>Data and Business>CEO.com Book Review: The Excellence Dividend by Tom Peters

In his latest book, The Excellence Dividend (Vintage Books, 2018), renowned business leader Tom Peters relates an experience all too familiar to 21st-century shoppers. Having realized he’s out of vacuum bags, Peters heads to Home Depot, where he discovers that the retailer is out of the particular type of bag he needs. As the clerk disappears into the back of the store to see if they have any more bags in reserve, Peters pulls out his phone, searches for the item on Amazon, and orders it for next-day delivery through his Prime membership. He then gets in his car, inputs his home address into his GPS (despite having driven the route countless times), and continues on his way.

Peters is the first to admit he’s a willing participant in the modern, tech-dependent, increasingly AI-driven world in which we find ourselves. However, like many other thought leaders with an eye toward the future, Peters sees a dark side. Driven by an unprecedented tech tsunami, software and machine labor are replacing jobs at a surprising rate—or soon will be—and through our over-reliance on these innovations both as producers and consumers, we may be leaving ourselves increasingly powerless in an uncertain future.

Welcome to the Great Restructuring

To more optimistic futurists, Peters’ warning may sound unnecessarily alarmist. Hasn’t each generation of the workforce successfully adapted to changes in their environment? Through one way of looking at it, this perspective isn’t wrong. With the American economy fully entrenched in the digital age, the overall employment rate is healthier than it’s been in nearly twenty years. However, the numbers alone don’t tell the whole story. Wage stagnation and underemployment remain a persistent thorn in the side of economic growth, and many businesses worry about the growing gap between the skills the average job seeker possesses and the skills the average business requires to fill open positions. In fact, one study estimates that 6.3 million jobs remain unfilled due to this growing skills gap.

When viewed in this light, the question becomes not whether we humans have a place in the dawning age of AI, but whether we’re adapting quickly enough to thrive in this rapidly changing environment. An often-cited 2013 analysis by Oxford University found that, over the next two decades, automation and AI could threaten a full 50 percent of American white-collar jobs. In what Erik Brynjolfsson and Andrew McAfee refer to as “The Great Restructuring,” even those in professions previously considered unassailable by technology—such as doctors, pilots, and hedge fund managers—must learn to adapt their work for a new era or risk being replaced by automated processes.

This is the environment in which Tom Peters writes The Excellence Dividend, a sort of “spiritual sequel” to his 1982 best-seller, In Pursuit of Excellence. In both works, Peters’ fundamental argument remains the same: the businesses that thrive regardless of the internal and external pressures they face are those who invest in the cognitive and interpersonal traits that make us distinctly human.

Over 35 years ago, Peters and coauthor Robert H. Waterman Jr. first revolutionized the business world with their concept of “business excellence.” At the time, American businesses were losing ground to international competition because they’d become lost in a sea of endless spreadsheets, projection models, and supposedly cutting-edge organizational structures. Today, the threat isn’t international—American business has since embraced its role in the new global economy—but rather, technological. Peters argued that, in order for a workforce in flux to rise to the existential threat posed by tech, business leaders must embrace what makes their flesh-and-bone workforce different from their tech-driven counterparts—specifically, their humanity.


A Return to Excellence

Much of Peters’ discussion of business excellence amounts to a perspective shift. For instance, middle managers can just as easily be seen as punching bags for their higher-ups as they can be pinnacles of human achievement, rallying others behind them in pursuit of excellence. Business leaders must decide what they value and put their money where their mouth is.

The problem is that the language of excellence—words like emotional, vital, innovative, joyful, creative, entrepreneurial, and excellent—often come across as soft, wishy-washy, and ultimately abstract ideals that are impossible to implement. Take those ideals away, however, and what is your business left with? As Peters asks his readers, “Do we want joyless, uncreative, un-excellent workplaces?” and answers, “Of course not.”  And yet, for the businesses that don’t put a premium on these so-called “soft” human traits—a joyless, uncreative, and un-excellent workplace is exactly what they’re likely to get.

And for those business leaders who want proof that an emphasis on humanity rather than data and on creativity rather than algorithms actually produces better, more upwardly mobile employees? Peters points to some interesting statistics out of a few well-known tech firms. At one firm, 43% of employees who graduated in liberal arts had ascended to upper management, while only 32% of engineering grads had made the same leap. Another firm found that 60% of their worst managers had MBAs, while 60% of their best had BAs.

These findings support the same fundamental mindset that thought leader Peter Drucker had long advocated for: a focus on “people and power; on values, structure, and constitution; and above all, on responsibilities.” In other words, management as a “truly liberal art.” To achieve this, Peters proposes a form of leadership that focuses on logistics over strategy, on actionables and to-dos over endless data and figures:

You suffer through a hundred-slide PowerPoint presentation. The first ninety-five slides focus on market analysis, competitors’ strengths, and numbers, numbers, numbers (i.e., abstractions, abstractions, abstractions). The final, if we even get there, is a rush through five dense pages of “To-dos.” Well, damn it, I want the “To-dos”—and the processes and people associated therewith—to be the last fifty slides in the presentation. (Better yet, a twenty-slide presentation, with the last ten [or so] devoted to How to/To do/Who do.)

In other words, for modern businesses to thrive in the age of AI, and for workers to remain effective in an ever-changing landscape, they need to pick up the pace. It’s okay if an organization doesn’t have all the answers—in fact, it’s expected—but they’re more likely to find those answers if they’re in motion rather than standing still.

Social Employees Create Cross-Functional Excellence

According to Peters, the number one opportunity for strategic differentiation is to build cross-functional excellence (XFX) by strengthening and deepening employees’ interpersonal relationships—in other words, by creating social employees.

Such an approach is focused as much on real-world interactions (i.e., employees from different departments sharing lunch) as it is on digital engagement (i.e., creating “novel, differentiated customer experiences” in a virtual environment). As Peters puts it, the goal of this XFX-focused approach is to create a workforce of “fully engaged employees providing personalized service that makes you smile and creates fond memories that last.”

In order for employees to become valuable contributors in both digital and real-world environments, Peters draws a distinction between the concepts of artificial intelligence (AI) and intelligence augmented (IA). With a focus not on how AI can automate or replace human jobs, but rather on how it can enhance their work, businesses have the opportunity to create “a world in which every employee, augmented (rather than deconstructed) by the new technology, adds significant and distinct value as he or she potentially becomes no less than an innovating customer-contact star.”

From this perspective, AI can be viewed as an ally rather than as a destroyer—a relationship that is essential for maintaining a healthy, thriving workforce. Artificial intelligence may be playing an increasing role in the decision-making process—driving trades on the stock market, identifying tumors faster than doctors and radiologists, and spotting key trends that the average person might otherwise miss. However, the human ability to relate, connect, and build interpersonal relationships remains an essential driver of commerce. AI may be great at performing automated tasks, but it still has a lot to learn about designing a rich customer experience.

Who Will Lead the Charge?

Will business as we know it be able to survive the Great Restructuring? While to Peters (an eternal optimist) the answer is yes, he notes that both the level of uncertainty and the implications of this rising tech tsunami are “astronomical.” If there is to be an “innovation tsunami” to counter this wave, however, it will be led by agile, engaged human beings who are dedicated to creating excellence in every effort and interaction.

The question is: Who’s going to lead the charge? Where are these agile, engaged human beings on whose behalf Peters advocates so passionately? According to Peters, “If there is hope of weathering the coming tech tsunami…it will not come from the sputtering behemoths but from entrepreneurs.”  Peters worries that large enterprises too focused on bureaucracy and generating shareholder value may be too slow to respond. Instead, as he sees it, small- and medium-sized enterprises (SMEs)—the “purest manifestations of business excellence”—are well-positioned to lead the way.

Whether in business journalism or popular MBA programs, MBAs are often overlooked, despite accounting for $17 trillion in American GDP. These lean, customer-centric organizations are bringing the workforce into the 21st century. Reflecting W. Chan Kim and Renee Mauborgne’s now-famous Blue Ocean Strategy, SMEs are focused not on being the best, but on being the only game in town with their unique service offerings. When you’re the only game in town, the reasoning goes, you become much harder to replace.

Peters pins the success of these “companies that chose to be great instead of big” on four fundamental traits:

  1. Cultivate exceptionally intimate relationships with customers and suppliers.
  2. Maintain extraordinarily intimate relationships with the city, town, or country in which you operate.
  3. Create an intimate workplace.
  4. Seek leaders who are deeply passionate about what they do.

Such a focus inevitably echoes Simon Sinek’s already timeless rallying cry: “People don’t buy what you do. They buy why you do it.” But is it enough? Will a refocusing on excellence alone be enough for both businesses and their employees to remain vital and valuable in the age of AI? Perhaps. Perhaps not. To Peters, those who recommit to excellence will spur employer and employee alike to keep moving forward rather than standing still. If they can do that, then somewhere along the journey, they may just find their place in an ever-shifting digital landscape.

Cheryl Burgess is CEO of Blue Focus Marketing, a leading customer and employee experience consultancy.  She is co-author of the best-selling book, The Social Employee (McGraw-Hill, 2014.) An international speaker, LinkedIn Learning course author, HBR Italia contributor, advisory board member of The Economist, and active participant to the Wharton Future of Advertising 2020 Project.