A Book Revie w

Presented by : Allan 0004 Pragun 0024

Searching for excellence
“People who have accomplished work worthwhile have had a very high sense of the way to do things. They have not been content with mediocrity. They have not confined themselves to the beaten tracks; they have never been satisfied to do things just as others do them, but always a little better. They always pushed things that came to their hands a little higher up, this little farther on. That counts in the quality of life's work. It is constant effort to be first-class in everything one attempts that conquers the heights of excellence.” Orison Swett Marden (18501924), Founder of Success magazine

What does the book talk about?
3m  action  almost  another  best  better  big   Business  champions  come  Companies control  cost  customer  day   division  does  down  employees even  example   Excellence executive  fact  few  find  first   force  form  get  go  good group  hp  ibm  idea   important  individual  industry  innovation  job   know  leader  line  little lot  major   Management  managers  market   McDonald  need  New  now  number  often  organization  own  part  People  percent  plant   point  president  problem  process Product  program  project  put  quality  rather  really   research  right  sales  seem  service set  simple  

“Almost all quality improvement comes via simplification of design, manufacturing... layout, processes, and procedures.” “Excellent firms don't believe in excellence - only in constant improvement and constant change.” “The magic formula that successful businesses have discovered is to treat customers like guests and employees like people.” Tom Peters

History Of The Book
• Published in 1982 • Started as a project on Organization: Structure and People in 1977, given by McKinsey based in San Francisco. • In 1979, presented their findings as a 700-slide two day presentation to Siemens. • Later PepsiCo invited to present but asked to compress the findings. • Thus, came the eight common themes responsible for the success of a corporation.

Design of the Research
Sample Size
Started with 62 best performing McKinsey clients and finally examine 43 Fortune 500’s top performing companies . They were: 3. High Technology Companies 4. Consumer Goods Durables Companies 5. General Industrial Goods Companies of Interest 6. Service Companies 7. Project Management Companies 8. Resource Based Companies

Design of the Research…
Tools employed for data collection: Limited interviews from different people 25 Years of Literature Review Results and Findings: Came up with 22 attribute of Business Excellence Brought them down to 8 Attributes

McKinsey 7S Model

Eight Common Themes of Excellence
A bias for action Close to the customer Autonomy and entrepreneurship Productivity through people Hands-on, value-driven - management philosophy • Stick to the knitting • Simple form, lean staff • Simultaneous loose-tight properties • • • • •

The Rational Model
American Management Style and Flaws
3. The Business Schools are doing us in. 4. The so-called professional managers lack the right perspective 5. Managers do not personally identify with what their companies do. 6. Managers do not take enough interest in their people 7. Top managers and their staff have become isolated in their analytic ivory towers.

Man Waiting for Motivation
Simplicity and Complexity
• The excellent companies intentionally keep corporate staff small. • Eliminate Paper work. E.g. P&G (Just one page Memo)

Positive Reinforcement
Two ways to gain attention: 7. Attempt through positive reinforcement to lead people gently over a period of time to pay attention to new article. 8. The reinforcement should be immediacy.

Managing Ambiguity and Paradox
The test of a first rated intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function. F. Scott Fitzgerald As a leader, you are either authoritarian or democratic. But in reality you are neither and both at the same time. e.g. Messrs Watson (IBM) Kroc (McDonald) Mariot et al.

Four Stages of Theory and Leading Theorists
Closed System Open System

Rational Actor

Social Actor

Importance of Culture and Evolution
They say that business has to be fiscally sound but their value set integrates the notions of economic health, serving customs and making money down the line.

To the extent that culture and shared values are important in unifying the social dimensions of an organization, managed evolution is important in keeping a company adaptive

A Bias for action
• Ambiguity in articulation of action orientation. • Organizational fluidity ( presence of action devices ). • Adhocracy • MBWA • E.g. Of Coning glass.

• Chunking, E.g. Exxon, Japan. • Experimenting organizations. • Alacrity and sheer numbers of experiments are ingredients of success. • Amoco oil wells. • Bootlegging at GE. (relative invisibility)

Close to the customer
Customer is being ignored or considered a nuisance.

Autonomy and Entrepreneurship
• Companies making a purposeful tradeoff. • The Champions. • Probability of success . • Tolerating Failure.( 3M’s 11th commanment)

Productivity through people
• Key to people orientation – Trust. • “people” and not workers, “Crew members” and not personnel. • Success stories.

• Figure out your value system and decide what your company stands for • Value is what an organisation does that gives everybody working in it the most pride • Values may not be hard like Structure, policies,strategies etc-Philips and kennedy • However not in excellent companies • Why does a company really fail??

• Reason- Values cannot be copied. • Caterpillar-dealers, J and J- railroad workers • Examples are Being the best, superior quality and service • Persistence is vital when sticking to values • HANDS ON MANAGEMENT is Management by wandering around • “Do not summon people to your office” • ED Calson of United Airlines( American CEOS) • Do not develop corporate cancer • Maintain good relationship with line positions

• Todays Conglomerates • Heubleins Acquisition of Conel Sanders in liquor business- “ Bought 5000 Stores!!!” • Du ponts acquistion of Connocos Oil business • Is it credible for a Electronics executive to talk about Consumer goods? • Most succesful diversification are those which diversify around a single skill eg:3M- The coating and bonding technology

• Related diversification is ok- GE from generation turbines to jet engines • Least succesful is reckless diversificiation • No synergy among most conglomerates • Pioneering European companies prefer internal expansion to mergers-Airbus,Benz • “Great companies do not test new waters with both feet” • “Small is beautiful” • Ill advised forays- P and G with pringles • “ COLGATE trying to become the firm it was a decade ago”

• Along with size comes Complexity • Most complex-Matrix Organisation structure • It consists of product grouping,Market segment, geographic area plus basic functions • It dilutes priorites Eg: dual control between production and functional managers • Boeing- either project team or technical discipline( gave rise to project management) • Follow any one dimension only • J and J- 150 independent divisions

• Simplicity is the best form of flexibility • LEAN STAFF- few administrators, more operators • Not more than 100 in corporate office • Cut down on hierarchy • Five levels of management in TOYOTA, 15 in ford • Structure of 80’s- Breaking old habits , Stability through simplicity and Entrepreneurship

• It is essence the co-existence of firm central direction and maximum autonomy • Best managers like procter, Hewlet packard were strict disciplinarians but gave maximum autonomy • “Give plenty of rope but accept the chance that people would hang themselves” • Culture- @ IBM it is service, chemical engineers @ 3m • Excellent companies have self defense mechanismcustomers,peers etc


• Quality vs cost- “ If u make a good with quality you don’t have to make it twice” • Execution vs autonomy-Classroom (autonomy is product of discipline) • Short vs Long term trade off-Believe more in values • Smart-Dumb Rule- MBA vs simpleton • People who lead excellent companies are simple people eg: Marriot ,procter,gamble,hewlett packard

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