Eight ways top companies help themselves stay on top
Never forget the basics of keeping close to your customers and close to your staff.
This is the philosophy of companies such as Bechtel, Caterpillar Tractor, Dana, Delta Airlines, Digital Equipment, IBM, 3M, McDonald's, and Johnson & Johnson.
Attention to these goals, say Thomas Peters and Robert Waterman Jr., makes these ''excellent'' firms. Though deep recession has caused some of them to falter, they are still ''resilient'' and are examples for the rest of corporate America, the two management consultants say.
Peters and Waterman are authors of ''In Search of Excellence,'' (New York: Harper & Row. $19.95) a look at America's best-run companies and why they are so successful.
After less than a month on store shelves, the book is in its eighth printing. It is expected to ride high on best-seller lists and be more widely read than ''Theory Z: How American Business can beat the Japanese Challenge,'' by William Ouchi.
The book stems from research and interviews with 62 companies when the authors worked as consultants for McKinsey & Company, a large consulting firm based in New York. The book was written because, ''if you don't know what excellence looks like, it's really hard to get better,'' said Mr. Waterman in an interview at the McKinsey offices.
Most American companies, the authors complain, are too ''rational'' - they pay too much attention to quantitative studies, financial analyses, and corporate structure, and not enough to employees and customers they work with. If you focus on the latter, ''good financial performance follows,'' Waterman reasons.
In their studies, Peters and Waterman found successful companies - ''the ones that can stay relevant even when the market place rapidly changes,'' says Waterman - have eight characteristics in common.
A bias for action. Experimenting and acting on an idea is much better than being paralyzed by proposals or fear of change, say the authors.
Closeness to the customer. The best firms listen and respond to customer needs - through better quality, service, and products. The authors applaud Caterpillar's 48-hour guaranteed parts delivery, and Procter & Gamble's 800 -toll-free number on product packages.
Autonomy and entrepreneurship. Excellent companies encourage innovation with everyone - from truck drivers to lab technicians. It's all right if an idea doesn't always work; apparently it's important to support risk-taking and good tries.
Productivity through people. Employees are the most important resource, the book says. Talk to them, listen to them, respect them, and give them responsibility. Successful firms have weeded out the we-they attitude between management and labor, the writers say. At IBM, for instance, the motto is ''respect for the individual.''
Hands-on, value driven. Here the authors point to the cofounder of Hewlett-Packard, William Hewlett, who regularly walked the factory floors. The best managers apparently know what work on all levels of the business is like. They motivate workers through values, such as McDonald's emphasis on QSC&V - quality, service, cleanliness, and value, the authors say.
Stick to the knitting. The odds are in favor of firms that stay with the business they know and resist the acquisition rampage.
Simple form, lean staff. Simplicity in the organization of staff is key.
Loose and tight organization at the same time. The excellent companies are both centralized and decentralized, research found. They push autonomy down to the shop floor, the authors write, but also want employees to focus on central ideas.
Why are these eight points ''conspicuously missing in most companies''?
Waterman said one reason is that firms get stuck in the rut of doing things the same old way and are not open to change.
The auto industry, for example, is ''too full of pride,'' says Peters, who now lectures at Stanford University's business school and runs his own consulting firm. ''The No. 1 issue is a demoralzied work force. It was the epitome of stupidity for GM this year to announce sweet bonus changes for managers 24 hours after unions made concessions.''
Peters says Chrysler is on the right track when Lee Iacocca, ''though a bit of a showman, takes his message to the public and puts himself on the line as to the success or failure of Chrysler.''
American industry also hasn't gotten a grasp on the basics because it's not getting the right kind of managers from the business schools, Peters says.
Schools ''should be pounding on the doors of IBM, looking for managers to teach courses,'' Peters says. But even if they did, the subject is ''next to impossible to teach.
''Someone coming back to school with five years experience will be responsive to (the eight points). But no way can you bring it to life for a 25-year-old who never had a newspaper route or sold girl-scout cookies.''
But change is bubbling up through America's industries. ''America is humbled enough by failures that now it is ready to listen,'' says Waterman. The authors are getting enquiries from such companies as AT&T and Kaiser Aluminum.
But Peters isn't quite so sure. ''Industry knows there are problems, but I wish they were more aware of the issue of a revitalized work force. They think robots are going to get us out of a crisis, and it's just not so.''