspended without pay or terminated.” —Leonard Barry & Kent Seltman, Management Lessons from Mayo Clinic

41 Leading 41 41

42 more than they’ve dreamed of being.”“The role of the Director is to create a space where the actors and actresses can become more than they’ve ever been before, more than they’ve dreamed of being.” —Robert Altman, Oscar acceptance speech 42 42

43 AND THE WINNERS AREN’T/AREWINNERS & LOSERS AND THE WINNERS AREN’T/ARE 43 43

44 “Mr. Foster and his McKinsey colleagues collected detailed performance data stretching back 40 years for 1,000 U.S. companies. They found that NONE of the long-term survivors managed to outperform the market. Worse, the longer companies had been in the database, the worse they did.” —Financial Times 44 44

45 AND THE WINNERS AREN’T/AREWINNERS & LOSERS AND THE WINNERS AREN’T/ARE 45 45

46 —Sixth Annual competition sponsored by Cintas Corporation, “AMERICA’S BEST RESTROOM” —Sixth Annual competition sponsored by Cintas Corporation, a supplier of restroom cleaning and hygiene products; from Retail Superstars: Inside the 25 Best Independent Stores in America, by George Whalin

47 “WE WANT THEM IN OUR STORES. ” 7X. 7:30A-8:00P. Fri/12A“WE WANT THEM IN OUR STORES.” 7X. 7:30A-8:00P. Fri/12A. 7:30AM = 7:15AM. 8:00PM = 8:15PM. (+2,000,000 dog biscuits) Source: Source: Fans! Not Customers. How to Create Growth Companies in a No Growth World, Vernon Hill with Bob Andelman 47

48 2,000,000

49 YESBANK* *Commerce Bank

50 of course— transferred the money“YESBANK”: “When we had a processing problem with MasterCard, it came to our attention that a customer couldn’t pay for their airline flights. A Metro Bank team member stepped in. She put the customer’s flights on her personal credit card so that the customer could still take advantage of a good deal, and later—with their permission, of course— transferred the money from their account.” Source: Fans! Not Customers. How to Create Growth Companies in a No Growth World, Vernon Hill with Bob Andelman

51 The Commerce/Metro Bank Model “COST CUTTING IS A DEATH SPIRALThe Commerce/Metro Bank Model “COST CUTTING IS A DEATH SPIRAL.” “OUR WHOLE STORY IS GROWING REVENUE.” Source: Fans! Not Customers. How to Create Growth Companies in a No Growth World, Vernon Hill with Bob Andelman

52 The Commerce/Metro Bank Model “ARE YOU GOING TO COST CUT YOUR WAY TO PROSPERITY? OR … ARE YOU GOING TO SPEND YOUR WAY TO PROSPERITY?” Source: Fans! Not Customers. How to Create Growth Companies in a No Growth World, Vernon Hill with Bob Andelman

53 “OVER-INVEST IN OUR PEOPLE, OVER-INVEST IN OUR FACILITIES.”

54 3. There are no other rules.Michael Raynor and Mumtaz Ahmed: THE THREE RULES: How Exceptional Companies Think*: 1. Better before cheaper. 2. Revenue before cost. 3. There are no other rules. (*From a database of over 25,000 companies from hundreds of industries covering 45 years, they uncovered 344 companies that qualified as statistically “exceptional.”) Jeff Colvin, Fortune: “The Economy Is Scary … But Smart Companies Can Dominate”: They manage for value—not for EPS. They get radically customer-centric. THEY KEEP DEVELOPING HUMAN CAPITAL.

55 Social Business/ Customer Engagement/ Customer Control/ “Brand Ambassadors”/ “Brand Assassins”/ Tweeting CEOs/ Etc./Etc. …

56 “IT TAKES 20 YEARS TO BUILD A REPUTATION AND 5 MINUTES TO RUIN IT.”Welcome to the Age of Social Media “The customer is in complete control of communication.” “What used to be “word of mouth” is now “word of mouse.” You are either creating brand ambassadors or brand terrorists doing brand assassination.” “IT TAKES 20 YEARS TO BUILD A REPUTATION AND 5 MINUTES TO RUIN IT.” Source: John DiJulius, The Customer Service Revolution

57 “Customer engagement is moving from relatively isolated market transactions to deeply connected and sustained social relationships. This basic change in how we do business will make an impact on just about everything we do.” Social Business By Design: Transformative Social Media Strategies For the Connected Company —Dion Hinchcliffe & Peter Kim

58 “I would rather engage in a Twitter conversation with a single customer than see our company attempt to attract the attention of millions in a coveted Super Bowl commercial. Why? Because having people discuss your brand directly with you, actually connecting one-to-one, is far more valuable—not to mention far cheaper!. … “Consumers want to discuss what they like, the companies they support, and the organizations and leaders they resent. They want a community. They want to be heard. “[I]f we engage employees, customers, and prospective customers in meaningful dialogue about their lives, challenges, interests, and concerns, we can build a community of trust, loyalty, and—possibly over time—help them become advocates and champions for the brand.” —Peter Aceto, CEO, Tangerine (from the Foreword to A World Gone Social, by Ted Coine & Mark Babbit) (FYI: See Peter Aceto’s book Weology.)

59 Going “Social”: Location/Size Independent River Pools and Spas/$5M/Warsaw VA “Today, despite the fact that we’re just a little swimming pool company in Virginia [Warsaw, VA], we have the most trafficked swimming pool website in the world. Five years ago, if you’d asked me and my business partners what we do, the answer would have been simple, ‘We build in-ground fiberglass swimming pools.’ Now we say, ‘We are the best teachers … in the world … on the subject of fiberglass swimming pools, and we also happen to build them.’” (Mktg: $250K-$20K) —Marcus Sheridan, in Jay Baer, Youtility: Why Smart Marketing Is About Help, Not Hype

60 10 August 2011: Apple > Exxon!D-Day/Design Day 10 August 2011: Apple > Exxon!

61 “We don’t have a good language to talk about this kind of thing“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 61

62 “Steve and Jony would discuss corners for hours and hours.”—Laurene Powell Jobs

63 —Rich Karlgaard, The Soft Edge“[Nest founder Tony Fadell] admitted, ‘Every business school in the world would flunk you if you came out with a business plan that said, Oh, by the way, we’re going to design and fabricate our own screws at an exponentially higher cost than it would cost to buy them. But these aren’t just screws. Like the thermometer itself, they’re better screws, epic screws, screws with, dare I say it, deeper meaning. Functionally, they utilize a specific thread pattern that allows them to go into any surface, from wood to plaster to thin sheet metal. And the [custom] screwdriver feels balanced to the hand; it has the Nest logo on it and looks ‘Nest-y,’ just like everything from Apple looks ‘Apple-y.’” —Rich Karlgaard, The Soft Edge

64 I believe that promise trumps fulfillment.“As a marketing executive, I view business as one of the greatest adventures of the human enterprise—if not the greatest. But I am not just a businessman: I am also an unapologetic romantic. I believe the world would be a better place if we had more romance in our lives. I believe that promise trumps fulfillment. I believe that emotion eats reason for breakfast. I am not a daydreamer, idealist, or social activist. I am a business romantic.” —Tim Lebrecht, The Business Romantic: Give Everything, Quantify Nothing, and Create Something Greater Than Yourself

65 LEADERSHIP “SOME STUFF”65 65

66 *Managing by Wandering AroundMBWA 25* *Managing by Wandering Around 66 66

67 “I’m always stopping by our stores— at least 25 a week“I’m always stopping by our stores— at least 25 a week. I’m also in other places: Home Depot, Whole Foods, Crate & Barrel. I try to be a sponge to pick up as much as I can.” —Howard Schultz Source: Fortune, “Secrets of Greatness” 67

68 FUN! 68 68

69 1 Mouth, 2 Ears

70 *Source: Jerome Groopman, How Doctors Think“The doctor interrupts after …* *Source: Jerome Groopman, How Doctors Think 70 70

71 18 … 71 71

72 18 … seconds! 72 72

73 [An obsession with] Listening is ... the ultimate mark of Respect.Listening is ... the heart and soul of Engagement. Listening is ... the heart and soul of Kindness. Listening is ... the heart and soul of Thoughtfulness. Listening is ... the basis for true Collaboration. Listening is ... the basis for true Partnership. Listening is ... a Team Sport. Listening is ... a Developable Individual Skill.* (*Though women are far better at it than men.) Listening is ... the basis for Community. Listening is ... the bedrock of Joint Ventures that work. Listening is ... the bedrock of Joint Ventures that grow. Listening is ... the core of effective Cross-functional Communication* (*Which is in turn Attribute #1 of organization effectiveness.) 73

74 Suggested Core Value #1: “We are Effective Listeners—we treat Listening EXCELLENCE as the Centerpiece of our Commitment to Respect and Engagement and Community and Growth.” 74 74

75 is notetaking—he has hundreds of notebooks.)Part ONE: LISTEN* (pp11-116, of 364) *“The key to every one of our [eight] leadership attributes was the vital importance of a leader’s ability to listen.” (One of Branson’s personal keys to listening is notetaking—he has hundreds of notebooks.) Source: Richard Branson, The Virgin Way: How to Listen, Learn, Laugh, and Lead

76 Acknowledgement!

77 “The deepest urge in human nature is the desire to be important“The deepest urge in human nature is the desire to be important.” —John Dewey “The deepest principle in human nature is the craving to be appreciated.” —William James 77

78 “Employees who don't feel significant rarely make significant contributions.” —Mark Sanborn78

79 2(A) 79 79

80 “Little” >> “Big”“THANK YOU” 80 80

81 CEO Doug Conant sent 30,000 handwritten ‘Thank you’ notes to employees during the 10 years [approx 10/day] he ran Campbell Soup. Source: Bloomberg BusinessWeek

82 2(B) 82 82

83 “I’M******************* SORRY”83 83

84 *PERCEPTION IS ALL THERE IS!THE PROBLEM IS RARELY/NEVER THE PROBLEM. THE RESPONSE TO THE PROBLEM INVARIABLY ENDS UP BEING THE REAL PROBLEM.* *PERCEPTION IS ALL THERE IS! 84

85 With a new and forthcoming policy on apologies … Toro, the lawn mower folks, reduced the average cost of settling a claim from $115,000 in 1991 to $35,000 in 2008—and the company hasn’t been to trial in the last 15 years! The VA hospital in Lexington, Massachusetts, developed an approach, totally uncharacteristic in healthcare, to apologizing for errors—even when no patient request or claim was made. In 2000, the systemic mean VA hospital malpractice settlement throughout the United States was $413,000; the Lexington VA hospital settlement number was $36,000 —and there were far fewer per patient claims to begin with.) Source: John Kador, Effective Apology

86 K = R = P (Kindness = Repeat business = Profit) (EXCELLENCE: Hard is soft. Soft is hard.)

87 “There is a misconception that supportive interactions require more staff or more time and are therefore more costly. Although labor costs are a substantial part of any hospital budget, the interactions themselves add nothing to the budget. KINDNESS IS FREE. Listening to patients or answering their questions costs nothing. It can be argued that negative interactions—alienating patients, being non-responsive to their needs or limiting their sense of control—can be very costly. … Angry, frustrated or frightened patients may be combative, withdrawn and less cooperative—requiring far more time than it would have taken to interact with them initially in a positive way.” —Putting Patients First, Susan Frampton, Laura Gilpin, Patrick Charmel (Griffin Hospital/Derby CT/Planetree Alliance) 87 87

88 K = R = P/Kindness = Repeat business = ProfitUnderstands that kindness to staff breeds kindness to others/outsiders. 88

89

90 BONUS 90 90

91 if he is learning new tricks all the time if he has a good disposition The local plumber or electrician does not provide a “commodity service” … if he knows his job if he is learning new tricks all the time if he has a good disposition if he shows up on time if he is neatly dressed if he has s spiffy truck if he cleans up so that the client could “eat off the floor” after he leaves if he volunteers to do a few tiny tasks outside the one at hand—gratis If he even goes so far as to create a blog with occasional posts featuring practical tips for his clientele—e.g., a tiny Virginia swimming pool company became a literal worldbeater adopting this social-media strategy

92 **ONE OR TWO ENTREPRENEURS—AND PERHAPS A VC. 10-Person BOARD OF DIRECTORS/Fit for the 2017 **AT LEAST TWO MEMBERS UNDER AGE 30. (Youth must be served/guide us at-the-top circa 2017—this is rare!!) **AT LEAST THREE WOMEN. (Boards with F-M balance lead to very high relative performance.) **ONE IT/DATA ANALYTICS/SOCIAL MEDIA SUPERSTAR. (Not an “IT representative,” but a Certified “Waterwalker” from, say, Google.) **ONE OR TWO ENTREPRENEURS—AND PERHAPS A VC. (The entrepreneurial bent must directly infiltrate the board.) **ONE PERSON OF STATURE WITH A “WEIRD” BACKGROUND—ARTIST, MUSICIAN, SHAMAN, ETC. (We need regular uncomfortable oddball challenges.) **A CERTIFIED “DESIGN GURU.” (Design presence at Board level is simply a must in my scheme of things.) **NO MORE THAN ONE-TWO OVER 60. (Too many Oldie Boards! Stop. NOW.) **NO MORE THAN THREE WITH MBAs. (Why? The necessity of moving beyond the emphases of the MBA-standard-predictable-linear-analytic-certified-vanilla model.) (Partial inspiration for this: Cybernetics pioneer W. ROSS ASHBY’S “LAW OF REQUISITE VARIETY.” The diversity of the Board should more or less match [be consistent with] the diversity [madness/2017] of the context/environment.)

93 “If I had to pick one failing of CEOs, it’s that … they don’t read enough.”