The publication of In Search of Excellence, in 1982, marked an important change in the culture of business. The success of the book, considered the best-selling business book of all time, created a new category in publishing, the business-book blockbuster. The personality and visibility of the book’s co-author, a Stanford Business School graduate and McKinsey consultant named Tom Peters, also created a new phenomenon, the management guru. Dynamic, enthusiastic and smart, Mr. Peters in turn created the category of business-book author as consultant/presenter, criss-crossing the United States and travelling to countries in Asia and Europe, selling the message that excellence is in the details. It is a message that Mr. Peters reiterates in The Little Big Things: 163 Ways to Pursue Excellence. In the book, and in conversation, one hears the same energetic voice and deeply felt convictions that a manager or business can achieve excellence, especially if they look after the little big things.

Ivey Business Journal: In The Little Big Things you write that among many other things, it is important to always say “Thank you” to colleagues, and to never cut the flower budget. Just how important are these things given the current climate of anxiety?

Tom Peters: Infinitely. When Nelson Mandela had his 90th birthday, Time Magazine did a special issue and among other things, they listed his half-dozen leadership secrets. One was a fabulous, irresistible smile. I happen to collect stuff like that for reasons that would take five minutes to explain, but one of my favourites was, no great surprise, that the Brits and the French were at each others’ throats around the turn of the last century. Edward VII, I think it was, who was considered one of the dimmer bulbs to have inhabited Buckingham Palace, went over to France for all of 96 hours. His French was impeccable, he was a fabulous dancer, he went to the theatre, he practically charmed the pants off the French and a year later, the Brits and the French had a detente or an entente which was effectively the most significant event that subsequently under-girded the success, if you want to call it that given all the dead bodies, of World War I.

And so, I believe in the age of the Internet, Facebook and Twitter, that relationships are everything. I wrote a little piece that I first did in 2009 when I was in Helsinki and it was a list of 46 things that were associated with dealing with the recession. It was little comments like the fact that rather than trashing your competitor and saying, “Ohmigod, a recession is a fabulous time to kick ass,” that it’s a fabulous time to be decent to your competitor. And the reality is, in 2010, as in 1902 or ’03, whenever Edward went to Paris, that rumours of decency spread across Canada or the United States or the world at about the speed of light. I wrote the book based on a blog that I keep. I also tweet. I don’t think that for an incredibly old fart I’m totally behind the power curve. I really believe that the essentials of human relationships remain the same. To my great fascination over the years, and I’ve given speeches in 67 countries or something like that, it’s not terribly surprising when the Brits and the Canadians and the Americans more or less speak the same language relative to relationships. But you find the same damn thing in Saudi Arabia and you find the same damn thing in Angola. And it works.

Obviously, the Canadian banks did rather well, but in the age of pretty shabby behaviour by a lot of CEOs, from Tony Hayward to the guy who runs Goldman Sachs, a little bit of thoughtfulness will go a long way. We do a section on apology and why apology is so shockingly powerful, especially for males who seem to have a genetic problem with it.

IBJ: How does a leader simultaneously worry about the flower budget, for example, and delivering quarterly results that the street expects. How does a leader strike a balance ?

TP: I think there are a couple of things. Number one, in part, though I understand precisely what you’re saying, I disagree. Among other strange things in my life, maybe because I grew up near the naval academy in Annapolis and was in the Navy, I am a pretty good student, if not a superb student, which I actually think I am, of Lord Nelson. It was said that when Nelson arrived at a new fleet, through the basics of making sure that the ships were clean and Nelson’s approach to his sailors, that he could literally turn a fleet around in a month. And I really believe that with a different attitude you can make an enormous difference in a surprisingly short time. And then there’s the part of me that just doesn’t give a shit. And when I say that, what I mean is that at the end of the day, when you pack it in, as in there are people standing around at your funeral, they’re going to talk about your decency and thoughtfulness, not your quarterly earnings. So screw ’em at some level, meaning Wall Street or what-have-you. But I do think it can happen fast. There’s one little thing that we talk about (The Little Big Things) where a hotel in Sweden was crippled. Two new owners came in who subsequently got into the organizational-change business. They started out by rethinking and re-doing the hotel, except it had nothing whatsoever to do with spiffing up the rooms. It had to do with things like the employee cafeteria and better uniforms. They didn’t turn the place upside down overnight but they turned it around in 90 days.

And so number one, I don’t think the stuff you do has to be long-term stuff. And I think if I come into a place and the shit has hit the fan, the reality is that I need the team that I’m working with, both at the top and particularly at the front line, to be part of the process of cleaning things up. I don’t care what the situation is. If I take over a 75,000-person company or a 7,500-person company or a 750-person factory, I can’t do the damn work. It’s got to be the people on the front line. To be fair to the guy, Lord Browne was quite an innovator at BP. But he had let quality go to hell and then this thing happened in the gulf. Tony Hayward was hired to improve the culture of quality at BP. Obviously, that’s not going to be what he’ll be remembered for but he was making some pretty damn significant progress.

And so I don’t think it’s small stuff that can’t have a rather dramatic impact in a short period of time. I think it’s almost the only thing that really can. What’s the alternative? One big bank buys another big bank and lays off 18,000 people and then wonders why they have a totally demoralized institution. There’s a terrific bank that used to ply its services on the east coast, called Commerce Bank. TD bought them and instead of doing the normal slash and burn, they were smart enough to say “We’ve got a going concern here and let’s build on what we’ve got.” The only thing I know that they did is change Commerce Bank’s bright red to TD’s bright green, but other than that, I’m not sure they’ve made that big a dent in the culture. I think you can do that stuff fast. What in the hell do you want to be known as — a guy who came into a factory of 750 people and behaved in a murderous fashion so he could get two more cents earnings in the next 90 days? I don’t want that as my legacy and I wish to hell that we could change our business schools so that the notion wasn’t, “Holy shit, let’s get the short-term earnings.” And if Wall Street doesn’t get it, then within some limits, I would say “Tough.”

IBJ: American business prowess was once unassailable. Now there are challengers. Why has American business declined?

TP: I wish you knew me better. What I mean by that is that you would know that I’m about as far from being a flag-waver — you won’t find any American flag pins in my drawer – as someone can be. So, you have to know this before I answer your question. In my lifetime, we’ve been through at least three rounds of the decline and fall of the United States. When I wrote my first book, In Search of Excellence, we were counting not the years but the days until the Japanese took over the world because they were making better quality cars than GM was in its crappy plants in the United States and Ontario. So I think the rumours of my death, to quote Mark Twain, have been greatly exaggerated.

There’s nobody in the world that wouldn’t change places with the Americans. The economy is phenomenally large, the entrepreneurial class is very alive and very well, the universities, despite budget problems, still turn out something like 90 percent of the refereed academic and technical articles in the world. There’s a lot on everybody’s agenda. I’m reading a fascinating book now which is talking about the rise of gated — believe it or not – middle-class communities in China. The Chinese are waking up to the fact — we’ve seen it with the strikes there in recent months — that when you have a relatively rich country, you can’t keep the wages down. I mean there’s plenty to worry about and yet I would be exceptionally surprised if the obvious decline of the United States was quite as obvious ten years from now. But it’s not a whitewash. I’m willing to spend time that we don’t have and tell you the 300 things that I think are wrong with the United States, but certainly economically and from a business practice, this is a stupid sentence. Forgetting the malfeasance on Wall Street, and talking about general business management, I know that when I go give a speech to a quality group in India or Shanghai, they’re as interested as they ever were.

IBJ: But if you look at the GMs of the world you see that the issues that drove them under – such as over capacity, labour practices and product lines that were too broad – were staring them in the face for years. They may have known that they needed to do something but the fact is that they did not do anything.

TP: Large institutions and big organizations get sluggish. Period. All stop. I’m incredibly empathetic when it comes to my American and Canadian brothers and sisters whose GM plants have closed and their expectations of a moderately cushy retirement have gone right out the window. But the de facto demise of General Motors — if we could forget the implications for the people — doesn’t bother me in the least. The manufacturing economy is over. I go to Shanghai and the only damn thing the Chinese want to talk about is what’s going to happen 20 years from now. All they ask is what they need to do to transform themselves. The Germans still do manufacturing, but you guys don’t (Canadians), we don’t, the Brits don’t and the French don’t. The Koreans have been going apeshit. I must have been there five times in the last 18 months to talk about design. As I said, I weep for the dislocated Americans and Canadians at our big manufacturing companies. One of the few turnarounds, to the extent that it was one, is IBM, and the reason IBM turned around was because they were getting killed by the Apples and the Microsofts, much smaller, much more agile companies.

Despite the fact that GM was losing market share, Toyota tripped over its increasing size and its culture and to some extent went to hell. If you look at the steel industry in Pittsburgh, where all the guys were educated in the same place and went to the same country club, there wasn’t a hell of a lot of impetus for change, despite the fact that Detroit had started to go down the tubes in the ’60s and so on. There were memorandums that said the ball game was over that were written by people like the vice chairmen of GM 30 years ago. They’ve been in the process of going down the tank for at least three decades. If I could say it without sounding crude, I would say relative to GM, Ford and Chrysler, so what? That’s not where we work any more. In the U.S. and I’m sure your numbers in Canada aren’t very different, something like 7 percent of us work for a Fortune 500 company. But that ain’t America today.

IBJ: All those lost jobs is a very troubling issue. It appears that these jobs are permanently lost.

TP: Absolutely, and a lot of those people are in their 50s. One thing about that, one saving grace, and again I don’t think that we guys and you guys are that far apart, is that if you talked to a 29-year-old today, she or he no more imagines themselves as having lifetime employment than flying to the moon. And this is the first generation that’s thought this way, at least since four generations ago when we were all farmers north and south of the border. So there was a la-la land in both countries and the la-la land is over and it’s not going to be. And then you have the issue of diminished pensions. The whole issue of under-funded pensions is very frightening. On the one hand even the French are raising the retirement age. At the same time, we’re not going to be able to provide the benefits that we did.

IBJ: Yes, underfunding is a huge problem.

TP: Exactly, so it’s unkind and ungentle for those people. But the one thing that’s happened to us, and I would again assume that to some extent it’s happened to you guys, is that the younger generation has taken it on the chin because an awful lot of 50-year-olds have been willing to take wage cuts, time cuts, in order to save a few more jobs of their 50-year-old peers. I don’t think anybody expected that. So to some extent, the old farts have held on to more jobs than we thought and the youngsters have been on the short of the end.

One other thing about the workforce is that the U.S. has become a women’s economy. At one point — and I don’t know what the numbers are now — early on, mostly because of construction and manufacturing, we had lost a net of one million jobs. The gender translation was that males had lost 1.2 million jobs and women had gained 200,000 jobs. There’s been some kind of an epidemic of articles on women taking over the world economically. That just happens to be one of the areas I’ve worked on for 15 years and I really believe we are, to use a term I hate, at a tipping point.

IBJ: In the past, you’ve said that everything that business schools do pisses you off. What’s the biggest thing they do wrong?

TP: They still don’t get the people stuff. I am a Stanford Business School graduate and I got my latest update, which announced that they just appointed a new dean. Now, I have a problem with business schools but I also have a problem with economists, and the new dean is the third consecutive dean who is an economist. So the Stanford magazine has a Dean’s letter and it actually says that it’s really a fact that having some skill in people management is reasonably important to one’s success. I went apeshit. In my narrow world, that for me hangs right in there with Tony Hayward’s behaviour (BP). As far as I’m concerned, it’s all about people, and those lines about 1 percent of life or 99 percent, I don’t know what the hell they are, but it’s a ridiculous statement, and that’s the kind of thing that pisses me off. Something that pisses me and people like Henry Mintzberg off is that there is such a thing as effective management. But everybody’s gone apeshit over leadership. I love good leaders too, but…

IBJ: What do business schools need to do?

TP: I have a little bit of problem with these things that started circulating in places like Harvard which are the “I’m going to be a good citizen” pledges. I’m not sure how far that takes us, but it wouldn’t be wrong to get out of business school with a little bit of a return of morality. One of those thingies in my book says that leadership is a sacred trust, and I believe that, at any level. Obviously, you believe that about the school teacher who is teaching your nine-year-old. Well, I don’t see any difference between that and the person who’s running a 400-person factory. It is a sacred trust, it’s about the development of human beings, for God’s sake.

IBJ: If you were a CEO in China or India, what would you admire most about American business today?

TP: Let me say one thing that’s different from what you asked but related and then I’ll try to answer your question. If we are talking about the dimensions that I think are important, you will not find a better role model than Infosys in India and their chairman and founder, Narayana Murthy, who would pass the test, I think by your standards or my standards. He focuses on the human development stuff and his business looks a lot different than an awful lot of other people’s. I think Europe looks at the Americans with particular envy on the one dimension that they have for a long time and that is the ability to produce entrepreneurs. The Indians are pretty damned entrepreneurial as we’ve sometimes seen when they go into another country and apparently take it over in a short period of time. The Chinese are quite entrepreneurial. Maybe, and this isn’t my area of expertise, remember when Lenovo bought IBM’s PC division. It was said that China didn’t need a brand name, China didn’t need to buy Lenovo to get into the PC business, I remember reading a one-liner somewhere which struck me as quite possibly true, it said the one thing that the Chinese had not been able to copy or figure out was the way, in terms of systems, that Americans — it probably would be true for Europeans as well — that Americans install and live by their management systems, while China is still quite half-assed. Perhaps that is a true statement. The one problem I have with your question, which is a big deal to me, is that I refuse to use the words China and India in the same sentence. They’re both monster sized and they’re both emerging. But talk about two different places, not least of which is despite that all of our failings and yours, I still respect democracies and am thrilled that India outpoints all of us in size and is a billion and a quarter person, true, no shit, honest to God democracy and when you look at their politics, I think they’re crazier by far than even their crazy American brethren.

IBJ: What does that mean in a business context?

TP: When wages in China go through the roof and so on, I can’t see how they’ll be able to maintain that rate of growth. The British historian, Paul Johnson, who has, to be sure, a pro-American bias, said in a column in the FT recently, don’t hold your breath waiting for China to take over the world. By definition, they’re going to have a bigger GDP than we do. Also don’t forget that China, in terms of business, still has the rather significant drag of about 500 million people in the countryside who could practically match the Africans for the degree to which they don’t yet belong to the global economy. And that’s a hell of a problem for the Chinese, among other things, because as has happened in other places, the 500 million do have Internet access and telephones and television and so they see. I am seldom shocked but I was when I ran into this book about middle-class, gated communities in China. If the book hadn’t been written by a very legitimate Cornell scholar, I would have thought it was totally out to lunch.

IBJ: Thanks very much for your time.

TP: You’re more than welcome.