Management: The One Thousand Percent Factor

Tom Peters

Despite the fact that they have never had a season as magnificent as that of the Detroit Tigers in 1984, over the past 25 years the Baltimore Orioles are more than 100 games ahead of the team with the next best winning record in major league baseball. With the same field length as the next team, and a generally poor draft position as a function of their prior season’s good performance, the Oakland-Los Angeles Raiders under Al Davis’s firm hand have put together an extraordinary record in professional football since 1963. They have 206 wins against 82 losses. Their winning percentage of 0.715 is the best by far in all of big-league sports.

Nucor Steel and Worthington Industries had returns to shareholders’ equity, over the past five years, of 27 percent and 23 percent respectively, while the steel industry was bathed in red ink.

The “action bias” and bustle of the more than 100 superb Mervyn’s department stores (a Dayton-Hudson subsidiary) is demonstrated by their ability to essentially re-merchandise their stores weekly; it takes their big competitors about a quarter of the year to accomplish the same degree of change (i.e., 13 times longer).

Mayor William Donald Schaefer of Baltimore won his most recent re-election (against a competent black candidate in a city with a sizable black majority) with 94 percent of the vote and an edge in every ward.

I call all this the “One Thousand Percent Factor.” Winners don’t do a percent or two better than the norm. They do hundreds of percent better. In December, 1983, I traveled to Burbank, Calif., to visit with Kelly Johnson of the Lockheed California Company. He brought the term “skunkwork,” borrowed from the L’il Abner comic strip, to American industry. A skunkwork is an “off line” innovative group, working semi-surreptitiously at the edge of the organization.

Kelly and his determined band are responsible for many of the planes in the sky today. They developed the first military jets right after the end of the World War II, the YP or F-80, in 136 days from concept to first flight. Subsequently, they turned out the F-104, C- 130, U-2, SR-71, and others. Kelly’s crew of mavericks put on quite a show.

But the output isn’t the real story. What lives behind the output is. In one instance, Johnson got involved in an ailing satellite program. It was a couple of years behind schedule, and several hundred percent above budget, and launch effectiveness ran 12.5 percent. While wandering around after taking charge, Kelly discovered, among other things, 1,271 inspectors working with a single subcontractor. In the course of the next year, he trimmed that number to 35. He got the program back on schedule and simultaneously improved launch effectiveness from 12.5 percent to 98 percent.

In another instance, the Air Force demanded that an arch rival of Lockheed’s visit with Johnson and his team. The two were working on projects of equal magnitude and complexity. The competitor was years behind and hundreds of percent over budget, with 3,750 people involved. Johnson was on schedule and under budget—with 126 people. A Rand Corporation study validated these extraordinary comparative numbers.

I was so taken by Kelly Johnson’s numbers that I did the following. I took a little white card, calling card size, and simply wrote “3,750–126” on it. I had it plasticized and keep it in my wallet. It’s a reminder to me that no matter what I’m up to—designing a product, thinking about marketing it, evaluating a staff addition, or performing any other activity—Johnson epitomizes what’s possible. And, most important, what’s possible as a function of good management alone.

The stories of Johnson, Stew Leonard, Mayor Schaefer, Frank Perdue, Nucor, Worthington, The L.A. Raiders, and the Baltimore Orioles are decidedly not stories of organizations with externally given 25 percent growth rates. No outside factors can explain the great increments of performance. Better management is the only explanation.

In the past two decades, the most exercised part of the corporate body has been the pointing finger. When in doubt, executives and managers blamed it on OPEC, the Japanese, EPA, OSHA, or EEOC. Some of them didn’t, however. Some looked inward and seized the moment. They have outperformed the crowd by a long shot. That’s The One Thousand Percent Factor. It’s the money challenge I believe we should all take.

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