Searching for Excellence

Towards the late 1970's the management imperatives of "quality and excellence" were given emphasis firstly by a report by the McKinsey organisation into 62 major companies worldwide (of high repute and performance). This report evaluated the strategies and organisational effectiveness of these businesses and their managers - and the characteristics that made them so. "High performing" was defined with reference to:

• profitability e.g. IBM
• strong positive image e.g. Marks & Spencers
• strong domestic organisation (Sainsbury's in the UK or 3M in the USA)
• strong player in a slumped or declining market and other aspects: general image, customer confidence, staff and customer loyalty.

More than a decade later we can see how some of the selected companies suffered decline and are still in the throws of decline. Limitations in the use of case evidence and ancedotal "legend" must be recognised as a technique of analysis and prescription. Nevertheless recommendations of the report included the following types of assertion:

• organisational leadership and management requires the wonderful qualities of vision, energy, dynamism and positive outlook.
• customer needs and wants are central. If a business (its managers and staff) lose this relationship then customers will go elsewhere
• ability to change and improve should be organisationally pervasive. Practices, skills, technology, response times and methods need updating to give new applications and enabling new markets for existing products and services to be accessed.
• the organisation must be receptive to external ideas and influences and be able to evaluate their local and global application.
• staff commitment, motivation, ability, training and development are critical to business success. They must share corporate vision and values. They must be valued and well rewarded
• The manifestations and effects of hierchical bureaucracies; supervision levels, regional and head offices must be kept to a minimum. Where these exist them must service those who actually generate business and profitability and not undermine them. They must be flexible and responsive and not inert barrier systems.

  Peters and Waterman's book, "In Search of Excellence" (1982) followed the McKinsey report nicely. The reader audience, suffering from the business threats of the 70s and 80s, was eager for these observations and messages on criteria for corporate excellence. The book and similar works (see Kanter, "When Giants Learn to Dance") became a boost to managerial confidence. Parts of the business community untouched by managerial textbooks were reached by the "excellence messages".

  Peters and Waterman evaluated particular business performance indicators of selected organisations including

  • asset , value, turnover and profit growth
  • return on capital invested
  • organisational reputation as leader and pioneer with customers, community and general public and within the industry.

  Organisations from which conclusions were drawn had rates of return on these factors of between 10 and 60 times their industrial average. For instance in a US Steel Works, a uncertificated sickness rate of 0.04% was found compared to a national average of 6% and industry average of 9%.

  Organisation reputations were assessed across marketing, HRM policies, customer care and relations, equality opportunities and a wider environment/community reputation (where the organisation was seen to have a stake, interest and responsibility).

  The "excellence" studies identified eight characteristics as being essential to both organisation and managerial success.

  1. Organisational Bias for Action
     The organisational approach should emphasise a preference for doing something - anything - rather than obfusticating ideas through endless processes of analysis and committee work. "Do it, fix it, try it".

     This suggestion appeals to the go-and-get-it manager. The argument is that without action and experimentation then new ideas, products, services, relationships are never tested and no movement is obtained. The organisation and its staff are locked in the status quo and if the external environment is changing rapidly, making new demands and offering new challenges - then - the organisation atrophies and becomes decrepit.

     This kind of punchy message is ideal for business conferences where managers can enjoy the warm after-glow of a "ra, ra" session with their peers.

  2. Move towards and Stay Close to the Customer
     Business are encouraged to learn about/discover customers preferences and cater for them. Thus virtues of listen carefully/regularly and responding with quality, added-value service and reliability are emphasised. Offer added value to the customer and working in co-operation with them are important to competitiveness.

     In a competitive supplier-customer relationship - the customer wants better quality for lower prices. The supplier wants the highest possible price at the lowest cost. So quality and support for customer relationships involves costs i.e. there is a tension in a competitive and collaborative supplier-buyer relationship. Collaboration involves trust, confidence and joint problem-solving. If a supplier becomes too confident in a relationship then complacency may set in. Both sides - it is argued - need a penetrating dialogue with detailed, evaluative feedback and mutual support to resolve problems a difficulties arising from the relationship.

  3. Autonomy, Entrepreneurship and empowerment
     P and W recommend decentralising: organising the corporation into small business units which can operate independently and competitively. Corporate managers are urged to enable autonomy & entrepreneurship (see PInchot's Intrapreneur), innovation & risk taking as being a normal expectation of "empowered" behaviour rather than conformist and conservative habits.

  4. Productivity through people
     This is the old human relations nutmeg. The managerial call to arms is to create an organisation - a place and a culture in which all employees are aware that their contributions and best efforts are essential to business success and that they will share in the rewards of the organisation's success. Manager's therefore should adopt a range of behaviours which "empower" others (employees) to bring their talents to bear in productive, mutually satisfying ways.

  5. Hands-on, value driven
     P and W suggest that executives should be "hands-on", come out of their offices and be visible and available at the point where the action is. Their objective as to secure value-added at every point and through every intervention (notwithstanding the importance of empowerment and inability to delegate). A hands-on, value-added approach with manager visiblity and management by walk-about inspires a strong corporate culture.

  6. Stick to the knitting
     Corproate managers in contemplating corporate development and acquisitions are recommended to stay close to what the business does well and not to diversify into unlikely tangential areas. The problems of managing these will take executive attention and energy away from focusing on the business that the organisation knows best.

  7. Stick to the Knitting
     This metaphor again emphasises the "core" business. Executives should keep in touch with the organisation's essential business and avoid being distracted by programmes and activities that are peripheral to success. Corporate decision makers should focus their attention on what the business knows and does best and divest themselves of non-core activities which do not add-value. The stick to the knitting argument introduces the "down-sizing, right-sizing and outsourcing" imperatives which were taken up on Wall Street in the late 80s and early 90s.

     Rather than constant corporate growth in pursuit of the vertically integrated and self-sufficient organisation - the "knitting" argument encourages consideration of whether or not organisations that have grown too big, monolithic and cumbersome should split up into more nimble, agile, entrepreneurial parts.

  8. Simple form with a lean staffingstructure
     Peters and Waterman recommended having fewer administrative layers with few people at the upper levels. Simpler structural arrangements and systems are recommened including a small HQ staff.

  9. Simultaneous loose-tight properties
     Corporate managers are urged to generate a climate where there is dedication to central organisational mediated (via operational decentralisation and autonomy) by tolerance and empowerment of employees who accept these values.

  On the surfance this is all good, common-sense stuff. However we must look very closely at the implications of many of the assertions and whether, in their application over time - they have been as singularly effective as was asserted by the book.

  So the essential "In Search of Excellence" messages cover:

  1. strong organisation culture - manifested in:
     • being "the best" (corporate and managerial confidence)
     • emphasising importance of "the staff (teams and individuals) in and of themselves and their contributions".
     • imperatives of top quality and customer focused service
     • providing an environment in which innovative and creative capacities of organisation members can flourish.
     • excellence in staff communications - if you want your people to trust you - then talk to them. Avoid the mushroom approach to communications ("Keep your staff in the dark and once a week feed them a load of Bull-sh......t".
     • application of the idea of "simultaneous, loose-tight " control means finding room for operational flexibility .
     • keep the cycle of development continous. Recognise that there is always room for improvement (attention to detail within the strategic vision). Keep an explicit, stated and encouraged belief in the importance of competitiveness, leadership and profit - visible.

  "In Search of Excellence " arguments, assertions and slogans promoted the confidence of many managers in their purposes and in themselves. They reference strength and style of leadership, drive and determination. Executives - the "good book said' - can be confident in promoting core business values. There is something attractive and virtuous in the strategic visionary who can energise organisational activities and make profits.

  In terms of developing a confident organisational culture, culture become manifested in everyday activities and messages - "the way things are done here" - the things we give attention to, concern themselves with and on which we spend time and money. Culture combines what is done and how. The executive leads from the front and through example demonstrates organisational values which become integral to structures, systems and activities.

  A fluid, flexible structure will be a response to the CEO's approach - as will a rigid bureaucracy. Organisational energy thus reflects ways in which senior executives want to have things done.

  The senior manager must manage organisational culture, style and values as

  • a designer and director of strategy
  • assessor of progress
  • the manager of the "simultaneous loose-tight properties".