How much value did 'Excellence' create? Lots!

As Clayton Christensen was explaining his theory of innovation someone asked[1]: “it clearly applies to the history of the disk drive industry.  But does it apply to its future as well?”

We could ask the same of the companies categorised as ‘excellent’ by Peters & Waterman.  Fortune magazine analysed the data in 2002, some 20 years after the book was published.   How well do you think these ‘excellent’ companies did overall?

Well, according to analysis by Fortune magazine, if you had invested $10,000 evenly across the 43 companies when you read the book in 1982, it would have been worth $130,000 in 2002.  If you had invested across the S&P 500 it would have been worth just $58,500.  That’s a pretty hefty premium!

Excellence would have earned you nearly 2.5 times the gains from a broad basket of stocks … certainly much more than your financial advisor would have earned you!

What are the lessons?  Well, it’s hard to argue with the broad prescriptions from Peters & Waterman.  While ‘stick to the knitting’ might generate some debate, I doubt any prescriptions on their list would generate serious debate.  But is this ‘the list’ for you?  Maybe you have a different list? 

But writing a list is a lot easier than relentlessly and consistently executing the practises you need to bring the list to life!  There is more value to be gained from a conversation with your leadership team around this issue – consistent, relentless execution – than there is debating the list at length.  Good luck. 


[1] Kirby, J. (2005). Toward a theory of high performance. Harvard Business Review, 83(7/8), 30-39.