Archives: November 2012

In Search of Excellence eBook

It’s with the greatest pleasure that we announce the publication of Tom’s In Search of Excellence in eBook format. Thirty years after the original burst onto the scene, there’s new technology—almost a new world—where books are concerned. Will kids born today have the bookcases full of hardcovers and paperbacks occupying so much space in their parents homes? Not likely. Tom’s groundbreaking work is ready for the transition. It’s available now for eBook readers; we hope a new generation of readers discovers In Search of Excellence and embraces it as did the last generation. The companies named in the book may not have survived into the present (though some notable “excellent” companies thrive), but that’s not the point. Its lessons, such as “A Bias for Action” and “Close to the Customer,” are as relevant now as the day it was written. Maybe more so.

About the Book:
In Search of Excellence

An old friend of Tom’s, Rich Karlgaard, the publisher of Forbes magazine, wrote a piece in the 19 November issue of that magazine, praising In Search of Excellence. Below, find Tom’s excerpt of the article, and see the original here. Thanks to Rich for this tribute!

Confidence had been in tatters for several years, following a big and ugly recession. It was 1982. A 17-year boom awaited at the tunnel’s end, but the present mood was awful.

It’s often debated whether Ronald Reagan’s tax cuts or Paul Volcker’s monetary medicine got the U.S. off its back. The answer is both, but let’s add a third and fourth reason. Third was the personal computer. … The PC was more than a machine. It was a garden of entrepreneurship that produced such daring men as Steve Jobs and Bill Gates. A fourth reason was a book that came out in 1982: In Search of Excellence, by Tom Peters and Bob Waterman. Yes, I am claiming that a single book belongs up there with tax cuts, a strong dollar and the PC as a pillar of the American renaissance.

In Search of Excellence was the right book for the time. It is a saga of the passion that the authors found in the best companies. The idea of passion in large business was a shape-shifter. In 1982 managers of large companies were expected to be strategic and financial in their focus. Efficiency was prized. Products were things to be counted and shipped, not loved. If quality was a problem, it was a systemic error and not connected to employee morale.

Not fully appreciated at the time was that most American companies had become large and profitable during a time of scant global competition. From the end of World War II through the 1960s little stood in the way. Then came the 1970s, with the rise of Germany and Japan. … The old rules went out the window. In Search of Excellence gave large company managers a new template. Its eight principles are: A Bias for Action; Close to the Customer; Autonomy and Entrepreneurship; Productivity Through People; Hands- On, Value-Driven …

It’s hard to improve on those eight today. So why was In Search of Excellence originally considered so radical? It shredded the idea that business is all about rational behavior and numbers. The very reason that reason often fails is that humans who work in companies and constitute the customer base aren’t entirely rational themselves. Employees and customers seek rational rewards, of course, but they also want something more. They want purpose. They want meaning.

Happy Thanksgiving

From all of us to all of you, if you are celebrating the American Thanksgiving, have a lovely holiday!

Moscow 2012

Tom revisits Russia, and his PPT recalls his 2006 appearance in that country’s Novosibirsk. Tom insists you need EXCELLENCE NOW to master “New trends in marketing and management,” the stated theme of the day. Below you can get the presentation from his World Trade Center seminar in Moscow.

World Trade Center, Moscow
Moscow Long Version

Thoughts: Leadership

It’s all about the quality of interpersonal relationships.

Leadership is a liberal art—Peter Drucker’s assertion. (“Management science” is an oxymoron.)

Listening (“fierce listening,” as one wag puts it) is arguably/inarguably leadership “Tool #1.” (Training in listening should be intense/rigorous/universal.)

“Authenticity” only goes so far—e.g., leaders aren’t allowed to have bad days, especially on bad days.

At the end of the day (one’s professional life), one remembers the people one has helped—net worth never goes on the tombstone.

“Leadership” is an 18-year-old working at McDonald’s who brings a great attitude to work on a gloomy day. (E.g., per Betsy Myers’s Take the Lead, every hour offers up leadership opportunities to every one of us.

The tools (e.g., social media) may be new, but the basics of leading—”It’s the people, stupid!”—are eternal.

Top Twenty

This list of “success factors” emerged after-the-fact from an interview with a reporter from Moscow in preparation for a seminar I’m giving in Moscow in mid-November 2012. FYI:

Just one “secret” to innovation: It’s a messy world. We’re always operating half informed. Hence, “try more stuff than the other guy” and sort it out as you go forward is the best way to up success odds. (“Ready. Fire. Aim.”—Ross Perot)

Paradox: Superb quality is an absolute necessity, and it requires superb systems; but superb quality with the wrong product flunks. Hence one needs to be organized (quality) and disorganized (innovation) at the same time. (Axiom: Management is art, not science.)

Waste #1: “Great branding”/marketing can not overcome a lousy product—it is largely wasted. The product (innovative, attractive, of the highest quality) comes first—though excellence in product and marketing is indubitably required to achieve a smashing success.

Everywhere: “Excellence” in quality and design is not restricted to the “high end.” Both characteristics can be imbedded in lower-end products and services.

Iron law: All organizations get worse as they become more and more enormous. No cultural differences.

Iron law: Over the long haul, national success is largely built upon SMEs, with growth and innovation associated largely with a large population of vibrant midsized enterprises—Germany’s “Mittelstand” is exhibit #1.

Paradox: Hierarchy is dead. Long live hierarchy. New market requirements and new tools can dramatically reduce hierarchy. Still, I don’t want to drive across a bridge that didn’t have a “command and control” structure to sign off on safety.

But: Hierarchy is often necessary—but relentless hot war must be declared on bureaucracy “24/7.”

“New marketing techniques”: The newest marketing technique is the oldest marketing technique but remains “new” because it is seldom practiced with requisite intensity. Namely, get the hell out into the marketplace and listen & listen & listen to customers. Then listen some more.

Always #1: Any nation’s Olympic team is as good as its athletes. (Duh.) Exactly the same is true with any (as in any!) organization: Investment in and development of great people comes first and is the greatest sustaining differentiator!

Motivator #1: Treating people with respect is always the #1 motivational “tool.”

Why not business: In the army and in the theater and in sports, training is always Priority #1. Why not in business? No organization ever devoted too much effort to training!

Success “secret” #1: Work harder/much harder than the other guy/s. There’s more to it than hard work but hard work is the sine qua non. (Again: Think of the Olympics.)

Speed’s enabler: The #1 cause of delays is invariably lousy cross-functional communication—the product developers don’t talk to the logistics people who don’t talk to the sales people. Etc. Etc. Excellence in cross-functional communication must become a day-to-day top-management obsession.

New context, new leaders: Innovation (and execution) today is a collaborative process. Women are on average better leaders than men in collaborative situations. Men take to hierarchies—we invented ‘em. Women tend to lead more by inclusion rather than coercion.

Customer #1: In retail and in products designed for retail, she is the primary consumer. Company leadership and the product-service portfolio should mimic, more or less, this fact. (You heard it here 1st: Men and women are different.)

New context, new skills; The Age of Brawn is largely behind us. Brains and creativity and flexibility have come to the fore. Not only are our organizations unprepared—but our schools get it more or less exactly wrong 100% of the time.

Acceleration: Technological change is accelerating as never before. It is not an exaggeration to say that “all bets are off”; adaptability and renewal are imperative on a short cycle unimaginable only 10 or so years ago. (And we ain’t seen nothin’ yet.)

Mix it up: Company leaders tend to be look-alikes. Only (only!) diversity on any dimension you can name induces creativity over the long haul—from the boardroom to the front line.

“Sexy”: Clever strategies and exciting products are important, but superb execution invariably carries the day. Asked his #1 success “secret,” peerless hotelier Conrad Hilton replied, “Don’t forget to tuck the shower curtain into the bathtub.” Amen!

Business Ethics and Other Oxymorons

Peters-Nohria_web.jpg

Tom is featured at The Ford Hall Forum in Boston tonight. He is engaging in a dialogue titled “Business Ethics and Other Oxymorons.” He will be having a dialogue with Nitin Nohria, Dean of the Harvard Business School; the discussion will be moderated by Donna Carpenter, founder of New Word City and, among other things, publisher of Tom’s eBooks

Tom calls what follows, “My ‘cheat sheet’ for the discussion.” Tom adds, “As most know, I am a fierce critic of B-schools. Yet Dean Nohria is making enormous changes, for the better as I see it, at HBS. I’d call the Boston discussion a ‘debate,’ except Nitin and I are in virtually complete agreement about the role of business in society—and the broad obligations of business leaders. Incidentally, Dean Nohria comes out of the business sub-discipline typically called ‘organization behavior’—so do I. Praise the Lord, for once, unlike at my alma mater, Stanford, we have a B-school dean who’s not one more bloody economist.”

Tom’s cheat sheet:

From 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

“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, Financial Times/0313.09/page 1/former GE chairman Welch was arguably the most vociferous proponent of the shareholder value ideology (Quoted in The Shareholder Value Myth)

“The notion that corporate law requires directors, executives, and employees to maximize shareholder wealth simply isn’t 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.”

“[A corporation] can be formed to conduct or promote any lawful business or purpose”—from Delaware corporate code, in which there is no mandate for shareholder primacy.

“[Courts] uniformly refuse to actually impose legal sanctions on directors or executives for failing to pursue one purpose over another. In particular, courts refuse to hold directors of public corporations legally accountable for failing to maximize shareholder wealth.”

“What about shareholders’ rights to sue corporate officers and directors for breach of fiduciary duty if they fail to maximize shareholder wealth? Such a right turns out to be illusory. Executives and directors’ duty of loyalty to the corporation bars them from using their corporate positions to enrich themselves at the firm’s expense, but unconflicted directors remain legally free to pursue almost any other goal.”

“From a legal perspective, shareholders do not, and cannot, own corporations. Corporations are independent legal entities that own themselves, just as human beings own themselves. … Shareholders own shares of stock. A share of stock is simply a contract between the shareholder and the corporation, a contract that gives the shareholder very limited rights under limited circumstances. In this sense, stockholders are no different from bondholders, suppliers, and employees. All have contractual relationships with the corporate entity. None ‘owns’ the company itself.”

TP comment: I read Professor Stout’s book like a thriller: It is breathtaking, for my money.

Related:

“Managers have lost dignity over the past decade in the face of widespread institutional breakdown of trust and self-policing in business. To regain society’s trust, we believe that business leaders must embrace a way of looking at their role that goes beyond their responsibility to the shareholders to include a civic and personal commitment to their duty as institutional custodians. In other words, it is time that management became a profession.”—Rakesh Khurana & Nitin Nohria, “It’s Time To Make Management a True Profession,” Harvard Business Review/10.08

“The hottest places in hell are reserved for those who in a period of moral crisis maintain their neutrality.”—JFK

From John Bogle, Enough. The Measures of Money, Business, and Life (Bogle is founder of the Vanguard Mutual Fund Group):

“At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, ‘Yes, but I have something he will never have … enough.’” (extracted from the New Yorker)

Chapter titles:
“Too Much Speculation, Not Enough Investment”
“Too Much Complexity, Not Enough Simplicity”
“Too Much Counting, Not Enough Trust”
“Too Much Business Conduct, Not Enough Professional Conduct”
“Too Much Salesmanship, Not Enough Stewardship”
“Too Much Focus on Things, Not Enough Focus on Commitment”
“Too Many Twenty-first Century Values, Not Enough Eighteenth-Century Values”
“Too Much ‘Success,’ Not Enough Character”

TP comment: I loved Jack’s book and was honored to have been asked to write the foreword to the paperback edition.

“For too long, the economics profession has minimized the critical role of cooperation in economic activity. Emphasis on the individual has risen above all else, and overshadowed the profound ways we depend on each other. … If we ignore the important ways people cooperate to create wealth, we miss the most valuable source of wealth creation imaginable. … By appreciating integrity as an asset that is valuable, companies can learn how to invest in it and create wealth.”—Anna Bernasek, The Economics of Integrity: From Dairy Farmers to Toyota, How Wealth Is Built on Trust & What That Means for Our Future

“In an era of structured finance, nano-technology, and complex business models, Anna Bernasek’s timely book reminds us that the economy runs on something much more simple: trust.”—Review of The Economics of Integrity by Dan Gross, author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation

“It is not enough for an agency to be respected for its professional competence. Indeed, there isn’t much to choose between the competence of big agencies. What so often makes the difference is the character of the men and women who represent the agency at the top level, with clients and the business community. If they are respected as admirable people, the agency gets business—whether from present clients or prospective ones.”—David Ogilvy

“I can’t tell you how many times we passed up hotshots for guys we thought were better people … and watched our guys do a lot better than the big names, not just in the classroom, but on the field—and, naturally, after they graduated, too. Again and again, the blue chips faded out, and our little up-and-comers clawed their way to all-conference and All-America teams.”—Bo Schembechler (and John Bacon), “Recruit for Character,” Bo’s Lasting Lessons (Schlemberger was the legendary college football coach at the University of Michigan)

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WPP (World’s largest marketing services firm)

Reading

Lynn Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public

Anna Bernasek, The Economics of Integrity: From Dairy Farmers to Toyota, How Wealth Is Built on Trust & What That Means for Our Future

Francis Fukuyama, Trust: The Social Virtues and the Creation of Prosperity

Edward O. Wilson, The Social Conquest of Earth

John Bogle, Enough. True Measures of Money, Business, and Life

Jack Beatty, Age of Betrayal: The Triumph of Money in America

Martha Nussbaum, Not For Profit: Why Democracy Needs the Humanities

David Hackett Fischer, Fairness and Freedom: A History of Two Open Societies

Hanna Rosin, The End of Men: and the Rise of Women