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In Search of Excellence

The Grandfather of Business Books

Tom Peters and Bob Waterman published In Search Of Excellence (1982) that summarized winning practices of a few American companies.

It started with McKinsey's John Larson asking colleague Tom Peters to step in at the last minute and make a presentation that leads to “In Search of Excellence.” Thus Tom Peters spawns the birth of the “management guru business.”

One remarkable fact about In Search of Excellence remains — its list of companies have held up quite well over time. The book focuses on 43 excellent companies. And while it contains a few embarrassing picks, such as Atari and Wang Labs, the companies Peters and Waterman called excellent have easily outperformed the market averages (Excellence Sought — And Found (Forbes). Since October 1982, when the book was published, the companies on the authors' list earned an average total return of 14.1% annually. This return outdistanced the DJIA companies, which earned an average annual return of 11.3%, and the S&P, whose companies earned an average annual return of 10.1%.

In other words, if you invested $10,000 in the Excellence index 20 years ago and then did nothing at all, you would have $140,050. An equal investment in the Dow would have yielded just $85,500.

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