8 Characteristics of Successful Companies
by Parker · 53 things on NewTwos
- 8 attributes of excellent, innovative companies from "In Search of Excellence" by Thomas Peters
- A bias for action
- “Ready. Fire. Aim.” - Executive at Cadbury's
- Instead of allowing 250 engineers and marketers to work on a new product in isolation for fifteen months, they form bands of 5 to 25 and test ideas out on a customer, often with inexpensive prototypes, within a matter of weeks.
- Advancement takes place only when we do something: try an early prototype on a customer or two, run a quick and dirty test market, stick a jury-rig device on an operating production line, test a new sales promotion on 50,000 subscribers.
- “Doing things” (lots of experiments, tries) leads to rapid and effective learning, adaptation, diffusion, and commitment; it is the hallmark of the well-run company.
- “Eighty percent of success is showing up.” - Woody Allen
- An excellent company attribute that seems to underpin the rest: action orientation, a bias for getting things done.
- Ready. Fire. Aim. Learn from your tries. That's enough.
- Close to the customer
- “It's a shame that, in so many companies, whenever you get good service, it's an exception.” - Francis G. Rodgers
- Many of the innovative companies got their best product ideas from customers. That comes from listening, intently and regularly.
- The excellent companies are better listeners.
- The excellent companies really are close to their customers. That's it. Other companies talk about it; the excellent companies do it.
- Autonomy and entrepreneurship
- “Make sure you generate a reasonable number of mistakes.” - Fletcher Byrom
- Excellent companies seem to take all sorts of special trouble to foster, nourish, and care for what we call "product champions"-those individuals who believe so strongly in their ideas that they take it on themselves to damn the bureaucracy and maneuver their projects through the system and out to the customer.
- “Champions of new inventions display persistence and courage of heroic quality.” - Edward Schon
- We are talking about tough-minded respect for the individual and the willingness to train him, to set reasonable and clear expectations for him, and to grant him practical autonomy to step out and contribute directly to his job.
- Productivity through people
- “Almost everybody agrees, 'people are our most important asset.' Yet almost none really lives it.” - Rene McPherson
- Every worker being seen as a source of ideas, not just acting as a pair of hands.
- The excellent companies require and demand extraordinary performance from the average man.
- It is attention to employees, not work conditions per se, that has the dominant impact on productivity.
- Treat people as adults. Treat them as partners; treat them with dignity; treat them with respect. Treat them—not capital spending and automation-as the primary source of productivity gains.
- These companies give people control over their destinies; they make meaning for people. They turn the average Joe and the average Jane into winners. They let, even insist that, people stick out. They accentuate the positive.
- There was hardly a more pervasive theme in the excellent companies than respect for the individual.
- Hands-on value driven
- “The basic philosophy of an organization has far more to do with its achievements than do technological or economic resources, organizational structure, innovation and timing.” - Thomas Watson, Jr.
- Organizational values and purpose are defined more by what executives do than by what they say.
- If you don't constantly monitor how people are operating, not only will they tend to wander off track but also they will begin to believe you weren't serious about the plan in the first place. So, management by wandering around is the business of staying in touch with the territory all the time.
- We found that companies whose only articulated goals were financial did not do nearly as well financially as companies that had broader sets of values.
- Every excellent company we studied is clear on what it stands for, and takes the process of value shaping seriously.
- Values are not usually transmitted through formal written procedures. They are more often diffused by softer means: specifically the stories, myths, legends, and metaphors.
- "Set and demand standards of excellence. Anybody who accepts mediocrity—in school, in job, in life—is a guy who compromises. And when the leader compromises, the whole damn organization compromises." - Charles Knight
- Stick to the knitting
- “This company has never left its base. We seek to be anything but a conglomerate.” - Edward G. Harness
- While there were a few exceptions, the odds for excellent performance seem strongly to favor those companies that stay reasonably close to businesses they know.
- Organizations that branch out somewhat, yet still stick very close to their central skill, outperform all others.
- The excellent companies don't test new waters with both feet. Better yet, when they stuck a toe in new waters and failed, they terminated the experiment quickly. As a general rule, the top performers moved out mainly through internally generated diversification, one manageable step at a time.
- "Never acquire any businesses that you don't know how to run." - Robert Wood Johnson
- Simple form, lean staff
- It appears to us that there is only one crucial concomitant to the excellent company's simple structural form: lean staff, especially at the corporate level.
- We had better start admitting that the most important people in an organization are those who actually provide a service or make and add value to products, not those who administer the activity.
- The underlying structural forms and systems in the excellent companies are elegantly simple. Top-level staffs are lean; it is not uncommon to find a corporate staff of fewer than 100 people running multi-billion-dollar enterprises.
- Simultaneous loose-tight properties
- “As a regimen, as a discipline for a group of people, planning is very valuable. My position is, go ahead and plan, but once you've done your planning, put it on the shelf. Don't be bound by it. Don't use it as a major input to the decision-making process. Use it mainly to recognize change as it takes place.” - Fletcher Byrom
- The excellent companies are both centralized and decentralized. For the most part, as we have said, they have pushed autonomy down to the shop floor or product development team. On the other hand, they are fanatic centralists around the few core values they hold dear.
- The excellent company response to complexity is fluidity, the administrative version of experimentation. Reorganizations take place all the time. If you've got a problem, put the resources on it and get it fixed. It's that simple.
- Autonomy is a product of discipline. The discipline (a few shared values) provides the framework. It gives people confidence (to experiment, for instance) stemming from stable expectations about what really counts.
- The "rules" in the excellent companies have a positive cast. They deal with quality, service, innovation, and experimentation. Their focus is on building, expanding, the opposite of restraining; whereas most companies concentrate on controlling, limiting, constraint. We don't seem to understand that rules can reinforce positive traits as well as discourage negative ones, and that the former kind are far more effective.
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- Read all of my notes on "In Search of Excellence" by Thomas Peters