Management: Guru sticks by principles if not examples: Chastened US pundit Robert Waterman is still advocating the same strategies but is now rather more wary about 'tipping winners'

ROBERT WATERMAN is a chastened man. In his position, who would not be? After all, he and Tom Peters have received a lot of stick over the fall from grace of several companies featured in their best-selling In Search of Excellence.

Partly as a result, Mr Waterman's new book, The Frontiers of Excellence (which as its title would suggest ploughs pretty much the same furrow) looks at a handful of organisations rather than the 45 considered in the original. 'I wanted to take fewer companies and do them in more depth,' he said.

Nevertheless, he insists that he has not been diverted from his belief that organisations can learn from those that have been successful in their own or other sectors. Indeed, the latest book was published in the US under the title What America Does Right. Mr Waterman added: 'You can still learn a lot from IBM (one of the fallen stars of the former book) when it was at its best.'

Some of the companies covered, such as Motorola, the US electronics company, and Federal Express, the international courier, will be familiar to readers of studies of this sort. Mr Waterman makes no apologies.

Noting that even people working out of FedEx's small but busy courier offices can find the time to give directions to pedestrians, he says that Fred Smith, the chief executive, and his team achieved wonders in employee motivation.

But there are also less well- known organisations, notably Rubbermaid, a low-tech company noted for household goods, such as brushes, and Little Tikes toys, which still manages to invent a new product for every day of the year.

The more rigorous selection process means that many organisations were considered but few chosen. Not that that dissuaded the author from featuring organisations with which he was connected. He has included Levi's (featured in last week's Independent on Sunday), which is run by Robert Haas, a former employee of Mr Waterman's at McKinsey, the consultants, and Applied Energy Services, a company that he and friends set up to test whether a company that 'valued people and acted responsibly' could also be successful.

It is 'a bit of a cheat', admits Mr Waterman, but he included it, at least partly, because it had 'a fun value', which prevents executives from taking life too seriously, despite their concern about energy conservation. At AES, which despite expansion is still relatively small, this is comparatively easy to introduce. But he is encouraged that a large group such as Merck, the pharmaceuticals producer that is also discussed in the book, can adopt a similar attitude.

And he sees increasing evidence that business leaders are recognising that the idea that good conduct equals good business seems to work. Moreover, business school professors are more prepared to take that 'leap of faith'.

But for all his enthusiasm, and some of the book's discussions of the ways organisations are 'putting people first' verge on the hagiographical, he said: 'Overall, it's still back to Adam Smith', with competition and profit all-important.

He also acknowledges that constantly peddling fresh ideas can lead to companies switching from one fad to another without giving them time to work or apparently realising that no one idea will provide a solution.

'One of the things I was trying to get at is how long it takes for a company to change,' Mr Waterman said, noting that Motorola was now synonymous with total quality but had been practising it since 1979. Similarly, Levi's transformation is still incomplete and therefore difficult to write about in the book. 'All these concepts have something important behind them, but people only tend to try them for a couple of years and then drop them.'

So, if genuinely believing in and, in the current parlance, empowering your people at the same time as sticking to core principles are the keys to success, why do they fail?

The number one reason, says Mr Waterman, is that companies stay or become too centralised. Those that succeed divide into smaller units. Accordingly, while IBM remained too centred on mainframes for too long, Procter & Gamble, the household products company, is more a collection of brands that can be developed or let slip as market conditions determine. Linked to this is the inability to respond to changes in the market.

Companies that lose their way are not always destined to collapse he adds. He certainly hopes that is true of ASK Group, the database company of which he is a director, and is trying to turn round.

(Photograph omitted)