Leading Blog






12.05.22

“In Search of Excellence” Revisited

Search of Excellence Revisited

IN 1982, Tom Peters and Bob Waterman released In Search of Excellence: Lessons from America’s Best-Run Companies. The book was a huge business bestseller and served as a guide for managers for many years to come. It became required reading in business school classes. Yet, 40 years later, few now speak of the book. Perhaps it’s time for In Search of Excellence to find a new audience.

When the book project started in 1978, the U.S. was in the midst of an economic quagmire. Inflation was in double digits while productivity and personal income were stagnant — an economic condition that became known as stagflation. Interest rates were through the roof. Interest rates on real estate loans had climbed to 20 percent and higher. The country was suffering an existential crisis, as well, amidst an OPEC oil embargo coinciding with Vietnam War and Watergate fatigue. Feel familiar?

September 11th, the Iraq and Afghanistan wars, the Great Recession, the COVID pandemic, and polarized politics have created our own existential worries. Yet, Peters and Waterman pointed out that there were bright spots in the economy. In spite of the times, some companies were pursuing excellence in the execution of their missions. They believed if the characteristics of excellent companies could be identified and shared with corporate America, more organizations could perform better and lift the country out of its doldrums.

Consider the timelessness of these key qualities:

Eight Characteristics of Excellent Companies

Like Jim Collins accomplished in Good to Great: Why Some Companies Make the Leap…And Others Don’t, Peters and Waterman developed a methodology for their study. Structure, strategy, people, management style, systems and procedures, guiding concepts and shared values, and corporate strengths and skills, along with financial performance, served as criteria for selecting excellent companies. Forty-three companies made the cut, with eight common characteristics identified among them:

  1. A bias for action rather than overanalyzing situations
  2. A customer-first focus in all decisions
  3. Ongoing innovation with new products, services, and processes through autonomy and entrepreneurship
  4. Productivity through well-trained, rewarded, and empowered front-line employees
  5. Hands-on, value-driven leadership
  6. Sticking to the knitting and avoiding distractions from the key business
  7. Avoiding top-heavy executive ranks and organizational bureaucracy
  8. Simultaneous loose-tight properties in which firm targets are set, but individual discretion is allowed to attain them

The eight characteristics of excellent companies are well-known today, even if most aren’t aware of their source. But knowledge and application are two different animals. How many companies today are actually excellent? How many companies exhibit these eight characteristics? And is a new study needed to identify today’s excellent companies to serve as beacons to lift the country out of its malaise?

Perhaps not. Buried within the text, Peters and Waterman offer the bottom line of how to identify excellence in companies. It’s one we use every day, consciously or not, whenever we buy something. At the best companies, “The love of the product and customer was palpable.”

Love the Customer

Love. It’s a strong word, eliciting romance and passion. But it can be adapted in a business context to reflect values of caring, kindness, consideration, respect, and honesty. Love can also be understood by placing it on the end of a continuum with its opposite: greed. We recognize a company’s greediness when it misleads, avoids making things right with its customers, ignores the well-being of its employees, layers bureaucracy between executives and everyone else to avoid accountability, shirks quality, and hits the customer with sneaky profit practices like hidden fees and up charges.

Love and greed. You know them when you see them. For example, each time my local Culligan service delivery man comes with salt for my water unit, he tries to leave an unneeded extra bag in my garage. He tells me it’s to cut down on the number of trips to my house and save gas. He never gives me a straight answer on why he just doesn’t put the required amount in the unit and leave it at that. I now have six extra bags that have accumulated in my garage from the times I haven’t been able to stop this practice in person. The corporate office hasn’t solved the problem for me either. Whether it’s an accounting trick to boost sales per stop or a fuel savings for the driver, one thing is clear: Culligan is making a decision that’s good for them but not for the customer. That’s what greed, and not love for the customer, looks like.

Harkening to the Golden Rule, companies should treat customers as they would like to be treated. Fred Reichheld, the creator of the Net Promoter Score, believes that love and greed are the foundations of two different types of capitalism: customer capitalism and financial capitalism. Customer capitalists abide by the Golden Rule with customers, whereas financial capitalists make decisions with the bottom line as their only guide. However, treating the customer with love is the best way to boost the bottom line in the long run. Financial capitalism, on the other hand, is concerned with short-term results without regard for long-term consequences.

Capitalism is under scrutiny today as to whether it’s the right system for the country to operate under. Might simply loving the customer help companies make a better case for what capitalism can provide? Might loving the customer help companies play a role in boosting the morale of the country?

Excellence is Discovered in the Details

You can also identify a company pursuing excellence and one that loves the customer by how much it pays attention to the details in its products and services. Consider a movie theater. Is the condiment area stocked with supplies? Are the seats and aisles cleaned well between shows? Are the restrooms maintained well? These little touches add to a special environment for how we experience a movie. If the theater looks like it’s given the care of a messy college dorm room, we’re better off waiting for the movie to come to our big-screen televisions at home.

With these qualities in mind, let’s circle back to the state of the world today. Our political climate might be hard to change, but we all have the chance to improve matters in our work. Given that today isn’t the only era in which these struggles have taken place, nor will it be the last, the pursuit of excellence remains one of the best ways to bring purpose and satisfaction back to our lives. Enlightened managers with a new commitment to excellence and quality in the 1980s made a difference. A job well done by enough of us in these times can bring a needed change to the world.

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Leading Forum
Michael Goldsby is the Stoops Distinguished Professor of Entrepreneurship and Chief Entrepreneurship Officer at Ball State University. Rob Mathews is the Executive Director of the Entrepreneurial Leadership Institute at Ball University. His new book with co-authors Min Basadur and Rob Mathews, Design-Centered Entrepreneurship, Second Edition (Routledge, 2022), provides a research-driven, step-by-step approach to creative problem-solving. Learn more at www.elprofile.com.

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Posted by Michael McKinney at 04:42 PM
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