Still in Search of Excellence

Leadership

Tuesday 30 October 2007

Tom Peters

Still in Search of Excellence: Unique business thinking and inspiration from the world’s top business guru

BFI IMAX, London

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Event Review

Tom Peters admits that most of the advice he gives to audiences is common sense. So why is he the world's leading business speaker? Partly, it's the way he delivers information: bellowing one moment, almost whispering the next, and wrapping each point in a rich, amusing anecdote. But more importantly, it's because he can guarantee you at least one "epiphany" per event.

Maybe he'll reiterate something you already know in a new way. Maybe he'll synthesise the latest trend data on a particular issue with surprising results. But whatever happens you'll change your perspective on business fundamentally, and return to the office eager to change the way you work. In this three-hour presentation for the London Business Forum, and the extensive Q&A session that followed, such moments came thick and fast.

Yet, for the most part, Peters felt obliged to restate the obvious. After 25 years of lecturing, he yelled, why was it still necessary for him to emphasise the importance of people to business leaders? Next time you draw up a budget, he advised the audience, "I want you to take the capital expenditures, cut them by 20% and put it into people. I don't care what the department is. I don't care what the industry is." If you decide a lower proportion is more advisable, he said, then "I bet you're wrong."

Instead of ROI, you should be concentrating on ROIR, or "return on investments in relationships." Most business leaders spend most of their time with only around 10 of their top people, he pointed out. What they should be doing is getting to know new people in the organisation continuously. The difference between success or failure is often your ability to seek out new "internal customers and vendors." In practical terms, this means going to lunch four days out of five with people you don't know, both internally and externally, who can help you to move projects forward.

Another bad habit that affects leaders more than other ranks, Peters suggested, is letting relationships "rust". "If you owned a plant, and the plant was rusting, you would invest in it," he shrugged. "Well, relationships rust too." The signs of wear are obvious at home - if we neglect our families, we can usually sense their unhappiness and move quickly to renew our relationships with partners and children. But in the office, a malignancy can grow between you and another key person without any obvious symptoms.

To prevent this from happening, you should set up "a recruitment policy for your internal network that helps you with implementation as much as [an external network helps] with staffing. You need a strategy. And you need, above all, a formal maintenance scheme."

Ultimately, what's most important is showing a genuine interest in your staff. As William James, America's "father of psychology", put it: "The deepest human need is the need to be appreciated." And you can show your appreciation for someone with a simple gesture such as asking them about their children. "Dale Carnegie got it exactly right... 50 years ago," Peters added. "You can make more friends in two months by becoming interested in other people than you can in two years by trying to make other people interested in you."

It's an attitude you should apply equally to your customers, he said, quoting the 19th Century US politician Henry Clay: "Courtesies of a small and trivial character are the ones that strike deepest in the grateful and appreciating heart." Peters said he was reminded of this quote recently at passport control in Singapore, where the immigration officer offered him a bowl of sweets. "What did the candy say? It fundamentally said, 'We want you in Singapore.'" Such a tiny gesture, and yet it differentiated the experience from that of any other passport control in the world.

To engage your staff and customers properly, you need to spend as much time as possible at the coal-face. "Regardless of what your activity is," Peters said, "[this] is where the action goes on."

Why does Howard Schultz, chairman of Starbucks, circle the globe continuously, and visit at least 25 of his cafés every week? Because, ultimately, his business is about one barrista serving one cup of coffee to one client - just as yours may be about small interactions on the telephone, on-line or on a construction site. Unless you "eyeball" such interactions on a regular basis, Peters argued, "you really don't know what the hell is going on even if you get 30,000 pages worth of data a week."

Having re-emphasised the need to focus on people, Peters then moved onto the key ingredients that he regarded as essential to modern organisational excellence. And he began by demanding an end to the complaints of Western companies who said they couldn't compete with low-wage, low-overhead competitors in Asia. The world's largest exporter by value, he pointed out, is Germany, because it has a highly efficient, productive and technologically advanced layer of medium-sized companies that earns high margins from highly specialised products and services.

One of the success factors of the Mittelstand, he suggested, is that smaller companies find it easier to attract talent than large ones. At a small or medium-sized company, "you will have significant responsibility and autonomy by the age of 27 of the sort that you wouldn't get until 37, if not 47, at a big company."

Equally, he said, it was futile and counterproductive for countries such as the US to resist offshoring with protectionist measures, since employment churn is vital to a healthy economy. In the fourth quarter of 2006, the US lost 7.2 million jobs but created 7.7 million - the perfect example of what economist Joseph Schumpeter called "creative destruction".

The "Darwinian truth," Peters concluded, is that "without huge amounts of death, organisms do not change over time. Death is the mother of structure. It took four billion years of death to invent the human mind." The secret of Silicon Valley's success is not the number of great minds and hit companies it produces, but the number of people and start-ups who are attracted to the area and then fail.

If the failure of 150 companies gives rise to one Apple or one Sun Microsystems, that is worth it, Peters suggested. The fittest companies survive. And the way to be the fittest company is to be the most adaptable. "Darwin got it right 150 years ago. It is not the strongest of the species that survives, nor the most intelligent, but the one that is most responsive to change."

Western companies should be reassured by the fact that they are still generally more productive than their Asian rivals. But in the future, Peters said, what will count more is this: "The essence of the economy of the United Kingdom is people who serve a relatively small region of the United Kingdom, and the same thing is true in France and Germany and United States and Canada and any other country, including Brazil and Kenya."

Referring to an essay he wrote several years ago, entitled, "Why it's so absurdly easy to beat a giant company," he said: "The answer is being local, whether you're a bank or whether you're running a cheese shop. Because... the secret is having intimate relationships within 25 miles. And the money may cost a little bit more at a small bank, but the reality is, people will pay a little bit more for those intimate services."

The only losing strategy in this scenario, he said, is to attempt to be both an intimate, small company and a commoditised large one simultaneously. In other words, to fall between two stools. "I've watched that a hundred times in the world of Wal-Mart where there's a 3,000 square-foot store in a town where Wal-Mart moves in, and they're trying to be a 3,000 square-foot Wal-Mart."

Finally, he said, it's up to corporations, as well as governments, to support the West's Knowledge Economy with the right kind of education and training. "The stuff that your father did and my father did can be done either by an Indian or a microprocessor," he said. "It was 90% rote-work, wasn't it? [So], as one of my friends said, you have your choice: who is going to going to take your job, an Indian or a microprocessor? Which is to say... our jobs are going to come from creative activities. It's all that's left."

Today's excellent organisations are the ones that are most humane, he concluded. They require "servant leaders" who nurture their staff, and thereby serve their customers with unrivalled care and creativity.