The Essential Drucker: Insights from the Original Management Guru

The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management is an indispensable read to help you enhance your business leadership and improve your business. What makes it particularly interesting is that much of it was written (up to) 40 years ago. It seems that insights into the fundamentals of business and leadership success really have not changed all that much over the years.

Sales and Marketing

  • The purpose of a business is to create and serve a customer.
  • The result of a business is a satisfied customer.
  • Key to sales and marketing
    • What does the customer want to buy?
    • What are the satisfactions that the customer looks for, values and needs?

Human Resources

  • The first sign of decline in an industry is the loss of appeal to qualified, able and ambitious people.
    • What do our jobs have to be to attract and hold the kind of people we need and want?
  • One does not manage people: the task is to lead people; and the goal is to make productive the specific strengths and knowledge of each individual.
  • Workers need motivation; motivation comes from having a “challenge.”
  • Pick people well: the decisions about people are the most important
    • If I put a person into a job and he or she does not perform, I have made a mistake.
    • In assigning people for a job, build on strengths. You cannot build on weaknesses.
    • Make sure that the employee understands what the job is about.
  • The only person in abundant supply is the “universal incompetent.”
    • Thus, need to staff with people who excel at one ability, but may have only modest endowments in others
    • Build the organization in such a manner that anybody who has strength in one important area is capable of putting their strengths to work.
  • At the same time, the scarcest resources in any organization are performing people

Face Reality and Focus on the Important

  • Do not expect the conditions to change to what they should be or what you want them to be; deal with them as they are.
  • Beware that the bigger an organization gets, the more will inside events tend to engage the interests, energies, and abilities of the executives
    • Organizational politics
  • Unless executives make a conscious effort to perceive the outside, the inside may blind them to the true reality.

Manage by Objectives

  • Emphasis should be on teamwork and team results
  • Objectives should be on tangible business objectives and intangible objectives such as organizational and people development, worker performance and attitude, etc.

Process is Important

  • The less an organization has to do to produce its results, the better it does its job.
  • Beware of exceptional, non routine situations
    • Do not bend the process to subjugate these situations
    • These situations may require special handling independent of the process
  • Minimize reports and procedures

Create Entrepreneurship Within a Company

  • Entrepreneurship requires discipline
    • Separate the new, entrepreneurial business from the old and existing
    • Give it significant management attention
    • Don’t over-burden at the start
  • Beware of being entrepreneurial by buying entrepreneurial businesses
  • Do not mix entrepreneurial units with established “managerial” units

Innovation

  • Innovation should not be diversification
    • Diversification rarely works unless it is built on commonality with the existing business
      • Common market (customers)
      • Common technology
  • With innovative products be open to other uses for the technology
    • Examine any unexpected interest in your product or technology and evaluate whether it might be a new market potential
  • Innovation results from the purposeful analysis, systems, and hard work
    • To be effective, it has to be simple and focused
    • It needs to start small
  • Don’ts of Innovation
    • Don’t try to be clever
    • Don’t diversify, splinter or try to do too many things at once
    • Don’t innovate for the future; in almost all cases, it is just too difficult.
    • Instead, innovate for the present – present problems, present needs, presents wants
  • Successful innovators are conservative
    • They are not risk takers
    • They are focused on opportunities
    • They work hard on innovating

Strategy

  • Being fustest with the mostest
  • Hitting them where they ain’t
    • Creative imitation – look at product and services from the viewpoint of the customer
    • Entrepreneurial judo – use real thinking to combat competitors suffering from any of the following:
      • Not invented here
      • Tendency to “cream” the high profit part of the market (e.g. Xerox)
      • Belief in quality
      • The illusion of “premium” price
  • Find and occupy a specialized niche

Individual Success in Business

  • The knowledge worker (employee) is expected to get the right things done
  • The effective person focuses on contributions
    • Contribution in own work
    • Contribution in relationships with others
    • Looking outward toward goals
    • Emphasis is on responsibility and accountability
  • The most common cause of failure is the inability or unwillingness to change with the demands of a new position
  • Effectiveness is a habit; a complex of practices
  • Build on strengths
    • Know strengths via feedback analysis – 360 reviews, a trusted advisor or mentor
    • Concentrate on your strengths
      • Place yourself where your strengths can produce performance and results
      • Work on improving your strengths
  • Remedy your bad habits
    • Things you fail to do
    • Things that inhibit your effectiveness and performance
  • Waste as little effort as possible on improving areas of low competence
    • Focus on strengths instead (see above)
  • Objectively know yourself
    • How do you really perform?
    • Are you a reader or listener?
    • How do you learn?
      • Learn by hearing themselves talk
      • Learn by writing
      • Learn by doing
    • Do you work well with others or are you a loner?
    • How do you perform under stress?
  • Again, do not try to change yourself. But, work hard to improve the way you perform.
  • At all times, however, your values need to be compatible with the organization’s values

Manage Time

  • Know what you do with your time
    • The effective person knows that to manage time, he has to know where it actually goes
    • Realize that a large part of the time in a job is wasted on things that contribute little or nothing
  • Time Diagnostic
    • Eliminate the things that need not be done at all
    • Which activities are better done by someone else?
    • Beware of the time of others that you waste
      • Good question to ask:
        • What do I do that wastes your time without contributing to your effectiveness?
  • Prune the Time Wasters
    • Organizational time wasters result from lack of system or foresight
      • The symptom of where you have organizational time wasting is to look for the recurrent crisis that has to be met “heroically”
      • A well-managed plant is a quiet place, not dramatic
    • Time waste results from over-staffing
    • Time waste results from malorganization with the symptom of an excess of meetings
    • Time waste results from a poor flow of information
  • In your time prioritization, do the most important things first

Effective Decisions

  • Focus on the important decisions
  • Solve the problem not the symptom
  • Beware of the most dangerous decisions to make – the one that might – just might – work if nothing whatever goes wrong
    • Bay of Pigs
  • Start out with what is right rather than what is acceptable because one always has to compromise in the end
  • A decision will not become effective unless the action commitments have been built into the decision from the start
  • Build a feedback into the decision to provide a continual testing of the expectations underlying the decision
    • A military commander never relies on what he is told by the subordinates to whom the order was given. Not that he distrusts the subordinate; he has learned from experience to distrust communications.
    • To go and look for yourself is the best, if not the only way, to test whether the assumptions on which the decision is based are still valid
    • In short, trust but verify
  • In decision making
    • Start with opinions, untested hypothesis
    • The understanding for the right decision requires a clash and conflict of divergent opinions; thus develop disagreements
  • One alternative is the decision to do nothing; is the decision really necessary?
    • De minimis non curat praetor (the magistrate does not consider trifles)
    • As a business leader, do not discredit yourself and waste time by making trivial decisions
    • Only act if (on balance) the benefits greatly outweigh the cost and risk.
    • Act or do not act, but do not hedge or compromise when making a decision
  • Knowledge workers are not getting paid for doing things they like to do. They are paid for getting the right things done – most of all in the task of making effective decisions.

Functioning Communications

  • It is the listener who communicates
    • The person who emits the communication (the “communicator”) does not communicate. He utters.
  • One can communicate only in the recipient’s language or in his terms.
    • We need to know what the listener can see and why
    • The unexpected is usually not received at all
      • Thus, the need to plant a seed, especially in managing upward
  • The human mind attempts to fit impressions and stimuli into frames of expectations
    • Thus, the effectiveness of starting off with a hypothesis (above)

Leadership

  • Keys to effective leadership
    • Set goals
    • Set priorities
    • Set and maintain standards
  • Leaders must see that leadership is about responsibility rather than rank and privilege
    • The effective leader is not afraid of strength in associates and subordinates.
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About David Shedd

David has been a President - CEO - COO of an up to $350M group of manufacturing, distribution, specialty retail and services companies, having led 22 different businesses from turnarounds to start-ups to fast growth companies.
This entry was posted in Business Acumen, Communication, Growth and Strategy, Personal Success and tagged , , , , . Bookmark the permalink.

One Response to The Essential Drucker: Insights from the Original Management Guru

  1. Justin says:

    Thanks for finally writing about >The Essential Drucker: Insights from the Original Management Guru | David M.
    Shedd – Move Your Company Forward <Liked it!

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