A PASSION FOR EXCELLENCE; The Leadership Difference. By Tom Peters and Nancy Austin. Random House. 437 pp. $19.95.
ALMOST EXACTLY 21/2 years ago -- on November 24, 1982 -- something strange happened in U.S. publishing. Harper & Row published In Search of Excellence by Thomas J. Peters and Robert H. Waterman Jr. American business and industry went back to school with a new book.
The first printing was for 15,000 copies. But by the publication date, In Search of Excellence was into a fourth printing and rocketing ahead on the power of emotional forces unforeseen by its authors or publishers. Later Waterman would recall, "On our down days when we were writing, we thought, 'If this gets to hardback and our mothers like it, we'll be lucky.'"
By November 1984, In Search of Excellence had made publishing history. After selling around 1.4 million copies in hardcover -- becoming the most successful book in Harper's 168 years, In Search of Excellence went on to more than double its sales as a paperback. There are today 3 million copies in print. In translation in Japan it sold 325,000 copies in the first six weeks.
Tom Peters, 41, and Bob Waterman, 47, have become business celebrities, commanding lecture fees of $15,000 a speech and consulting fees of $20,000 a day. While Waterman, as a director, stayed with McKinsey and Co., the consulting firm where he and Peters, who was a partner, did the spade work that led to their book, Peters made, he says, "an extremely unpleasant" departure a year before Excellence was published. Since he splits royalties with McKinsey on a 50-50 basis (Waterman apparently gets only glory), it was a departure that also made Peters a millionaire at least twice over. Since lightning struck, Peters, anonstop talker and locomotive of energy, has established five separate companies, and he has put himself and his words on everything from video cassettes to newsletters and calendars. Oh yes, caps and T-shirts, too.
Regardless of what business-school pipe- puffers and management gurus like Peter F. Drucker have said about In Search of Excellence, it was far more than a fad or nationwide pep talk. Its message addressed a core business problem: human behavior and its perceptions.
COMING at a time of 10 percent U.S. unemployment, a prime rate of around 15 percent, parades of automotive recalls, an invasion by Japanese manufactured goods, In Search of Excellence spoke of hope. It said there were indeed successful American companies and their success wasn't due to magic. It was due to human common sense. It said there were great American managers and executives and their greatness didn't derive from Stanford or Harvard Business School educations. It came from imagination, hard work, and human caring. Furthermore, Peters and Waterman proceeded to show how -- at least in part -- 36 designated "excellent" U.S. companies got that way.
Their fundamental criteria for qualification were six measures of financial performance: three dealing with long-term wealth creation over a 20-year period, and three dealing with return on capital and sales. But the essential purpose of In Search of Excellence was to discover how such companies as IBM, Chesebrough-Pond, Emerson Electric, Procter & Gamble, Merck, Delta Airlines and McDonald's achieved their financial success. And it wasn't, said Peters and Waterman, primarily because they had more MBAs presiding over MRP, EOQs, MISs, or otherwise stirring the corporate alphabet soup. It was because they knew more about people and acted intelligently on that knowledge.
PETERS AND WATERMAN said their "excellent" companies fostered attitudes about people and corporate cultures that underpinned their success. In the authors' nomenclature, they shared eight traits:
A bias for action: Do it now. Try something, fix it, try it again. Reduce analyses, reports, surveys. They quoted with enthusiasm one company's operational slogan: "Ready. Fire. Aim." Staying close to the customer: Meet them, know them, talk to them, visit them. Ask about their likes and dislikes regarding your product. The authors believe nearly all product innovation comes from customer suggestions.
Productivity through people: Making certain everyone feels a part of the company's goals and shares in its successes. The best companies are teams in which the captain is generous with praise, promotes winners, and earns the respect of his or her staff by treating them with dignity.
Hands-on, value driven: Keeping executives in touch with the company's basic business. Rarely are top-flight companies run by accountants or lawyers. Often they're run by salesmen or operators who know first-hand about the company's values -- superior quality from Procter & Gamble, perfect chickens from Perdue's, flawless delivery from Frito-Lay.
Stick to the knitting: Doing what you know. Delta hasn't stumbled into the hotel business and Avon owns no restaurants. 3-M has consistently innovated with adhesives and abrasives. It explores new applications, but it doesn't attempt broadcasting takeovers.
Simple form, lean staff: Top companies are run by few executives. Everyone is a generalist with a specialty. The best companies operate with ad hoc groups, temporary assignments, and no permanent committees. Seldom are there more than 100 people in a corporate office even though the company may employ 10,000 to 100,000.
Simultaneous loose-tight properties: A corporate environment that passionately holds to certain business values -- quality, delivery service, innovation -- but tolerates diversity among employes who adhere loyally to these values.
Autonomy and entrepreneurship: Dividing the company into smaller, relatively autonomous groups who are committed to customers and company values, and who compete with one another. Reward champions who break the rules to make their new ideas succeed.
A Passion for Excellence is less a new work than a recycling -- perhaps "explosion" fits better -- of ideas found in In Search of Excellence, and I doubt that any except those initiated by the first book will be willing to struggle through this one.
Perhaps twice as long, assembled rather than organized, broken up and punctuated with anecdotes, vignettes, checklists, questionnaires, charts, diagrams, cartoons, side panels, advertisements, A Passion for Excellence is a long-winded discourse on how the eight principles of excellence set forth in the former book are being applied in the more diverse, more acidic world of work and hustling that Peters discovered when he started hitting the lecture circuit. In Search of Excellence examined business in three-piece suits; now Peters checks out the men and women in overalls as well. This new book is obviously drawn from Peters' talks and seminars. (I've seen tapes of them; parts of A Passion for Excellence are there almost verbatim.) Peters has no pause button and a defective off button; so the book is spoken rather than written. His collaborator, Nancy Austin, who co-authored The Assertive Woman and once worked for Hewlett-Packard, one of the companies cited in In Search of Excellence, is currently president of one of Peters' enterprises. Her contributions are unclear. The first book was so well written it was a delight to read. This one is a chore.
Peters and Austin classify their material under five major headings -- "Common Sense," "Customers," "Innovation," "People, People, People," and "Leadership" -- but there's a tendency towad interchangeable parts, and one finds anecdotes and case histories, testimonials and avowals repeated, embellished or recast throughout the book as it progresses from section to section, citing the attitudes and actions of companies and managers that have landed them on Peters and Austin's new list of 29 enterprises where "top flight performance is . . . spirited . . . emotion-filled."
It's an odd lot that includes a Ford assembly plant in New Jersey, a California garbage collector called Sunset Scavengers, the U.S. Air Force Tactical Air command at Langley, a catch-all food retailer in Connecticut named Stew Leonard's Dairy Store, along with Scandinavian Airways System, Apple Computers, Campbell Soup Co., Herman Miller Furniture, W.L. Gore & Associates (fabric people), the city of Baltimore, the Trammell Crow real estate organization, Giant food, Ryder System, People Express, Citibank, and everyone's favorite gourmet mailorder house, Williams- Sonoma.
These are companies or organizations in which Peters and Austin find the principles of In Search of Excellence practiced with a passion and that exhibit "what we now call the 'smell' of a customer-(or innovation-) oriented company." Using the behavior of these organizations and their executives -- presented in innumerable tales and yarns -- as examples, A Passion for Excellence becomes a do-it-yourself business guide to achieving excellence, complete with "pragmatic questions and suggestions in every chapter" designed "to analyze where you are, how you got there, and particularly what you might do now to construct . . . building blocks of excellence on your own turf."
Peters and Austin's subtitle is "The Leadership Difference." They have rediscovered what Emerson meant when he said that an institution is but the shadow of a man.
"We believe the words 'managing' and 'management" should be discarded," they say. "'Management' . . . connotes controlling and arranging and demeaning and reducing. 'Leadership' connotes unleashing energy, building, freeing and growing."
The issue then becomes how to lead. Peters and Austin "advocate a change from . . . concern with hard data and balance sheets to a concern for the 'soft stuff' -- values, vision, and integrity."
Insights, attitudes, and provocations on this theme are woven in and out of Peters and Austin's seemingly endless stream of stories about executives who "manage by wandering around" (a passionately held concept of supervising by dropping in), stay close to their customers by putting on overalls to clean hospital halls or take turns answering telephone complaints, assemble highly creative teams in temporary "skunkworks" to make new products, encourage and reward productive people by flying them to vacations in the Caribbean or putting their names in lights, provide environments in which corporate values can be understood and embraced and so on.
THE BEST parts of A Passion for Excellence, I think, are insights made by Peters and Austin while reporting on findings made during Peters' whirlwind seminars. They're insights that show how quality is perceived, customers come first or employes define a business culture. They're insights about behavior.
Words count and symbols count heavily. "Disney, McDonald's, Gore, Wal-mart, Dana and People Express eschew 'worker' or 'employee' in favor of 'cast member,' 'crew member,' 'associate,' and 'person.' At People everyone is a 'manager.' Disney calls every customer 'guest'." The chairman of People Express told Peters, "Coffee stains on the flip down trays (in the airplane) mean (to the customers) that we do our engine maintenance wrong."
While there is not much that is new in A Passion for Excellence -- other than that great organizations start at the top, which both Harry Truman and Emerson told us -- there is much that is instructive here. Chief executives would do well to see pages 354-357 for the differences between a leader and a non-leader; no more officers' dining room and reserved parking. It's reassuring to see Peters and Austin acknowledge that MBWA (managing by wandering around) can be turned into preemptive strikes by tyrants. It's helpful to contemplate their distinction between coaching and mentoring. To coach is to build. To mentor is to attempt to duplicate yourself. They argue that to gain market share the wisest strategy is to "achieve a 'relative perceived product-quality' edge over your competitors," enhance service, and lastly "take advantage of economies of scale," which is contrary to conventional wisdom that counsels price cutting first to gain share.
But on the most vexing questions posed by In Search of Excellence and subsequent events, they are nearly silent. By 1985 we've learned that Peters' kind of excellence may not be excellent enough. Something else is also at work. Several companies cited in In Search of Excellence have had tough times. In 1983 Caterpillar Tractor took a seven-month strike to deal with labor. Texas Instruments had big trouble in the home-computer market. Atari became bad news on Wall Street. The list goes on.
I guess what I would've hoped for when Peters wrote a new book was greater depth, more penetration into the grammar of business and the triad of forces -- government policy, social change, accelerating technology -- that have in fact created modern American business and industry. What's the meaning of increasing consolidation? Saturated markets? Premature technical obsolescence?
But that's like asking my aunt to be my uncle. Peters and company are verbalists, romantics, the meistersingers of business. They have found stories. Many of them are true. I and my colleagues believe in them and try to apply their truths. But Peters and his associates want to institutionalize their stories. Maybe it will work. I suspect the response to A Passion for Excellence will be to revisit In Search of Excellence. There lie the jewels of thought. Here lie settings in which they have been placed.