Peters' Principles: Secrets Of Growth

In Search of Excellence confirms that the key to prosperity for companies large and small lies in a commitment to such irrational, difficult-to-measure things as people, quality, and customer service.

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The week In Search of Excellence reached # 1 on The New York Times list of best-selling nonfiction books, all hell broke loose at a small, white frame house in Palo Alto, about 40 miles south of San Francisco. It was an ordinary house, with a nice garden and blue trim, but the first floor happened to be occupied by Thomas J. Peters, who, with Robert H. Waterman Jr., wrote the book. That week, it seemed as though much of the corporate world was reaching out to touch Peters -- the phones rang constantly. And every day, the mail brought 10 to 15 requests for speeches and consulting work. There were a few crank letters -- clipped-out headlines with words circled in red. Then, too, there were the customary accolades accorded the winner in the best-seller sweepstakes: the magnum of Dom Perignon and the Eastern Onion singing telegram from Harper & Row; the congratulatory telegram from the second-place finisher, in this case John Naisbitt, author of Megatrends.

But most of the letters and calls came from America's major corporations, as well as from some of the country's fastest-growing smaller companies. In the messages, moreover, one could sense something special -- a new hope for American business and a belief that this man, Tom Peters, could help the rest of corporate America understand what companies like IBM Corp. and Procter & Gamble Co. had known all along.

The book confirms what some observers of American management have long suspected -- that the key to the survival and prosperity of American companies, large and small, lies not in the rational, quantitative approach to problem-solving so popular in the 1960s and '70s, but rather in a commitment to irrational, difficult-to-measure things like people, quality, and customer service.

It points out that many professional managers have forgotten how messy, sloppy, and irrational the real world really is; that they have come to think of people as variables that mess up the model; that, too often, they regard customers as uncooperative factors that refuse to perform as rational analysis dictates; that they see quality as an attribute a well-managed company can afford only so much of.

But Peters and Waterman show that some managers -- specifically, the managers at 62 of America's "best-run" companies -- have been different. These "excellent" companies (as they are referred to in the book) believe in the importance of superior quality and service, and they value people as individuals. They consistently exhibit certain core characteristics, which the two consultants codify into eight attributes of excellence:

* A bias for action

* Closeness to the customer

* Autonomy and entrepreneurship

* Belief in productivity through people

* A hands-on, value-driven operation

* A tendency to stick to the knitting

* A simple form and a lean staff

* Simultaneous, loose-tight properties -- autonomy at the shop-floor level combined with fanatic adherence to certain ideals

These characteristics make up a way of looking at the world that is both radical and mundane. It is radical in that two consultants from one of the world's most prestigious and pragmatic consulting firms, McKinsey & Co., abandoned their quantitative tools and endangered their reputations as rational men to focus on issues many of their peers thought were better left to sociologists. And it is mundane because the ideas are vaguely reminiscent of the kinds of things your mother used to say about why she went to a particular gas station or bought from a butcher two miles out of her way. It isn't the validity of the characteristics that the book's critics are inclined to doubt, but rather their importance.

As the authors themselves point out, most of it has been said before -- to little effect. Chester Barnard, once president of New Jersey Bell Telephone Co., was talking about good managers as value shapers in the 1930s, and others had followed his lead. Few managers, however, had been listening.

But, 40 years after Barnard's ground-breaking work, perceptions of the United States as an industrial power have changed. The rational model clearly is not working. U.S. conglomerates are having trouble competing in international markets; economic growth has slowed; productivity is declining. People have begun to question the orthodox axioms of management. Some U.S. companies -- Hewlett-Packard, Tandem Computers, and Apple Computer, for example -- seem to be developing a new corporate model, and little by little, the gray-suited organization man of the 1950s is giving way to the informal, innovation-oriented entrepreneur of the '80s. But, until Peters and Waterman came along, no one seemed able to pull all these threads together.

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