#140 Tom Peters - Fired from McKinsey to Top Business Thought Leader

[00:58] Paul: Today I am talking to Tom Peters, who, like me, at one point in his career found himself in strategy consulting, but sort of a weirdo in that world. We eventually both made our way out of that and found work that brought us alive. Tom ended up publishing a book, In Search of Excellence, that sort of reshaped how the consulting industry was thinking about doing work with businesses. And I think a lot of the consulting firms eventually took credit for seeing the world the way Tom was already seeing it in the late '70s. Excited to dive in today, Tom.

[01:39] Tom Peters: Yeah, what you just said, I've heard this before. The highest praise is when somebody steals your stuff and doesn't remember who they stole it from. That's the ultimate.

[01:53] Paul: Yeah. It's having written my book. So I've been writing about our relationship for work for 6 or 7 years. And it's interesting to see people start using like phrases, but it's such an honor. And I think that's the whole point of sort of doing work that matters to you is that you don't actually care about the outcome.

[02:16] Tom Peters: Yeah. Well, one, one thing before doing that, I want to talk about what you've been writing about. Just had the 25th anniversary of my Brand You book, and a lot of people read it and got it wrong. And they got it wrong because they saw it as self-marketing. And what I saw it was as being distinction distinctive and having a great set of relationships. But the point, the point I— that's not even the point I want to make relative to what you do.

The reason the book exists was go back, you know, 25 years, the end of the last century, lifetime employment was still the norm, and your identification was not your name. It was badge 273 in the XYZ division of GE or HP or what have you. And what I was saying is You are not going to survive with that model in the future. You've got to stand for something. And, you know, that, that was the entire story. But I, you know, I think probably we are very consistent on message in that regard.

[03:23] Paul: Yeah, I love that so much. And you're so clear about this in all your writing. I feel like so many people that talk to you, the journalists, the writers, they're— they just like want to talk about the book and like If you read in between the lines, you're always talking about, okay, I was doing the work that mattered to me. This eventually caused me to be thrown out from McKinsey and Company. But can you bring me back to like those first moments of like when you started to get captured by this search for like understanding how businesses were thinking?

[03:56] Tom Peters: Well, I'd love to make it glorious and glamorous, but, uh, When I got out of the Navy in 19— whatever it was, '70, I went to business school and I met a professor in business school who became my closest friend in life. And he taught a first-year required course called organizational behavior. And 9 out of every 10 people who came to the business school came for the finance courses and came for the marketing courses. And I became totally captivated with his stuff. And his stuff was all about how do organizations really work. And in the middle of all that, he told me, he pushed me to get a PhD and I got a PhD.

And I know this is an exaggeration, but it has been called the first PhD thesis, at least at Stanford, on the topic of implementation as opposed to strategy. And, you know, and then, and then we had a repeat because I went, went to work for McKinsey, the old McKinsey, not the one that has sickeningly embarrassed itself in the last couple of years. I went to work for McKinsey and the managing director called. I was in San Francisco, called me to New York. And he said, I've got a project that you want. And this really fits what you were talking about.

He said, we design the best strategies awesome strategies, clever strategies for our clients, and then they can't implement them. And what I want you to do, Tom, is to head up a project where we look at people who get— actually get things done. And so, you know, that was it. And then the, the fun part for me and the fun part for McKinsey and so on was when I started talking about this stuff, it turned out that people like to hear it. You know, they just did not look at the world that way. They were as you They were locked into strategy.

They were locked into systems. And, you know, the mere fact that you call a living human being a human resource tells you that you are 99.9% off base to begin with. You know, and most of the human resources work in staff departments, otherwise known as cost centers. So here I am, having worked my ass off to get a PhD, and I am now a human resource who is in a cost center kind of dragging the company down from its profitability goals.

[06:23] Paul: So at first, I think some of the ideas didn't take off with companies, right? I've read that you pitched these ideas to Shell, and I mean, Shell is known as a pretty well-run company, but some companies were like, ah, this is not how the world works. Talk to me about that. And then eventually, shift in like why people, and I know story here around Japan and—

[06:48] Tom Peters: Well, we did, we did find one, oddly enough, and they ended up funding the study and it was the Siemens Corporation. And you know, they are, well, they were headquartered in Germany before, sorry, in Berlin before the wall went up in the '60s. And then they were, you know, whatever. At any rate, and this is kind of a funny story. One of the companies we featured in the book, which is now a messed up bureaucracy, but at that time was a vital energetic middle-sized company, was Hewlett-Packard. And Hewlett-Packard was doing things differently, which you and I can talk about in a minute.

But Siemens was getting the crap beaten out of them by Hewlett-Packard, and they couldn't understand it. And you know, they were doing the Germanic system straight down the center of the road and so on. And so at some level they funded, they said, we don't understand why companies like this, you know, do so well. And then I've got to tell you a story that I will admit I regularly tell. I hate this kind of talk. Well, there was a magic moment, but there was a magic moment.

And my co-author Bob Waterman and I worked in the San Francisco McKinsey office. We were starting these interviews, and we had this incredibly energetic, interesting company 30 miles away called Hewlett-Packard. And so I called down to Hewlett-Packard and, you know, set up an interview with the president of HP. It was then a billion-dollar company. And so Bob and I drive down to Palo Alto. We go to the front door, modest headquarters building, and we said, you know, I'm Don Peters.

I'm Bob Waterman. We have a meeting with John Young. Now, we were working in the Bank of America Tower, and if you had asked for the CEO, at the very most you would have been blown off or you would have been greeted by the executive assistant to the executive assistant to the executive assistant. So 2 minutes after we say we're here to see John Young, this guy pops out of a door nearby. Hey, it's John Young. Come on with me.

You know, it was the most informal thing in the world. And so we go back then to the president's office of this billion-dollar company, and it is on the engineering floor. It is a cubicle that is no more than 7 feet by 7 feet with, you know, the plastic walls that come up to here. And, you know, Bob and I both said, or I sure said, holy shit, this isn't the way things work. But that still isn't the magic moment. The magic moment was later in the interview when Mr.

Young introduced us to what was called the HP Way. And the centerpiece of it was this thing called MBWA, managing by wandering around, which we thought was kind of the most asinine phrase we'd ever heard in our life. And so at some point he chatted with us and talked to us and he said, come on. Let's do a little MBWA. So, you know, we go out of his little teeny cubicle, we're wandering the engineering floor. Guy runs a billion-dollar company.

I won't say he knew every engineer by name, but he knew half of them by name, and they acted like he was the guy next door, not the president of the company. And then finally he said, you know, there's— he said, see over there in that corner? And over in there in that corner was an old guy who was working with somebody who looked like a 25-year-old engineer at one of the old-fashioned big computer screens. So, so John takes us over and he said, Tom and Bob, I'd like you to meet Bill Hewlett. It was like, excuse me? And so there's Hewlett, the founder of the company, chatting amiably with a 26-year-old engineer about some little issue they were working on with a new machine.

And I mean, that, that hour changed everything for me. It changed the definition of leadership. The way I like to say it is what I learned was that leadership is not about systems. It is an act of intimacy. It is the connection between the big guy and the 26-year-old engineer. And we're just a bunch of equals, except I've been around a little longer than you, and let's work on this problem together.

But that was, as I said, I despise terms like magic moment, comma, it was a magic moment.

[11:16] Paul: I love that. It seems like, and I was watching some clips of you talking in the '80s, which was really cool. Just one, to see like how captivated people were in the '80s, like huge crowds. Like this was a whole new way of thinking about the business world. But you said this one line, which I thought was really amazing, which was that From World War II to the early '70s, basically a big company didn't need to compete, right? And then globalization starts happening and then like companies, especially in the US, were kind of just sitting around like sort of dumb, like didn't really have like thoughtful approaches.

And it seems like you were, you were like clearly seeing this, seeing these moments at HP and like, oh. Oh my gosh.

[12:06] Tom Peters: Yeah. Uh, the biggest practical part is much more than today, Americans were really connected to their car. You know, the name of the guy was the name of his car, his Buick or his Plymouth or whatever it was. And suddenly, instead of seeing Buicks, Plymouths, Chevrolets, and Fords, we were seeing Nissans, Toyotas, and Hondas. And that was, you know, that was presumably this is not entirely a family show. That was kicking us in the nuts, if you will, to have, you know, to have that happen.

And that's when we really realized that the world was not as small as we thought it was. You're right. It was a more general phenomenon, but I really think psychologically it was the business that I had this funny thing happen. And I taught in an executive course at Stanford. And I had a guy in the course who was a pretty senior GM guy, and we got along well. And the course was over and we were out having a beer, and he looked at me and he said, Tom, I know you taught good stuff, but what you taught me was not the most important part of this course.

And I said, well, it's okay. I can handle that. And he said, the most important part of this course— this was Stanford, Palo Alto, California. The most important part of this course was pulling up to a red light in Hewlett-Packard in Palo Alto and seeing a Nissan on one side, a Toyota on the other side, and a Honda behind me. And he said that did more than 87,000 pages of charts and graphs that were being used at GM. You know, I could smell it, taste it, feel it.

And, you know, I always thought that was just a, you know, just fantastic little— what he said and the whole deal.

[13:54] Paul: I'd love to talk about like the shift. So what you were doing in Search of Excellence was sort of like going out and doing like corporate ethnography in a way, right? You're going and observing companies and you're sort of just seeing what works, which was pretty radical at the time. Can you talk a little bit about why that was so opposed to like what McKinsey was doing and sort of the, the rift that eventually led to you leaving?

[14:21] Tom Peters: Well, McKinsey generally worked with those giant firms. Biggest office was in New York. And, you know, they, they nailed all the financial services companies around the country. It was pretty much the same thing in one way or another. And see what Bob and I said. As we said, the business practices in most of these big companies stink, but there are some superstars out there.

What the hell are they doing differently? And so through hook and by crook and examples and friends, we found these companies like Hewlett-Packard, like 3M, like Johnson Johnson, like Texas Instruments that were middle-sized to big companies And they lived a different life. They lived a different life, you know, and, and, you know, HP being a classic example, but we ran into this guy by the name of Wren McPherson and he ran a company in Toledo, I think, and, and it was an auto parts company and they were doing all the right stuff. It was an auto. Well, here, here, here's, say, here's a story and this defines the new world. Giant companies like GM have parts that work.

And so we went to a parts factory and it was, had, was run by a woman by the name of Pat Carrigan, who was in fact the first woman to run a parts factory at GM. And so my, me, and I was doing this for a public television show, me and my team show up. And we're wandering around and trying to figure out what to do. And there's an office back here and, you know, I see the symbol on the door. It's the guy who runs the union. You know, GM is a United Auto Workers operation and it's a big thing.

So the union boss has got his own office. So, you know, I knock on the door and go in to see the union boss. And I, this was like that MBWA. This was an eye-opener. Talking about the old days, he said, Pat Carrigan arrives at the plant, let's say 8:00. He said, at 8:10, I heard a knock on the door and a, can I come in?

And it's Pat Carrigan standing at my door. Now listen carefully, he said, I have been here 20 years, and I have always been summoned by the factory manager. No factory manager has ever asked to come into my office.

[17:11] Paul: Wow.

[17:12] Tom Peters: I mean, you know, if that's not a holy shit moment. But what we found as we wandered around to these good big companies is a lot of stuff like that where people were engaged, people were important, people were being trained. People were in small entrepreneurial units, even though the company was a giant unit. And then, you know, we came up in the book with this list of 8 basics and so on, but they were people first, customer first, innovate by trying more stuff than the next guys and so on. But, you know, it was, it was, you know, the MBWA moment, the Carrigan moment. And if we had 2 hours instead of just a few minutes, I could give you 10 magical moments like that.

And, but they were, there's no way in the context of the time to describe how mind-blowing that was. But think of that. The guy's been, he's running the union in a, in a, in a UAW world where unions are tough mothers and the boss has never walked into his office. I mean, you know, that's, I'm sorry, that does not require a Harvard MBA. You know, to figure out that something's wacky there.

[18:24] Paul: And was that the passion you were fueling into your work?

[18:29] Tom Peters: Yeah. I mean, I, you know, I happen to be a very energetic speaker. And so I do a pretty good job of transmitting passion. And it was standing in front of a group of 1,000 managers and telling the story about the guy who runs the UAW operation at the GM parts plant. And these are, you know, it's said, and this is the psychology and all that sort of stuff, is people are not convinced by logical arguments. They are convinced by stories.

And, you know, a good speech, as I've said to people, is not good theory. You've got your theory, but the way you illustrate your theory is with a bunch of good stories about how this thing really helped us when we ran into a jam.

[19:18] Paul: In, I think I read in Duff McDonald's book that you, you wrote this op-ed sort of saying that like strategic planning is overrated, all these things. And it sort of like signaled this disconnection between like what you were seeing as the future of business thinking and the consulting firms. Now I worked at consulting firms from '08 to 2017 and like, Your way of seeing the world is basically how work is done. But talk to me about the reaction to what people were saying to what you were writing.

[19:56] Tom Peters: Well, one reaction to it was the guy who ran the biggest office at McKinsey, whose name was blank. Mike, I don't remember what his name was. It doesn't matter anyway. He wanted me fired for having put that article in The Wall Street Journal. The good news was, as I think I said earlier, my study had been commissioned by the managing director of the firm, and so I didn't get fired at that point. But, you know, again, to your point, we— the Adam Meyerson was the guy who's the editor of the Wall Street Journal at the time.

Remember, he called me a week or so later and he said, my God, we've gotten more letters and calls about that article. And you know, the, the, the, the article just said, you know, all the things you and I have been saying, you know, train your people, pay attention to your people, uh, get out of your office and do some form of MBWA. If you want innovation, just start trying stuff. Whoever tries the most stuff wins.

[21:01] Paul: So one thing I found impressive, you, you bet on yourself. Um, you bought, I think, 50% of the royalties of the book for $25,000. Obviously you were getting some feedback from like the Wall Street Journal, but that's a pretty bold thing to do. Like, how did you know to bet on yourself?

[21:21] Tom Peters: Well, I would love to give you some wonderful convoluted answer about my genius, but way beyond, I was acting like a renegade. I was acting like not McKinsey, and eventually, and I'm on their side. They had to say, you gotta go somewhere else. And basically I left and, you know, it wasn't hard. We didn't, we didn't think the book would sell worth a damn, but you know, it seemed fair that I'd get half of the royalties and Bob would get half of the royalties. And so, you know, it was, it was a 50/50 deal, which I thought the net result of that was, you know, gonna be, you know, 15 cents or something like that.

In fact, I just had a birthday and we had a birthday party and somebody said, put your books out there. And I accidentally picked up a copy of In Search of Excellence and inside it turned out to be the one the publisher had given me. And it was the 1 millionth copy of the book. But the top, listen, it's, this is true for everybody. And this is one of my life irritants or what have you. What we wrote was a pretty good book with perfect timing.

[22:37] Paul: Yeah.

[22:39] Tom Peters: You know, the week the book was published, President Reagan announced that unemployment had hit 10%. And, you know, which was the first time that had happened since the Great Depression. And so people were looking for answers. They knew what was going on was not working. And so our timing You know, was a gift directly from God into, you know, Bob and my hands, essentially. I, because I've often said to people that there are 3 kinds of people I hate in the world.

Mass murderers, number 1, child and spouse abusers, number 2, and number 3 on my list is successful people who think they deserve their success. We didn't, we worked our asses off, but you know, and I'm not, trying to make this a social studies thing, but you know, I had it pretty well nailed when I came out of the birth canal. I was white, male, Protestant, American, and both of my parents were intelligent. I mean, the rest was details, you know, to a significant degree. And I just hate it when I outworked all the buggers. Well, that's true, but I worked, I worked all the buggers after I'd gotten into McKinsey.

[23:49] Paul: Yeah. So, I got a copy of— is this your 20th book?

[23:56] Tom Peters: Yeah.

[23:56] Paul: That's pretty incredible. Does the 20 feel like a cool number to reach?

[24:03] Tom Peters: It feels like a bizarre number. I don't think of it as cool. I think of it as, holy shit, how did this happen?

[24:11] Paul: Yeah.

[24:12] Tom Peters: And with the new book, which was so terrific, the new book is small. In terms of size. It was designed by one of the country's best designers who I was lucky enough to be able to work with, Nancy Green, whose name is on the spine. And it is a book that is a summary book. You know, and it's to be thought about, it's to be talked about. It's not 80 pages of, you know, 10-point type.

It's a big quote from somebody who is of significance. And then I'm asking you to talk about it and you to figure out what it means. So it was very, very different. And you know, I don't know whether it's worth a damn or not, but I do know that I've never said this about any of my books and it's Nancy Green who pulled it off. I love the book. I love the size of it.

I love the feel of it. And I've always been, or no, for 25 years, I've been a big fanatic about great design. And what the book is, is its look, feel, taste, touch, smell, as much as the content inside.

[25:16] Paul: It seems like you've always sort of lived in the future. I have the sense that you were sort of always ahead of trends. I mean, in the early 2000s, you're writing about the new economy. We're now very clearly in a new economy emerging now, even though some people are still like trying to grasp onto the past. But, um, what, what does that feel like? It must be frustrating sometimes.

[25:42] Tom Peters: It's frustrating in a different way. You know, I, I guess I did smell it earlier than a lot of people. I was on the COVID of Time at one point talking about the new world of work, like the brand new thing. The frustration is that it feels to me So obvious. And I once said, if you want, you know, I've got a PhD from Stanford, for God's sakes, and two engineering degrees from Cornell. And I said, if you want to understand my books, you have to show me a signed graduation certificate from the third grade.

You know, there is nothing that stretches you intellectually. I mean, here, here's, here's a story I love, and it translates one-to-one to the workplace. So there was this little, call it a social psych, whatever, experiment. All right. And you're the teacher of a 7th grade class and, or an 8th grade class. And as the class begins, as people are gathering in the hall, you stand in the hallway.

And as people come in, you say, hey, Jane. Hey, Joe. Hey, Bill. Nancy, looks like that cold of yours seems to be going away. There's no conversation. It's just a sentence or two.

The results are that negative behavior incidents go down dramatically. Academic engagement goes up dramatically. And it is just because you treated people as if you cared about them as living human beings, you know, and what— hey, why the hell do I have to waste my time saying things that are obvious? But you know, that's my great frustration. If I'm ahead of the curve on stuff like that relative to a business school or an engineering school, you know, curriculum, but I ain't ahead of the curve in the sense that it's a million-year-old thing. Be thoughtful.

You know, I had this funny little thing happen. I gave a speech somewhere and the former and late governor of Texas, Ann Richards, spoke at lunchtime. And she said, you're flying somewhere. You have a mechanical problem. Uh, everything has gone to hell. Everybody has important meetings.

There are 25 people waiting in line to read book. They're screaming, they're yelling, and they're shouting. And she said, and finally you get to the front of the line. She said, remember something, there are 7 billion human beings on earth and that woman on the other side of the desk is the only one of the 7 billion who can help you. Treat her accordingly. And it is just the little thoughtfulness things.

It's life-changing. I mean, it's, I mean, besides it makes your life, there's this David Brooks did this, the New York Times columnist did this column a couple of years ago and he compared what he called resume virtues and eulogy virtues. And resume virtues are the schools you graduated from, the 7 career promotions you got, et cetera. Eulogy virtues are what they say about you at your funeral. At the funeral, they talk about how was he to people, you know, and, and, you know, that's, that, that to me is, is, is, is really, really the essence of it. How do you treat people?

I mean, the— ah, I've got it in both of my last two books. A head of a biotech company, which means incredible complexity, says biotech. Got it. We only hire nice people.

[29:31] Paul: Yeah, I love that.

[29:33] Tom Peters: He said some of the degrees which are required to work here You wouldn't even understand the name of the degree, they're so complex. But he said, I figured this thing out. There are actually a lot of people in the world who have the degree, hire the nice ones. And what he then argues is that it's the essence of their innovative spirit. It is the essence of their success in general. It's people who get along well with each other, who help each other and so on and so forth.

But you know, why the hell do I have to log over the last 43 years, 2,200,000 frequent flyer miles to say, stand in the doorway and nod at people and the world will be your oyster.

[30:13] Paul: So I, I have this idea, um, I've coined called too big to think. And it's my argument that these big consulting firms have become too big to generate good ideas. I, I sort of date the end of the good idea era to like the beginning of the 1980s in these big consulting firms. And I think it coincides with the rise of sort of like professional careerism. And you don't join McKinsey anymore to do great work. You join McKinsey to eventually get another job at another great firm and keep going indefinitely.

What do you make of this idea? Does it resonate with what you've seen?

[30:54] Tom Peters: I think it's a fine idea. And what you're saying is what I will do Until I get lucky and find a boss who looks at the world a different way. You know, I was in the Navy for 4 years and the first 2 years were in Vietnam. And my first commanding officer in Vietnam, I was all 24 years old. I was a combat engineer. Uh, my first commanding officer in Vietnam was the most influential person in my life.

Even including my dad, I must say. And I said to somebody, my, you know, we had to build stuff. We had to build stuff under fire. We had to build stuff with shitty material. We had to build stuff with broken down machines in the middle of nowhere and so on. And he was tough.

He wanted the jobs done. He wanted it done well, but you knew, you knew. That Captain Anderson loved, L-O-V-E-D, loved every one of the 875 sailors who were in that battalion. You know, he cared about them.