Book: In Search of Excellence
Author: Tom Peters & Robert H Waterman
In search of Excellence is a book on research using 7S(Strategy & Structure(hardware), Style, systems, Staff, Skills, and shared Values(software) framework of McKinsey as the authors were working with McKinsey. The book was first published in 1982 and thought that was striking the mind is after 22 years is it makes relevant to today’s competitive and technology companies. To identify the rationale of the excellence companies the author had chosen over 43 companies out of the Fortune 500 and held them up as defenders of excellence, measured by six financial yardsticks such as Compound asset growth, Compound equity growth, Ratio of market value to book value, Return on capital, Return on equity and Return on sales to validate the secrete behind driving excellence. The best part is even today these companies are doing well and there are case studies shard in the book. However, one drawback is the analysis and comparison of these shortlisted companies are not been reported. My key insights from the book are
•Quality and Service are invariable hallmarks. The excellent companies require and demand extraordinary performance from the average man. Service, Quality, Reliability are the strategies aimed at loyalty and long-term revenue stream growth. Three themes in an effective service orientation
1.Intensive, active involvement on the part of Senior Management
2.A remarkable people orientation
3.The high intensity of measurement and feedback
•Excellent companies have the ability to manage ambiguity and paradox. Excellence companies had gotten to be the way they are because of a unique set of cultural attributes that distinguish them from the rest. The excellent companies have developed cultures that incorporated the values and practices of the great leaders.
•Tools are biased towards measurement and analysis. Paralysis through analysis syndrome. Tools didn’t substitute for thinking. Intellect didn’t overpower wisdom. The analysis didn’t impede action. Rather these companies work hard to keep things simple in a complex world.
•Eight attributes of excellent, innovative companies are
1.Bias for action, for getting on with it
2.Close to customer
3.Autonomy and entrepreneurship
4.Productivity through people
5.Hands-on, value driven.
6.Stick to the knitting
7.Simple form, lean Staff
8.Simultaneous loose-tight properties
•Good managers make meanings for people, as well as money. Treating people – not money, machine, or minds as the key natural resource. Majority of businessmen are incapable of original thought because they are unable to escape from the tyranny of reason. Gamesmanship replaces pragmatic action. A managers job is decision making. Make the right calls. Make the tough calls. A managers job is to keep things tidy and under control. Get the incentives right and productivity will follow. Three items – inventories, profits, and sales – form a crucible for managers.
•The exclusively analytic approach run wild leads to an abstract, heartless philosophy. To be narrowly rational is often to be negative. Today’s version of rationality does not value experimentation and abhors mistakes. The excellent company response to complexity is fluidity. The rational model causes us to denigrate the importance of values. Fluidity, chunking and experimenting are interestingly abetted by the character of the excellent companies’ formal system.
•Managing process is an interactive flow of three variables; Path-finding, decision making and implementation.
•Our control systems are designed under the apparent assumption that 90 percent of the people are lazy. Association with past personal success apparently leads to more persistence, higher motivation, or something that makes us do better.
•Negative reinforcement will produce behavioral change, but often in strange, unpredictable, and undesirable ways. Positive reinforcement causes behavioral changes too, but usually in the intended direction. Two ways to accomplish shift – First we attempt through positive reinforcement to lead people gently over the time to pay attention to new activities. Secondly, the reinforcement should have immediacy. The third system of feedback mechanisms should be an account to achievability. Listening carefully, frequently speaking with encouragement and reinforcing words with believable action.
•Excellent companies tap the inherent worth of the task as a source of intrinsic motivation for their employees. Excellent companies know to manage Paradox. Excellent companies are learning organizations. Human needs in the organization are
1.People need for meaning
2.People need for a modicum of control
3.People need positive reinforcement to think of themselves as winners in some sense
4.The degree to which actions and behaviors shape attitudes and beliefs.
•Small group is the most visible of the chunking devices. Small groups are quite simply the basic organizational building blocks of excellent companies. The true power of the small group lies in the flexibility.
•Five fundamental attributes of companies close to the customer
1.Astute technology manipulations
2.Pricing skill
3.Better segmenting
4.A problem-solving orientation
5.Willingness to spend in order to discriminate.
•Excellent companies have 5 attributes of a communication system that seems to foster innovation
1.Communication systems are informal
2.Communication intensity is extraordinary
3.Communication is given physical supports
4.Forcing devices
5.The intense, informal communication system act as a remarkable tight control system.
•Excellent companies to acquire, but they acquire and diversify in an experimental fashion.
Bottom-line:
Are these insights relevant to today's competitive world, where younger companies achieve billion dollars within 5 years of the establishment? I feel they have ingredients these while designing and developing the organization by making these as the way of doing business.
I would recommend a good to read for young managers!
