“If today were the last day of my life, would I want to do what I’m about to do today?”

Wednesday, November 19, 2008

Checklist of Innovative Companies

1. A bias for action, for getting on with it.

Even though these companies may be analytical in their approach to decision making, they are not paralyzed by that fact (as so many others seem to be). In many of these companies the standard operating procedure is “Do it, fix it, try it”. Says a Digital Equipment Corporation senior executive, for example, “When we’ve got a big problem here, we grab ten senior guys and stick them in a room for a week. They come up with an answer and implement it”. Moreover, the companies are experimenters supreme. Instead of allowing 250 engineers and marketers to work on a new product in isolation for fifteen months, they from bands of 5 to 25 and test ideas out on a customer, often with inexpensive prototypes, within a matter of weeks. What is striking is the host of practical devices the excellent companies employ, to maintain corporate fleetness of foot and counter the stultification that almost inevitably comes with size.

2. Close to the customer.

These companies learn from the people they serve. They provide unparalleled quality, service, and reliability – things that work and last. They succeed in differentiating – a la Frito-Lay (potato chips), Maytag (washers), or Tupperware-the most commodity like products. IBM’s marketing vice president, Francis G. (Buck) Rodgers, says, “It,s a shame that, in so many companies, whenever you get good service, it’s an exception”. Not so at the excellent companies. Everyone gets into the act. Many of the innovative companies got their best product ideas from customers. That comes from listening, intently and regularly.

3. Autonomy and entrepreneurship.

The innovative companies foster many leaders and many innovators throughout the organization. They are a hive of what we’ve come to call champions; 3M has been described as “so intent on innovation that its essential atmosphere seems not like that of a large corporation but rather a loose network of laboratories and cubbyholes populated by feverish inventors and dauntless entrepreneurs who let their imaginations fly in all directions”. They don’t try to hold everyone on so short a rein that he can’t be creative. They encourage practical risk taking, and support good tries. They follow Fletcher Bytom’s ninth commandment. “Make sure you generate a reasonable number of mistakes”.

4. Productivity through people.

The excellent companies treat the rank and file as the root source of quality and productivity gain. They do not foster we/they labor attitudes or regard capital investment as the fundamental source of efficiency improvement. As Thomas J.Watson, Jr., said of his company, “IBM’s philosophy is largely contained in three simple beliefs. I want to begin with what I think is the most important: our respect for the individual. This is a simple concept, but in IBM it occupies a major portion of management time”. Texas Instruments’ chairman Mark Shepherd talks about it in terms of every worker being ”seen as a source of ideas, not just acting as a pair of hands”; each of his more than 9,000 People Involvement Program, or PIP, teams (TI’s quality circles) does contribute to the company’s sparkling productivity record.

5. Hands-on, value driven.

Thomas Watson, Jr.’ said that “the basic philosophy of an organization has far more to do with its achievements than do technological or economic resources, organizational structure, innovation and timing”. Watson and HP’s William Hewlett are legendary for walking the plant floors. McDonald’s Ray Kroc regularly visits stores and assesses them on the factors the company holds dear, Q.S.C. & V. (Quality, Service, Cleanlines, and Value).

6. Stick to the knitting.

Robert W. Johnson, former Johnson & Johnson chairman, put it this way: “Never acquire a business you don’t know how to run”. Or as Edward G. Harness, past chief executive at Procter & Gamble, said, “This company has never left its base. We seek to be anything but a conglomerate”. While there were a few exceptions, the odds for excellent performance seem strongly to favor those companies that stay reasonably close to businesses they know.

7. Simple form, lean staff.

As big as most of the companies we have looked at are, none when we looked at it was formally run with a matrix organization structure, and some which had tried that form had abandoned it. The underlying structural forms and systems in the excellent companies are elegantly simple. Top-level staffs are lean; it is not uncommon to find a corporate staff of fewer than 100 people running multi-billion-dollar enterprises.

8. Simultaneous loose-tight properties.

The excellent companies are both centralized and decentralized. For the most part, as we have said, they have pushed autonomy down to the shop floor or product development team. On the other hand, they are fanatic centralists around the few core values they hold dear. 3M is marked by barely organized chaos surrounding its product champions. Yet one analyst argues, “The brainwashed members of an extremist religious sect are no more conformist in their central beliefs”. At Digital the chaos is so rampant that one executive noted. “Damn few people know who they work for”. Yet Digital’s fetish for reliability is more rigidly adhered to than any outsider could imagine.

Most of these eight attributes are not startling. Some, if not most, are “motherhoods”. But as Rene McPherson says, “Almost everybody agrees, people are our most important asset”. Yet almost none really lives it”.

Source : In Search of Excellence by Tom Peters

Powerful Question:
Where are we based on the above checklist? Try 3K!

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