Healthy Corporation

Like him or hate him, Tom Peters is clearly the most
influential--and certainly the most visible--management consultant since
Peter Drucker. His conversation is intoxicating, his intensity almost
evangelical, yet he is utterly comfortable with the contradictions and
paradoxes in his works.

Instead of simply exhorting American businesses to stay "close to
the customer," he now feels that large corporations must not only revamp
their entire organizational structure--but set a match to it. When he
says something like "We work to fail," it's hard to take him seriously.
But he is serious. With the intensity of a sports event, he continues to
shout his ideas at us, and it is unclear whether he wants us to take him
literally, or whether he just wants to shake us up.

Owen Lipstein and James Mauro for Psychology Today: For the benefit
of those who haven't read your books, can you give us a general run-down
of your current philosophy?

Tom Peters: Okay, let me start with where it came from. I make the
comment that in In Search of Excellence and the next two books we talk,
ad nauseam perhaps, about companies getting "close to the customer." My
25-words-or-less mea culpa is that that philosophy is a bunch of bull if
you're trying to succeed in some seven- or eight-layered organization
with lots of delay in decision-making, lots of middle-management, a steep
hierarchy, etc. I'm not arguing that customers are less important these
days, just that, to some extent, we put the cart before the horse.

I have now decided that the definition of horse is creating agile
organizations, and I focus a lot more on developing structures that
eventually make getting close to the customer an automatic thing.
Absolutely no intervening bureaucracy whatsoever. Now, with the
life-expectancy of a new product going from a half-dozen years to six or
eight months, you'd better have an organization with virtually zero
impedance in a structural sense. My philosophy these days can be boiled
down to a single sentence: It's a crazy world, so you'd better have a
crazy organization.

PT: What do you say to the IBMs of the world--the companies that
are already large? Are you telling them that they should commit hara-kiri
and destroy their entire middle management?

TP: De facto? Yes. I sincerely believe that the IBMs of the world,
as structured today, don't stand a snowball's chance in hell of
surviving. IBM is beginning to believe that. One problem with large
organizations is that they are stuffy in an unstuffy world. Stuffy
organizations are terrific if you can count on the Model-T lasting 20
years. Then, who in the hell would want rapid decision-making?

I can give you modern examples of companies that took for instance
a 4,000-person headquarters and trimmed it down to 200 people. That
doesn't mean that everybody else was out on the street; a lot of people
get redistributed into moderate-size business units that are a lot closer
to the marketplace.

PT: You're talking about radical surgery, not 10-percent cuts in
work staff.

TP: Absolutely. Take for instance this so-called ".05 to 5 Rule"
which was coined by a couple of Boston Consulting Group partners and
which says that things are only happening .05 to 5 percent of the time,
and that 95 to 99.95 percent of elapsed time is waste. Acknowledging that
means the fundamental basis of the organization is wrong.

PT: It's almost like you have to take an organization chart and
draw an X across it.

TP: Yes, except that, when you sit down with your organization
chart, you don't use an eraser, you use a match. But it is true that you
almost have to go bankrupt. One of the things that intrigues me is the
work on organizational ecology, which essentially says that the
probability of organizational success is largely dependent upon the
accident of when you were founded. The thing that fascinates me is that a
lot of the difference between CNN and CBS stems from the fact that CBS is
a 70-year-old organization, and CNN was founded in June of 1980. These
other poor souls at CBS, say, are trying to adapt the computer to an
old-fashioned organization where, basically, CNN started with a blank
sheet of paper. There's a wonderful line from True Believer by Eric
Hoffer, to the extent that naivete is one of the great success
keys.

My passion is to get people to have a serious discussion about the
importance of the role of groundless courage. What I want to do is sit
down with a bunch of stuffed shirts and say, look, we're going to spend
the next six hours together and our topic is going to be groundless
courage. Kirkus Reviews called me "the Tim Leary of management gurus."
But groundless courage is not Tim Learyism; it is a phenomenally
pragmatic statement in 1993. What the hell else could you call Ted
Turner's vision?

PT: Do you realize just how threatening you are to chief executive
officers? To essentially middle management of all sorts?

TP: Yes, but the point is--which is worse? What I'm saying may be
threatening as hell, but in an environment where on the 26th of October,
1992, the chairman of General Motors gets canned, there aren't many
people who are safe anymore. So which is more of a threat?

PT: What do you think changed to bring about this threat?

TP: What's changed, in my mind, is the whole metabolism of the
economy. The half-life of new products changed. For instance, the number
of grocery and drugstore products increased from 2,600 in 1980 to more
than 16,000 in 1992, and 574 new salty snacks appeared in 1991 alone
according to the records. And so the institution has to achieve a degree
of flexibility--of the agility and the ability to reinvent itself, to
destroy itself and re-create itself I'm not suggesting that I know how to
survive. I think I have a pretty good idea of how to die.

PT: Your ideas are remarkable in their compassion for
failure.

TP: Well, to not fail is to die. To pursue failure is not
necessarily to succeed. You see, that's the key to what I'm saying. If
you are not pursuing some damn dream and then reinventing yourself
regularly, assiduously, you're going to fail. Period.

PT. And you will be less interesting.

TP: Yes, and you will be less interesting. And when you look in the
mirror at the age of 60, you will be somewhat less ashamed of yourself if
you've gone for it, regardless of the outcome. Part of it, I admit, is
personal. The thought of going to the grave having been boring is much
more terrifying than the thought of going to the grave $ 10 million in
debt. There are worse things in life.

PT: You said to not fail is to die. That's going to seem to our
readers like a typo. Can you explain that?

TP: In the world of dull, boring management, the essence to me of
everything that one accomplishes in life, from the trivial to the grand,
is failure. You don't ride a bike the first time. You don't play a violin
the first time. The essence of experimental physics is to create
experiments at which you fail; then along the way you eventually achieve
some knowledge of something. It's hard to articulate because, for me,
it's so damned obvious that the only thing worth pursuing is
failure.

The most worthwhile pursuit is pushing yourself to the limit, and
the definition of that is failing, for god's sake. It's running faster
than you could possibly run and therefore dropping out of the race with a
phenomenal cramp that puts you out of action for six months. But pursuing
failure vigorously is to me the essence of individual success, career
success, corporate success.

Richard Lamb, the former governor of Colorado, said "No nation ever
survived the ravages of success." The problem with the IBMs of the world,
with people who win Nobel prizes and who write best-selling books, is
that there is such pressure to replicate what you did last time. And that
might be profitable for a while, but eventually the world is going to
catch up with you. People are going to come in from left field and nail
you. In the old days, maybe you could have a 60- or 70-year run; I'm not
sure you've got that luxury anymore. How long before somebody comes and
takes a serious whack at Wal-Mart?

PT: Are you really saying pursue failure or are you saying take a
chance, don't be afraid to fail?

TP: I am saying, as an analyst, as an observer, as a man from
Mars--pursue failure. Pursue risk until you screw up. If you believe
Warren Bennis' work, a shockingly high share of successful people have
been identified as having had significant failures. And it's not good
enough to fail, you have to do it with real panache! Public, embarrassing
failures. That makes sense to me, because in an environment that is
moving as fast as I think this one is, to not be pushing the limit is to
be falling back.

Most of us I think as kids believed that once you got out of high
school or college, one of the great joys of life was no more homework.
What I am essentially saying today is that the teamster, wine maker, and
receptionist had all better think about doing homework for the rest of
their lives. If you are not growing today, if you can't demonstrably say
at the end of the year I have learned some new stuff and tried some new
stuff, then you've fallen back. And there just isn't any room, it would
seem to me, in a developed-country economy, for people who are standing
still.

PT: Are you biased toward small?

TP: Well, toward non-huge. One of the problems with the American
language is that American has two words--small and big. Big is Exxon and
small is the person peddling warm chestnuts on Fifth Avenue. Somewhere
between one-person and 200,000-person organizations is a lot of stuff. So
one has to watch the language. I get upset when people say I am an
advocate of small business. Well, yes I am. I am an advocate of more
units rather than less units. But that doesn't make me a fan of the Small
Business Administration and how do we get a $7,000 loan into the hands of
every man, woman, and child in America.

PT: Aren't you really talking about a perception change? You are
trying to get people to look at things in a different way--the way we
perceive ourselves and the rules that we learn, including the ideas that
bigger is better, haste makes waste, look before you leap. Doesn't that
involve a cultural sea change?

TP: First of all, yes. Alvin Toffler recently said that this change
was so significant we'd have to reinvent civilization. I don't find that
excessive. My father, for instance, worked for the Baltimore Gas and
Electric Company for 44 years. That was normal. I'm saying that the man
or woman entering the work force [today] should expect to work for about
eight or nine different companies in the average career.

I don't deny the psychological proposition that people need some
stable base, but the stability can come from the network and reputational
background that they develop. And frankly I think that the talented young
person is in a lot better shape looking to the future than the person
sitting on IBM's payroll waiting for the next 20,000-person reduction to
be announced. I am completely willing to acknowledge that saying your
network, not your logo, is your stability is scarier than shit to a large
number of human beings.

PT: Still, we all have these working archetypes--the boss, the
corporate ladder--that you're tossing out of the picture.

TP: Yes. I agree that we have to worry about new images, new
models. On the other hand I think one can also paint a picture that is
too extreme in an environment where there aren't many people left in
steel mills anymore. I have total empathy for the 54-year-old steel
worker, but you don't build the whole nation's policy around saving the
last six steel workers. A lot of the change is dramatic. The imagery has
shifted. And a surprisingly high share of people are learning to deal
with this--to pursue, as the psychologists might say, new bases for
stability. Because if you're re going to be crazy you've got to have a
little bit of life rope to hang on to. That's not so strange to an
increasing number of people.

PT: But you'd agree it's not easy.

TP: It's not easy if you're one of the middle managers or senior
professionals laid off at 47 years old. Absolutely not. Some do well,
some don't. I'm a champion of radical metaphors and I agree that it's not
easy at all, but on the other hand we're not on Day One of this
transition, either.

PT. But in your talk of redefining roles in the
workplace--rewriting the rules and making my boss both my subordinate and
my boss--where does ego fit into the picture? Is it somewhat unreasonable
to expect that people are going to say, "Fine, I have no problem with
that?" Don't you find that people love levels?

TP: Speaking as a card-carrying member of the American
Psychological Association, I acknowledge that people love security. And
levels are security in a way because you know where you are. But again,
the new security resides in that network that you're part of. If I do
good work on Project A, then my reputation grows. I have worked for a
project manager who, if I do well, will think highly of me and I can take
a great deal of comfort in that. That comfort doesn't come from fitting
into a hierarchy, but in knowing that the project managers are reasonably
fair in their assessments.

I completely acknowledge that people want a deck of a ship that's
not always pitching to and fro. But it doesn't have to be a traditional,
standard hierarchy where we climb up the rungs of the ladder. I try to
make the distinction between pecking order and hierarchy--pecking order
is defining who's the great one, who's the middle-great one, and who's
the least-great one. One constantly makes those kinds of judgments.
Hierarchy means people with different kinds of offices who have the
ability to slow down decision-making because they are here on a chart
instead of there. That doesn't need to exist.

One of the most powerful phenomena in social psychology is "social
comparison theory." And yes, egos are bruised and yes there are pecking
orders, but that doesn't mean we have to have 11 levels and associated
with each one are 34 perks and a staff to go along with those perks and
which keeps you from getting anything done.

PT: Isn't this an ideal situation you are talking about?

TP: No! I'm telling you this isn't far-out stuff nor is it
idealistic. I'm talking about professional service firms, which I define
broadly as people who create things on the basis of pure knowledge. I'm
saying there are millions of workers who live in this environment and
have learned to live with security but based on something different from
what's in the traditional hierarchy. leis weird if you are at Bethlehem
Steel. Damn straight. It's worse than weird; it's Tim Learyism. And I
would be terrified--because I am actually quite conservative--if I
couldn't find some bases to tie this thing to.

I don't think of myself as a change agent, but I'm simply saying
that, like it or not, professional service firms--which used to be
thought of as people who sucked the blood of real people--are king today.
They are the model you ought to be looking at if you are running Dupont
or Dow Chemical.

PT: Aside from smaller and simpler, one of your biggest messages is
speed. People are pulled in many different directions, and we have all
these tools that help us to keep up-faxes, cellular phones - and we're
constantly plugged in, constantly going. And yet you're sort of
advocating getting a little faster, or at least keeping up the
pace.

TP: No, I'm not saying that. I'm saying that all the genies have
come out of various bottles. Information technology, new competition, new
countries that are competitive. Which says to me that the pace of
commerce is in my opinion going to continue to move in the direction it
is moving in now--that is, faster and faster. And so the issue is not do
we choose to be faster; the issue is the genies are only barely out and
you ain't going to stuff them back in. That's your competitive world,
ladies and gentlemen, like it or lump it. I'm suggesting there are ways
to organize which make it I think significantly less stressful. I'm
advocating speed not because I think it is a good idea. I'm advocating
speed because all the forces at work seem to be pushing in that direction
and how do you escape it?

At the simplest level, if the world is inundated with 10 thousand
new software packages a year, there is no way in bell you can make a
rational choice among them. You are going to make the choice because
something "grabs" you. [Microsoft's] Bill Gates says he has three
criteria for what makes great software. Number three is that it delights
you. And that's a fashion word. In a crowded marketplace, in order to
stand out, you have to be fashionable.

PT: And yet a recent article in Fortune quoted a bank vice
president as saying "as long as managers keep doing their jobs, we'll
keep giving them more to do." So in other words, if we keep up with the
pace now, the pace is going to get faster and faster. Where do you see
all this going?

TP: My assumption is that Darwin will have his way, and it will
take less time than one thinks. Those who continue to try and get more
and more mileage out of yesterday's organizations will fall by the
wayside. CNN is a stressful place and they move damn fast there, but in a
funny way CNN feels less stressful because there's less bull-shit. And a
lot of stress in life I think comes from the bullshit in the hierarchy
and having to spend 40 percent of your day saluting. Nobody salutes
anybody at CNN. Those who can't keep up do have problems, and they tend
to weed themselves out. The company doesn't have to do it.

PT: What advice would you give to the person who is not totally in
charge, yet has some control?

TP: I have empathy but no sympathy for the so-called middle manager
who feels trapped in the middle of an organization, because it is a crock
of shit. Powerlessness is a state of mind more than anything else. And if
you allow yourself to believe that you are sitting in the middle of a
hierarchy and therefore you must mind your Ps and Qs, you will be a
person stuck in the middle of a hierarchy from now until the end of time.
And I'm sorry that you were brain dead at 32 on the job and most of your
waking hours were spent shuffling papers and that you didn't realize it
until you are 57. I'm sorry but I'm not sympathetic.

My response, besides tough shit, would be "act like a vice
president." How do you get promoted to partner for example? Act like a
partner, then the promotion will just certify it. How do you get promoted
to project manager? A person who is already doing the work of a project
manager gets promoted to project manager. Very simple. The definition of
an entrepreneur is a person who doesn't know his or her place. If you
"know your place" you wouldn't try shit in this world. Entrepreneurism is
institutionalized disrespect, is it not?

PT: How do you exhort people to be brave? Is it a trumpet
call?

TP: By telling these stories, I help the 5 percent who already
believe this stuff, who are just about ready to make the move. I let them
know that they have company and exhort them to fight the good fight. I
sing to the choir, but not only to the choir. I sing to the radicals in
the choir. I sing to the nut cases and say, hey, you are not alone. Which
is the kindest thing you can say to some poor bastard who is about to
leap off a cliff. And to me that's more than enough to accomplish.