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 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 (1850-
1924),
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.
 HANDS ON,VALUE DRIVEN
• 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
 STICK TO THE KNITTING
• 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”
 SIMPLE FORM,LEAN STAFF
• 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

 SIMULTANEOUS LOOSE TIGHT
PROPERTIES
• 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 mechanism-
customers,peers etc
• PARADOXES
• 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
Thank You