In Search of Excellence

Volume 17 Letter 6

What started as a presentation to Siemens turned into a classic business book published back in 1982 called “In Search of Excellence”. In their book the authors, Bob Waterman and Tom Peters, analyzed 62 organizations for financial performance and cataloged their best practices. Back then there wasn’t an Uber, Tesla, Google or Amazon and Apple was still a young company run out of Steve Jobs’ mom’s garage. The internet was still in its infancy, search engines were yet to be invented and YouTube was still a ways off. So the question is, after 35 years do the principles described in their book still apply? I’ll give you a summary of the principles they described:

Six Principles from In Search of Excellence:

  1. A Bias for Action: The authors summed up a bias for action as ‘ready shoot aim’. Excellent companies, they stated, are not bogged down by analysis paralysis but rather do lots of small incremental advancements and learn from their mistakes. An example might be a Swedish medical device maker which had a mantra of “Fail often and fail fast” in the belief that the way to success is through failure.
  2. Stay Close to the Customer: Some mistakenly interpret this as “ask customers what they want and give it to them” but ‘staying close to the customer’ really means better understanding customers’ problems and how your customers create value so together you can actively solve problems and generate more value. This can mean increasing quality, reliability or improving product or service attributes.
  3. An Entrepreneurship Mindset: To be a successful product champion there is a recognition that risk taking is involved. The mindset that encourages risk taking accepts that mistakes lead to something being learned. As William James once stated “Profit is the reward for taking risk”.
  4. Stick to the Knitting: You should never get into a business you don’t know how to run. You may recall Warren Buffet saying he’ll never invest in an industry he doesn’t understand.
  5. Simple and Lean: Keeping it simple and lean means people know who they are responsible to and what they are responsible for. A manager for Warren Buffet must commit to two numbers, Revenue and Net profit (before tax). Then they must write their strategy on a single piece of paper.
  6. Simultaneous loose / tight: What may sound like an oxymoron means that key company values (quality, service, ethics etc) are tightly adhered to. However, how value is delivered by employees is given a wide berth.

While the book may be 35 years old and the companies touted may or may not continue to exist, many of the principles therein continue to be relevant today. Companies exist to create customer value and shareholder value with products and services that (ideally) benefit society and create meaningful careers for those who work there. The Search for Excellence continues…………

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