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[APPLAUSE] SPEAKER 1: It's great to see all of you, and welcome to this year's Olin Lecture. Each year, as many of you know, this series presents an internationally prominent speaker addressing a topic relevant to higher education and to the current world situation. Established in 1986 by the Spencer T. and Ann W. Olin Foundation, the lecture has become a highlight of our reunion weekends.
This year, we are most proud to present a Cornell alum class of '64 who has had remarkable impact on business management and the way many of us think about leadership. Tom Peters burst onto the organizational improvement scene and the Best Seller lists in 1982 with In Search of Excellence. Co-authored with Robert Waterman, the book tapped into widespread concern at that time that American products were declining in quality, especially in comparison with our colleagues in Japan.
Peters and Waterman identified key ways that corporations could, should, and in fact, must pursue excellence. They urged managers to learn from their customers, to value their workers, to encourage entrepreneurship, to keep the organization simple, and to take a chance on new ideas and new methods.
The book attracted millions of readers with its ideas, its energetic can-do spirit, and its advice captured in so many witty epigrams. If a window of opportunity appears, don't pull down the shade.
In Search of Excellence was followed just three years later by A Passion for Excellence: The Leadership Difference, co-written with Nancy Austin. By that time, Tom Peters was well launched on a whirlwind life of consulting and writing and making personal appearances around the world.
He has written more than a dozen Best Sellers, including Thriving on Chaos, Liberation Management, and The Brand You 50. His latest book just published this spring is The Little Big Things: 163 Ways to Pursue Excellence.
Tom is a native of Baltimore and came to Cornell to study engineering. He earned a bachelor's and a master's in civil engineering. Then went to Stanford for an MBA and a PhD. He served in the US Navy from '66 to '70 and was twice deployed to Vietnam as a combat engineer in the Seabees. He was Drug Abuse Advisor to the White House in 1973-'74, and he worked for about seven years at McKinsey Company, the international management consulting firm, before In Search of Excellence transformed him into a household name and a management guru.
David Collins, in a book analyzing Tom Peters' career, describes him at the forefront of a movement that provides a new vocabulary of managerial work, deals with managing as a social and political process rather than a cold and rational science. And by representing work in cultural terms, highlights the importance of storytelling and myth making in management.
"In short," says Collins, "Tom Peters produced or popularized ways of thinking that have altered the way we all view the world." We are very fortunate to have Tom back at Cornell today to share some of his insights and inspiration. Please join me in welcoming the 2010 Olin Lecturer, Tom Peters.
[APPLAUSE]
TOM PETERS: The most worrisome feature of that entry was speaking at someone who is not as young as he used to be and a wearer of graduated lenses. I told somebody long ago, I now know how I'm going to die, and it's going to be falling down steps, but I was able--
[LAUGHTER]
--was indeed able to make it. Well, I appreciate those extraordinarily kind words, and I would say that I am honored and humbled. But I am not only honored and humbled. I am terrified.
[LAUGHTER]
This is a meeting of friends, and as is always the case, there's no scarier audience than a meeting of friends.
[LAUGHTER]
I was saying earlier, I've given something like 3,000 speeches. I survived 2,999 of them, and number 3,000 my mother-in-law was sitting right in the front row, and I just-- I lost it.
[LAUGHTER]
I want to refer back briefly to some of the comments about In Search of Excellence, and I'll talk about it a little more later on. But there is an interesting phenomenon. The sales were pretty good.
And at one point, the number 1 and number 2 Best Seller on The New York Times nonfiction list, no particular order, was a Cornellian Class of 1964 by the name of Tom Peters and a Cornellian class of 1962 or '61 by the name of Ken Blanchard, and so we pretty well had that thing nailed.
[LAUGHTER]
And Kenny being Kenny, In Search of Excellence had eight basic points to it. And Blanchard pulled me aside one time. I ran into him in New York. He said, do you know why these books are selling so well? And I said, no, Kenny. I have no idea. He said, because we've got lists. And you know, he was probably right.
[LAUGHTER]
Well, as I was wandering around the campus this morning, thinking about this, that, and the other, I thought, who should I dedicate the lecture to? And lots of names came to mind. But in the end, having devoted my life to capitalism, I decided to dedicate the lecture to socialism.
[LAUGHTER]
Now, you may ask, why? But the reason is incredibly logical, and that is for four years at Cornell University, the treasurer of Cornell got a check twice a year from the United States Navy, which covered my tuition. And so I was indeed sucking from the government trough the entire time that I was there.
[LAUGHTER]
As for the rest of the money to cover my expenses, I saw building after building in which I washed dishes or waited on tables, so there it is. Now speaking of the Navy, it also leads to a problem. It always does, and particularly here in this kind of a setting, and that is metaphorically at least-- metaphorically is a pretty big word for an engineer--
[LAUGHTER]
Metaphorically, I always want to strangle when I begin John Fitzgerald Kennedy, because Mr. Kennedy said at some point along the way, no one should open one's mouth unless it is one's intent to change the world. Now, that is a pretty damned high bar. And normally, that makes me want to run for my life.
Well, my beat, though I would like to think that I've been of help a little bit beyond that, is business, and business is going through one of the periods of time, to a significant extent, deservedly so, where its reputation is not very good. But the simple reality is like it or not, the business of America is business.
We would not be here in one of the world's great research universities unless we had the funding that ultimately comes from the private sector. Our security may not be what we wish it to be, but on the other hand, we would not be here if we did not have the most powerful military in the world, which likewise is, in fact, funded by the power of the private sector.
We were-- obviously, for some of us who are a little bit older, we lived through the Cold War. We ended up on the right side of the Cold War. And fundamentally, we won the Cold War through profit, which allowed us to have a more powerful military. And the rotten economy of the Soviet Union did them in a lot more than the courage of any soldier, because god knows for those of you associated with World War II, you know that the courage of Soviet soldiers is impeccable.
And that's an understatement. As somebody once said about World War II, Churchill gave the speeches, the Soviets gave the bodies, and the Americans built the tools. And you know-- well, I was just in Washington talking to somebody. And speaking of building the tools-- and this is another one of my pet projects over the years-- the World War II memorial, the first and tallest statue, should be to Rosie the Riveter.
[APPLAUSE]
But indeed, business has given itself more than a few black eyes in recent times, not least of which the truly majestically stunning performance of the chairman of British Petroleum.
[LAUGHTER]
No, I mean, it fascinates me as an analyst. I mean, you know and I know, even though this is a gathering of Cornell alumni, that that guy is as smart as any of us, and probably as smart as any combination of three of us. How could a person with that high an IQ have that low an EQ? It just-- it staggers me.
But it is my view, and it is what I want to talk about today fundamentally that business can be done right. It can be done with integrity. It can be done with transparency. And in fact, business is at its best that way.
I can't think of anything worse than reading a positive review of one's book, but back in 1987 I wrote a book called Thriving on Chaos. And there was a review in The Wall Street Journal written by a guy named Paul Weaver who was a fellow at the Hoover Institute.
And he said, "Mr. Peters is an enthusiast storyteller, a lover of capitalism. He says that effective management is management that delivers more value to customers and provides more opportunity for service, creativity, and growth to workers. He is saying that the decent thing to do is also the smart thing to do." And that fundamentally is my bias.
I would also say in defense of those who need no defense that the business of America is not 500 big companies called the Fortune 500. They employ no more than about 5% or 6% of us. The other 94% in fact are the people with incredible integrity who work in the little insurance offices or the little health clinics or the corner stores or what have you. The business of America is actually small business, believe it or not.
In fact, you can take the boy out of the engineering, but you can't take the engineering out of the boy. And I have this difficulty of not reducing everything to either a list or an equation.
I was thinking about coming here and thinking about my engineering, and I didn't practice it other than in Vietnam in a very direct way. And I was talking to somebody. It was just last week. And I'm standing in front of him and I say, OK, let's look at it this way. Number 1, I thought, where in the hell did that list making function come from?
[LAUGHTER]
But the joy of it, which I also learned, is that when you give lists to people, they kind of buy the act, and so you can say utter rubbish as long as you number it.
[LAUGHTER]
[APPLAUSE]
Well, it happened to me. I did some training years ago at Hewlett-Packard. And in fact, the guy who hired me was a classmate from Stanford. And he was-- the guy was in charge of human resources for research and development.
And I remember at one point, because I had a reputation for rather nonlinear thinking, he said, Tom, this is great material. He said, but do me a favor. Next presentation, number your paragraphs. He said, it'll make the engineers feel better.
[LAUGHTER]
As to the equation-- and this has been on my mind for quite a while, and I'll explain it because it's the essence, essentially, of the new book. My equation is K equals R equals P, which is to say Kindness equals Repeat business equals Profit. You never make money on the first transaction. You make it on the seventh and the eighth and the ninth and the 10th and the 12th. And the fundamentals of human behavior-- decency, kindness, and thoughtfulness-- are what bring people back.
[APPLAUSE]
And if you wonder about the things that 67-year-olds can do, that equation was written expressedly for Twitter.
[LAUGHTER]
The answer is, yes, I tweet. I passed my 4,200th tweet this morning, in fact, and it's a lovely feat. One of the reasons-- I wrote an 800-page book one time. I am not exactly short-winded.
[LAUGHTER]
And even at the age of 67, there's always a time for discipline. And if you want to make a coherent statement in 140 characters, now, that is discipline. And so I love it.
As always, speaking of which, I have a speech which will take six times longer than it's supposed to, but it doesn't really matter, because I'll do whatever I do.
[LAUGHTER]
I mean, you heard it in the introduction, because I have to make these things sound long. You heard it in the president's introduction. There's not a damn thing in the Search of Excellence that's interesting.
[LAUGHTER]
We said, listen to your customers, take care of your people, and shut up and do something.
[LAUGHTER]
And then Blanchard said, and whatever you do, don't take longer than a minute.
[LAUGHTER]
So we had it nailed. So I have-- I'm now going to present-- I suppose it's more engineering-- the three H story of enterprises, all you need from the three H's.
The first of the three H's is Howard Schultz, the founder of Starbucks. Schultz is a busy guy. Schultz has got a good staff. Schultz collects an incredible amount of data. But Mr. Schultz says-- and I asked him if what I read was true, and he swears that it is-- Mr. Schultz says that religiously, almost capital R religiously, he visits a minimum of 25 Starbucks shops per week.
Because he said, I've got the numbers. I know the analysis. But the reality is Starbucks is one Starbucks employee selling one cup of coffee to one customer. And unless I can see it and smell it and get all of my senses around it, then I really don't know what the hell is going on, regardless of the tons of computerized, analyzed data that I've got. So that's the first H, Howard.
Near the time of his retirement, there was a roast in New York City for the great hotelier, the peerless hotelier Conrad Hilton. And it was a standard roast. A lot of people got up and told funny stories. And then at the end, they asked Mr. Hilton to come to the podium and they asked him to give his secrets of this magnificent career.
And so the story is told that Mr. Hilton walked to the podium. And he was an incredibly distinguished old man. Squared himself away, looked out to the audience, rose his finger, and said, don't forget to tuck the shower curtain into the bathtub.
[LAUGHTER]
And with that, he turned and walked off the stage.
[LAUGHTER]
Our third H is Herb. A funny thing happened in-- maybe it was March of '09. Yeah, it was. March of '09. On the same day, there were two annual meetings in the great city of Dallas, Texas, by two of the United States' leading airlines, one Southwest, one American. The American Airlines annual meeting was picketed by hundreds of members of the American Airline Pilots Association.
The same, AAPA, spent hundreds of thousands of dollars to take out full-page, double-page ads in places like USA Today thanking the founder of Southwest, Herb Kelleher, for a 37 years of extraordinary service. I mean, if that ain't a contrast, I don't know what the hell is.
And it's funny, because it's not unlike Mr. Hilton and the tucked-in shower curtain. Kelleher must have been asked 1,000 times, if not 1,000 1,000 times what it was that his secrets were. And he too always answered with the same one liner. And he said, the secret is you have to treat your employees as your primary customers.
And the way I like to put it in slightly less appropriate English than should be spoken in great academic centers like this, and that is if you want to treat the customer first, you must treat the employee who treats the customer even more first. And ugly English, but what can I say?
Well, we did. I am not foolish. And you heard it in the introduction, I'm allowed out in public because I wrote that book In Search of Excellence back in 1982, and a whole lot of people bought it, which was very nice. My wife and I, family deeply appreciate the royalties.
[LAUGHTER]
So I love signing books and things like the book signing out there. Once they're signed, you can't send them back.
[LAUGHTER]
People say, why are you signing so fast? I'm saying, it's like a little cash register.
[LAUGHTER]
The reality is we made a ton of money off that damn book because they charged what was an insane amount of money in 1982, which was $14, and the normal price was $10. And the reason they charged $14 was because they knew it was a business book and nobody would buy it.
[LAUGHTER]
So In Search of Excellence was born effectively in Palo Alto, California. Bob Waterman and I worked for McKinsey & Company. We worked in the San Francisco office. We were asked to talk about excellence by the other British oil company or half-British company, Royal Dutch Shell. And there was this interesting company down the road from us in San Francisco in Palo Alto called the Hewlett-Packard company.
We went down there. We talked to the chief executive officer, John Young. And John, along the way-- no, sorry, John was president at the time. And John along the way told us about this funny little HP habit, and it was called MBWA, which stood for Managing By Wandering Around.
[LAUGHTER]
And on the one hand, it's worth a chuckle. On the other hand, it is a metaphor for being in touch. And the simple reality is that preachers with big congregations and CEOs with big companies and even small companies spend too much time in the back room and not enough time out where the rubber meets the road, with vendors, customers, employees, community members, and so on.
I mean, that was our story, the three H's. What Howard said, Schultz, was be in touch. What Conrad Hilton said was sweat the details. And what Herb Kelleher says was, it's the people, stupid. And that's it. And that's what we said in the damn book. I mean, we wrote eight principles, but the real reality is you didn't need all eight. It was just about the four words. People, customers, action, and values. You know? And that was really the whole deal.
Well what happens? And if you have four degrees from pretty good schools, you-- incredible schools. I'm the luckiest guy in the world, you know?
Before I started doing what I was doing, I had tutelage. Came from a dorky little town outside of Annapolis, Maryland, and I ended up at Cornell, Stanford, and the United States Navy. And if you are looking for three foundational blocks, if you can name a better three, you're a better person than me. And of course, my mom. That's why I'm up here, because she talked even louder than I do.
[LAUGHTER]
So what happens if you have all those degrees and you're fundamentally a frustrated academic is you dig deeper and deeper and deeper into stuff. And by the time you've dug really deep, you've lost the whole meaning of what the hell you said in the first place that actually made sense. And that's what happened to me. I was getting off on what I was saying, but I was pretty much the only person who understood me.
[LAUGHTER]
And then my wife and I, we spend a couple of months-- we live in Vermont. My history, which you don't know, which is important to all this stuff, is I spent 35 years in Silicon Valley. And it was when Silicon Valley was becoming Silicon Valley-- and the reason that's important was if you live in Silicon Valley, you understand the total believability of things that are not believable, which is like young hair-- long-haired hippie dorks like Steve Jobs could topple the entire establishment.
And we saw it over and over and over again. Somebody once asked me, they said, what do you think Silicon Valley's secret is? I said, it's very simple. We've got an unfair share of demented dreamers.
[LAUGHTER]
They wake up in the morning and they think they can outdo Steve Jobs. It's interesting, because it is the essence of America's strength, you know? When I wandered around, giving talks, I knew Sam Walton who I adored reasonably well. And I'd give these talks, and the talks would be to middle managers, and I'd talk about Sam.
And people-- some of the people who hired me said, what in the hell are you doing? These people can't aspire to be Sam Walton. And I said, you don't understand America. Statistically, of course they're not going to be Sam Walton. But the average American-- and I hope it continues to be true-- the average American wakes up in the morning assuming that he or she can be the next Sam Walton or Bill Gates.
And incidentally-- and maybe it's a controversial topic with some of you, and I really don't give a damn if it is-- the essence of that strength is our immigrants. Never forget it. Period. My grandfather--
[APPLAUSE]
--my grandfather arrived here from Germany in 1873. I am only the second generation in my family to be born in the United States. And as far as I'm concerned, I am an immigrant in every sense of the word, as are approximately 100% of the rest of you.
[LAUGHTER]
So as the Vermont winters get longer, which they do with advancing age, my wife and I have started spending time in New Zealand. And in New Zealand two years ago, which led to the current book, I was reading a lovely, magical book called The Summer of 1787 written by David O. Stewart. It is a day-by-day analysis of the Constitutional Convention.
Now, for those of you who are not quite as engaged in it as I am, or if you took your history as I did, when we think of the Constitutional Convention we tend to think of Ben Franklin, and we tend to think of James Madison, and we tend to think of all these other famous people. Well, that is the biggest load of crap in the world. I mean, they were there, but it wasn't all that interesting.
The Constitution of the United States of America, the accurate title would be the Constitution of the Great State of Delaware as Interpreted By the Rest of Us. It worked this way.
Number 1, states could send delegations of any sizes they wanted, all right? Some states thought the whole damn thing was a dumb idea, and so New Hampshire and New York just didn't bother to go.
Now, the biggest delegations I think were as big as six but Delaware sent five, A. B, for those of you who've spent any time in Philadelphia-- and I grew up near Baltimore-- the weather is awful in July and August. 107% humidity, 95 degrees. On top of that, they didn't want their secrets to be exposed so they shut the damn windows in Independence Hall, and in 1787 they all wore wool suits with wool vests. So the number 1 goal was to hell with what this Commerce Clause said. Let's get to the pub.
[LAUGHTER]
As a result of all this and a result of the fact that most of them were half broke and had to go back to the farm, on average there were 30 people on the floor in Pennsylvania-- in Philadelphia at any given time. Almost never more. The Delaware guys came early, left late, and never missed a day. So they were five out of 30 the entire way through. And so this is, in fact, the thing that suggests that the smartest guy in the room was Woody Allen who said, 80% of success is showing up.
[LAUGHTER]
That was the Delaware secret. The second half of the success was, which some of you will remember from your university careers, is whoever brings a first draft is 10 steps ahead of the game.
[LAUGHTER]
So you had those two, and then you had the really important stuff. There was some guy-- I think he was from Maryland. And he was a guy who should have played a main part in this convention, all right?
But as you can imagine, the glasses that people wore in those days were not as good as they are today, and his glasses kept falling down over his nose, and he walked around like this, and they thought he was a stuck up SOB, and nobody ever invited him to be on the subcommittees. This is how your Constitution was written.
[LAUGHTER]
But what it reminded me of was not just in trivial events like a corporate decision, but in the biggest events in our nation's, and indeed, the world's history, the stuff that matters is the little things. The stuff that matters is the little things.
And then I went on and read a marvelous analysis of Nelson Mandela. And it was actually Time magazine devoted the whole magazine on his 90th birthday, and they ended up with the five leadership secrets of Nelson Mandela. Five. That is a low number, right? One of the five was great smile. They said literally no one, including jailers, could resist Mandela's smile.
And these little stories, which are the things that always get me. Now picture this, OK? There's a little bit of wobbliness going on in the apartheid government, and so they're thinking of talking with Mandela. And the most evil of all human beings, the justice minister, comes over to meet with Mandela for the first time, all right?
Mandela is obviously as high a quality prisoner as you could possibly have, so Mandela is surrounded by seven of his body-- of his jailers, OK? And so Mandela meets the justice minister, and they talk for a couple minutes. And Mandela says, oh my god, Mr. Minister. I am really sorry. The seven guys who are around me, I meant to introduce you to Mr. Smith, Ms. Jones. He introduces him to all of the guards.
And they said-- and so these guards start acting like a president's bodyguards instead of the number 1-- and needless to say, the guards were whiter than white, to put it mildly. But I just love stories like that.
Then I read the best biography I've ever read about one of the least beloved who ought to be moral of it guys in the world from my generation called Dwight David Eisenhower. Eisenhower went from lieutenant colonel to the head of the whole damn D-Day landing force because of his smile.
[LAUGHTER]
They said he had an infectious grin. And he did. And he did the Kansas act better than any Kansans other than him do it. And I mean-- because the number 1 issue in D-Day was to make sure that the Brits and the Americans didn't kill each other before they had a chance to kill the Krauts.
[LAUGHTER]
I can use that word, because I am one.
[LAUGHTER]
And it's just stunning. And these are the big things. There was a line in the book, and it came from somebody at the time, and it said, Eisenhower's demeanor-- and it's just staggering. It said Eisenhower's, demeanor was such that parents were willing to let their sons die for him. And that's a demeanor issue. That's not the best strategy. It's the demeanor. You know?
And that's what I've been fighting for 40 years. It's not the person with the best strategy and the best numbers. It's the person who can-- look. You know the coolest thing that's happened to me professionally? It happened in 2004, and it has its origins no more than, I don't 70, miles from us here. It's flawed. The Fortune magazine has that list every year, the 100 best companies to work for in America. And usually, it's somebody like Google or Genentech. You know who it was in 2004? Wegmans, our regional grocer based in--
[APPLAUSE]
And I loved it. And I loved it for the simple reason that I would give these lectures and people would come up to me when I talked about the people stuff, and they said, oh, yeah. You're from Palo Alto. You can do this stuff in Google. You can do this stuff in Hewlett-Packard. But I'm in groceries.
And I can look at them and say, yeah, and guess who's the best managed company in America? It ain't anybody other than the grocery guys. God bless Wegmans. So anyway, I wrote this book recently. Called whatever it was called.
[LAUGHTER]
And it starts with toilets.
[LAUGHTER]
There are 163 things in it. I have a house in Boston and I fly out of Logan and live in Vermont. It's 173.6 miles from my house to Logan. And I am 67 years old, and I am male, so there is therefore a requirement during that period of time to make certain stops.
[LAUGHTER]
The absolute number should not be addressed in this audience.
[LAUGHTER]
But at exactly the halfway point is Wagon Wheels Restaurant in Gill, Massachusetts. Now, the muffins are great. And if you don't believe me, ask my cardiologist.
[LAUGHTER]
My other cardiologist. I now have two. But the bathroom, always fresh flowers. And I always spend an extra minute there because all the wall is covered with these family pictures. And Gill was a down and dirty sort of place, and they did ice harvesting and everything else, and I always kind of look at the pictures. And the muffins are great. And if the muffins poison me, I wouldn't go, or I wouldn't go back. But I go for the bathroom.
[LAUGHTER]
Now, that was number 1. And then number 163, the last page of the book ends up with a quote from Peggy Noonan, who was writing a de facto obituary for Tim Russert in The Wall Street Journal. And so this is the last paragraph in my book. I've never written a better one, which is to say, I've never cribbed from Peggy Noonan before.
[LAUGHTER]
It's said with attribution. Believe me. "In a way, the world is a great liar. It shows you that it worships and admires money, but at the end of the day, it doesn't. It says it adores fame and celebrity, but it doesn't. Not really.
The world admires and wants to hold on to and not lose goodness. It admires virtue. At the end, it gives its greatest tributes to generosity, honesty, courage, mercy, talents well used, talents that brought into the world make it better. That's what it really admires. That's what we talk about in eulogies because that's what's important. We don't say, the thing about Joe was that he was rich. If we can, we say, the thing about Joe was he took good care of people."
And it is my bias and my view and my 40-odd years of devotion there too that in fact, this is the essence of an effective church, fire department, school, and business, whether the business is making software, whether the business is making medical devices, or anything else. And so thank you, Peggy Noonan. And so that was what the book was about.
Hardest part of writing a book-- and this sounds like a joke liner. I don't know what it sounds like, but it's the truth, is picking an epigraph. Because you've got to come up with 10 words written by somebody else that summarize the last five years of your life.
I've written 16 books, so I've got 16 epigraphs. And it's not my intention to ever write another book, but then it wasn't in 1983 either. But anyway, if I ever write another book, the epigraph will come in second place because-- excuse the self-congratulatory words-- I really nailed this sucker this time.
[LAUGHTER]
And the quote is from the great American statesman Henry Clay, and the words are "courtesies of a small and trivial character are the ones which strike deepest in the grateful and appreciating heart." It is the little stuff that we remember 15 years later.
Again, I'm not being an idiot. If the car doesn't work at all, you're not going to like the car. But the reality is, take a look, for those of us who were sort of in my class, remember when you bought a car in the 1960s? You actually made a list that you took to the dealer at the end of the 30 days about the 11 things that are bad, none of which were minor?
There are no bad cars today. I don't care whether you're top of the market or whether it's the low end, the Kia. I mean, anybody in this room know how to change a spare tire anymore? Some of us who are my age changed them twice a week.
[LAUGHTER]
And it's just-- they work. And so it is the little things. Now, I've got all these other things, but I was going to talk to you about a couple things. I'm just going to tell you some stories, because they're what it's all about, really.
I read a book. I'm not in the habit of writing books-- reading books by television personalities, but I ran across this one and read the first page. And it's by Deborah Norville, who's a morning TV person.
There is a college class that's taking a science exam, all right? And the teacher, as is often the case, has told the kids pretty directly what material will be covered so they know more or less what the deal's going to be.
She hands out the test and the kids go through the test. There is the usual and appropriate silence. And suddenly, there's a lot of jabbering. And the jabbering-- is this really true? Is this part of the test? And so on and so forth.
The teacher says, yes, it is. And they were complaining about the last question. And the last question was, what is the first name of the person who cleans this room at the end of the day? The answer is Otis, by the way, in case the question ever comes up to you.
[LAUGHTER]
And then I came across another one-- did I bring the book? No, I didn't bring it out with me. A fabulous book that is called Civility, and it's written by a guy by the name of PM Forni. Mr. Forni is an Italian literature professor at Johns Hopkins University. And here is what he wrote at one time. I picked up the wrong notes. Maybe I won't even find them.
"For many years, literature was my life. One day while lecturing on the Divine Comedy, I looked at my students and realized that I wanted them to be kind human beings more than I wanted them to know about Dante. I told them that if they knew everything about Dante and then went out and treated an elderly lady on a bus unkindly, I would feel that I had failed as a teacher.
Professor Forni has now started what, in fact, is the Johns Hopkins Civility Project, which is absolutely magnificent. Perhaps it will even spread to health care.
[LAUGHTER]
Couldn't resist. The third of my three stories is told on me. And you've got to understand, I grew up near Annapolis, and Annapolis was a deeply Southern town in the 1940s. And therefore, for the kind of Southern lady that my mother was, it was like good manners came right next to godliness, and godliness was in a deep second.
So I fly-- and I'm going to a doctor's appointment in Virginia, and I fly into BWI early in the morning. And for those of you who ever fly into BWI, you will know that the car rental place is like a half a continent away from the airport. And so a bus comes by, because they're not individual rental car buses. It's just a generic rental car bus. Bus comes by, door opens, and I say, is this the rental car bus? And the driver-- this is so wonderful.
[LAUGHTER]
The driver looks at me. He has a smile on his face. He said, I believe that we normally start conversations like this with, how are you today?
[LAUGHTER]
[APPLAUSE]
My mother reached down-- or up, how the heck do I know? My mother reached out and grabbed me by the neck, and I can still feel the grip.
[LAUGHTER]
Now, I'll tell you one more story about this kindness thing, and that is I do an awful lot of work with health care these days, which is incredibly depressing, meaning that we can do all the hard stuff very well, but we kill them on missing the easy stuff. Literally, depending on whose stats you look at, 300,000, 400,000, 500,000 people a year in the United States killed unnecessarily by rotten procedures.
At any rate, there's a group called Press Ganey which studies patient satisfaction more thoroughly than anybody else. And they did a study. I haven't got the numbers in front of me, but my memory is pretty good on this one. I can't remember what I did yesterday, but I can remember stuff long ago. And that is they studied something like 139,000 people and-- patients from 275 hospitals, and they statistically teased from the data the factors that most contributed to patient satisfaction.
15 factors, all right? Not one of the 15 factors most contributing to patient satisfaction had anything to do with whether or not the patient got better. Every single one of them was associated with the quality of the interaction of staff with staff and staff with patients.
Now, I work with one hospital that is particularly good at this. It's called Griffith Hospital. It's in Derby, Connecticut. It was just ranked as one of the top 1% hospitals on quality in the United States. They started the patient-centric movement, et cetera, et cetera.
But this is what I love. There is a misconception that supportive interactions require more staff or more time, and are therefore more costly. Although labor costs are a substantial part of any hospital budget, the interactions themselves add nothing to the budget. Kindness is free. Listening to patients or answering their questions costs nothing. It could be argued that negative interactions, alienating patients, being unresponsive to their needs or limiting this-- still feel the grip.
[LAUGHTER]
Now, I'll tell you one more story about this kindness thing, and that is I do an awful lot of work with health care these days, which is incredibly depressing, meaning that we can do all the hard stuff very well, but we kill them on missing the easy stuff. Literally, depending on whose stats you look at, 300,000, 400,000, 500,000 people a year in the United States killed unnecessarily by rotten procedures.
At any rate, there's a group called Press Ganey which studies patient satisfaction more thoroughly than anybody else. And they did a study. I haven't got the numbers in front of me, but my memory is pretty good on this one. I can't remember what I did yesterday, but I can remember stuff long ago. And that is they studied something like 139,000 people and-- patients from 275 hospitals, and they statistically teased from the data the factors that most contributed to patient satisfaction.
15 factors, all right? Not one of the 15 factors most contributing to patient satisfaction had anything to do with whether or not the patient got better. Every single one of them was associated with the quality of the interaction of staff with staff and staff with patients.
Now, I work with one hospital that is particularly good at this. It's called Griffith Hospital. It's in Derby, Connecticut. It was just ranked as one of the top 1% hospitals on quality in the United States. They started the patient-centric movement, et cetera, et cetera.
But this is what I love. There is a misconception that supportive interactions require more staff or more time and are therefore more costly. Although labor costs are a substantial part of any hospital budget, the interactions themselves add nothing to the budget. Kindness is free. Listening to patients or answering their questions costs nothing.
It could be argued that negative interactions, alienating patients, being unresponsive to their needs, or limiting their sense of control can be very costly. Angry, frustrated or frightened patients may become more combative, withdrawn, less cooperative, therefore requiring far more time than it would have taken to interact with them positively in the beginning.
And that's-- so there-- all these things I looked at. With the sole exception on Earth of Sam Johnson's business school, I am the number one enemy of MBAs.
[LAUGHTER]
If you were to read my 2003 book Reimagine, it begins with a story of my effort to return my MBA to Stanford.
[LAUGHTER]
Have you ever called a leading educational institution and said, could you please direct me to the department of returning degrees?
[LAUGHTER]
But it was logical. I'm an engineer. It was logical. The logic went like this. I was taught an advanced accounting course by one of the top three accountants in the world, a guy named Robert Jaedicke who was at the time the Dean of the Stanford Business School.
One of the perks of being the Dean of the Stanford Business School is Robert Jaedicke was on the board of Enron. Robert Jaedicke was, in fact, the chairman of the Enron Audit Committee. The last time I saw Robert Jaedicke, one of the smartest human beings I've ever met in my life, was testifying before Congress, on CNN, explaining how he couldn't remember anything.
[LAUGHTER]
For those of you who went through Iran-Contra, it was like John Poindexter who had a photographic memory not being able to find Iran on a map.
[LAUGHTER]
And so my logic is very simple. Jaedicke is obviously a fraud. Therefore, my advanced accounting course that he taught me is obviously a fraud. I was flying pretty close to the sun. I had no extra credits. And so if you take my credit hours and subtract the Jaedicke course, I'm under the requirement.
[LAUGHTER]
It's kind of USC giving those wins back.
[LAUGHTER]
But they wouldn't take it back. But I'm mad at them because they don't teach the right stuff. And at least they're honest sometimes. There was one guy who said, we don't teach this other stuff because it's hard.
[LAUGHTER]
So in this new book, for example, I've got these three sections on what I say are the three key skills for a leader or anybody else for that matter. Listening, saying thank you, and saying I'm sorry when you're wrong, which incidentally is genetically not possible for a male, so, you know.
[LAUGHTER]
No, I wrote this thing, and I-- because see, I'm talking. I'm not going soft. I'm going hard. I'm talking about what the hell leads to profit. And I'm not going to read you this whole list, but I will read you just a little bit of it. This is from-- this is my draft of the section on listening.
Listening is the ultimate mark of respect, the heart and soul of engagement, the heart and soul of kindness, the heart and soul of thoughtfulness, the basis for true collaboration, the basis for true partnership, a team sport, a developable individual sport-- skill. You've got to learn listening. You've got to commit yourself to listening the same damn way you would to play a cello.
When I started looking into this thing and I started on Amazon, I found over 150 books on how to listen. It can be studied. It is the basis for community, the bedrock of joint ventures that last, the bedrock of joint ventures that work, the core of effective cross-functional communication, which is the number one organizational issue, the engine for superior execution, the key to making a sale, the key to keeping the customer. All those things. Isn't that true? It comes from listening.
[APPLAUSE]
And the list goes on, page after page after page. And I read a book related to this [INAUDIBLE] called How Doctors Think. And the author is a Harvard med guy, Dr. Jerome Groopman. And he cites some information. I mean, some research. First he asks the rhetorical question, what is the principal source of information about the patient's ailment? Duh. The patient.
[LAUGHTER]
You obviously won't use the right language, but if I listen to you talk for 20 minutes, I will find a fair number of nuggets. So the statistical question before this group is on average, when does a doctor interrupt? 18 seconds. Well done.
[LAUGHTER]
I knew this was a literate crowd.
[LAUGHTER]
Average doctor interrupts after 18 seconds. Now, I do not use this in my presentations to criticize doctors. What I talk about instead are the 18-second managers, approximately 100% thereof. For those of us with a reasonable degree of intelligence, for those of us who have been around for a while, we are interrupters. I could not make it to 18 seconds if God froze the polar caps, which I guess he's doing.
[LAUGHTER]
And then the whole thing about apologies. Marshall Goldsmith, the greatest of the executive coaches, says, "I regard apologizing as--" listen to these words-- "most magical, healing, restorative gesture human beings can make. It is the centerpiece of my work with executives who want to get better." So that's kind of the deal.
I want to wrap it up a little bit. I had a big section that I missed on service. And I believe my simple one-liners on a slide I have somewhere is organizations exist to serve, period. Leaders exist to serve, period.
And I'm not a very religious guy. There is one final thing I'll read you. I'm not a very religious guy, but I was asked to be the keynote speaker at the first conference two years ago celebrating the life's work of Peter Drucker. And needless to say, if you're the keynoter for an event like that, you take it pretty damn seriously.
And so I was really thinking as Drucker had thought about the essence of what organizations are. And so what I wrote surprised me. I said, "In fact, organizations are cathedrals devoted to human development." The goal is to serve the customer as best possible, which, as we said before, occurs when the people who are serving the customer are excited and motivated.
Obviously, a third grade classroom is a cathedral. Obviously, Cornell University or any other institution of higher learning is dedicated entirely to the development of human beings, but so is a 10-table restaurant, or a two-person walk-up accountancy in downtown Ithaca, or a company with 100,000 people on the payroll, or the United States Navy.
And so what I wrote-- and this will serve as my conclusion-- is I wrote-- and I obviously don't really mean it literally, what I called the manager's oath of office. And it goes like this. It goes on for 14 pages. Actually, it doesn't. It only goes on for one and a half. But I wrote this.
"Our goal is to serve our customers brilliantly and profitably over the long haul. Serving our customers brilliantly and profitably over the long haul is a product of brilliantly serving over the long haul the people who serve the customer. Hence, our job as leaders, the alpha and the omega and everything in between, is abetting the sustained growth and success and engagement and enthusiasm and commitment and excellence of those one at a time who directly or indirectly serve the ultimate customer.
We, leaders of every stripe, are in the human growth and development and success and aspiration to excellence business. We, leaders, only grow when they, each and every one of our colleagues, are growing. We, leaders, only succeed when they, each and every one of our colleagues, are succeeding.
We, leaders, only energetically march toward excellence when they, each and every one of our other-- of our colleagues are energetically marching toward excellence." And it's stuff like that that I believe, and I would really be happy if you read this book.
[LAUGHTER]
It's not mine. It's not mine. It's Jack Bogle's book Enough. Jack, who's been called one of the [INAUDIBLE].
[APPLAUSE]
And I got hooked on Jack's book. Never met the guy. I was simply walking around the bookstore, and I picked the book up, and I was hooked by the time I was halfway through the contents. And I will read you the table of contents. 10 chapters.
Too Much Cost, Not Enough Value. Too Much Speculation, Not Enough Investment. Too Much Complexity, Not Enough Simplicity. Too Much Counting, Not Enough Trust. Too Much Business Conduct, Not Enough Professional Conduct. Too Much Salesmanship, Not Enough Stewardship.
Too Much Management, Not Enough Leadership. Too Much Focus On Things, Not Enough Focus On Commitment. Too Many 21st Century Values, Not Enough 18th Century Values. Too Much Success and Not Enough Character.
AUDIENCE: Wow.
[APPLAUSE]
TOM PETERS: It is a beautiful book.
[APPLAUSE]
I never met the guy, and perhaps the proudest moment of my life was when he asked me to write the prologue to it, because it's one of those things where it's just kind of nice to stand next to somebody like that. And obviously, I have no biases.
[LAUGHTER]
So that's what I've been doing for the last 40-odd years. And there is not a question in my mind-- there is not a question in my mind that it was the joy-- I did none of the things I was supposed to do yesterday afternoon when I got here. I just walked around our gorgeous campus and I sniffed a lot. I was by myself, which I'm not as often as I ought to be.
And I can't give you that part of the speech where I tell you the 17 or 1,700 ways that Cornell influenced me. But I do know that the impact was phenomenal. I lived in a little town of 300 people near Annapolis, Maryland, with dirt roads. Ithaca to me was the really big city.
[LAUGHTER]
The only problem I had was it was my first experience in the Northeast. And after the first day, I called my mother and I said, they don't wave when you walk by.
[LAUGHTER]
I nearly went home after that one. I matriculated as an architect. Lasted one semester. Good news was that I had a prep school headmaster who said to my mother, the boy is into science and into math. Send him to an architecture school that has a good engineering school.
[LAUGHTER]
And so there it was. It is a magnificent place. I would also add that no one has asked me to add that almost without question, hanging in there tied for first with the entrepreneurial zeal is the astonishing and matchless power of America's research universities. They are our gems on top of gems. There is no issue about that whatsoever.
They need help. I'm not here to raise funds. They take care of that really well without me. But they are magnificent. We still in the United States have something like 60% or 70% of the top 50 universities in the world. We still have 85% or 90% of the published, refereed scientific journals in the world. It is our matchless, matchless strength. And never forget it.
Never forget the other thing, which is obvious for the boy from Severna Park, Maryland. We are just lucky as hell, every one of us, to be a Cornell graduate. Thank you very much.
[APPLAUSE]
Thank you.
AUDIENCE: [INAUDIBLE]
TOM PETERS: Absolutely Yeah. Sure. I-- I think the drill-- I really hate giving the speeches. I've done it before. But what I really like is the questions. And I am-- we have microphone runners up top, microphone runners down below. And I would love to take questions on any topic whatsoever. Well, I didn't say I'd answer them. I said I'd be happy to entertain them.
[LAUGHTER]
Questions? Comments?
AUDIENCE: Have you thought of--
TOM PETERS: Whoa, whoa, whoa. We have to have a voice-enhanced device.
[LAUGHTER]
AUDIENCE: Hi. Frances Wan. Have you ever thought of joining the Rotary International where the motto is service above self?
TOM PETERS: I have not, but I agree. I have to acknowledge and admit something to you that I'd rather not admit. 25 or 30 years ago, a guy by the name of Robert Greenleaf wrote a book called Servant Leadership. And I picked it up and I said, that's cool, and I tossed it down.
And then I picked it up about a year ago and I said to myself, you idiot. You should have memorized this, because I do believe-- Kenny Blanch-- I write about wow service, and Kenny Blanchard writes about raving fans, and other people write about experience marketing. I was writing something last week, and I said, service is a beautiful word. Not raving fans, not wow service, but service, the entire idea of service per se.
That is why we exist. That is all that we can do as human beings is to serve and-- I missed all these damn books. There was this great guy from MIT. There are actually great people from MIT. Not in engineering, but--
[LAUGHTER]
His name is Ed Schein, and he just wrote a beautiful book called Helping. And I've just fallen in love with these books, books with names like Helping, books with names like Listening. You know the best of the lot.
Any of you read David Brooks, The New York Times columnist? David introduced me to the best book of all. Have you read this one? You can't-- can you read the print, any of you? This little book is George Washington's Rules of Civility and Decent Behavior in Company and Conversation. I've given away over 100 of these things.
I mean, George-- look, George Washington was no great strategist, right? I mean, we're not allowed to admit that, but the real fact of the matter is the guy lost the battle in 1776 and he retreated for the next seven years and the French pulled him out in the end. But he led people to believe. He led people to believe.
I mean, and this is like 150-- this isn't-- it's his interpretation as a schoolboy of some stuff that was originally written by Jesuit brothers in 14-- I read the book. And some of it only associates with stuff maybe back in those ages.
But the two that really hit me-- and I think I do pretty well on one. I was mad as hell at myself about the other one. The two that hit me are the one that said, never, under any circumstances whatsoever say bad things about other people. It rots your innards. I mean, there are people who are the problem-- the hell with the person you want to criticize. It's you who ends up getting punished.
I nearly died with this one. I was giving a speech to Philips medical device people, and I just got wrapped up and I said, do not ever, under any circumstance whatsoever, ever, ever badmouth indirectly or directly any competitor. And I almost expired because I was so tied up with it.
The other one-- this is my mother again. And I think I'm pretty good on this stuff. I still say at 67 yes, ma'am and yes, sir to 17-year-old 711 clerks who probably have criminal records.
[LAUGHTER]
It's like my wife is like a proper Bostonian. They don't say thank you from one decade to the next.
[LAUGHTER]
I'm not being fair to-- see, some Bostonians left.
[LAUGHTER]
But she was doing this big fundraising thing in Vermont, and I just pushed her to send thank you notes to people. I said, Susan, I don't give a damn whether you want to thank them or not. Send them thank you notes and watch what the hell happens. And she would send somebody a two-line thank you note, and she'd get three pages back. Now if any of you see my wife and repeat that, you are chopped liver.
[LAUGHTER]
I really mean it. She is-- I adore that woman. And the only reason she couldn't come is her life above all things is gardening. And if you live in the great state of Vermont, you get about six weeks of it a summer, and no way in hell was she giving up two days for-- in a [INAUDIBLE]. At least she thought about Cornell. She didn't think about Stanford. But yeah, we have a hand up there. OK, sorry.
AUDIENCE: Here.
TOM PETERS: There. Yes, sir?
AUDIENCE: Yes, thank you. Robert Lanza, class of 1980, chemical engineering. I had a question--
TOM PETERS: 1980? You shave yet?
[LAUGHTER]
AUDIENCE: Yes. Yes, thank you.
TOM PETERS: [INAUDIBLE]
AUDIENCE: I'm a little younger than the people in the front row here. And god bless all of you.
TOM PETERS: Well, now, that's a smart aleck remark if I've ever heard one.
[LAUGHTER]
You're starting to sound like me. Yes, sir? Sorry.
AUDIENCE: No, I had a question. You've been talking for most of your talk about interactions with people in organizations. One of the things that you also said at the beginning of your talk, you alluded to the CEO of British Petroleum and his efforts to communicate the issues that are going on in the Gulf. And I'm not only thinking of BP. I'm thinking of Toyota with their floor mat issues and other issues.
Could you talk a little bit about the people issues concerning a lot of these corporate failures? They tend to-- they tend to blame the equipment, in other words, and not look at their organizations and find out how they got to the point where they are. Could you talk about that to some extent?
TOM PETERS: The biggest answer, which is too long, but the two-sentence version is that's why I'm doing what I do. I have a PhD in organization effectiveness, and there were four of us in my class, in that particular program in whenever it was we started, '73. All four of us were engineers.
And I think it was because we had observed the limits. We had observed the limits. And the engineering can be letter perfect, but if the people stuff is wrong, it doesn't matter a heck of a lot. One of my good friends works for BP, and he keeps talking to me in engineering terms about it being a very low-probability event. And I said, and?
[LAUGHTER]
I said, first of all, why do all these low-probability events seem to happen to BP?
[LAUGHTER]
But-- well, I mean, I think there are many ways to talk about. I mean, first of all, are we talking CEOs, or are we talking below? There was a fascinating analysis I read somewhere, and it was a dozen of the world's great psychologists talking about Eliot Spitzer's little problem.
[LAUGHTER]
No, but the question, the serious issue was how a human being can become so isolated. And the suggestion was that such a person literally lives in La La Land. And the reality is-- and you and I are equally vulnerable. If somebody tells you 100 times a day that you are the best-looking, smartest human being God has ever put on Earth, you can have the strength of Zeus, and you're going to buy the act eventually. And the isolation is just terrible at the top of some organizations.
[SIGH] I mean, there's fascinating stuff-- and this is all indirect, because this is a three-hour conversation, not a three-minute one. There's fascinating stuff that's arriving a little bit from the world of health care, that if you apologize to a patient for a screw-up, you reduce the odds of a malpractice suit by some enormous amount, like 60% or 70% or 80%. And the key is you have to apologize before you're asked, essentially. And it just works.
I mean, some of it's just really stupid. A good friend of mine runs an enormous ER in Northern Virginia, and he now teaches patient satisfaction stuff. He runs an enormous ER. And sometimes you have long lines in an ER. I'm sure none of you have ever heard of that.
[LAUGHTER]
My wife, last July the 13th, in case you're interested, waited five hours in a hall on a gurney in Mass General Hospital waiting for somebody to fix a broken leg. I had the good luck of speaking in keynoting the American Hospital Association meeting thereafter and had the joy of saying the CEO should be fired.
[LAUGHTER]
I said, I know he loses money on an ER. I'm not stupid. I understand hospital economics. But he's the damn CEO. It's his house, and it shouldn't work that way. And I didn't tell them it was Mass General. I simply said it was one of the top 10 hospitals in the United States located in Massachusetts--
[LAUGHTER]
Now, I wanted to make a little shirt. I said, and I personally am a patient of Brigham and Women's, and it's not Brigham and Women's.
[LAUGHTER]
But I said, I don't remember where it was that she was. No, so this guy who runs the ER, OK? In Northern Virginia. [LAUGHS] He reduced complaints like waiting in the emergency room by 80% by giving people who were caught-- who had to wait a long time gift certificates to Outback Steakhouse.
[LAUGHTER]
But it's that Henry Clay thing. They just wanted a little recognition that they had suffered, you know? And they wanted it to be because he gave it to them before they asked.
And you and I can laugh and we can say, we're from Cornell. They're not. I hate that stuff when people-- some guy who wrote a book, and he said, intrinsic motivation really matters. Extrinsic doesn't. Listen, I studied with a University of Chicago rat psychologist. Trust me, I believe rats know better than you and I do. If you give me positive feedback, I don't care whether you are the guy who runs the laundromat or the President of the United States. I suck it up.
[LAUGHTER]
It's a long discussion. The good news is to some extent, we don't really depend on the large organizations. They are important. I do not dismiss them. But the magic is, can we keep those immigrants, as David Brooks-- as Tom Friedman said I think the day before yesterday, can we staple green cards to their diplomas? Et cetera, et cetera. We need the entrepreneurs, because we get 1,000 entrepreneurs and 999 of them fail, and one of them turns out to be Google.
We wrote about IBM a lot in that 1982 book, and then they stunk up the house within five years. But I said, the great news is IBM cut its payroll by over 100,000 people. The real-- I mean, that's the bad news. The good news is that we got those jobs back times 10 thanks to 3Com and Google and everybody else in the world. So anyway, I'm getting the hook. Hey, listen, it is so great to be home.
[APPLAUSE]
Good business is the result of kindness, courtesy and sweating the details, said Tom Peters '64 in the Olin Lecture June 11 at Bailey Hall during Reunion Weekend.
In 1982, Peters co-authored "In Search of Excellence," the best-seller that immediately launched him as a foremost business management guru.
The Olin Lecture was established at Cornell in 1986 through a gift from the Spencer T. and Ann W. Olin Foundation, annually bringing to campus an internationally prominent speaker to address a topic relevant to higher education and the current world situation.
