39 members of the Class of 17 were alive in 87 18 in 87 F100 18
F100 survivors under-performed the market by 20% just 2 (2%), GE
& Kodak, outperformed the market Forbes100 from 1917 to
1987
Slide 5
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March 54,321 2002 255,260 Layoff Scenario
Slide 7
Number of Public and Private Chapter 11 Bankruptcies (in
thousands) 9.2 10.2 11 00 01 02 Estimated Source: Fortune, April
15, 2002
Slide 8
Fortune 500 Results (April 15, 2002) In 2001, 97 FORTUNE 500
companies reported losses, for a total of $148.5 billion In 2000,
53 FORTUNE 500 companies reported losses, for a total of $18.1
billion %Billions Revenues3.3$7,420 Profits-53.5$206 Deepest Dive
In 47 years of Fortune 500
Slide 9
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Industry Dominant Competitor Traditional Competitor Strategic
Innovator Airline American Delta, United, Northwest Southwest Car
Rental Hertz Avis, NationalEnterprise CoffeeMaxwell HouseFolgers,
Nescafe Starbucks TV NBC CBS, ABC CNN SteelUS Steel Bethlehem,
NationalNucor PhotocopierXerox IBM, Kodak, Ricoh Canon Source:
Markides, 2001
Slide 11
GE Powers Dramatic Change 1/2 Worlds Market In Power Generation
Equipment Acquired Nuovo Pignone Surround the Customer
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Moved into Supplying Services Moved into supplying equipment
Enlarged pond to $48 billion ExistingNew Existing New Customers
Needs A B D C $20 Billion $5-10 Billion $18 billion Moved into
Supplying Services Moved into supplying equipment Enlarged pond to
$48 billion
Slide 15
GE Power Systems 1998 pond is $700 billion 37 times as big as
the Market defined and served three years previously Existing New
Existing New Customers Needs A B D $700 Billion
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The Creosote Bush Drips poisonous oil, kills everything around
it Dominant microprocessor strategy was Intels creosote bush No
other businesses could sprout around it
Slide 20
Intel at Crossroads, Again?? Business Goes To New Heights
Business Declines Inflection Point Memory Chip Business
Microprocessors 1985 Valley of Death
Slide 21
Intel at Crossroads, Again?? Business Goes To New Heights
Business Declines Inflection Point Microprocessors Internet
appliances 1999 Valley of Death
Slide 22
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2 84% market in PC processors 2100% of profits 2 90% of
revenues 2Growth in Processor market slowing Down PC
Components
Slide 24
New Business Group New rules for funding new projects No more
tight budgets No more rigorous reviews of internal startups Similar
to venture-capital financing Launched about 25 seed projects Spent
more than $50 million on these projects
Slide 25
Information Appliances Move Intel into the home, somehow Screen
phones E-mail terminals TV set-top boxes
Slide 26
Communication Products Home Networking Broadband Modems
PC-based Telephony Server Appliances Ethernet Hubs Small Networking
Switches Specialized Servers for Web Traffic and speeding up
e-commerce
Slide 27
Networking Chips Fastest growing category among chips Used in
modems, network interface cards, switches, and routers Acquired a
lot of companies Level One Communications ($2.2 billion) NetBoost
($215 million) Softcom Microsystems ($149 million)
Slide 28
Web-hosting for clients (Citigroup) Vivonic: digital handheld
health planner PassEdge: technology for protecting digital content
Installing 3,000 information terminals on the back of seats of
Madison Square Garden Equip doctors with secure Ids to encourage
online medicine New Business Group
Slide 29
Sony In Troubled Waters Personal Computers Cell Phones Video
Games 3 of the Biggest Opportunities Where IS SONY? Where IS SONY?
DIGITAL ERA
Slide 30
The Playstation Dream Begins bought a Nintendo game for his
daughter sound was awful games were stored on magnetic
cartridges
Slide 31
KUTARAGIS BRIGHT IDEA Confident that the system could be vastly
improved Use storage system he developed for the Mavica Improve
processor speed
Slide 32
WHAT ABOUT SONY? No one at Sony shared Kutaragis enthusiasm for
the videogame business Kutaragi met with Nintendo instead Nintendo
liked Kutaragis suggestions Nintendo products a toy Threw a fit
when news leaked out Failure to realize potential of the product
Sonys President protected the project
Slide 33
Kutaragi seen as a traitor Kutaragi isolated within the company
Project moved to a different location Project Update
Slide 34
Sony had to convert to digital, information-based company
Transition bland business computers to a fun product Kutaragi
threatened to leave Sony Kutaragi promised to create a platform for
Sonys future growth Two years later Playstation released Tremendous
success Kutaragi became Head of Engineering What would Sony
Do?
Slide 35
Kutaragi becomes CEO of Sony Computer Entertainment Sony
releases PS2 Most profitable division within Sony Possibility of
the marriage between TV, Film, Computers, Music, and the Internet
Is PS2 a platform for Sonys future growth?
Slide 36
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1982: Provided online quote Provided trading services Vision:
Someday, everyone would own computers and invest through them with
unprecedented efficiency and control. 1992: Offered services
through AOL & Compuserve 1996: ww.etrade.com ww.etrade.com Meet
complex investing, banking, lending, & planning needs of
households across their entire financial cycle
Slide 38
Investing Stocks, Bonds, Options Mutual Funds Research Banking
Checking Savings CD Money Market Lending Mortgage Home Equity Loans
Auto Loans Credit Cards Plan & Advice Retirement College
Savings Asset Allocation Estate Planning Insurance
Slide 39
Serves 45 million per day 29,000 McDonalds 121 countries $40
Billion in 2000 Best known brands Undisputed fast food leader Stock
price is low Slow same store sales growth Europes mad-cow scare
Weak currencies New items disastrous Health-conscious
customers
Slide 40
Chi-chi coffees and desserts Cold Sandwiches FRESH ingredients
Diner Inside McTreat Reinvention! It is about Survival!
Slide 41
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Virgins Business Definition Challenge existing rules Give
customers a better break Be more entertaining Beat complacent
incumbents Culture is one of WHY NOT rather than WHY
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Worlds largest aircraft manufacturer Live internet connections
on passenger jets Air Traffic Control Systems using satellite
technology Aircraft Service Business Financing
Slide 46
SET UNREASONABLE EXPECTATIONS
Slide 47
Chryslers Minivan Baby Boomers Getting Older (With Growing
Families) Lifestyle changes (Soccer Moms) Space Problems Vans Were
Too Large (Commercial) Station Wagon Sales Were Falling Morphed
Pickup, Station Wagon, Passenger Car The Minivan was Born!!!The
Minivan was Born!!!
Slide 48
CNN 24 Hour News Changes in lifestyle longer and unpredictable
work hours Changes in Technology handicams and suitcase size
satellite linkups Changes in Regulatory Environment growth of cable
TV industry Changes in geopolitics interconnectedness of
economies
Slide 49
STRETCH YOUR BUSINESS DEFINITION You have to be either #1 or #2
to survive From the wellhead to the consumer What is our share of
the stomach? From cradle to grave
Slide 50
Segmenting the Market Continuously strive to break up a market
into smaller pieces VW with its Beetle Xerox and Ricoh Apple and
iMac Daimler-Benz and the Automobile Industry Saturn and the
Automobile Industry
Slide 51
THE LEADER innovates is an original is an original develops
develops focuses on people focuses on people inspires trust
inspires trust has a long-range perspective has a long-range
perspective asks what and why asks what and why has their eyes on
the horizon has their eyes on the horizon originates originates
challenges the status quo challenges the status quo is their own
person is their own person does the right thing does the right
thing THE MANAGER THE MANAGER administers is a copy is a copy
maintains maintains focuses on systems and structure focuses on
systems and structure relies on control relies on control has a
short-range view has a short-range view asks how and when asks how
and when has their eyes always on the bottom line has their eyes
always on the bottom line imitates imitates accepts the status quo
accepts the status quo is the classic good soldier is the classic
good soldier does things right does things right Leaders vs.
Managers
Slide 52
Why Grow? Imagination Energy Motivation Creativity Excitement
Commitment Maintain Status Quo = Beginning of the End
Slide 53
Innovation Venture Capitalist Thousands of business plans Drug
Industry 5,000 to 10,000 compounds Sea Turtles 1,000 eggs Human
Procreation 59,999,999 sperms
Slide 54
What should be done? Institutionalize experimentation Reward
excellent failures Punish mediocre success Facilitate and encourage
newer voices Creative destruction