An Early Summer Night’s Musing

Tom Peters

Chew on these morsels for managers, collected from recent seminars. I think you’ll find the nutritional value high.

* Regulatory mastery. Quit complaining about “running up against a regulatory brick wall.” The fact is, firms exhibit the same degrees of relative goodness and badness at dealing with regulators as they do at, say, serving the customer. Consider: It takes Merck an average of 65 months to get FDA approval for a new drug; competitors eat up 110 months (about four, expensive years extra). When he was vice president for regulatory affairs at Bell of Pennsylvania, Bell Atlantic Chairman Ray Smith had extraordinary success with local regulators. Ditto former United Airlines Chairman Ed Carlson and the FAA in the early ’70s. Hint: There are few “secrets,” beyond patience, time spent, straight shooting, treating regulators as customers, and urging lots of folks in your organization (despite cries from the control fanatics) to develop contacts “up and down the line” in the regulator’s operation.

* Little can be huge. Tiny Landsberg, Germany, produced tiny Rational Grosskuechentechnik (400 employees)—undisputed world leader in “combi-cooker” technology. The company sells 70 percent of its software intense, user friendly, combination steamer-convection ovens outside of Germany. At just $50 million in revenue, Rational is like IBM, Fujitsu, and DEC combined in its chosen lair. Aero Component Technologies of Fort Walton Beach, FL, consists of 16 wee, independent divisions performing small tasks in support of the aircraft-maintenance industry. One focuses exclusively on “overhaul and repair of 8D intermediate (engine) cases”; another specializes in “repair and overhaul of gas turbine compressor stators and cases.” Each unit is genuinely dominant in its micro-slice of the universe.

* Pursuing Leonardo da Wiring. I met a guy in Connecticut who installs underfloor wiring for computers. Like any temperamental artist, he scorned the pathetic efforts of his peers, as he fitfully untangled for a client the mess made by a prior contractor. To me he’s Leonardo da Wiring: The craft of wiring and connecting, as he plies it, approaches Nobel-level excellence. Appreciating the “Leonardo phenomenon” is the trick to winning subcontracting. ServiceMaster raises housekeeping services to high art. Professional Parking Services Inc. of Irvine, California, sees event parking as a skill worthy of the gods. For every mundane task, there are masterful artists at play. Each sees some job you disdain as a noble calling. Let them at it.

* Scoring process innovation. Hewlett-Packard carefully charts figures that reveal, for example, 75 percent of 1989 sales coming from products introduced in the last three years. But what about measuring process innovation—in, say, training? Couldn’t we similarly declare that 70 percent (or whatever) of “instruction offered” came from courses created in the last three years? Or that 50 percent of all course offerings have undergone sweeping revision within the last 48 months? And in airline maintenance, can’t we state—with precision that, for instance, 252 out of 367 major work packages have been “zero based” (revised from the ground up) in the last 36 months? If “innovation is everything,” as so many say, then why not measure innovation in everything, not just product development?

* Projects are life. EDS, the mighty information-systems company, is a $6.1-billion monster with a payroll of 62,000. The average employee works on a dozen-person project team. That is, you can organize a vast enterprise as a “collection of projects.” Furthermore, at any moment about 50,000 of EDS’ folks are on (or next door to) customer premises, most working as part of EDS-customer teams. Who “runs” such teams? Irrelevant, say EDS chiefs. “We report to them, they report to us—though, make no mistake, every EDSer’s toes are held to accountability’s hot fire. The organization chart may be useless (and the giant has no policy manual), but responsibility for results is clearly understood.

In the last five years, snack manufacturer Frito-Lay has increased its “marketplace initiatives,” the essence of its strategy, from about 120 per year to 400 per year. These initiatives are tests of new ideas, invariably executed by small-scale, multi-function groups. To view huge Frito, like huge EDS, as a “collection of projects”—through those marketplace initiatives—is hardly an exaggeration.

* Managing the mushy. Philip Morris paid $12.9 billion for Kraft in 1988. About $1 billion of the value came from “hard” assets (factories, offices, paper clips, PCs, cheese). The “other” $12 billion was intangibles, or “good will”—essentially marketing skills and the value of the Kraft name. These numbers are not anomalous: In most firms today, old-line metal benders as well as consumer-product purveyors and banks, the “soft stuff” accounts for almost all the value. Yet with rare exceptions (Philip Morris is one, incidentally), managements still spend most of their time managing what they can touch—the roughly 10 percent of assets that are “hard.” It would often be fair to say that the “residual” 90 percent go un-managed. Have you hugged—and managed—your intangibles today?

Have at it!