How was the book?

Why should you read ”In Search of Excellence” book. Thomas J. Peters and Robert H. Waterman Jr. wrote the book in early 80’s and it was published 1982. The companies that were reviewed in this book have had truly excellent financial performance for the past twenty years in order to be part of the analysis. So the book is nearly 27 years old, the cases are much older than 27 years and some definitions used in the book are not very contemporary. Before starting this review we can ask one crucial question – are the learnings of Peter and Waterman still valid?

My answer is yes and no. No, because many of the learnings are elementary and self-evident from the current corporation’s perspective. Yes, if you have not lived the hard facts of running a large corporation. The book is needed to understand the basics of a large corporation. It’s also beneficial to learn how the current management theory has evolved from works of Peter Drucker to Jim Collins. This a ”back to basics” kind of book. The modern corporation has all or should have all these features by now that Peters and Waterman are explaining.

”In Search of Excellence” is a business book based on analysis of 43 American large corporations and out of those were interviewed 21 corporations. The method is like in the ”Good to Great” by Jim Collins. A side notion is that Peters and Waterman were ahead of their time, because they cited the famous duo – Kahneman and Tversky, on the representativeness i.e. how we are more influenced more by stories than by data. 

Also in the book was introduced a practices and concepts novel in corporate life globally in early 1980’s. For example a practice called ”MBWA” (Management by Walking Around) which meant that the management should also be visible. People working for you need to have informal constant contact or communication with management and being present is one of the most efficient ways of communication. Importance of culture: ”Profit is like health. You need it, and the more the better. But it’s not why you exist.” Culture as a corporate concept started to emerge in the early 1980’s.

 The book that I read was 340 pages long. The authors used 1/3 of the book before they even got to the point i.e. started to present results from the analysis. Second critique is that the results presented were only qualitative. I would have preferred quantitative analysis also. This critique does not lessen the wealth of understanding of management theory. 

 What are the key learnings?

 The writers were eager on forming a new theory how the excellent corporations ”behave”. Their new theory was built on three pillars:

1.    Breaking old habits and shifting attention which includes

a.    Regular reorganization

b.    Major thrust overlays

c.     Experimental units

d.    Systems focusing on one dimension

2.    Stability

a.    Simple, basic underlying form

b.    Dominating values (superordinate goals)

c.     Minimizing/simplifying interfaces

3.    Entrepreneurship

a.    ”Small is beautiful” units

b.    Task forces, and other problem-solving implementation groups

c.     Measurement systems based on amount of entrepreneurship, implementation

The new theory is supported with eight basics of excellent management practice or attributes that the writers found from the excellent companies:

1) A bias for action, for getting on with it.

The excellent companies had the standard procedure of ”Do it, fix it, try it.”

2) Close to the customer. These companies learn from the people they serve.

Excellent companies are close to the customer. Especially they are very close to the lead users. Other companies just talk about it.

3) Autonomy and entrepreneurship.

”The most discouraging fact of big corporate life is the loss of what got them big in the first place: INNOVATION”

4) Productivity through people.

”Nothing is worse for the morale that a lack of information down in the ranks. NETMA (Nobody Ever Tells Me Anything)”

5) Hands-on, value driven.

Figure out your value system and decide what your company stands for.

6) Stick to the knitting.

Robert W. Johnson: ”Never acquire a business you don’t know how to run.” When acquiring a company stick very close to your knitting and you will outperform the others.”

7) Simple form, lean staff.

Top-level staff are lean, keep the corporate staff fewer than 100 people and newer go for the matrix organization.

8) Simultaneous loose-tight properties.

Autonomy pushed to the shop floor and fanatic centralists around the few core values they hold dear.

Excellent corporations were brilliant on the basics. No hoopla, no nothing fuzzy. Simply K.I.S.S. The companies worked very hard to keep things simple in a complex world. They wanted to be simplistic. As Peters and Waterman elegantly express: ”They persisted. They insisted on top quality. They fawned on their customers. They listened to their employees and treated them like adults. They allowed their innovative product and service ”champions” long tethers. They allowed some chaos in return for quick action and regular experimentation.” We could stop here. This is the best that any book can offer. In these six sentences the writers explained the core formula of an excellent corporation.

How should we change according to the book?

The experienced boss has good instincts – his vocabulary of old-friend patterns tells him immediately whether things are going well or badly. Besides the instinct an excellent boss needs day-to-day management practices according to the book are:

·       Know your numbers, because business is a numbers game

·       Build momentum by accumulating small successes

·       Have only three to five objectives for the year

·       Be action oriented to maintain innovation

·       Support diversity to maintain creativity

·       Ask for one-page ”memos”

·       Embrace simplicity

·       Do MBWA IRL (or with Social Media)

Other notions about corporate life that I would interesting in the book were:

·       Excellent companies can separate creativity and innovation. ”Creativity is thinking about new things. Innovation is doing new things.” So support diversity.

·       Poorer performing companies may have strong cultures, but the cultures are dysfunctional.

·       Past personal success apparently leads to more persistence, higher motivation or something that makes us to do better.

·       People are good on holding six to seven pieces of data in our short-term memory. And that’s why even companies should focus on few key business values and few objectives.

Useful one-liners:

·       ”Label a man a loser and he’ll start acting like one”

·       ”Nothing succeeds like success”

·       ”More than two objectives is no objectives.” Watchword of Texas Instrument.

·       ”Sell it to the sales force.”

·       ”What gets measured gets done.”

·       ”But above all try something” Franklin Delano Roosevelt.

What should I personally do?

Support diversity and embrace innovation.

Summary

The book in six words – ”Eighty percent of success is showing up” Woody Allen.