IN SEARCH OF EXCELLENCE - Lessons from America's Best-Run Companies

TLDR: In this article, the authors studied 43 successful American companies to discover the secrets of the art of American management, including a bias for action-preferring to do something, anything, rather than performing endless analyses and convening committees, staying close to the customer learning and catering to the client's preferences, autonomy and entrepreneurship, productivity through people, making all employees aware that best efforts are vital and that they will have part of the rewards of the firm's success, hands-on, value driven, and stick to the knitting.

Abstract: The authors studied 43 successful American companies to discover the secrets of the art of American management. The firms were in various categories, including high-technology companies, consumer goods companies, general industrial goods companies of interest, service companies, project management companies, and resource-based companies. To choose the companies, six measures of long-term superiority (three are measures of growth and long-term wealth creation over a 20-year period, and three are measures of return on capital and sales) were selected and imposed: compound asset growth, compound equity growth, average ratio of market value to book value, average return on equity, and average return on sales. The superior companies had eight attributes characterizing their distinction. Each attribute is discussed in detail, with examples and anecdotes from the firms involved. The attributes are: (1) a bias for action-preferring to do something, anything, rather than performing endless analyses and convening committees; (2) staying close to the customer-learning and catering to the client's preferences; (3) autonomy and entrepreneurship--dividing the corporation into companies and encouraging independent and competitive thought within them; (4) productivity through people--making all employees aware that best efforts are vital and that they will have part of the rewards of the firm's success; (5) hands-on, value driven--insisting that higher-ups keep in contact with the company's essential business; (6) stick to the knitting--staying with the business the firm knows best; (7) simple form, lean staff-administrative layers are few, with few staff members at the top; and (8) simultaneous loose-tight properties--a climate combining dedication to the firm's central values along with tolerance for all employees who accept those values. The rational model of management is discussed, along with its history and implications in corporate functioning. A chapter on human motivation discusses some of the contradictions of human nature that are relevant to management and describes how they can be dealt with to everyone's benefit.