Profitable Chaos

TOM PETERS'S "Liberation Management" will probably be as widely ignored as his "In Search of Excellence" (1982) was read.

While his first book (written with Robert H. Waterman Jr.) pointed to success stories in American business, Peters now analyzes corporate America's paralysis. He concludes unsurprisingly that only small and mid-sized companies (or firms that act like them) have the focus and fanatical devotion to their customers that are necessary to flourish in fierce, fast-changing markets.

Although Peters understands the importance of pleasing the customer, this book heaps contempt on its readers (customers for his ideas). What group of customers was he writing for when he produced 834 rambling pages?

Peters contends that brilliant organization springs out of chaos. Not so with his book, which never quite emerges from the morass. Flashes of inspiration grace the pages, but most of the information seems tired and rehashed. Instead of fresh research, the book seems more the result of the author's sifting of databases and clip files for valuable nuggets. Whereas a book has to have a guiding rationale that pulls the strands together, Peters's insights are haphazardly sprinkled throughout his tome.

"Liberation Management" has some interesting points, particularly when Peters digs into the dynamics of change inside companies. He writes: "One of the last of the centrally controlled economies is coming under the market's sway - not Cuba, but the centrally controlled, nonmarket arenas ... inside of the traditional, vertically integrated corporation."

The most engaging parts of the book are the case studies of manufacturing companies. Titeflex, a Springfield, Mass., manufacturer of hoses is an example of a blue-collar company that embodies Peters's ideals. In late 1988, Titeflex had a multilayered, bureaucratic management and "convoluted" factory-floor systems. Enter Jon Simpson, company president during a radical reshaping of the business.

Now representatives of each aspect of the business - from ordertaking to design, production, and shipping - work in tandem to direct the work flow of the entire factory. Orders that previously took from nine to 11 weeks fly out the door in two to five days. "What made the whole difference ... was a new attitude, and tearing out bureaucratic constraints that got in the way of people doing what they had known how to do (and wanted to do) all along," Peters writes.

Peters's mantra is that companies must exhibit a slavish devotion not only to the customer's stated needs, but also to the needs customers don't even know they have. The customer is not simply always right, Peters says, the customer is "God."

Devotees of pure competition will certainly agree with Peters's dictum: "Embrace failure to discover success." Those same people will also be interested in the "violent market-injection strategies" Peters lays out midway through the book. Though his language is startling, Peters is not far off the mark in this area.

His recommendation to "destroy your most profitable products" bears looking at carefully. His argument is that in order to keep ahead of the competition, companies have to introduce innovative products that cannibalize their own product lines. On Page 1 of The Wall Street Journal recently, the same point was echoed by John Morgridge, chief executive of Cisco Systems Inc., a computer networking hardware company.

"You have to face up to the question of destroying your product with new products," Mr. Morgridge said. "If you don't do it, someone else will."

After about 500 pages, Peters's capricious style of writing and presenting his ideas does start to grow on you. And Peters could be right: "Liberation may well be a `nice' idea.... But that's beside the point. The times make it a necessary idea."

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