The Peters Principles

The management gury as playground director, provacateur, and passionate defender of open societies.

Virginia Postrel from the October 1997 issue

(Page 3 of 7)

Peters: Absolutely. Anybody who is an entrepreneur is a person who essentially has impaired judgment. The odds of success are zilch. This valley is loaded to the gills with a whole lot of totally insane people who honest to God believe that they can be the next Bill Gates or the next [Sun Microsystems CEO] Scott McNealy. And that is genuinely stupid. In the great city of San Francisco, where I used to live, at 2 in the morning every other Victorian [house] has somebody who is writing the great American novel. And the city is not loaded with James Joyces or Virginia Woolfs. But entrepreneurship is about distorted views of reality.

Reason: You emphasize experimentation as trying lots of things, encouraging lots of ideas, but what about the other half of the equation, which is selection?

Peters: A lot of stuff goes on, some of it works. A jillion people send articles to your magazine. You publish some, you choose not to publish others. The same damn thing is true with companies that make it in Silicon Valley, or presumably Chicago or Pittsburgh. The essence of a successful enterprise, or economy, is its failure rate.

Reason: When you talk about corporate management, you talk about it in an anti-planning way. Yet part of the point of corporate management is to select from all the possible things that a company might do. It can't do everything.

Peters: Without any question my favorite management book of the last 10 years is The Rise and Fall of Strategic Planning by Henry Mintzberg. He says that a strategic planner should not be a planner. He should be a discoverer who pursues wildflowers in the fields, i.e., interesting ideas sprouting here, there, and everywhere. And then puts fertilizer on them. Essentially, a sensible strategic planner looks for experiments that have already started, and then makes some effort to nurture them.

Fortune did a beautiful piece recently on Cisco Systems. Cisco has an acquisition strategy which has nothing to do with traditional acquisition strategies. What they are doing is essentially buying bodies at an average of $2 million a head. In the same way, Hewlett-Packard has long been an acquirer. For years they've been buying companies, dozens of companies. But they buy companies with five people in them. That's the Mintzberg theory.

There is a wonderful new book, The Living Company, by the former Shell planner Arie de Geus. He talks about tolerant pruning of roses vs. rigid pruning. He says that if you prune your roses rigidly, you may well get the biggest roses this year. But if you prune them tolerantly, you will get roses every year. That's quite a lovely analogy. The fact that everybody said America sucked 10 years ago and now they say we're great is part of that deal. We prune tolerantly, and all kinds of stuff goes on in our economy, which is not necessarily true of a large number of other economies. And out of it over the long haul comes more good stuff than out of any other alternative.

Reason: What makes a business good by your lights?

Peters: When Paul Weaver wrote a review of, I think it was Thriving On Chaos years ago in The Wall Street Journal, he said: What Tom says is that the good thing is also the most profitable thing, i.e., innovate like a son-of-a-bitch, serve your customers incredibly well, treat your employees like decent human beings and da, da, da--Milton Friedman rides to the rescue--you maximize profits. And so it turns out that a lot of stuff I was talking about in a very apolitical way is good--maybe even uppercase L--liberal stuff and makes very good lower-case c conservative profit-maximization logic. The open society to me is a term that can arguably be applied as effectively to an enterprise as it can be to a nation.

Reason: How would you describe yourself politically?

Peters: Several ways. The reality is big countries are going to have big governments. But I have fallen in love over the last 15 or 20 years with gridlock. I don't give a damn whether it's a Democrat in the White House and a Republican-controlled Congress, or a Republican in the White House and a Democrat-controlled Congress. When Washington is fucked up, it doesn't do anything much. And that's the best of all possible worlds.

My politics is totally screwed up. I have sometimes described myself as having economic views that are far to the right of Jack Kemp, and social views that are to the left of Jesse Jackson. Which makes me sort of a libertarian, kinda, in a way. But I am not a libertarian, because I don't see how you can be a pure libertarian. I have much too pessimistic a view of humanity to believe that--I do believe that humanity fundamentally sucks. That people do phenomenally shitty things to each other in the absence of any control whatsoever.

Reason: So you really mean an anarchist when you say libertarian? Hayek was a libertarian.

Peters: I've never studied libertarianism. I know the only time I come close to studying it is when I get my California ballots and read the Libertarian Party position on any given proposition. And it is anarchist basically. It says you must get rid of all this stuff. And unfortunately I don't have that positive a view of humanity.

Reason: In its political manifestations libertarianism, as with the L.P., sounds utopian. In its intellectual manifestations, if you actually read the seminal figures, it's very anti-utopian. Hayek is no utopian.