In Search of Excellence
In Search of Excellence is an international bestselling book written by Tom Peters and Robert H. Waterman, Jr.. First published in 1982, it is one of the biggest selling business books ever, selling 3 million copies in its first four years, and being the most widely held library book in the United States from 1989 to 2006 (WorldCat data). The book explores the art and science of management used by leading 1980s companies with records of long-term profitability and continuing innovation.
In Search of Excellence did not start out as a book, as Tom Peters explained when interviewed in 2001 to mark the 20th anniversary of In Search of Excellence: Peters and Waterman were both consultants on the margins of McKinsey, based in the San Francisco office. In 1977 McKinsey director Ron Daniel launched two projects; the first and major one, the Business Strategy project, was allocated to top consultants at McKinsey's New York corporate HQ and was given star billing. Nothing came of it. The second 'weak-sister' project (as Peters called it) concerned Organisation - structure and people. The Organization project was seen as less important, and was allocated to Peters and Waterman at San Francisco. Peters traveled the world on an infinite budget, with licence to talk to as many interesting business people he could find about teams and organisations in business. He had no particular aim or theory in mind.
In 1979 McKinsey's Munich office requested Peters to present his findings to Siemens, which provided the spur for Peters to create a 700-slide two-day presentation. Word of the meeting reached the US and Peters was invited to present also to PepsiCo, but unlike the hyper-organised Siemens, the PepsiCo management required a tighter format than 700 slides, so Tom Peters produced the eight themes.
Peters and Waterman found eight common themes which they argued were responsible for the success of the chosen corporations. The book devotes one chapter to each theme.
- A bias for action, active decision making - 'getting on with it'. Facilitate quick decision making & problem solving tends to avoid bureaucratic control
- Close to the customer - learning from the people served by the business.
- Autonomy and entrepreneurship - fostering innovation and nurturing 'champions'.
- Productivity through people- treating rank and file employees as a source of quality.
- Hands-on, value-driven - management philosophy that guides everyday practice - management showing its commitment.
- Stick to the knitting - stay with the business that you know.
- Simple form, lean staff - some of the best companies have minimal HQ staff.
- Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralized values.
As early as 1984 it was apparent, to certain analysts, that the book's choice of companies was poor to indifferent. NCR, Wang Labs, Xerox and others did not produce excellent results in their balance sheets in the 1980s.
Rick Chapman titled his book on high-tech marketing fiascoes, In Search of Stupidity, as a nod to Peters's book and the disasters that befell many of the companies it profiled. He notes that "with only a few exceptions... [the excellent companies were] large firms with dominant positions in markets that were senescent or static."
In an article in Fast Company, cited below, Peters remarked that the criticism that "If these companies are so excellent, Peters, then why are they doing so badly now," in his opinion "pretty much misses the point."
The research methodology employed by the authors of this book is also severely criticized by Phil Rosenzweigh in his book "The Halo Effect"  as the "Delusion of Connecting the Winning Dots". Rosenzweigh opines that it was not possible to identify the traits that make a company perform simply by studying already-performing companies which Peters and Waterman did.
Peters' "confession" of "faked data"
In December, 2001, Fast Company printed an article, crediting Tom Peters as author, entitled "Tom Peters's True Confessions". Most of the "confessions" were humorously self-deprecating remarks (In Search of Excellence had been "an afterthought... a hip-pocket project that was never supposed to amount to much"). One of them, however, used the term "faked data:"
- This is pretty small beer, but for what it's worth, okay, I confess: We faked the data. A lot of people suggested it at the time. The big question was, How did you end up viewing these companies as "excellent" companies? A little while later, when a bunch of the "excellent" companies started to have some down years, that also became a huge accusation: If these companies are so excellent, Peters, then why are they doing so badly now? Which I'd say pretty much misses the point.
- [In] Search [of Excellence] started out as a study of 62 companies. How did we come up with them? We went around to McKinsey's partners and to a bunch of other smart people who were deeply involved and seriously engaged in the world of business and asked, Who's cool? Who's doing cool work? Where is there great stuff going on? And which companies genuinely get it? That very direct approach generated a list of 62 companies, which led to interviews with the people at those companies. Then, because McKinsey is McKinsey, we felt that we had to come up with some quantitative measures of performance. Those measures dropped the list from 62 to 43 companies. General Electric, for example, was on the list of 62 companies but didn't make the cut to 43 -- which shows you how "stupid" raw insight is and how "smart" tough-minded metrics can be.
- Were there companies that, in retrospect, didn't belong on the list of 43? I only have one word to say: Atari.
- Was our process fundamentally sound? Absolutely! If you want to go find smart people who are doing cool stuff from which you can learn the most useful, cutting-edge principles, then do what we did with Search: Start by using common sense, by trusting your instincts, and by soliciting the views of "strange" (that is, nonconventional) people. You can always worry about proving the facts later.
BusinessWeek ran an article about Fast Company's article. As related by BusinessWeek, the article was actually written by Fast Company founding editor Alan M. Webber, based on a six-hour interview with Peters. Peters reviewed and approved the article prior to publication, but the actual phrase "we faked the data" was Webber's, and Peters had not actually used these words during the interview. BusinessWeek quoted Peters as saying "Get off my case. We didn't fake the data." According to BusinessWeek, Peters says he was "pissed" when he first saw the cover. "It was his [Webber's] damn word," he says. "I'm not going to take the heat for it."
- Tom Peters (November 2001). "Tom Peters's True Confessions". Retrieved 2008-07-17.. Quoted material also includes material from web page 4 of article
- Rosenzweig, Phil (2007). The Halo effect and Eight Other Business Delusions That Deceive Managers (1st ed.). USA: Free Press. ISBN 978-0-7432-9126-2.
- "The Real Confessions of Tom Peters: Did In Search of Excellence fake data? A magazine suggests it did". 2001-12-01. Retrieved 2008-07-17.