Archives: September 2007

"Systems Thinking" and Me: Never the Twain Shall Meet

I just read a major article on Bill Clinton's new approach to philanthropy. It is profit-based. (Stuff, to get imbedded in day-to-day life, has to be based on sound economics.) I applaud that. The problem I had was that Clinton's principal associate is Ira Magaziner, the same "intellectual" who was the schemer-in-chief behind "Hillary care" in 1993.

Years ago, in my McKinsey days, one of my bosses was bemoaning the help we were getting from an "economic genius." He said, "Tom, consider a matrix. One axis boils down to 'simplifier' vs 'complexifier.' The other is 'smart' and 'dumb.' Thus we are dealing with a 2X2 matrix. The analyst-from-heaven is the 'smart simplifier.' The analyst-from hell is 'smart complexifier.' He is, in fact, worse that the 'dumb complexifier,' who you can simply ignore, and the 'dumb simplifier' who might actually be of help." I can't help but think (Huh? I'm quite certain) that Magaziner is the poster child for "smart complexifier."

I'm also told that Mr M is a devout advocate of "systems thinking." Well, I'm not.

The first thing I wrote that got national attention was an Op Ed in the Wall Street Journal in June 1981. (It appeared 5 days before my Dad died, which was sad, because rightly or wrongly he would have been beside himself.) The article got me in deep doo-doo with my McKinsey colleagues. It was called, "Ideas. Plans. Actions." Planning was the rage, as it mostly still is—and it was-is McKinsey's bread & butter. My article claimed that "planning" was highly overrated. The best performers, I said, seesawed back and forth between "ideas" and "actions." That is, they had a "big idea." (Or a small one, for that matter.) Rather than think it to death, they immediately got the hell into the field and experimented with some element of it (a prototype). They watched what happened, adjusted, and then quickly ran another experiment—in the meantime the "big idea" also was trimmed or expanded to fit the incoming "real" data, the results of those experiments. As far as I'm concerned this approach, rather than a "planning-centric" approach, is the best (bold assertion) route to success. By the by, another definition of "my" approach is the Newtonian "scientific method," wholly dependent on ideas shaped and reshaped by actions—my studies of Nobel laureates in the sciences, for example, suggests (and not oversimplifying by much) that the winners "do more experiments faster." (Among other things, this was what my summer neighbor for a few years and winner of a Nobel for the first successful organ transplant told me of his situation, giving me heightened confidence in my beliefs.)

I am an unabashed fan of MIT Media Lab guru Michael Schrage—particularly his book Serious Play. His principal axiom: "You can't be a serious innovator unless you are ready and able to play. 'Serious play' is not an oxymoron; it is the essence of innovation." And, in turn, the heart of his serious play is ... fast prototyping: "Effective prototyping may be the most valuable core competence an innovative organization can hope to have." His intriguing connection, which makes all the sense in the world to me, is that true innovation comes not from the idea per se, though it guides the work, but from the "reaction to the prototype." In fact, in a surprising number of cases (the majority?) the collective responses to a host of fast prototypes reshape the original idea beyond recognition—or lead one down an entirely new path.

Years and years ago, while working in the UK, I delightedly heard a Cadbury exec call his approach to product development "Ready. Fire. Aim." It was love at first sound. (Mistakenly, Ross Perot is often given credit for this—though I acknowledge it captures his successful mode of action.)

Here is a sampling of my favorite quotes, from trustworthy sources, on the topic:

"How do I know what I think until I see what I say."—C.K. Chesterton

"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 to plan—for months."—Bloomberg by Bloomberg

"This is so simple it sounds stupid, but it is amazing how few oil people really understand that you only find oil if you drill wells. You may think you're finding it when you're drawing maps and studying logs, but you have to drill."—The Hunters, by John Masters, wildly successful Canadian Oil & Gas wildcatter

"Experiment fearlessly"—BusinessWeek, in a Special Report, on the premier innovation strategy of the best innovators

"The secret of fast progress is inefficiency, fast and furious and numerous failures."—Kevin Kelly, founding editor, Wired

I won't arrogantly proclaim "Case closed"—though, secretly (not), that's what I feel based on over a quarter century of pretty intensive study.

There is lots to learn from "systems thinking"—but the heart of the matter for me will always be to cast the plan aside for the moment—and get into the lab (field) and try something concrete. Only then will you begin to learn about the practicality (implementability) of your Grand-Grandiose Design—uh, system.

(NB: The principal objection to my approach is that we end up with a not so pretty cobbled together design. True. But there is a term for that: "Welcome to the real world." Or Speaker Tip O'Neill's "Politics is the art of the possible"—all effective implementation is the product of smart corporate or non-corporate politics, as much as that idea offends purists. Magaziner's approach in '93 might well have been "perfect"—though most of us think the opposite, but its result was overcomplexity, total failure to implement—and loss, after 50 years of hegemony, of the House by the Democrats.)

Fed Up.
But …
(My Own Fault.)

Yesterday I was doing an interview with a journalist from Flanders. At one point he asked me about something I guess he'd found at Wikipedia, a reference to an article titled "Tom Peters' True Confessions," relative to In Search of Excellence. The callout, repeated on the cover of the magazine, was "We faked the data." It's my own fault that such a line ended up in print—though I could live without the guy who concocted it.

A few years ago, as I was working with Fast Company co-founder Alan Webber on the article, we were talking about In Search of Excellence, and the selection of companies for the book. In Jim Collins' Good to Great, he claims he started with a list of the top 1,000 companies (or some such) and, applying some hurdles (see below, re "hurdles"), came up with his sample. I said to Alan that we'd not done such a purported "scientific" thing. Instead, we'd gone around to McKinsey colleagues, academics, corporate types we knew, and so on, and asked about companies they thought were doing exceptional stuff (e.g., one of our neighboring firms was HP, then a fresh-caught $1 billion company—we put them on the list because they had a lot of out-of-the-ordinary practices, especially by 1979's standards). Thus, we were "unscientific" by some measures (scientific by the standards of "exploratory research," which this was) in developing a list of candidate companies. However, after we had our roughly 100 "nominees" we subjected them to steep long-term financial hurdles described in the book, and we were forced to prune the list to the final 43. And that's the story of our methodology, take it or leave it. Since our goal, demanded by our client, Siemens, was to find "interesting" "good" companies to analyze, we thought this was as good a way to go as any other—though there were, of course, a hundred ways we could have gone.

At some later point, Alan and I, in a rambling discussion, got onto the topic of "lies, damn lies, and statistics"—statistics, weird as it is, are a major hobby of mine. That's when I said something like, "Of course we know all this [Jim's way or ours] is to some extent phony baloney. That is, if you try enough variations of plausible, tough long-term financial hurdles—e.g., 10 years or 20 as the baseline—you can significantly influence the outcome." And that, of course, is true, as any business analyst of any seniority knows—change an assumption by a dab here and a smidgen there, and a questionable project looks like the pot of gold at the end of the rainbow—Defense acquisition projects being one glaring example. I suspect it was this latter discussion that may have influenced the headline writer.

So it goes, and thence it's my own damn fault. I unhesitatingly acknowledge that in the social sciences it's not too hard to reach varied results depending on the measures you decide to use. But that's a country mile from "We faked the data." So you can take that explanation, or leave it, but there it is.

Tom's Essential in Taiwan

EssTai_White.jpg

That's Leadership, Talent, Trends, and Design, appearing this week in Taiwan. The publisher is Commonwealth Publishing Group, and we'd like to thank them for making available Tom's (and let's not forget that Marti coauthored Trends) Essentials Series.

Cool Friend: Bill Raeder

Today, Bill Raeder joins the ranks of our Cool Friends, not as an author, but as a publisher. Since 1975, he has served as managing director, executive director, and finally president of National Braille Press (NBP). He is about to retire, and he's going out with a bang. This past July, NBP achieved a major milestone by publishing the Braille version of Harry Potter and the Deathly Hollows at the same time as the printed one, and at the same price. (Imagine all the people who worked on it without giving away the plot?) Perhaps a more noteworthy legacy he will leave behind: The mission of National Braille Press is to promote the literacy of blind children through Braille to empower blind people to engage in work, family, and community affairs. You can read more in Bill's Cool Friends interview here.

We're assisting Bill and the National Braille Press by announcing their Hands-On Gala, on October 26, 2007, in Boston. Jay Leno will be Master of Ceremonies and J.K. Rowling will make an appearance by video. To become a corporate sponsor or simply make a donation, please contact: Tanya Holton, National Braille Press, 6l7-266-6160 x15, tholton@nbp.org; or Jennifer Stewart, 6l7-266-6160 x36, jstewart@nbp.org.

Event: ASIS

ASIS International bills itself as the world's largest association for security professionals. Tom is speaking to several thousand people at their Las Vegas Convention. Slides are linked below, and there's something new. Tom has provided an exposition—an expansion of the bullet points from the PPT—in an accompanying MSWord file. Let us know if that works as an explanation of his talking points that the slides sometimes only hint at.

ASIS, Las Vegas, NV, and accompanying MSWord Bullet Points

The Mighty Marvelous Mittelstand Rules:
SBI/Success By “Ichironomics”

Bougainvillea blossoms

Who is the Number One exporter in the world?
Who has (probably) the highest wages in the world (not CEO "wages"!)?

If you answered that it was a nation of 83 million folks in Western Europe—namely Germany—you'd be correct.

Why?
If you answered Siemens you'd be wrong.
So, too, BASF—wrong.
Or Commerzbank—wrong again.

If you answered "Mittelstand firms" you would be spot on!

But I'm getting ahead of myself ...

Last week's BusinessWeek featured the best companies to go to work for as a fresh-caught college grad. Deloitte was #1 (I'm a Deloitte fan, especially their program for retaining women and getting them into senior leadership roles, but best in the U.S.?). The likes of Google was on the list, too. But, to me, personally, not a damn company on the list ought to be on the list—that's a little heavy-handed, but not by much.

Why, oh frigging why, is it always the Gargantuan Companies (because they are the magazines' advertisers??) on such lists (repeat, this week's Fortune has a biggie on the best leader development programs—100% monster institutions again) and not any of America's wonderful middle-sized companies?

About a year after In Search of Excellence appeared (October 15, 1982), my partners, Bob LeDuc and Nancy Austin (my coauthor on A Passion for Excellence) and I decided to launch a series of 4-day intensive workshops on implementing the main ideas in Search. We called them "Skunks Camps" (after Lockheed's renegade "Skunkworks"—look it up in Passion, or on the Web), and held them 100 miles south of home (Palo Alto), at a lovely spot on the Pacific called Pajaro Dunes.

Considering the firms in Search, 100% Big Dudes (who else would McKinsey guys feature?), it was obvious to us that our participants would be, say, VPs or EVPs of Fortune 500 companies.

Nope!

We had a few F500 denizens—mostly from Search companies such as 3M and J&J. The rest? American "Mittlestand":

Frank Perdue, and son Jimmy, of Perdue Farms. ("It takes a tough man to make a tender chicken.")
Tom Malone, president of the stellar textile firm (and, arguably, inarguably to me, America's quality leader) Milliken & Company.
Don Burr, founder of People Express.
Tom Monaghan, founder of Domino's Pizza.
Stew Leonard, and son Stew Jr, of Stew Leonard's.
Hal Rosenbluth of Rosenbluth International, the pathbreaking travel services firm.
John Fisher, the acclaimed IT guru from a much smaller Bank One of Columbus.
John McConnell of the steel's Mittelstand star, Worthington Industries.
Bob Buckman of the Memphis specialty chemical firm, Buckman Labs—Bob almost single-handedly invented what we now call (and genuflect to) "knowledge management."

And so on.* (*Some "troubles," for sure, at Stew Leonard's and People Express—but absolute pathbreakers at the time, 1984.)

Me?
I fell in love with these guys!!

Talk about a tough audience! No bullshit tolerated—and if they heard something good, it was launched 3,000 miles away in the likes of Salisbury, MD (home of Perdue), the day after it was discussed at Pajaro Dunes. E.g., Frank P liked Tom Malone's description of Milliken University, about the first of the corporate "universities," and got up the next day at 4 a.m. PST, called Salisbury, and launched Perdue University.

Hence, I've had a soft spot for the likes of these folks since 1984—and as time has passed I have come to appreciate the likes of them, and the likes of the techie start-ups from "the Valley," too, as the true engines of our economy.

And, to this day they are unsung!

I was so taken, that on the advice of the fellow who headed our European operations, Lennart Arvedson, I decided to explore this odd German phenomenon, called the Mittelstand. To make a long story as painless as possible, a year or so later I could be found in Germany on a three week TV shoot—for a program on this "Mittelstand phenomenon." It was by far the best show I've ever done, among a dozen or so, though the "obscure" topic meant less attention than for most of the others.* (*You'll find the stories in print in my Liberation Management.)

These Mittelstand firms tend to ... DOMINATE (exactly the right word) ... high-end niche markets. The three we featured in our show "The Mighty Mittelstand: The 'Secret' to Germany's Leadership of the World in Exports" (yes, they led then, too—including, amazingly, textile exports!) were:

Playmobil (part of Brandstatter Enterprises), the peerless toy makers; Trumpf, the high-end machine tool superstar; and Rationale, supplier of tippy-top high-end cooking equipment (the "combi-cooker") to most of the high-end restaurants in the U.S. and Europe.

Each tallied a few hundred million dollars in revenue, and all three were growing nicely. Oddly enough, to this day I think I'm the only American "management guru," prominent or otherwise, who has studied these firms—I guess when people see the astounding German export figures, they assume it was Siemens or BMW or the tooth fairy, and leave it at that.

The point of all this is to insist that there are thousands of Fab Firms out there that are really worth working for when one exits university—focused on product, surviving only by continuous innovation, manageable in size, meritocratic to a fault (they can't afford not to be), and providing incredible opportunities to get ahead quickly. The chief problem is, the youngster has to find 'em; they aren't among the Gargantuans who make it easy by showing up with donuts at the college employment center.

Oh dear, I do love, love, love Canada's London Drugs (beating the hell out of their new opponent, Wal*Mart, with 4X Wal*Mart's sales per square foot) and Canada's Cirque du Soleil; Connecticut's $50 million+ Basement Systems (the basement mold and dampness removal superstar; founder Larry Janesky's book, Dry Basement Science, is edging up to 150,000 copies sold—no kidding, I carry it around with me as an icon to what's possible, anywhere and everywhere); Ralph Stayer's Johnsonville Foods; David Kelley's IDEO, the premier product design and innovation consulting firm; the late Harry Quadracci's Quad/Graphics; Dennis Littky's exciting The Met/Big Picture schools; Maxine Clark's supercalifragilisticexpialidocious Build-A-Bear; Rick Semler's seriously cool Brazilian powerhouse, Semco; Derby CT's Griffin Hospital (home of the fantastic, patient-centric Planetree Alliance); and every damn one of the firms featured in Bo Burlingham's Small Giants: Companies That Choose To Be Great Instead of Big.

Yup, these are my stars, home to many of the best leaders I've met in business, unsung engines of German and American economic prowess—and noticeably, to me, AWOL from the likes of the BizWeek and Fortune "bests" lists.

Publisher Rich Karlgaard took me over the top on this in his "Digital Rules" commentary in the current issue of Forbes (October 1). He beats up Michigan ("Tackling the Michigan Problem" is his title) and praises to the sky the likes of Minnesota and Washington. Consider Spokane:

"Spokane, like Minneapolis-St Paul, refuses to bet the economy on one or two industries. Rather, it practices what one city booster calls 'Ichironomics.' Like the Seattle Mariners' center fielder, Ichiro Suzuki, we try to hit singles and doubles. We want to improve the overall conditions for small businesses, not chase the large employer."

"Ichironomics"—love it. Wonder how you translate that into German?

(NB: Mr Suzuki has 227 base hits, and he's batting a stratospheric .351, going into the last week of MLB's regular season—in 2004 he broke the all-time record for hits in a single season, with a staggering 262.)

(Above: bougainvillea, blooming right outside my hotel—what's not to love about my spiritual home, California?)

Perceived Effort

I'm not going. Nonetheless ...

"They say" that I help them because I condone-certify-applaud their excesses in pursuit of ... innovation, a business start-up, etc. Thank you! I say that the late sports super-agent, Mark McCormack (once voted the most powerful man in sports), condoned and certified me in one of my excessive habits.

McCormack said there are times, and not necessarily that infrequently, when it is wise to travel 5,000 miles for a 5-minute meeting. It was a tactic I started using instinctively years ago, when I was working in Washington, in 1974, on drug abuse issues; the fact that I could say, "Look, I was with Ambassador Moynihan in Delhi just three days ago and he assured me that ..." was, well, a show-stopper. Without fail! (And worth a 25,000-mile roundtrip in 96 hours.)

I'm not going, this time, as I said at the top of this post. Because a tough situation mostly cleared itself up, or at least went sub-critical. But I changed my plans just yesterday, so that I'd arrive in L.A. from Sydney, doubtless exhausted after 14 hours in the air, at 10 a.m., then take off from LAX two hours later for a 1,500 mile one-way trip, be at my destination about 6 hours, then head back to L.A. and immediately go on to Las Vegas for a difficult speech.

But the point here is that I did not hesitate (and it wasn't a critically ill family member or some such personal crisis), and it's something I end up doing at least a couple of times a year. And the power is, as in the D.C. example, literally beyond measure—and almost without fail. Some part is substance, but it's overwhelmingly psychological. The fact that someone would make an "insane effort" (e.g., travel, exhausted, thousands of miles for a 25-minute audience with whomever) almost always breaks a logjam, and sometimes leads to a solution on the spot.

(Incidentally, this timeless tool is arguably more important than ever—in this age of electronic communication, the personal touch has become more valuable because of its rarity.)

100 Ways to Succeed #96:

Make a Public "Insane Effort" Upon Occasion;
Consider It to Be an "Extreme Weapon" in your Success Arsenal

When an issue is of the utmost importance and at a standstill or in freefall, proactively look for an opportunity to "make a statement" through a gesture that indicates great pain and engagement and urgency on your part. Often, this comes in the form of "5,000 miles for a 5-minute audience" with a key participant.

(Is this Machiavellian? Sure, to some extent—but the fact is that you actually must care to do this. The "insane gesture" simply acts as proof that you'll go to any length to make progress.)

Ciao, Sydney

Century plant with flowers on stalks

I love Sydney. I ended my stay with a 2-hour powerwalk in one of my favorite venues anywhere in the world—the Royal Botanic Gardens and Domain. Above you'll see one of the gardens' century plants in bloom—they can grow several feet in a day when they explode from their dormancy. (I thought one was an intruder years ago, when it appeared instantly outside the window of my San Francisco house.) Below "the mother of all trees."

Mother of all trees

????????????

I found at a bookstore here Flip: How Counterintuitive Thinking Is Changing Everything—from branding and strategy to technology. On the front cover was an endorsing quote from one Warren Hart. It read like this: "EDWARD DE BONO MEETS TOM PETERS ... ESSENTIAL READING."

My question (and I eagerly await your answers) is: What the hell does that mean?

(FYI, neither De Bono's name nor mine is in the Index.)
(FYI, the book looks pretty good—I shall at least skim.)