Management Theory of Robert Waterman

The management theory of Robert Waterman

Waterman’s theory, even decades after its publishing, remains one of the best-regarded business management theory readings in any industry. Many of the principles have become best practices. These are the eight attributes outlined in the book:

1. “A bias for action, for getting on with it”: Also known as agility, the bias-for-action principle outlines the importance of rapid decision-making, efficient response processes, and comfort in creating fluid groups in organizations that can solve problems quickly. Vivian Au, founder of the business services provider Air Corporate, said that, to embody this attribute, businesses should “streamline processes and push decisions closer to the ground level.”
2. “Close to the customer”: The most effective companies value what a customer has to offer their business and will treat each one as an individual. Companies should eagerly ask for and listen to feedback to improve a product or service. Au said this attribute “is about active listening and integrating customer needs into every decision. Build teams around trust, and make your core values the compass for every action.”
3. “Autonomy and entrepreneurship”: Encouraging the champion or the veteran champion of a product remains one of the most vital practices of excellent, successful businesses. These champions have the zeal to operate as a mini entrepreneurial center, and you should support and reward them.
4. “Productivity through people”: This principle embodies the sentiment that employees are the backbone of successful organizations and you should treat them with respect, value them beyond their work output and foster them as unique individuals. Joseph Braithwaite, senior business transformations executive at EvolveThinking, said that, to embody this attribute, businesses should “prioritize people and … the right organizational mindset.”
5. “Hands-on, value-driven”: Regarding principles directly related to culture, wholesome and ethical values should guide the work of successful companies. Employees, leaders and decision-makers should actively live out these values by demonstrating them to peers and customers.
6. “Stick to the knitting”: Diversification comes at the cost of veering outside your expertise. When it’s time to branch out, successful businesses should understand the risks associated with diversification and experiment rather than jumping in headfirst. Prioritizing your core competencies ensures that you continually innovate and progress with what you know how to do best. Braithwaite pointed out that this attribute may apply less “in our current dynamic and multifaceted business environment,” where “diversification of products and services often emerges as a key differentiator.”
7. “Simple form, lean staff”: Similar to the expression “too many cooks in the kitchen,” this principle encourages a simple, straightforward team to make decisions.
8. “Simultaneous loose-tight properties”: Although it sounds like an oxymoron, this principle walks a nuanced line of instructing successful businesses to keep a central mission or vision at the forefront of work while allowing employees the autonomy to accomplish the goals that tie back to the company’s mission or vision in the way they see fit. “The ‘simultaneous loose-tight properties’ idea is often underplayed,” Au said. “[Giving] teams the freedom to innovate while holding them to shared values … builds trust and creativity.”

Waterman’s management theory: origins and current relevance

Many management theorists believed that adding parts of an organization would equal a whole organization, but Waterman and Peters knew a workplace needed interaction and synthesis, not mere addition, to be successful. Because management theories have a huge impact on how managers manage, Waterman and Peters sought to integrate management theories and practice with human beings and organizations. [Read more: Human Relations Management Theory Basics] 

Peters and Waterman knew that common management theories played an important role in how anxious or afraid people were in their workplace. Therefore, they developed a self-analysis tool for corporations to assess their standing, which often decreased fear and anxiety because corporations were in much better shape than originally thought. 

Braithwaite suggested keeping some considerations in mind to successfully harness Waterman’s theory in the modern context. “Ensure each implemented point supports overarching organizational objectives,” he advised. 

According to Braithwaite, these elements include:

• Considering the impact of digital transformation and global challenges on these principles. 
• Anticipating obstacles and developing proactive strategies to overcome them. 
• Defining measurable indicators to track implementation success. 
• Encouraging interdepartmental cooperation for cohesive adoption. 
• Regularly assessing and adjusting strategies based on feedback and results.

Lessons from Waterman’s management theory

Waterman’s management theory has clear applications to today’s world and business environments and offers a few distinct lessons that leaders can apply to their own teams.

A pursuit of excellence

As evidenced by the title of his book, businesses can embody the spirit of excellence through Waterman’s management theory. Embodying this spirit doesn’t begin and end with the simple idea of “I want my business to be excellent.” Instead, it comes from setting high standards and having high expectations for a team, committing to continuous improvement, and prioritizing quality in every facet of a business. 

Becoming an “excellent” business comes from applying Waterman’s eight principles to your own team, which means each leader’s application of the principles will differ in daily use. However, the goal of having lofty aspirations remains constant across teams, industries, sizes and scopes.

A people-centered approach 

Waterman’s groundbreaking principles diluted complex theories into actionable principles, like putting both employees and customers at the forefront of a business to achieve success. While it’s easy to become entangled in numbers and lines of communication, Waterman’s principles demonstrate how straightforward it is to treat people with respect, communicate their value, and converse with them as unique individuals with something special to offer.

For employees, that means granting autonomy, providing support and offering training resources. For customers, it means valuing feedback to innovate the product or service they buy to keep you in business. [Read more about the management theory of Frederick Herzberg]

A hunger for results

Pursuing excellence means not only setting clear goals and expectations but also following through on analysis to measure progress against important key performance indicators. Your team will not challenge itself to attain excellence by setting easily attainable goals, nor will your employees get the opportunity to innovate solutions to problems and challenges as they appear.

A culture of innovation

Innovation begets progress. The principle of “stick to the knitting” can be misconstrued as a direction to do something “by the book,” but it actually means inviting leaders to dig deep into their expertise. By committing to continuous improvement — and giving employees both a guiding value and the autonomy to create — leaders will foster an innovative environment that not only invites progress but creates excellence.

An understanding of organizational culture  

Waterman and Peters noted that strong organizational cultures yield strong companies. Organizational culture develops from shared assumptions, beliefs and values exhibited explicitly and implicitly. For a strong culture to emerge, there should be alignment with the organization’s strategic context and the ability to adapt to environmental changes.

An examination of success 

As consultants for McKinsey’s New York corporate headquarters, Waterman and Peters began studying structure and people, which led to the discovery of similar outlines for excellent Fortune 500 companies. With this information, they developed the McKinsey 7-S Framework to link strategy and organizational effectiveness; they connected employees, customers and actions as elements to develop.

Alternatives to Waterman’s management theory

There are dozens of alternatives to Waterman’s management theory. Au and Braithwaite noted some others worth considering:

• Servant leadership: Au recommended this management mindset to complement Waterman’s theory because it “prioritizes employees” and “creates loyalty and motivation.” It focuses on encouraging employee professional development, empowering your people and prioritizing your team’s well-being.
• Agile: This project management theory, which originated in the software development world, has grown into a full-on management theory. “[Agile] emphasizes flexibility, iterative progress and team collaboration,” Braithwaite said. “These principles now offer significant advantages to organizations tackling complex, dynamic projects across industries.”
• Deming’s total quality management: This 14-point model is designed to improve a company’s productivity and quality. Au said it also “focuses on teamwork and continuous improvement” and “complements Waterman and Peters’ ideas well.”
• Systems and contingency theories: Braithwaite named these two theories together because they “focus on how organizations function as interconnected systems. By adjusting management styles to align with shifting business needs and integrating diverse teams,” he said, “these theories are particularly effective in project-driven industries.”
• Blue Ocean Strategy: Centered on pursuing both differentiation and low-cost approaches, the Blue Ocean Strategy posits that any industry’s composition is fluid and ever-changing and that companies and their leaders can shape it via their thoughts and actions. “This framework encourages businesses to create untapped market spaces, avoiding saturated, competitive environments,” Braithwaite said. “It focuses on innovation and differentiation to achieve sustainable growth.”

Additional alternatives to Waterman’s theory

Beyond the alternatives the experts interviewed for this article suggested, other Waterman and Peters alternatives include these business management theories: 

• The management theory of Henri Fayol outlines five ways for managers to interact with their teams on projects: planning, organizing, commanding, coordinating and controlling.
• Group cohesion is at the heart of the management theory of Elton Mayo, which illustrates how teams encourage positive or negative behavior and the overall likelihood of that team’s success.
• The management theory of Max Weber proposes that bureaucracy is the most efficient way to run a business, whether it’s public or private.
• Expectancy theory, value chain analysis, and the Five Forces model are central ideas in the management theory of Michael Porter.
• Quality planning, control and improvement are the tenets of the management theory of Joseph Juran.
• The management theory of Frederick Taylor emphasizes rewarding employees for high-quality work, rather than punishing them for mistakes, to improve overall productivity and efficiency.
• Developed by the inventor of the Gantt chart, the management theory of Henry Gantt underlines the balance between work completed and work remaining in project management.
• The management theory of Rosabeth Moss Kanter highlights methods for fostering positive change based on six key ideas: show up, speak up, look up, team up, never give up, and lift others up.
• The “inside-out” management theory of Stephen Covey supposes that change starts at the individual level and poses seven positive habits for effective transformation.
• The management theory of Charles Handy defines four styles of management: the power culture, the role culture, the task culture and the person culture.
• Creating a positive organizational culture from the top down is just one example of the many principles your business can learn from Peter Drucker’s management theory.
• The management theory of Edgar Schein introduced the Model of Organization Culture, which outlines three levels of team culture: artifacts, espoused values and basic assumptions. 

8 principles, a lifetime of success

Embracing the lessons from Waterman’s theory can bring more innovation and results to your team while still valuing your people over your profits. While some of the theory’s tenets are less applicable to the modern-day business world than others, most shine as brightly as ever. Adapt this theory and some of its complementary principles within your business, and you’ll be on your way to developing a successful and innovative organization.

Max Freedman contributed to this article.