This is a classic of airport business books, written back in 1982. It is an early specimen of consultancy-mining, where data was collected by interviewing lots of successful companies, and then trying to find attributes that they share. Other than later tries, like From Good To Great or Built To Last, this early attempt does not control the results by comparing the answers with ones from similar, but ultimately unsuccessful firms.
You can also see that the book is older as it is not as streamlined into neat lists of bullet points as later works. In fact it is crammed full of tiny type, academic theory, philosophy and what not. These guys sometimes really crack me up. But it is a rich mine to dig around in.
The book emphasizes heavily the "soft" side of management. The attributes they came up with (and which they artificially grouped into eight groups) were:
A bias for action, for trying things out, rather then trying to predict them with analysis and committee reports, for informality and light plans. Values that drive the general direction and give people room to implement them through various strategies. Entrepreneurship and autonomy of the doers and little staff, to make this possible. Interacting closely with customers, listening to them, learning from them, being focused on them, to the level of obsession. Breaking the organization into small groups free of central planning and even competitively between themselves. Productivity through people, creating in all employees the awareness that they are important and rewarding their success. Management by walking around, that informally stays involved and talks to all layers of the company to get a feel for what is going on. Doing what the business and company does best instead of diversifying. Few administrative layers. Keep things simple, which of course the hardest thing to do.
If you would have to sum up the message in a few, individual words it would be: small, independent, quality, informal, customer-focus, people, respect, try, do.
Strategy: is less about the actual strategy and more about the ability to execute it and flexibly change it if needed. Build new business from your core competency, from your strength. Don't stupidly diversify (unless you do that as a business, building portfolios of companies). They found virtually all growth in excellent companies to be organic. [Not true, cf Citibank/Weill, who build on his back-office ops strengths and grew by doubling up through acquisitions.] You can buy tiny companies which can be fully absorbed and bring in a new skill or technology, though.
People: how, if not through people would you think an organization could achieve anything? Sometimes rational ways are worse then irrational ones, because they are not motivating to employees. And demotivated employees are worse than many other inefficiencies. Attention to employees, not the actual work conditions has an impact on productivity -- there was an experiment by Elton Mayo, where productivity went up both after turning the lights up, and up again after turning them back down again later. People need to betreated with respect; they need meaning; clear goals; a modicum of control or autonomy; positive reinforcement, to think of themselves as winners in some way; respect.
Respect: treat people as adults and with respect. I believe this is the most fundamental guideline for working with people, from which all others flow. Accept mistakes, as long as they are made in good faith, taken seriously and not repeated. Be though and don't take bullshit.
Values: Values give meaning. Values also work for large organizations, which are too complex to be managed centrally, as they give direction. (cf. Good To Great). Obviously, to get people fired up, they need something to believe in: the product, quality, reliability, satisfying the customer. A bad product kills you twice: one time, because the customer will not buy it or not buy it again, and one time, because your own people will just be doing time. Profit or market share does not energize the employee down the line, but these values can do it. Values are best communicated through stories, anecdote, founder myths and so on. Also, by defending them with tough love: people who do not follow them have to go. Organizational values are defined by what the boss does, not what he says. You can only lead by example. Profit or market share is just not something the worker can identifies with, it is too abstract and removed from his daily work. "Profit is like health. You need it, and the more the better. But it is not why you exist." It just shows you you are living the right way. It is a natural by-product of doing something well, not an end in itself. Typical values include: a belief in being the best; in superior quality or service; in the importance of the people; in informality of communication; and in teh importance of profit as a measure.
Quality: better quality in the long run saves cost, because you do not have to redo everything twice, because you need less support, because you have happier customers, because you do not have to replace stuff, because your people can take pride in it. If you are not shooting for 100% (even if this is not really attainable), you are tolerating mistakes, and you'll get what you ask for. [cf Night Flight, Saint-Exuperie.] [Just make sure you define it through the customers needs, not through what your engineers think of as quality, cf Drucker].
Goals. They are rah-rah for setting easy targets that can be made, so everyone can feel a winner. Because "the real key to success is helping the middle 60 percent a few steps up the ladder" (McPherson), and easily attainable goals motivate them to try so. [I believe slightly challenging targets are better. People are not dumb, they know if you celebrate mediocrity, and that is hypocrisy. Everyone wants to grow a little. Winning then is really motivating and meaningful, and falling slightly short, while not great, is not demotivating. Have high expectations, and more often than not they will not be disappointed.]
Self-determination: if people believe that they have some control, that they have some freedom to decide, they will persist and try to make it better, and have more commitment. Because, if they are free how to do it, they are responsible for the results, and that makes them want to come out winners. If they just may follow your directives, you are responsible, and they do not care if they succeed or not. The relationship of an employee to his direct supervisor has the largest impact on his work happiness, as he provides or doesn't provide these things.
Feedback: Positive reinforcement --lauding good work, looking for successes-- works in encouraging and motivates, as long as it is really about good work, and not a lip service given without consideration to all and sundry. Instead of whining and complaining, focus on what works well, and push that. Feedback must happen immediately, so people can make the connection. Unpredictable and intermittent feedback works better. Small rewards often work better then large ones, because they do not kill the intrinsic motivation of wanting to do good for an external one.
Communication: should be informal and honest [cf Welch]. Unabashed questioning, no matter the titles. Should have support systems like whiteboards, chat rooms, project web sites etc. Near co-location is crucial to increase intensity. Practice management by walking around, have an open door, go below the party line. Don't shield yourself with personal assistants or aides. Such informal communication system is a tighter control system than lifeless reports. You will be aware if an unsuccessful project lumbers on for years. Share information from the top freely, also financial, so that everyone understands the situation, and can act based on their own insight. The chain of command, while needed in case of problems, isn't the right way for day to day communication. Information on comparative performance (for example small competing productivity teams) can work very well for motivating. Have transparent measurements for the group, peer pressure is a stronger motivator than some boss.
Growing: Train people so they become stronger. Put your fast trackers at teh helm of small products and projects, so they can learn the whole works while damage potential is limited. Get your leaders from operations, not from business school.
Customer focus: attend sales calls, visit customers, inspect your product or production and use your service (like Ray Kroc at McDonald's or Mariott). Use your own product [known as "Eat your own dog food." in IT]. If you do not, you'll quickly lose touch with the realities on the floor. Make sure that your product is overwhelmingly cost-justifyable for your customer. Act if you were on the verge of losing every customer. Develop products together with your customer, to make sure they are not a pipe dream of technology-starstruck engineers, but work for living breathing people. (Most failed innovations share the trait that users were not asked, not involved, not asked enough, or ignored).
Ideas: you can get a lot of good ideas by just putting a group of inexperienced people in a room and brainstorming. You can get even better ones from your customers. The secret is in executing, having the know-how, energy and persistence to put them in action.
Entrepreneurship: To get something started, just DO it. Try things. Focus on immediate, tangible results. Start with the easiest, doable targets. Look for action-oriented people, not Jeremiahs. Build on small initial successes to create momentum, hoopla, and gain additional resources. Focusing on building something, on generating revenue, which is open ended, over containing costs. 3M considers "a coherent sentence" an acceptable first draft for a new product plan. They don't do more elaborate plans, until there are some simple test at customer premises or in a pilot facility done (see below under Innovation). And have the product managers "Sell it to the sales force.", which do not have to sell it unless they want it.
Planning: The people that will implement the plan must make the plan (or at least contribute to making it, so they can buy into it.) Plans are necessary to dig in and understand the problem, but by the time they are ready, they are already outdated. So making them is important, sticking to them is foolish.
Champions: a volunteer champion must drive the project, who wants to see it through, and can later build the business about the product. Assigning somebody who was not eager was the single shared factor of all failed product launches at TI. "Whenever anything is being accomplished, it is being done, I have learned, by a monomaniac with a mission (Peter Drucker). If the project fails, cut it back, but let the champion spend some work on it if he is determined to do so, to keep it alive. Teams that consist of volunteers, which are recruited instead of assigned work much better. Teams that set their own goals are more productive.
Organization: Simple form, lean staff. There are too many dimensions around which you can organize: geographic areas, market segments, functions like finance sales or manufacturing, products. Everything connects to everything else. If you reflect this in a multidimensional matrix structure, nobody is responsible for anything, and the result is paralysis. Organizing work by product or project works better than by vertical function, because it allows entrepreneurship, and makes it easier to identify yourself with something, overlaps an on-paper inefficiencies be damned. You also will get competition between groups to give motivation. You can even set up internal markets for people to be assigned to project teams [cf McKinsey]. Let people, who do the work interact with customers and screen the competition. Not staffers. The successful organizations all had very few layers of management and less structuring. For example Emerson electric or Dana in the book had 54k and 35k employees worldwide, and just 100 staff in headquarters. That's around 0,2%. Toyota had just 5 levels of management. Virtually all functions were decentralized to at least the divison level. Have staffers rotate out to line again after a few years, to keep them from creating complex overhead systems.
(If you set up a task force, best man it with busy people who have other work to do, and whose main objective is to get of the damn task force and back to their work, so they are motivated to solve the problem.)
Small groups: A team of five to ten great people often can accomplish more than a stable of hundreds of people (it is also very hard to only get great people if you need hundreds.) Research effectiveness per person, or pretty much any effectiveness, goes down as numbers of people go up above half a dozen to a dozen, because of the huge overhead in communication, the need for coordination, and the loss of self-determination and useless work it generates. Cost of coordination often swamp economies of scale and make work impersonal. Limited resources make stronger products, because you have to design a simpler product in the first place. Smallness induces manageability, commitment, vitality.
Innovation, Experimenting and Testing: If you want to discover new things, you must be prepared to make mistakes. Innovation is all about trying more things, listening and observation. The only way of assuring more "hits" is to increase the number of "at bats." Many ideas will fail, so be prepared to kill them if they do. It's about doing all resource allocation by internal competition. It's about small independent units. "Don't just stand there, DO something". Learning only occurs when there is something to learn from, any kind of completed work. Testing, testing and more testing with a limited number of customers is crucial to get a product right. A sophisticated customer is often crucial in the successful experimenting process. You can do it with a user, on the users premises [like with Extreme Programming]. Doing something and looking if it works is often much cheaper and faster than elaborate analysis and prediction. Set harsh deadlines, cut all that is not essential, go. Innovation often does not occur in established structures, which want to perpetuate themselves. You need to set apart some time and resources for people to just play around, and allow champions to start their ideas. It will make you more productive and innovative, instead of less [compare Google, who allow 20% free time for your own projects]. Star performers often sacrifice an unproven technology for something that works ("being second to market and proud of it"), not releasing experimental stage crap on hapless customers.
Services: keep your promises, whatever the cost. Even if it seems that you "overspend" on service, quality or reliability.
Your boss: Presidents need confidence, not warning.
Measurement: without numbers you don not know a thing. Measure customer satisfaction, revenue, costs. What gets measured, get's done. [Note that this is dangerous, because it also means, what does not get measured does not get done, and there are a lot of important things which yiou can not measure, or not measure economically. I used to be a big fan of measurements, but I since have come to think that keeping it simple here too, and taking informal discussion into account is more useful.]
Interesting quirks: P&G's One Page memos, force you to boil things down to the heart of the matter, no endless waffling on. TI's "More than two objectives is no objectives", helping to focus on the important goals. 3M having an ironclad requirement that each division must make 25% revenue from products younger than 5 years. Wal*Marts regular management meetings start at 07:30 on Saturday -- that's commitment. A key success factor is getting your arms around almost any practical problem, and knocking it off. One less thing to worry about.
They also invented a framework for management, where they split it into 7 "S": Structure (organization), Systems (operating procedures like quarterly meetings, strategy meetings, employee assessments etc), Strategy (planning), Shared Values (apparently there was no acronym for values starting with S), Staff (how to deal with people) and Skills (areas where the company is good, and has an advantage in understanding how to do things) as well as Style (I never learned what that was really about). Note that the majority is "soft", geared to tap into the energy, enthusiasm, motivation of people. Only Structure, Strategy and maybe Systems is hard. They then promptly ignore this framework for the rest of the book.
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