Tom Peters' book on excellence has managers and employees alike changing the way they do business.
Tom Peters' book on excellence has managers and employees alike changing the way they do business.
Ed Gaffney is the kind of manager who admits that if he doesn't say anything to an employee about how he is working, the employee is supposed to take the silence as a sign of approval. "When I give someone a job, I expect him to do it well," he says with a smile that takes the edge off the gruffness. "When I don't say anything, that's a compliment."
This is the same Ed Gaffney who, over the past year, has introduced discussion groups among employees at all levels in his company, Ortho-Kinetics Inc., in Wauksha, Wis., and whose enthusiasm has sparked similar companywide discussions and action groups in at least two neighboring Wisconsin enterprises. The catalyst behind the discussion is In Search of Excellence, a best-selling book that captured the mood and affirmed the behavior of managers like Gaffney throughout the country.
In the nearly two years since the book first appeared, 1,301,000 hardcover copies have been sold (as of May 1984) in the United States alone, making it the second-fastest-selling nonfiction book since the publishing industry has been tracking such things. (The first was Alex Haley's Roots.) It has been translated into French, Spanish, Portuguese, Japanese; printed in Finland, Sweden, Germany, Holland, Australia, Italy, the Philippines, Denmark, Norway, Israel, Indonesia, Greece, China; reprinted in the English in India; published in paperback in the United States; excerpted by more than 20 magazines and newspapers; and packaged as a cassette tape that busy executives may play in their automobiles, and as a multiday training program.
The conclusions of Excellence -- that in the best-run companies people are important, value systems are powerful, product quality and customer service are closer to the heart of long-term success than attention to return on investment, and that management is the key factor in a company's performance -- appeal to American business's self-confidence, its optimism, and its sense of how things really work.
Although one chief executive officer in Virginia restructured his entire company to be closer to his customers -- one of the eight attributes of excellence described by Thomas J. Peters and Robert H. Waterman Jr. in their book -- not all managers have bought the ideas wholesale. (The other seven attributes are a bias for action; 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; and, finally, simultaneous, loose-tight properties -- autonomy at the shop-floor level combined with fanatic adherence to certain ideals.) Some think the idea of "Management By Wandering Around" (MBWA) is a waste of time. Others find the basic concepts so obvious that they don't understand what all the excitement is about. ("I think I could have written that book," said a secretary at one company. "Don't you think you could have?") Still others aren't sure how advice like "sticking to the knitting" is going to help an Ohio machine-tools manufacturer that had been dependent on the auto industry. But most have discovered that, whatever its flaws, the book makes people think. And that was its appeal to Ed Gaffney. "It looked like it might be a good vehicle for getting a better dialogue going with our employees," he says.
Gaffney, a mechanical engineer, had wanted his own company as far back as he could remember. After graduating from Michigan Technological University and serving in the Navy, he worked for Allis-Chalmers Corp. for a while before starting an engineering service firm. Around the same time, he developed a "lift" chair which, at the press of a button, would tilt forward so his arthritic mother could get out of it more easily. He built another for one of her friends, then a couple more before he realized he had come upon the product he was looking for to launch a manufacturing company. Ortho-Kinetics now employs 120 to 130 people, and produces lift chairs and a line of "mobility" vehicles for the handicapped that resemble golf carts. Sales for the year ended March 1984, the company's 20th, were $18 million. Gaffney says he gets up every morning at 5:30, makes a list of things to do for the day, reads the paper, sets his goals for the day, and comes to work and wanders around. Gaffney is not a manager who generally gets excited about management books or new theories, although he did buy five or six copies of The One-Minute Manager, which is chock-full of how-to suggestions, to pass around to members of his management team. Shortly after that, he saw his sales manager reading In Search of Excellence, and heard a business acquaintance talking about it.
Within six weeks, Gaffney had outlined the book, bought 18 copies for his managers, and issued an "invitation" to a meeting the following Tuesday afternoon to discuss how the chapter "A Bias for Action" applied to Ortho-Kinetics. Before the second meeting, the group had read the chapter called "Close to the Customer," and during the discussion decided that, among other things, the company would figure out a way to ship all emergency repair parts (those without which the handicapped could not operate the vehicles) in 24 hours.
"We had a problem shipping service parts," says Gaffney. "We wanted them out in 24 hours, but we were averaging three days. A task force met and figured out how to solve that problem. In the first month, 90% of the parts were going out within 24 hours. [Before then, about 25% of the parts had gone out within 24 hours.] The second month, 96% of the parts went out within that 24 hours. And the third month, 100% of the parts went out within 24 hours. What it took was for the people involved in doing the job to look at the procedures."
The members of the task force -- a customer service representative, a person from the bench that handles United Parcel Service shipping, a person from purchasing, and the service manager -- met twice and decided that they needed a new postage meter to speed up the processing, that they wanted a rubber stampe saying "Emergency Order" to make everyone more aware of the need for urgency, and that when an emergency order came in, people had to drop routine tasks to attend to it.
"Most important," says Scott Zyduck, an Ortho-Kinetics customer service rep who was head of the task force, "was instilling the attitude that each part had to go out, that people were stranded without it. And second, was letting people know how they were doing."
During the first two months of improvement, Zyduck personally told all employees involved that they were doing well. When they started getting 100% of the emergency parts shipped within 24 hours, he made up a chart. At the end of each day, he would take it out to the shop floor and show the workers how they were doing. He kept a chart posted in the UPS department. At the end of the fist month that all emergency parts went out within 24 hours, the service manager sent around a written notice. At the end of the second month, he bought everybody champagne.
"They still talk about it," says Ken Kanack, manager of operations. That may have been the most dramatic, tangible result of the Tuesday discussion meetings -- but it wasn't the only one. The results were so good, in fact, that Ed Gaffney decided to conduct a second, more structured series for the production people.
Only 15 or 20 minutes each session were spent on Excellence, and then the discussion turned to Ortho-Kinetics, its problems, and what could be done about them. It turned out that the production people wanted to see their managers practice MBWA more diligently, or at least more visibly, that some felt isolated from the corporate family, and that they wanted better communication among departments. Task force meetings led to impressive improvements -- for example, curring the time it took orders to get from the office to the shop floor from three days to 24 hours. Sometimes a group of three to seven employees came up with solutions for the problems in a single meeting. Frequently the solutions cost nothing. Often no managers were involved in these sessions.
The weekly meetings at Ortho-Kinetics vested the people who had read Excellence with confidence that problems could be addressed and solved. While the book doesn't give any specific answers, it provides many examples of how the best-run companies in the country deal with issues that plague all companies. It quotes manager after manager who believed and acted on the idea that small, mundane things are important. And it repeatedly emphasizes that one of the key determinants of success is a resource everyone has at his or her disposal -- attention. The Excellence meetings were "the first time people from all departments in this company really talked," says Kanack, despite previous monthly employee meetings, management meetings, and quality circles.
"Unlike The One-Minute Manager, which Gaffney views as an entertaining introduction to a somewhat limited idea -- that a manager who sets clear goals and provides immediate unambiguous feedback on behavior will be more effective than one who does not -- Excellence is really about "what makes a company run," says Gaffney. "It told us what good companies do differently." He found parts of the book a little abstract, but the "meat of the book" seemed to apply directly to Ortho-Kinetics, and not just to its managers. It describes engineers solving "impossible" problems in improbably short periods of time; a car salesman who sold more cars than anyone else in the world because he showed customers he cared; Frito-Lay's heroic route salesmen who call on each of their customers almost every day. It provides examples that people at all levels of a company could learn from. It supplies a kind of management code or shorthand for important practices, phrases like "chunking," for breaking tasks into pieces that can be handled by small groups; and "skunk works," for small groups of people who get together outside the corporate structure to work on a company problem. And it reinforces the significance of the thousands of little things that a lot of small-company managers instinctively know are important.
As the Ortho-Kinestics production group was finishing up its discussions, Gaffney was plotting to keep the conversations going -- joint meetings with the first and second groups, continuing task forces, and a third Excellence discussion group for people who had missed out on the first two. The company intends to continue building on the momentum indefinitely. "With any luck at all, we'll never finish talking about it," says Kanack.
The Milwaukee Sentinel picked up the Ortho-Kinetics story, which is how John Findley found out about Ed Gaffney's discussion groups. His interest was piqued by Gaffney's experience. Findley, the heir hopeful to his father's company, Findley Adhesives Inc., already had read In Search of Excellence. "It was nothing new," he says of the book. "It just kind of hit me. Sure, I'd heard it before, but how many things have you heard that you don't practice? Everybody talks about product quality and service, but how many people actually do it? The examples and the research seemed valid. I saw a lot of Findley in it. It identified, in writing, a lot of the things we'd been living. I like to say it gave me the soft warm fuzzies."
Findley Adhesives had been started by John's grandfather as Wisconsin Paste Co. in Milwaukee in 1911, and it enjoyed two generations of fairly steady growth. It is a highly profitable, small company that makes the adhesive that keeps cereal box tops from opening, beer, liquor, and jam labels from falling off bottles, and disposable diapers from falling down, among other sticky jobs. It has a reputation for quality and service, and a number of strong consumer companies -- Procter & Gamble, Johnson & Johnson, General Foods, Kelloggs, Smuckers, Miller, and Pabst -- as its customers. It had a long-standing strategy of identifying niche markets -- disposable diapers, for example -- designing a product to fill the niche's need, then putting extraordinary energy into servicing the customers in the niche. It made a practice of competing on value, not price, and wasn't ashamed of the fact that some of its products were expensive. For 20 years Findley grew 15% to 18% a year, but in the last four or five years, the growth rate rose to 25% or 35% a year.
The company was getting large enough and top management old enough so that young Findley figured it was time to articulate some of the beliefs and policies that the older generation of management tended to take for granted -- or to look at as a matter of personal style. Findley Adhesives wasn't having communications problems or values problems that anyone could define, but John Findley had a vague sense that it was taking too long for the new employees joining up to understand the company's values. He wanted to speed up the proces. And he was looking for some kind of vehicle to get the discussion going. That is why he called Ed Gaffney.
Gaffney told Findley about his weekly discussion groups, and sent him his chapter outlines, discussion notes, and the invitation he had given to his managers for the first meeting. John Findley, however, was the son of the number-one man at Findley Adhesives, not the number-one man himself. He could only suggest that the discussions get underway. The top managers responded by saying that although most of them liked the book, they didn't want to meet every week to talk about it. But they did agree that those who hadn't already read the book would read it, that they would increase the frequency of management-group (35 top and middle managers) meetings from quarterly to every 60 days, and that they would devote a portion of that time to talking about the parts of Excellence that applied to Findley Adhesives. John Findley said fine, he wnated to start with "core values," and asked the group to read the chapter on values and the last half of another study, "The Winning Performance of the Midsized Growth Companies," sponsored by the American Business Conference and conducted by the consulting firm McKinsey & Co.
Like a lot of managers at smaller traditional family-owned-and-operated companies, the upper echelon of Findley Adhesives never had sat down and actually talked about their values. They lived what some jokingly referred to as "The Findley Way" as habitually as they put on their ties in the morning, but they had never been struck by the need to write down what they considered to be self-evident truths. After talking about it at a management meeting last March, the younger generation thought it was important to reestablish or at least reiterate the company's core values, and the older generation agreed to go along.
John Findley and Mark Ward, the son of the executive vice-president, made the rounds of the president and a number of Findley's top managers in the weeks before the meeting and asked what they thought Findley's core values were. The two men then wrote a statement, which they presented to the meeting. It read: "Findley Adhesives Inc. is successful because we: compete on perceived value, not on price; provide uneualed service and product quality; build strong relationships with our customers; listen to their needs; and respond quickly. We are innovative and unique, therefore being different from our competitors. Above all, we are successful because of our people. We take pride in being an organization where -- 'You make the difference."
"I wanted the guy in the shipping department, debating about whether or not to send out a Findley product in a ratty box, to have a basis for making that decision," John Findley says.
"We wanted a statement that would make sense to everybody from the chairman of the board to the guy who sweeps out the dock at night," adds Mark Ward. "We must have done 20 drafts."
And the group agreed that the paragraph "captured the essence" of Findley's core values. "We were well aware of those values before John was around," says Russ Anderson, a sales manager who has been with Findley for 22 years. "We believed in them.We had lived them. But we thought there were probably some new people who were not conscious that Findley had those values. Some of the older people who reinforced them by living them were no longer around."
The statement was published in "Findley in Focus," the company newsletter, and the managers agreed to talk about it with the people they worked with. What they found didn't surprise the old guard -- most people knew, without being told, what Findley's values were. Still, John Findley thinks the exercise was important.
"I can remember when Findley Adhesives was a $5-million company," he says. "It was run by 5 people, and they used to meet every morning at 8:30. Now the company is run by 35 people, and some of them are spread all over the world. We need to devise a more formalized system of communication, but at the same time keep it simple, to monitor things, but give autonomy to the individual managers. Most people here like working for a family business. We want to keep it that way. The need for education and communication is strong than ever."
Excellence is a good book, Findley says, and the timing was great, at least for Finding Adhesives. But its true importance is as a provider of a common language and a framework for discussion. This seems especially true after decades of managerial preoccupation with sophisticated financial formulas, efficiencies of scale, and institutionalized product-development processes. Excellence has helped companies talk about issues, attributes, and values that they intuitively know are important.
Ed Gaffney was having lunch with Dean Treptow, president of Milwaukee's Brown Deer Bank and, as must have happened countless times over the past two years in countless other places and among countless other people, the conversation turned to In Search of Excellence and, in this instance, to the seminars at Ortho-Kinetics. Treptow, like John Findley before him, started a discussion series at the bank for employees who wished to attend. Eighteen to 20 of its 50 employees usually showed up at 7:30 Thursday mornings.
They, too, went through the book chapter by chapter, with discussions led by anyone who showed "even the faintest sign of interest" in the subject. "It's important to have regular and ongoing opportunities for everyone in this organization to participate in the decision-making process," says Richard Laabs, the bank's senior vice-president. "There are no civil wars here, but it isn't always easy to get a forum for groups to get together."
The book also reminded managers at Brown Deer Bank of the importance of task forces. Shortly after a couple of the bank's managers had finished reading the book, they decided to put together a task force to evaluate the bank's fringe-benefit policy. And the policy adopted at the task force's suggestion was "far different than what the policy committee [composed of the bank's five senior officers] in its infinite wisdom would have come up with," says Laabs. Other than increased awareness of the need for communication and a reminder of the usefulness of task forces, Laabs isn't sure what Brown Deer's people came away with from the meetings. "But if you could remember the eight principles, you'd be doing well," he says. "That's the kind of stuff football players put inside their helmets. Businesspeople could sew it inside their lapels."
In their examination of successful American businesses, Peters and Waterman found and articulated a national corporate mythology, fragments of which had been stretching the fabric of a more control-oriented managerial thinking for years. They spoke up for a widespread longing to return to old-fashioned American business values. They defined a new emphasis on people, on motivating employees, on informal communications.They placed them in a conceptual framework, provided a history, a vocabulary, and the stamp of legitimacy documented by the stories about successful companies. In a world that sometimes threatened to let itself be governed by a fascination with the tools of an increasingly technology-oriented age, they chose to reemphasize a gut-level understanding of business and life, an understanding that people from many segments of the business world already shared. And American business responded.
"Something has to act as a catalyst," says Ed Gaffney. "Somebody has to set the goals. People need direction. This book helped us to communicate goals, to get more people to believe. It became a focal point." So he and his counterparts throughout the country bought the book, to help pass the word both within their companies and among their business associates. And that mission, probably more than any other, sums up the business and publishing phenomenon of a book called In Search of Excellence. It has set in motion an energetic self-examination among managers about how to get their companies moving and how to keep their employees enthusiastic about their work and progress -- activities that were, in fact, about to take off. They just needed a slight push to get started.