' Academy

ol Management

Pxecufive, 20G2. Vol. IG, No 1

Tom Peters on the real world of business^

/nferview by William C. Bognei Executive Overview Tom Peters describes himself as a prince of disorder, champion of bold failures, maestro of zest, professional loudmouth (as a speaker he's "a spitter" . . . according to the cartoon strip Dilhert), corporate cheerleader, lover of markets, capitalist pig . . . and card-carrying memher of the ACLU. The Economist tags him the Vher-guru. And his unconventional views Jed Business Week to describe him as business's "best friend and vrorst nightmare." Tom followed up on fhe success of In Search of Excellence with four more best-selling hardback hooks: A Passion for Excellence (1985, with Nancy Austin), Thriving on Chaos (1987), Liberation Management (1992), and The Circle of Innovation: You Can't Shrink Your Way to Greatness (1937). He has also authored hundreds of articles for various newspapers and popular and academic journals, including California Management Review, The Academy of Management Executive fthree times!), and Harvard Business Review. Tom is a graduate of Cornell (B.C.E., M.C.E.) and Stanford (M.B.A., Ph.D.). He served on active duty in the U.S, Navy in Vietnam (as a Navy Seahee), was a senior White House drug-abuse advisor in 1973-74, and worked at McKinsey & Co. from 1974 to 1981, hecoming a partner in 1977. He is currently the chairman and founder of a glohal training and consulting company, Tom Peters Company (tompeterscompany). When Tom is not in an airplane, he spends his time in Vermont, where he and his wife Susan Sargent (and Max and Ben) co-hahit a 1,500-acre working farm in Tinmouth . . . along with alpacas, chickens, goats, dogs (Hummer and Bosie and Wally . . . they all sleep on the bed), horses, barn cats, sheep, and geese.

Tom, I'd like to ask you first about the original response to In Search of Excellence.^ It generated far more attention when it came out than any prior management book. I guess part of the initial question is, how much of that excitement came because of the pent-up frustration with how sluggish U.S. competitiveness had become by the start of the 1980s? I think it was 100%. As I think all of us recall, in the early '80s we were getting our pants beaten off by the Japanese. First it was shipbuilding, partially by the Koreans, then it was steel, then it was cars, and then it was semiconductors. I was close friends and colleagues with Bill Ouchi and Tony Athos and Richard Pascale, and the Art of Japanese Management^ and Theory Z^ had come out. Initially, Bob Waterman and I were to40

tally irritated that our colleagues had come out first. In retrospect, it was the best thing that ever happened to us, because those two books were very popular. By the time of In Search of Excellence, not only was American management getting pounded, but in a xenophobic way, I think managers were tired of everybody battering them and saying that the only people who knew how to find the difference between their left hand and their right were the Japanese. There was absolutely, utterly, nothing positive written about American management. I do want to say, and really go on the record, that there is not a doubt in my mind that the real progenitor of this taking a new look at management was the famous Bob Hayes and Bill Abernathy piece in the Harvard Business Review, "Managing Our Way to Economic Decline."'*

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turned out that the emperor certainly wasn't naked but was wearing a lot less clothes than had been imagined. So you had Corporate Cultures,^ you had Theory Z, you had the Art of Japanese Management, then you had In Search of Excellence, then almost within spitting distance of that you had Lee Iacocca's book'^ and this incredible phenomenon, which was the CEO as hero. Because if you go back again to the '70s, I think of the difference between Jack Welch on the one hand and his predecessor Reg Jones on the other this way: Reg was as gray as Jack and Lee Iacocca are Technicolor. But it fit the times; again, no argument. Those were the Jonesera stuff, CEOs were bland, CEOs were unknown, and probably the average person on the street couldn't have named their own CEO, let alone a half dozen CEOs. There were no Sumner Redstones, no Ted Turners, no Steve Cases, no Bill Gateses, no Andy Groves, let alone no Jack Welches. Well, I think that lack Welch and Reg Jones are two of the best examples that we still use today in contrasting CEO styles of management. My only point is that I would give them both A grades. Tom Peters One of the things you start off mentioning very early in In Search of Excellence is your eight basics; you call them, repeatedly, "motherhoods." You say maybe these are trite and everyone says they know them, but to some extent, top managers weren't walking the talk back then. Was this a threat to them? Well, yes and no. Let's look at Mr. Drucker and let's look at Mr. Abernathy and let's look at the Harvard Business School dogma; it was very arguably the right dogma for 1942 through 1957. My old Business Week friend John Byrne wrote a marvelous book about six or seven years ago called The Whiz Kids,^ and it focused on Bob McNamara and Tex Thornton. So all of this hyper-analytic, budget-driven. Bob Anthony, McNamara stuff was done exactly appropriately at the time. Then suddenly we're getting the crap beaten out of us, and I think rather than say that what we were doing was threatening, I would say managers were befuddled. By the mid-'60s or early '70s, the Europeans were scared to death that the American way was going to take over, and American managers believed, essentially, that they were infallible. Then effectively, it If we look back over those eight basics that you set out 20 years ago, did you anticipate the breadth with which some of them would be embraced? Was the high level of response to some of these admonitions expected? No, none oi it was expected. It was utterly unexpected. You know, I've often made the comment that I think the first printing of the book was either 5,000 or 10,000 copies, and Waterman and I thought that was optimistic. A few of the firms. Caterpillar, Kmart, GM and IBM, that you looked at had some tough times. How much of that difficulty was due to their failure to stick with these basic principles, and how much was it simply the speed and scope of environmental change that they had to face? Well, I think the answer is, to take your two terms, failure to cope and speed of change, it's A multiplied by B. You know, first of all, even though I've said versions of this, in the hot book du jour, the Clayton Christiansen book,^ Clayton at one point early on says the number-one problem that companies have is good management. That is, with good management you look too hard at your current customers, you look too hard at your current model em-

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ployees and so on, and these folks got stuck with their press clippings to some extent, number one. Then the world changed on them to a degree. The comment I've always made in my seminars, particularly, for example, if I have people from AT&T or GM, is I say to them, and this is meant from the heart, "I am astonished." I've said to them, "I'm pessimistic about big company change, A. I'm astonished at how much you've changed since 1985, B. And C, given the environmental change, I'm astonished at how little good it's done you relatively. That is, you've changed three times faster than I would have imagined. The problem is, the environment has changed five times faster. So even though you're a lot more agile and a lot more effective and a lot more quality conscious and a lot more people oriented than you were 15 years ago, we're confronted with a world of Dells and Oracles and people who are really redefining the business paradigm in a way that I don't think anybody, including Drucker or Toffler or other futurists, even came close to imagining."

Yes, Gary Hamel got the shift, Mike didn't. In a way, Mike was like the Japanese; he was the last vestige of the strategic-positioning, plan-yourway-to-success environment. Exactly as you say, now you've got Gary Hamel talking about the creation of latent corporate resources, which can respond to any damn thing that happens. It's also been kind of amusing, as the coauthor of In Search of Excellence, to watch his migration. Remember also that in In Search of Excellence we had that little two-liner that said soft is hard, hard is soft, and the strategy stuff is not as hard as it looks and the people stuff and the entrepreneurial spirit stuff is the real hard stuff. Now you've got Hamel leading off his current activities by saying, "Create a cause, not a business,""^ which for God's sakes is, when I put on my snide aging old man's hat, what we said 20 years ago. But the world wasn't quite ready for it, and we are saying things more cleverly now than then.

When we look at some of those firms that came back in the '90s, IBM, Caterpillar and the like, were people like Lou Gerstner really able to at least do that three-fifths of the environmental change that you need? I think in some cases yes. Certainly there's a big difference between a Cat and an IBM, because Caterpillar was not confronted with particularly fast-moving competition. But in the case of an IBM, which was confronted with Gates and the Compaqs and the Dells and so on, I think that IBM is one of the most effective turnarounds, again given the context of their competition, that's ever been seen. On the other hand, with great kudos to Gerstner, the reality is that IBM today is a damn good company, but they aren't setting the agenda the way they were when we wrote about them in 1982. If you were to attend a serious computer conference or something like that, the conversation focuses on the AOL Time Warners and it focuses on the Oracles and it focuses on the Microsofts, and we all acknowledge that IBM is an important player, but the world is not stealing Lou Gerstner's garbage to try to find his deepest thoughts so that they can predict what's going to happen next. At the time In Search of Excellence came out, the other really popular book read and used in business schools was Michael Porter's book,^ and that really emphasized positioning the firm, positioning the business within the industry. Now we've sort of gone away irom that to an emphasis on building resources that can be flexible.

The strategy stuff is not as hard as it looks and the people stuff and the entrepreneurial spirit stuff is the real hard stuff.
If we look from In Search of Excellence to Liberation Management,^* you continue to put new dimensions or new elements into your prescription. When I read Liberation Management, the two things that come out big in that book are the use of networks and the use of knowledge management. Yes, and I had so much fun with that knowledge management stuff, because nobody was talking about that at the time. As you move more towards discussing culture and people, the question arises for the multinational or transnational company as to how transferable these principles are to other national cultures. I've always been of two minds, and they are the following: If you are not extremely sensitive to national cultural differences, you shouldn't be allowed out onto the management field. Having said that, to a significant degree people are people. Let me tell you a funny little story. In Search of Excellence came out in '82. We got together with a training company that's now been bought 17 times and so on, called Zanger Miller. Jack Zanger had been the HR vice president at Syntex

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and then started his own training company. He wanted to do a training program based on In Search of Excellence. But they were very international, and so this program, which was called Towards Excellence, was peddled all over hell and gone. We got the most amusing responses that I can ever remember. We had Saudi Airlines say, "We love this program. It's the first program based on the principles of Islam." Then we sold it to some big company in India, who said it was the first Hindu program. Then we sold it to somebody in the Philippines who said it was based on the principles of Catholicism. I go overseas and I'm scared to death, because I say I'm an American for God's sakes. I talk about baseball. I talk about football. My only significant time out of the country was spent in Vietnam, in the company of Americans, so that doesn't exactly count. And then I talk about this stuff and people identify with it. I'd love to teach a course on the cultural stuff, just because I'm confused myself. You know there's a book called Riding the Waves of Cul(ure,'^ by that Dutch consultant Trompenaars. I love it, I love it. Even though on about page ten he says, "If you want to understand international business, the first thing to do is to make sure you never read a word of Tom Peters or Peter Drucker," which I loved. I've met him and we've laughed hard about it.

That's an interesting observation, because as academics would say, he writes very differently from an academic, in that he uses so much more narrative in his presentation. Yes. One other thing is intriguing to me, which is back to the point of In Search of Excellence and so on. I had a good friend years ago at Stanford, and he said to me, "One of the most amusing things is that when our 25-year-olds and 26-year-olds are going through the MBA program, they all love the courses in finance and decision science. Then when they come back for an executive program at 35, all they want is OB, because their whole damn life is taken up with people problems." I think that's a bit of an exaggeration, but there's also a significant grain of truth to that statement.

Is the search still on? Are we still searching for the ultimate prescription, or is it a constantly changing prescription that requires new perspectives like those in Liijerafion Management? Well, I would hope to God we're not hunting for the one best way any more. I would hope that Frederick Taylor has had the final spike nailed into his tomb and we're living with quantum mechanics instead of Newtonian physics, and hopefully we're living with something a little closer to that in the world of enterprise as well. Many things have changed and many things were done anything but perfectly in In Search of Excellence. But my favorite on the list is the one that was number one, which is "a bias for action." That was a serious slap in the face to the strategic planners in 1982. And in the big companies today it remains damn near as much of a problem as it was in 1982. But in a world where you really don't know what the dimensions of the playing field are, you've got to try something and see what the heck happens, and that's a lot of what's gone on, albeit with many business failures involved as well. But in the Austins and in the Atlantas and in the Silicon Valleys and the Seattles and the Phoenixes and the Fort Lauderdales, I mean the whole thing is fascinating. It's a different set of cities that are redefining the world. You know Atlanta, Fort Lauderdale. Phoenix, San Jose, and Austin and Seattle are now telling New York, Chicago, etc., where to go and how to go there. My view is very straightforward and that is: The book was pretty good, but without any question it is a cultural icon in the world of the way business and business education thought about itself. In the sense of us being worthy or the research being

"If you want to understand international business, the first thing to do is to make sure you never read a word of Tom Peters or Peter Drucker."

You wrote an article for the California Management Review^^ on your Stanford teaching experiences that Henry Mintzberg put in his textbook about ten years ago, where you commented on how you would get a response such as, "Tom Peters teaches these really interesting soft things. They're really entertaining, but I don't think those are the tools I'm really going to be using." Right, and incidentally, relative to this whole discussion, and I've said it in several places, I go on record as saying that Henry Mintzberg's Rise and Fall of Strategic Planning^'^ ranks as my numberone business book of the last fifteen years. I thought it was a brilliant piece of work.

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worthy, it was a clear punctuation mark, and the world was kind of never the same. Most of the citations from In Search of Excellence are from the first three pages and the last three pages. So you can't exactly kid yourself into believing that everybody memorized the book. But it had to sit on people's desks for a couple ol years, and it was a symbol of a pretty fresh re-look at management that probably, if it hadn't been us, it would have been somebody else. Again, it started with brothers Hayes and Abernathy, this really serious relook, which continues to this day. I think management dogma is far from settled at this stage of the game.

business, particularly in today's environment, isn't about theory.

// there's one thing that's damn sure, it's that the real world of business, particularly in today's environment, isn't about theory.
Endnotes
' Peters, T., & Waterman, R. 1982. In search of excellence; Lessons from America's best-run companies. New York: Harper & Row. ^ Richard, P., & Anthony, A. 1981. The art of Japanese management. New York: Warner Books. ^ Ouchi, W. 1981. Theory Z: How American business can meet the Japanese challenge. New York: Addison-Wesley. ''Hayes, R., & Abernathy, W. 1980. Managing our way to economic decline. Harvard Business fleview, 58(4): 67-77. ^ Byrne, J. 1993. The whiz kids: The founding fathers of American businessAnd the legacy they left us. New York: Doubleday. ^Deal, T., & Kennedy, A. 1984. Corporate cultures: The rites and rituals ol corporate life. New York: Addison Wesley Longman, Inc. 'Iacocca, L. (with W. Novak). 1984. Iacocca: An autobiography. New York: Bantam. ^ Christensen, C. 1997. The innovator's dilemma: When new technologies cause great iirms to fail. Boston: Harvard Business School Publishing. ^ Porter, M. 1980. Competitive strategy. New York: Free Press. '" Hamel, G. 2000. Leading the revolution. Boston: Harvard Business School Press. " Peters, T. 1992. Liberation management: Necessary disorganization for the nanosecond nineties. New York: Alfred A. Knopf. '^ Trompenaars, F., & Hampden-Turner, C. 1998. Riding the waves ol culture: Understanding diversity in global business. 2nd ed. New York: McGraw-Hill. '^ Peters, T. i984. Strategy follows structure: Developing distinctive skills. Cahfornia Management Beview, 26(3): 114-128. ''' Mintzberg, H. 1993. The rise and fall of strategic planning: Reconceiving roles ior planning, plans, planners. New York: Free Press.

The hot topic right now is change management, the actual creation of dynamics in the organization. Yes. Well, I'm even told that that's 50% of the business at my old employer, McKinsey. It was very much the tail that had been docked at the time that Waterman and I started our thing. Now it's half oi what the heck they do. I think, though, for people who do work in change management and the like, this is coming from the soft areas, the OB and the organizational dynamics areas. Those had always been sort of the laggards in terms of prestige and salary and the like in both the business schools and what the students perceived as being important. Now that definitely is changing. If I were czar, there's a half of me that says I would never allow kids into a business school until they were at least 30 years of age and until they've been beaten and battered by the real world of dealing with change. Because again, there's too much oi a tendency that the 24-year-old who is just coming out with a couple of years' seasoning from the pristine undergraduate environment is playing with wonderful stuffbut it's theory. If there's one thing that's damn sure, it's that the real world of

About the Author

William C. Bogner is Retrospectives Editor of The Executive.