What America Does Right: Learning from Companies that Put People First. - book reviews

Business Horizons, Jan-Feb, 1995 by Henry H. Beam

Reviews of current books discussing subjects on the horizon of business activities, particularly those on controversial issues being encountered by both practitioners and teachers, will be considered for publication. Manuscript guidelines are available upon request.

The reviewer, Henry H. Beam, is a professor of management at Western Michigan University, Kalamazoo.

A little over a decade ago, Tom Peters and Robert Waterman teamed up to write In Search of Excellence. An enormously popular business best-seller, it sought to find what 50 of America's excellent companies had in common.

In What America Does Right, Robert Waterman renews this quest, but with a slightly different approach. Instead of looking at 50 companies, he looks in considerably more depth at a few carefully chosen U.S. companies to find out what they do right. The author explains, "The purpose of this book is simple: to explore, in depth, the strategic and organizational reasons why a handful of widely admired American firms do so well. The theme is similar to that of everything I've written, starting with In Search of Excellence: learn from the best; find role models to emulate" (p. 15). In Waterman's view, this is the most powerful way people learn--and it still isn't done very well in most companies.

Near the beginning, Waterman makes a statement that many readers will find surprising about productivity, based on a recent Organization for Economic Cooperation and Development (OECD) study. "Research on industrialized nations shows conclusively that American workers out-produce workers in Germany and France by about 20 percent, workers in Britain by over 30 percent, and Japanese workers by over 60 percent" (p. 16). And no country is closing the gap. Thus some American firms must be doing extremely well.

But exactly what do these very successful firms do to develop a sustainable competitive advantage? It can't be technology, new ideas, a good strategy, or following the latest management guidelines, because these are available to all. The good firms get a sustained advantage from the way they organize rather than from a brilliant idea. "Because they persist where others give up, they accomplish that most difficult part of strategy: implementation, that is, getting what is often a simple idea done and getting it done right" (p. 22).

From his visits to the good companies, Waterman concludes that they all deliberately organize around their people and their customers. They are willing to take years to build up the relationships necessary for success, both inside and outside the firm. Over time, they gain a competitive advantage because they attract and retain better people than do their competitors. Although shareholder interests are important, they do not dominate the formulation and implementation of corporate strategy.

The first half of the book is devoted to an examination of various aspects of human motivation and their link to the organization and its strategy. The soap division of Procter & Gamble is used to illustrate the positive effects of a Theory Y or participative management style, in which control is shared with the workers. Success is the result of doing many small things right, most of which are not apparent to the untrained eye. Most of the examples are from large corporations--Procter & Gamble, Levi Strauss, Federal Express. However, there are also examples of individual excellence in smaller organizational settings, such as Sheldon Salzberg, a high school principal in the Bronx, and Dr. Richard Steadman of Vail, Colorado, a world-renowned knee surgeon whose patients have included tennis player Martina Navratilova and skier Marc Girardelli.

In the second half of the book, Waterman's focus shifts to finding out how top companies in different industries build wealth-creating strategies. Rubbermaid is used as an example of a firm that succeeds through continuous innovation. Headquartered on the fringe of Wooster, Ohio, this highly innovative maker of plastic and rubber household products brings out nearly one new product per day. How does Rubbermaid do it? The leadership provided by CEO Stanley Gault is certainly an important part of the answer. But a closer look reveals that the real secrets are in paying close attention to detail and using cross-functional teams:

There's no simple explanation, of course, for Rubbermaid's consistent success at churning out new products--more than a thousand of them in the past five years. But pressed to identify a key ingredient, Gault explains that it has much to do with a structure that allows people to focus on narrow product areas. The mindset is to segment, focus, concentrate, and plan at the lowest possible level. (p. 175)

In similar fashion, Waterman discusses how three other highly admired firms--Merck, Motorola, and Procter & Gamble--have gone about developing wealth-building strategies. What America Does Right is as free of prescriptions for success as In Search of Excellence was full of them. By the end, however, some common themes emerge that apply to all the companies Waterman discusses. First, the companies that stay successful break themselves into small, fairly autonomous units. The value of doing this is that small units are closer to the customer than any companywide unit would be. Second, they organize with an outward orientation to pleasing customers rather than an internal orientation to pleasing top management. Third, they use cross-functional teams to break the shackles of bureaucracy when necessary and adapt to rapid change.