Tom Peters On His Most Inspired Work Searching For Excellence
Being excellent in everything helps you stand out, but how can you be excellent with everything as a leader? In this episode, Tom Peters, the co-author of Tom Peters’ Compact Guide To Excellence, sits with Mitch Russo to provide insights that could help us take the path in search of excellence. As inflation is still peaking, Tom shares what it means to become a long-term investor. He argues that business leaders should focus on the betterment of society. As he goes deeper into the conversation, he stresses that leaders should think that excellence is not about the mountains to climb but about its quality. Excellence is “the next five minutes.” Take a step to excellence now and tune in to this insightful episode with Tom Peters!
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Tom Peters On His Most Inspired Work Searching For Excellence
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Now, on to my amazing guest and his incredible story. This story starts back in 1985. It’s a book I read called In Search of Excellence: Lessons from America’s Best-Run Companies. In full disclosure, at 28 years old, I had no clue how to run a company. I had no business even trying to start one, but I did anyway. Swimming in a sea of confusion, I grasped for lifelines everywhere. One afternoon, I picked up the book that I heard mentioned on a talk radio show. Honestly, I couldn’t put it down.
I started taking notes. I read it again and again. That book was co-written by Tom Peters. I had found my mentor and he never knew it until many years later. After reading his book, I spent years studying Tom’s incredible words of wisdom. We have a treat because Tom is going to be talking about a book called The Compact Guide To Excellence. This will become my new passion. He’s here to tell us all about it. Welcome, Tom Peters, to the show.
Thank you for those outrageously kind words. I don’t believe one of them, but it makes me feel good anyway.
I’m glad it makes you feel good, but every single word is true. I don’t care what you say. It happened that it’s true.
In terms of that, I’ve described a big hit, presumably a song or a book as a pretty good product with perfect timing. In 1982, the Americans had come out of the second World War. We were at the top of the heap in everything you could name. Suddenly, the road was filled with Japanese cars and they had this phenomenal secret. The cars worked. We were piling down in the dumps. We were scared and terrified. In Search Of Excellence, we went around and we found 20 or 30 companies that we thought were doing it right.
They were pretty good case studies, but the time timing was right on. Literally, the book pub date was the week that President Reagan announced 10% unemployment. As I said to somebody, “All the business books in the bookstore went from the back of the store to the front of the store overnight.” Timing is not a bad thing to have on your side, regardless of what it is.
The timing of me finding your book was perfect as well. One of the big problems that we all had back then was the quality of the software we were creating as a software company. It seemed as that, no matter how much money or resources I threw at it, it wasn’t changing. I’m going to tell the readers, as I told you the little secret that I learned from you after following you around and listening to you rant from the stage many times. The little secret was very simple. You told us all, “All you’ve got to do is buy six books on quality, put them on your desk, facing spine out, call your team in every week, yell at them about the quality and demand to understand what’s going on with that.” All of a sudden they realized, “Mitch cares about quality.”
It’s called a sucker play, but whatever works.
It worked great because within 90 days, we had the quality problem solved. We were able to get a handle on what the issues were. As you said, “Timing is everything.” For us, the timing was perfect. We started to release a Windows product at the end of the DOS cycle. I know that you remember that, but the readers might not. That became the hit that we were hoping for and more. Based on that and the fact that we had built a certification program that put 350 certified consultants on the street, basically doubled the value of the company in eighteen months and we sold it. That’s a typical entrepreneur tale.
It’s not typical. It’s a good entrepreneur tale. Most of the entrepreneurs’ tails, we never hear a word of because they quietly disappeared into the night.
I’ve had a few of them disappear before then and after them. I never quit. My secret here is I keep going. Apparently, you do too. Now you have this new book called the Compact Guide To Excellence. Does that mean it’s small enough to fit in my pocket, or does it mean that it’s shorter than your other books?
The answer is it is small enough to fit in your pocket. It was specifically designed that way. It is a co-authored book. My co-author, Nancye Green, is one of the country/planet’s great designers. Her CV reads like a whatever. She was the Chairperson of the Parsons School of Design Board. For reasons unknown, she was willing to join me. I’ve only had one interview about the book so far, and the person who interviewed me was talking about the shape, feel, taste, and touch. That is the deal with this book.
The liberation management was 900 odd pages, and it had some clever things. I rambled on and on. In this book, we get rid of the ramble on and on, and get down to the essence. It is the essence and the design. Sit on your bedside table and have some of the words seep in. It is compact, and that is the key. It is not worthy.
I can’t see the actual physical form factor because I have a PDF of the book. What I like are the topics. I’d like to ask you about a couple of the topics that are here. We’re in a very interesting position here in the United States. We have inflation that is soaring. Inflation is peaking still. We have chaos going on inside the US government and potentially in society as well. Yet, you have this Chapter 4 called Long-Term Investors Prosper. I immediately thought about that and said, “That’s a pretty optimistic viewpoint. I’d love to know more.” Tell me more about that. Why do you say that? What do you think about being a long-term investor?
The data are clear and nauseating. Milton Friedman, in September of 1970, published an article in New York Times. It famously said, with no adornment, “Businesses have no social responsibility. Their only responsibility is to maximize value for their shareholders.” Here are the simple and easy-to-remember numbers. In 1970, when Friedman wrote that 50% of corporate profits went to shareholders and executives, 50% went to the workforce, the capital investment, and so on. A study was made in 2011, which means 41 years later. I almost tear up when I say this, “Ninety-one percent of the profits go to shareholders, stock buybacks, and so on, and 9% go to people plus capital investment.”
That’s point number one. You don’t have to be a genius and have an MBA to know that that’s sickening, nauseating, disgraceful, and disgusting. There ought to be a special ring in Dante’s health or Friedman, as far as I’m concerned. My old friends whose reputation has been very tarnished. I’m so sad to say, McKinsey & Company did a long-term financial analysis. This is in the USA. They looked at 615 companies that amounted to 70% of the GDP, and looked at them over a 30-year period of time, and 167 of them passed their tight-ass Mackensey standards for focusing on the long-term. Those 167 beat the crap out of the 330. They did 7% better. It wasn’t like they did 17% better. It was like they did 3 or 4 times better.
The numbers are there. As far as I’m concerned, the reason you do the right thing is because you ought to do the right thing, and we’ll come back to that. Even if you are a tight ass, hard nose, and can’t live without a spreadsheet for more than fifteen seconds, the spreadsheets tell the story. Invest in people, invest in capital and capital investments, and the good Lord will smile on you and smile on you quickly. I don’t how badly we could have been. I don’t think it’s unrelated to the despair and anger on the streets. People are pissed. They feel left out. You’ve got to believe that wildly disproportional change in the way the money is distributed is a big part of it over the long haul. Friedman managed in one fell swoop to screw everybody other than the elite.
I’m an elite. I don’t deny that. The amount of privilege that I have compared to other people nauseates me. This is not just about better business. It’s about a better society. I’ve been working on that. Part of the reason is that I’m approximately 200 years old and don’t have another 200 years left. David Brooks, the New York Times columnist, wrote this wonderful article couple of years ago. He discriminated between what he called resume virtues and eulogy virtues. The resume virtues are you finished third in your class at MIT, then first in your class at the Harvard Business School, you were promoted seven times, and so forth.It is not just about better business. It's about a better society. Click To Tweet
The eulogy virtues are what people say about you at your funeral. It’s your funeral. They only talk about, “What was it like to be around Mitch? How did he help people?” I don’t do any Power-Pointing these days, but one of my favorite slides that I designed had a tombstone. On the tombstone it said, “Joe Jones, $23,618,212.14 net worth on the day that he died.” To the best of my knowledge, there are no tombstones with a net worth on it.
First of all, we’re going to have to rename chapter four to the Right Long-Term Investors Proper. That is a key element. I’m going to make you angry right now, because the bottom line is that everything you talked about is completely legal. All of the money that these people made, and all of the disproportionate elements of this that are in place are not against the law. In fact, the law pushed them into doing so, in my opinion. Where does that come from? I’m going back to the theme of investors here. Why should we care? Aren’t we, as investors, looking to maximize the return on our own investments? Isn’t that what investors are supposed to do?
I don’t buy that for a minute. I buy that line and I buy a comparison of net worths at the country club or on the golf course, but at the end of the day, it’s Tom and Mitch and what they contributed to the world around them. I don’t know exactly how broad our audience is. That is total absolute unadulterated BS. I don’t care if it is legal, illegal, or what have you. It is immoral. It is why before this conversation, a Texas Congressman gave an award to a January 6, 2021 guy who had been indicted, punished and so on. Something is wrong. I’m not going to all blame the whole show on Friedman.
I wrote a piece in the Financial Times and I said, “The first thing we need to do is shut down all the business schools.” It was tongue only sort of near cheek. The thing that irritates me is business should be a force for good. It’s what people do. I don’t know whether it’s parents or whatever the hell it is. The whole notion that capitalism is simply about it, it is a way to distribute money, and that is a way for individuals to get rich is nauseating. It’s disgusting.Businesses should be a force for good; it's what people do. Click To Tweet
It requires a structural change that I have not seen this country willing to make. I agree with you. I see the virtue of what you’re saying. Shareholders are not just going to reward those who don’t focus on what’s most important to them.
I’m not a good enough economic historian. I think a good economic historian would only go so far with you on that one. The data is in fact, much less disgusting than one would think. Let’s take this study that I mentioned that McKinsey did, 620 companies and 167 of them invested for the long-term. I was sitting, talking to a guy who was running about a $3 billion electronic parts company. I had spoken to his people and we were chatting about this. He said, “I said to my board, ‘If you would like me to increase profitability by 50%, within 18 months, I can do it with both hands tied behind my back and a blindfold. Your only problem is I won’t do it for you. You’re going to have to find somebody else.’”
I get furious about this. I got in trouble because I use Twitter a lot. For the first time, I got massive trolling. It is when I said that I felt that January 6, 2021 was worse than Pearl Harbor Day. I do. Our country is 243 years old and our democracy has never been fundamentally threatened. I will not blame it all on CEOs and Milton Friedman. I would say if I was in a CEO’s office, I would think, “What kind of a world am I creating?” I don’t get it. How could you sit in those offices? I guess you can if you’ve got seventeen assistants who are serving you. As I remember, one corporate boardroom in China looked like it came out of Buckingham Palace.
I’m not a moralizer, but I’m becoming a moralizer because I’m absolutely positively scared to death. I checked into a medical facility. The woman checking me in was not overly busy. We chatted at one point. She said, “My husband and I decided not to have children.” I said, “It’s none of my business in any way, shape or form, but I will tell you that thinking about not having children in the midst of the things that we’re going through right now strikes me as not a silly thing.” We are in trouble. Relative to things you were talking about, 90% of it is fixable. The only good news, and you’ve conned me into this or I’ve conned you into it, is what we do forget is that the Fortune 500 only employs about 8% of us, and the other 92% are in the gorgeous and often beloved SMEs.
You have a chapter here called Big Stinks SME’s Rule. Do you want to tell us a little bit about what we’ll find when we open up that particular chapter?
You’ll find stories, which is what I’ve been doing ever since the beginning of In Search Of Excellence. You’ll find the story of Basement Systems Inc of Seymour, Connecticut. They take your crappy old, dirty basement, turn it into a fun family room and extra bedrooms. In the basement transformation business, they put together a couple hundred million dollar company. There are $80 jillion opportunities like that. They take incredibly good care of their employees. They’re the ones I love.
My good friend, Bill Taylor, who was a Cofounder of Fast Company, wrote a fantastic book called Small Giants. It is a collection of 20 or 25 war stories, not about the two-person companies as important as they are, but the middle-sized ones, the 100, 80, and 250 employees. There is where the action is. My old McKinsey friend, Dick Foster, did a study of 1,000 largest companies. Over a 40-year period, not one outperformed the stock market. When I’m speaking to groups, what I always say is, “Go for it and have fun. You’re in a big company. You’re on your way down the hill. Enjoy the ride.”
The last thing I wanted to ask you before we wrap this up is I love the name of your last chapter called Excellence Is The Next Five Minutes. The reason I like that is because it’s that lift at the end that’s the hope that I think that you’ve implied all through this conversation. Tell us what you meant by that. I apologize, I had not read this yet, but I will.
I’m going to twist what you asked a little bit. What it means is a teacher stands in the doorway of her or his classroom every morning with a smile and welcomes his 22 students and says, “Good morning, Mitch, how are you doing?” or not something grand. As a result of that, disciplinary problems fall through the poor, and academic engagement goes through the roof.
A wonderful book called Compassionomics by these tight-ass researchers which is about healthcare and the degree to which compassion pays. If a doctor can get himself away from A) His ego, B) All the requirements to write things down for financial reasons and looks directly in the eye of a patient for 38 seconds, complications go down. My point is it’s not about hills and mountains to climb. It is about equality.It's not about the mountains to climb; it is about the quality. Click To Tweet
Let’s talk about the last 25 minutes. I’ve lived for close to 80 years, but my entire life and existence on this planet are about our conversations. I don’t have anything else. That’s all there is to my wife for these 25 minutes. I’m sure I haven’t, but if I do my best to turn it into a piece of art and something that’s thoughtful, helpful, and so on, that’s the best I can ever do. Long-term doesn’t cut it for me. What cuts it is smiling at the kid when she or he comes in the morning and saying, “You are looking pretty good today.” That’s a heavy look back.
I reflect back on my own life. The reason that those inflection points in my own life came from people like that, it came from that smile and from that individual who saw something in me at a young age and said, “Maybe this is special. Maybe we should cultivate that.” I agree with you. Without reading the chapter, I think the point I’m getting is that excellence is in the present moment.
I’ll use the word admiration. As many people might have heard, admiration is the most important element of the human condition. If we were able to apply admiration to foreign policy in a sense, we’d probably have hardly any of the problems we have today. Let’s bring it back down to the classroom. Like you said, “That’s a nice book bag you have there, Bobby.” It’s that little moment in time where you are admired by a person of authority that changes how you see the world.
That’s a great sentence because it’s a profound sentence, “Changes how you see the world.” That is as big a statement as is humanly possible to utter, yet I completely agree with you.
This is the spot and place in time where maybe this piece of art or this small contribution to the world is you and I being able to urge people to please slow down and look someone else in the eye, be nice, be courteous, listen, and not try and speak for a few minutes while the other person shares a little bit more about them. That moment of empathy could potentially save a life. That’s what I love about that statement, “Excellence in the next five minutes,” would be the most powerful contribution any of us could ever make.
Those kinds of stories you can dig up around this are staggering.
I want to give you a chance to tell us, to those who are thinking of potentially grabbing a copy of this book, why should they? What is it that they need from this book that they don’t have now?
It’s a bright red cover. It’s an undersized book and it is a book of reminders. It is a book where there’s a quote that sounds exactly like your words. It comes from William James about, “The single most powerful thing that people want is to be appreciated.” He didn’t say they want it. He said, “They crave it.” It is a book to be read slowly and opened randomly. You don’t get Tom pontificating about all this stuff, which has been the case. This is the raw material.The single most powerful thing that people want is to be appreciated. Click To Tweet
In Search Of Excellence is 40 years old in 2022. It’s 45 years since that research began, and this is an effort to boil it down to its true essence. I won’t call it one-liners, but it’s the essential little pieces. I would love to see people grab one, share it, and carry the book around, partially because my wonderful co-author, Nancye Green, is a great designer and it’s an attractive book that I hope sucks you in. Having been sucked in, I hope that tomorrow morning you stand in that doorway and give that extra smile.
The whole essence of In Search Of Excellence, which I’ve told many times, was when Bob Waterman and I, my co-author who passed away on January 2, 2022, I’m sad to say, made a trip from McKinsey San Francisco office down to Palo Alto to visit a big-ish middle-sized-plus company by the name of Hewlett-Packard. The President, John Young, introduced us to MBWA, which was Managing By Wandering Around. The point of that, and it goes back to things you’ve been saying, what that taught me when I figure it out is leadership is an intimate act.
It is Mr. Young, President of a $1.5 billion company, wandering with Bob and me through the engineering spaces. He is probably 50 or 49 or something with one million problems on his desk, and chatting amiably, kindly, thoughtfully with a 26-year-old engineer, and treating that engineer as if that kid was the only living human being on the face of the planet Earth. In retrospect, that day, those four letters, MBWA, were the most transformative letters in my life.
Leadership is intimate. Leadership is about personalization, care and thoughtfulness. A) It’s a great way to make money. B) It’s a great way to keep people who work for you from being suckers for the pissed-off people who would like to recruit them for rather nasty causes. It is 1 step at a time, 1 minute at a time, 1 small act at a time. I hate to use the term, “It works,” but it does work.
I hope that you are no way near done creating beautiful content for this amazing world that we live in and contributing in the way that you have. For readers, we’re talking to the incredible Tom Peters, the co-author of In Search Of Excellence and many other books. You’ll be able to click on a link at Tom Peters’ show page to pick up a copy of his new book, which I believe might in fact change the world because that’s all it takes. It just takes a few minutes of understanding what another person’s problems are. You could change not only the world but their world and maybe yours too. Thank you again, Tom. This has been a lot of fun. I always enjoyed talking to you.
We’ve done it before, and it’s been fun. I hope we continue to do it. I admire infinitely what you are up to and appreciate your inviting me to chat.
It’s my pleasure. Have a great day.
- In Search of Excellence: Lessons from America’s Best-Run Companies
- Tom Peters
- The Compact Guide To Excellence
- Nancye Green
- David Brooks’ Article
- Tom Peters’ article on Financial Times
About Tom Peters
Tom Peters is coauthor of In Search of Excellence—the book that changed the way the world does business and often tagged as the best business book ever. Eighteen books and thirty-five years later, Tom is still at the forefront of the “management guru industry” he single-handedly invented. What’s new? A lot. As CNN said, “While most business gurus milk the same mantra for all it’s worth, the one-man brand called Tom Peters is still reinventing himself.” His most recent effort is Excellence Now: Extreme Humanism.
Tom’s tireless focus is on putting people first and developing leaders who stay in intimate touch with the front-liners who do the real work. In November 2017, Tom received the Thinkers50 Lifetime Achievement Award. Effectively, all of Tom’s written and speech material covering the last 20+ years is available—free to download—at tompeters.com and excellencenow.com.
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