Business Management Leadership

In Search of Excellence: Lessons from America's Best-Run Companies (Summary)

by Tom Peters and Robert H. Waterman Jr.

In the 1970s, a 3M scientist named Art Fry was frustrated that the bookmarks in his church hymnal kept falling out. Meanwhile, his colleague Spencer Silver had accidentally created a bizarrely weak adhesive that nobody knew what to do with. Ignoring formal procedures, Fry combined the two 'mistakes' and started passing around his prototype—the Post-it Note. This wasn't a fluke; it was the direct result of a culture that championed 'skunkworks,' tolerated failure, and encouraged employees to bootleg their own projects, a core trait of America's most excellent companies.

Don't Just Analyze, Do Something

Excellent companies have a 'bias for action.' They avoid 'analysis paralysis' by encouraging experimentation, quick trials, and a 'ready, fire, aim' approach, believing it's better to try something and be wrong than to do nothing at all.

At Hewlett-Packard, co-founder Bill Hewlett once found a lab supply room locked on a weekend. He immediately broke the lock and left a note saying, 'Never lock this door again.' This legendary story, part of 'The HP Way,' demonstrated a deep trust in engineers and a commitment to removing any barrier to action and experimentation.

Obsess Over Your Customers, Not Just Your Spreadsheets

The best companies are defined by a fanatical devotion to their customers, using them as the primary source for new ideas and quality improvements, rather than relying solely on abstract market research or technology.

Frito-Lay's salespeople were expected to visit stores daily, a far higher frequency than competitors. This wasn't just to restock; it was to gather intelligence on freshness, placement, and customer feedback. This obsessive hands-on approach ensured their products were always fresh and perfectly positioned, making them dominant in the snack food industry.

Keep It Simple and Lean

Complex organizational structures and bloated corporate headquarters stifle action and create bureaucracy. The most effective companies maintain simple structures and small central staffs, pushing autonomy and decision-making down to the lowest possible levels.

Dana Corporation, a multi-billion dollar auto-parts manufacturer, was run with a tiny corporate headquarters of just over 100 people. They pushed almost all operational decisions down to the plant managers, who ran their factories like independent businesses, fostering a powerful sense of ownership and accountability.

Stick to What You Know Best

This principle, famously called 'Stick to the Knitting,' argues that excellent companies resist the allure of reckless diversification. They grow by focusing on the core business they understand intimately, expanding into related fields only when it makes clear sense.

McDonald's achieved global dominance by obsessing over a simple formula: burgers and fries, executed with unparalleled consistency (Quality, Service, Cleanliness & Value). Their rare forays into unrelated areas, like the infamous 'McPizza,' were often failures, reinforcing the wisdom of mastering their core business.

Go deeper into these insights in the full book:
Buy on Amazon
Listen to the full audio book with an Audible Free Trial.
As an Amazon Associate, qualifying purchases help support this site.