In Search of Excellence

"In Search of Excellence"

By Tom Peters and Robert Waterman

No “Best Business Books Ever” list would be complete without In Search of Excellence.Written by former McKinsey consultants Tom Peters and Bob Waterman and published in 1982, it was never intended to be a book. 

The authors were assigned to do a project on organization, structure and people. Peters travelled the world piecing together what he could about people and teams and their impact on organizations.  The study became a 700 slide deck. It was boiled down to eight attributes of excellent companies. In their book they featured 43 companies that met the authors’ standards of excellence.   

 Search has had its detractors, largely because not all of the 43 companies continued to do well.  But the point of the book isn’t that companies who do well today will always do well. It’s that if you do well at the eight attributes, you will do better than those who don’t.

Another point was that excellent companies were, above all, brilliant at the basics. Isn’t this true in every endeavor—entertainment, sports, backyard grilling? Strategy is 10 percent of the game, but get the basics right and you’re 90 percent there. Success is mostly about execution.

The third point, and it’s the reason we selected Search for “To Good to Be New,” is that companies still are struggling to get these basic attributes right. Thirty years later In Search of Excellence is relevant!

Here are the attributes. 

A bias for action. Although excellent companies may be analytical in their approach to decision making, they’re not paralyzed by it. In excellent companies the standard operating procedure is "Do it, fix it, try it." Promote organizational fluidity through management by wandering around, fast decision making, breaking problems down into manageable chunks, busting the bureaucracy and communicating intensely.  

“The nature and uses of communication in the excellent companies are remarkably different from those in their non-excellent peers,” the authors wrote. “The excellent companies are a vast network of informal, open communication.”

 Close to the customer. These companies learn from the people they serve. They provide unparalleled quality, service, and reliability—things that work and last. They succeed in differentiating. “The good news from the excellent companies is the extent to which and the intensity with which the customer intrudes into every nook and cranny of the business,” Peters and Waterman wrote. “All business success rests on something labeled a sale, which at least momentarily weds company and customer.” This is the foundation of Lean today—an obsessive focus on the customer.

Autonomy and entrepreneurship.  Innovative companies foster many leaders and many innovators throughout the organization. “They are a hive of champions. They’re a loose network of laboratories and cubbyholes populated by feverish inventors and dauntless entrepreneurs who let their imaginations fly in all directions." They encourage practical risk taking and support good tries. They follow Fletcher Byrom's ninth commandment: "Make sure you generate a reasonable number of mistakes."

Productivity through people. The excellent companies treat the rank and file as the root source of quality and productivity gain. They do not foster we/they labor attitudes or regard capital investment as the fundamental source of efficiency improvement.  “Thomas J. Watson, Jr., said of his company, ‘IBM's philosophy is largely contained in three simple beliefs. I want to begin with what I think is the most important: our respect for the individual.’”  This is a very simple concept but very difficult for most leaders to do well over the long run.

 Hands-on, value driven. This philosophy guides everyday practice - management showing its commitment. It was within this attribute that Peters and Waterman focused on the importance of linking people to a greater, nobler sense of purpose and on adopting a clear set of values that would in turn drive success—including financial success.

Stick to the knitting. Stay with the business that you know. Never acquire a business you don't know how to run. “We are almost apologetic for subjecting the reader to this onslaught of often arcane analysis. But with merger mania as prevalent as it is, it seems worthwhile to illustrate rather exhaustively the almost total absence of any rigorous support for very diversified business combinations.” That was 30 years ago.

 Simple form, lean staff.  Some of the best companies have a small number of people at their headquarters. The authors said along with bigness comes complexity. And most big companies respond to complexity in kind, by designing complex systems and structures. Then they hire more staff to keep track of all this complexity, and that’s where the mistake begins.

“Our favorite candidate for the wrong kind of complex response is the matrix organization structure,” the authors wrote.   You hear that, pharma?

 Simultaneous loose-tight properties. The excellent companies are both centralized and decentralized. For the most part they push autonomy down to the shop floor or product development team. On the other hand, they are fanatic centralists around the few core values they hold dear. In one of his later books, Tom Peters referred to this concept as guided autonomy.

 Review Written by Jim Shaffer, Leader, Jim Shaffer Group