Drucker on the theory of the business

The theory of the business must be known and understood throughout the organisation. This is easy in the organization’s early days. But as it becomes successful, an organization tends increasingly to take its theory for granted, becoming less and less conscious of it. Then the organization becomes sloppy. It begins to cut corners. It begins to pursue what is expedient rather than what is right. It stops thinking. It stops questioning. It remembers the answers but has forgotten the questions. The theory of the business becomes “culture.” But culture is no substitute for discipline, and the theory of the business is a discipline.

The theory of the business has to be tested constantly. It is not graven on tablets of stone. It is a hypothesis, And it is a hypothesis about things that are in constant flux – society, markets, customers, technology. And so, built into the theory of the business must be the ability to change itself. Some theories are so powerful that they last for a long time. Eventually every theory becomes obsolete and then invalid. It happened to the GMs and the AT&Ts. It happened to IBM…*

Peter Drucker – Managing in a Time of Great Change (From The Daily Drucker)

*It happened to Compuserve, MySpace, Yahoo, Nokia…

Values and vision: the acid test

Peter Drucker and Stephen Covey ask the same simple question to get at the heart of these:

“What do you want to be remembered for?”

Covey asks you to imagine your funeral:

  • Who is there?
  • What do you hope they’d say about you?
  • Is this consistent with how you live now?
  • Which goals and relationships matter, in the end?
  • Which work and stresses fall into insignificance?

The answers to these questions are your compass.

Peter Drucker on continuity and change

The more an institution is organized to be a change leader, the more it will need to establish continuity internally and externally, and the more it will need to balance rapid change and continuity.

Balancing change and continuity requires continuous work on information. Nothing disrupts continuity and corrupts relationships more than poor or unreliable information. It has to become routine for any enterprise to ask at any change, even of the most minor one: “Who needs to be informed of this?” And this will become more and more important as more enterprises come to rely on people working together without actually working together – that is, on people using the new technologies of information.

Above all, there is need for continuity in respect to the fundamentals of the enterprise: its mission, its values, its definition of performance and results. … The balance between change and continuity has to be built into compensation, recognition and rewards.

Peter Drucker – Management Challenges for the 21st Century (in The Daily Drucker)

In other words, the faster things change, the more valuable stability becomes. This is true for skills and routines, for cultural reference points, and especially for relationships. The hard part is seeing which things are most valuable: if you’re not careful, you don’t know what you’ve got till it’s gone.

Peter Drucker on social responsibility

A business that does not show a profit at least equal to its cost of capital is irresponsible; it wastes society’s resources. Economic profit performance is the base without which business cannot discharge any other responsibilities, cannot be a good employer, a good citizen, a good neighbor.

But economic performance is not the only responsibility of a business any more than education is the only responsibility of a school or health care the only responsibility of a hospital.

Every organisation must assume responsibility for its impact on employees, the environment, customers, and whoever and whatever it touches.

That is social responsibility. But we also know that society will increasingly look to major organizations, for-profit and non-profit alike, to tackle major social ills. And there we had better be watchful, because good intentions are not always socially responsible. It is irresponsible for an organisation to accept – let alone to pursue – responsibilities that would impede its capacity to perform its main task and mission, or to act where it has no competence.

Peter Drucker – Managing in a time of Great Change

Drucker on abandonment

Effective executives know that they have to get many things done effectively. Therefore, they concentrate. And the first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive. The first class resources, especially those scarce resources of human strength, are immediately pulled out and put to work on the opportunities of tomorrow.

If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.

Peter Drucker – The Effective Executive

Peter Drucker on Freedom

Freedom … is not the same as individual happiness, nor is it security or peace and progress. It is not the state in which the arts and sciences flourish. It is not good, clean government or the greatest welfare of the greatest number.

This is not to say that freedom is inherently incompatible with all or any of these values, though it may be and sometimes will be. But the essence of freedom lies elsewhere. It is responsible choice. Freedom is not so much a right as a duty. Real freedom is not freedom from something ; that would be license. It is freedom to choose between doing or not doing something, to act one way or another, to hold one belief or the opposite. It is never a release and always a responsibility. It is not “fun” but the heaviest burden laid on man: to decide his own individual conduct as well as the conduct of society and to be responsible for both decisions.

Peter Drucker – The Freedom of Industrial Man

You won’t agree with all of the above – I’m still mulling it over – but Drucker’s emphasis on choice and responsibility is spot on.

Most aspects of our lives, both personal and public, are products of choice. This isn’t the same as them being directly under our control (many of the choices belong to others), but we still have choice in how we act: what to accept, what to maintain and what to seek to change.

Homework:

Look for choices that you’ve been blind to up to now. Which parts of your life – including big, permanent looking things – could do with a review?

Maintenance of the status quo is a choice that we sometimes fail to notice. What are you maintaining as if you have no choice in the matter, when perhaps you should stop? What are you ignoring that you should choose to put more energy into maintaining?

What choices are you in denial about? What have you been choosing to accept that you could – should – choose to change? Small improvements that actually happen are better than giant overhauls that don’t.

Peter Drucker on management as a discipline

If you can’t replicate something because you don’t understand it, then it really hasn’t been invented; it’s only been done.

When I published The Practice of Management fifty years ago [in 1954], that book made it possible for people to learn how to manage, something that up until then only a few geniuses seemed to be able to do, and nobody could replicate it.

When I came into management, a lot of it had come out of the field of engineering. And a lot had come out of accounting. And some of it came out of psychology. And some more came out of labour relations. Each of those fields was considered separate, and each of them, by itself, was ineffectual.

You can’t do carpentry, you know, if you have only a saw, or only a hammer, or if you have never heard of a pair of pliers. It’s when you put all of those tools into one kit that you invent. That’s what I did in large part inThe Practice of Management – I made a discipline of it.

Peter Drucker – from Frontiers of Management in The Daily Drucker

Understand the tools (make them if you have to). Build a tool kit. Make it reproducible.

I have mixed feelings about this quote from Drucker. On the one hand, bringing together a set of reliable tools for making effective non-profits or social enterprises is exactly what I’m trying to do with DriverlessCroc. On the other, a lot of the things that make these organisations effective in their contexts are very hard to reproduce – often apparently serendipitous combinations of people and resources in the right times and places, with combinations of vision, skills and technology that aren’t reproducible because they haven’t happened before – and might not again.

The point, I think, is to learn which tools are out there and how to use them so that you can be more effective at the creative, unreproducible work that only you can do in your context. Use the tools to make a new tool for change: your organisation.

I’ve posted a few thoughts about what some of these are here – more to come soon.

A reading list for 2019

Here’s a DC-related hitlist for the first part of 2019… images link to Amazon UK.

The Invisible Killer: The Rising Global Threat of Air Pollution – and How We can Fight Back – Garry Fuller

The Invisible Killer: The Rising Global Threat of Air Pollution - and How We Can Fight Back by [Fuller, Gary]

A gift from Sharky. Necessary reading for someone living in Jakarta. Or anywhere.

The Inevitable – Kevin Kelly

The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by [Kelly, Kevin]

See also WtF? Technology and You. KK is great at describing big picture trends, and this is good so far. Definitely generative reading.

This is Marketing – Seth Godin

This is Marketing: You Can’t Be Seen Until You Learn To See by [Godin, Seth]

Seth has written and produced so much helpful stuff centred (increasingly) around doing ‘work that matters for people who care.’ This is his first book for five years or so, and he describes it as a distillation of the most important things he knows about marketing.

See also my series of posts on the Boostrapper’s Workshop for Non-Profits and The Marketing Seminar.

Execution: The Discipline of Getting things Done – Larry Bossidy and Ram Charan

Apparently a classic which will help me get things done.

The 4 Disciplines of Execution – Chris McChesney, Sean Covey and Jim Huling

4 Disciplines of Execution: Achieving Your Wildly Important Goals by [Covey, Sean, McChesney, Chris, Huling, Jim]

Recommended by a good friend who does business growth for a living. This is also going to help me get things done.

Leveraged Learning – Danny Iny

Leveraged Learning: How the Disruption of Education Helps Lifelong Learners, and Experts with Something to Teach by [Iny, Danny]

A jumping off point for thinking about the challenges and opportunities in education today.

Forgotten Wars – The End of Britain’s Asian Empire – Christopher Bayly and Tim Harper

Forgotten Wars: The End of Britain's Asian Empire by [Bayly, Christopher, Harper, Tim]

More for the Hinterland… I found the prequel to this hugely enriching to my understanding of SE Asia. This was a Christmas present a year ago, and I owe it time this year.

Defeat Into Victory – William Slim

Defeat Into Victory: (Pan Military Classics Series) by [Slim, William]

Slim played an important part in the history described above – he’s an interesting guy and a great case study. This is a book to enrich (i.e. network with) Forgotten Wars – and vice-versa.

The Daily Drucker – Peter Drucker

The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done by [Drucker, Peter F.]

Drucker is excellent. I’ll be dipping in and out of this throughout the year.

Blood and Bone (3): Drucker on decisions

All events but the truly unique require a generic solution. They require a rule, a policy, or a principle. Once the right principle has been developed, all manifestations of the same generic situation can be handled pragmatically—that is, by adaptation of the rule to the concrete circumstances of the case. Truly unique events, however, must be treated individually. The executive cannot develop rules for the exceptional.

The effective decision maker spends time determining which of the four different situations is happening. The wrong decision will be made if the situation is classified incorrectly.

By far the most common mistake of the decision maker is to treat a generic situation as if it were a series of unique events—that is, to be pragmatic when lacking the generic understanding and principle. The inevitable result is frustration and futility.

Equally common is the mistake of treating a new event as if it were just another example of the old problem to which, therefore, the old rules should be applied.

Peter Drucker, The Effective Decision, HBR1967

Blood and Bone (2): policy from decisions

An easy way to start making policy is to take a moment to record decisions you’ve made and why you made them.

When you can articulate the reason for key decisions, you make it much easier to make similar decisions in future – or better yet, easier for someone else to make a good decision without needing to come to you at all.

Peter Drucker describes four types of decision:

1. Decisions for generic events, of which the individual occurrence is only a symptom.

These are questions or problems that keep cropping up in the same or in slightly different form. An example might be repeated questions from clients about a specific service – our question is ‘how should I answer’?

There are three ways to save time with problems like this:

  1. Make the decision about what you’ll do and how you’ll do it, and document it. In this example, it might be writing a template email that provides key information in an appropriate tone. Copying and pasting and tweaking an email is far easier than reinventing the wheel each time.
  2. Find a way to make the problem solve itself. A good-quality FAQ section on your website might reduce the number of people who end up emailing. (But whatever you do, don’t send people who email to the FAQs without copying the relevant paragraph into your answer).
  3. Eliminate the problem. Few problems or questions are inevitable. Is there something you can do to eliminate the need for the question? This could be a case of designing a better product, or investing in a better ‘wrapper’ – one that puts the necessary information in the hands of your client exactly when they’ll need it.

2. Decisions about problems that seem unique, but are actually generic

Your problem might be new to you, but be common to all organisations. Financial management, child protection policies and performance reviews are examples of this.

There are established standards and processes like double-entry bookkeeping because everyone has to deal with money. If they help – and they’re likely to – use them.

Ask for help, learn from others, then be generous in sharing what you know when someone asks you.

If there’s nothing helpful out there – could you share yours once you’ve made it? How about open-sourcing your policies to save others from reinventing the wheel?

3. Decisions about exceptional events 

Unique and unrepeatable events are rare – do the best you can.

4. Decisions about exceptional events that turn out to be generic

It’s possible that you’ll come across an apparently unique problem that turns out to be, in Drucker’s words, ‘the first manifestation of a new genus… the early manifestation of a new problem.’ Try to look closely and see, then treat as in (1), above.