How to Be Great

Lessons in good management

One message of In Search of Excellence is K.I.S.S., for Keep It Simple, Stupid.

The best-managed American companies do just that, in their meetings, paperwork, memos and lines of communication, say Co-Authors Thomas J. Peters and Robert H. Waterman Jr. in their book to be published this month by Harper & Row (360 pages; $19.95). Among those companies: United Technologies and Procter & Gamble, both of which have banned memos longer than a page.

Peters, an alumnus of the New York management consulting firm of McKinsey & Co. who runs his own consulting firm in California, and Waterman, now a director of McKinsey, have themselves done an excellent job of putting forth what the book's subtitle calls "Lessons from America's Best-Run Companies." The authors draw their teachings from 42 model U.S. companies that their research team began studying in July 1979.

The list includes Johnson & Johnson as well as Procter & Gamble in consumer goods; Digital Equipment, Hewlett-Packard, IBM and Emerson Electric in high technology; Delta Air Lines and McDonald's in services; and Caterpillar, Dana and 3M in a catchall category called "general industrial." Those companies were singled out not only because of their solid financial performance over the long haul (20 years or more) but also because of other qualities, especially the ability to innovate. The excellent companies, say the authors, "fawn" on their customers and learn from them. The best managers value action above all else, a spirit of "do it, fix it, try it." They insist on top quality in their products. They solicit their employees' ideas and "treat them like adults," allowing talented people "long tethers" for experimenting. To uncover these characteristics, the authors spent considerable time at each company. Said Waterman: "We didn't talk just to top management. We talked with ex-employees and people down the line."

How did the best companies get that way? In almost every case, say the authors, "a strong leader (or two) seemed to have had a lot to do with making the company excellent in the first place." The great leaders leave a legacy that their successors must protect. Peters and Waterman conclude that "the real role of the chief executive is to manage the values of the organization." The authors draw heavily upon Social Scientist Ernest Becker, who pointed out (in the 1970s) the essential "dualism" of people: to want both to be part of a team and be recognized individually. The best companies find ways to satisfy these needs.

IBM is one company cited by the authors for a long record of motivating people and rewarding them in effective, sometimes spectacular ways. There was the time, for example, when the manager of a 100-person IBM sales unit rented a stadium in the Meadowlands Sports Complex in New Jersey for an evening. Before spouses, children and some top executives, all members of the sales staff ran through the players' tunnel to the field while their names were flashed on an electronic scoreboard to the cheers of the crowd.

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