Peter Drucker's Way to the Top

by William Cohen

  DEPENDENCE ON OTHERS

  Along these lines, it is inevitable that we depend on others to help achieve certain parts of our goals much as we help others to achieve their goals. Here we need to incorporate a ‘what if?’ cautionary note. What if those we depend upon to act in some way or to do something for us do not do so? We need to think this through ahead of time. While defining goals and obstacles, all possibilities need to be identified along with potential alternative solutions. Of course, you don’t achieve your goals automatically just because you have set them. That’s where plans come in; you need to make plans to reach your goals and objectives. They are the road maps that take you from where you are now to where you want to go, the objective and goals you want to reach.

  Planning: How You Reach Your Goals

  Planning is challenging work and a good plan needs information gathered from many sources. It is used with the ‘how’ of strategy and tactics to accomplish specific objectives and goals. The process is not difficult, but it does require effort and organization.

  There are many ways of organizing a plan. This applies to life planning as well as developing a project plan, a marketing plan, or any other type of plan. Some say you should just stumble on and figure out what to do as you encounter challenges, opportunities, and threats. You will need to do that eventually anyway. But it makes sense to struggle with each issue ahead of time to think things through before you encounter these as you execute your plan. You can avoid many obstacles and threats and exploit many opportunities if you can identify them before you begin. Even if you can’t, better to have actions and alternatives ready before you start, than to try to deal with issues that might have been anticipated when you’re under the pressures of time and execution during implementation.

  I said there are many ways to organize a plan. Here is one I developed based on various concepts Drucker and other recommended.

  INTRODUCTION

  The introduction is the explanation of what the plan is about. Its purpose is to give the background of the project and to describe your situation so that you will understand exactly what it is you intend to do.

  SITUATIONAL ANALYSIS

  The situational analysis comes from taking a good hard look at your environment and the situation you face and contains a vast amount of information such as political situation, financial situation, economic situation, competitive advantages, trends, new technology, etc.

  PROBLEMS AND OPPORTUNITIES

  This is a summary that emphasizes the main points you have already covered in preceding sections. When you put your plan together and developed your situational analysis, you should have covered the problems and opportunities inherent in your situation. Group them first by opportunities, then by problems. Indicate why each is an opportunity or a problem. Also indicate how you intend to take advantage of each opportunity and what you intend to do about each problem.

  GOALS AND OBJECTIVES

  Goals and objectives are accomplishments you intend to achieve through your plan. In this section you must spell out in detail exactly what you intend to do.

  What is the difference between a goal and an objective? An objective is an overall goal. It is more general and may not be quantified. Goals are usually quantified.

  STRATEGY

  Here you should describe what is to be done to reach your objectives and goals. You can also talk about obstacles to the strategies you discuss and how you will overcome these obstacles.

  TACTICS

  Just as strategy tells you what you must do to reach your objectives, tactics explain how you will carry out your strategy. List every action required to implement each of the strategies described in the preceding section and the timing of these actions.

  IMPLEMENTATION AND CONTROL

  In the implementation and control section you are going to forecast valuable information to help control the project once implementation has started. You will use this information to keep the project on track. Thus, if your budget is exceeded you will know where to cut back or to reallocate resources.

  STRATEGY FOR IMPLEMENTING THESE PLANS

  Drucker was opposed to any mathematical formulae for calculating strategy. He did not even discuss the once pervasive four-celled matrix of cash cows, stars, problem children, and dogs. He reasoned that following the advice of the four-celled matrix would invariably lead to acquisition as a main solution, and if the acquiring company had nothing to contribute but ownership it would have poor results.

  Drucker maintained that in all cases you had to think your strategy through and concentrate your resources where they were decisive, abandoning those businesses or projects which had less potential.

  Therefore, if you sat in a Drucker class you saw no matrices populated with cartoon images or curves or matrices that instructed a strategist to adopt one strategy or another. He maintained that a strategist needs to use his brain and think through actions and consequences. The overall decision was made by executive’s gut feeling. Quantitative analysis were inputs only to the evolving ultimate strategy which came from the gut.

  ESSENTIAL PRINCIPLES OF STRATEGY

  Strategy is important because by applying the right strategy and using the right tactics, you can dare the impossible and achieve the extraordinary in any human endeavour, not just business.

  Many experts have maintained that there are certain principles of strategy. Unfortunately, while there is no collective agreement as to which all strategists agree, the following are ten principles from my book The Art of the Strategist to develop a strategy.2 Some were advised and undoubtedly used by Drucker. A few came from others but I combined them with strategies that Drucker employed:

  1. COMMIT FULLY TO A DEFINITE OBJECTIVE

  Everywhere you look, you see people who logically should not even attempt what they attempt. But they are so committed to a definite objective that, more often than anyone can believe possible, their strategies are successful, and they are successful. Politics provides numerous examples. President Obama was told he couldn’t win. And the election of President Trump is the most recent example. Did you know that Abraham Lincoln was not supposed to have any chance of becoming president? How do these things happen? We have discussed some of them previously. The basis is a fundamental principle of strategy: commitment to a definite objective.

  2. SEIZE THE INITIATIVE AND KEEP IT

  Nothing happens until you make it happen, until you take action. Putting things off until you can get around to it or until conditions are perfect almost always results in failure. W. Clement Stone, who rose from poverty to build an international insurance company worth hundreds of millions of dollars, asserted that to overcome procrastination, you need only say these three words to yourself, and then act on them: ‘Do it now!’

  Is it any wonder that the rewards in industry, in any organization, go to those who show initiative? Those who sit around waiting for something to happen or for someone else to tell them what to do are rarely successful. The same is true for the strategist who looks to the competition to dictate his own actions.

  3. ECONOMIZE TO MASS YOUR RESOURCES

  Good business strategists amass their resources where it counts. They know that they can’t concentrate and be strong everywhere. Microsoft founder Bill Gates built the most successful technology company in the world virtually from scratch and along the way became the richest man in America. In an interview with Fortune Magazine, Gates said: “You know, the notion that a kid who thought software was cool can end up creating a company with all these smart people whose software gets out to hundreds of millions of people, well, that’s an amazing thing. I’ve had one of the luckiest situations ever. But I’ve also learned that only through focus can you do world-class things, no matter how capable you are.”3

  If our resources are greater than those of our competitors we have an automatic advantage from the start. We bring these resources – money, people, time, skill, know-how, influence, or whatever – together, by massing them
, concentrating them, or focusing them at the right place and at the right time.

  4. USE STRATEGIC POSITIONING

  The strategic position is the decisive point that will make the difference in attaining your well-defined objective. Some strategic positions should be obvious but are still ignored in the heat of business and competition. For example, at the height of the e-commerce frenzy, dot-com companies advertised all over the web. Yet. Although other factors impacted on the decision of where to advertise, these firms generally should have economized elsewhere to concentrate on these sites. This should be basic stuff. Yet, supposedly sophisticated strategists continue to violate this lesson repeatedly, with predictably poor results.

  5. DO THE UNEXPECTED

  It doesn’t make any difference whether you are a large organization or a tiny one, or even an individual. You can use boldness and creativity to create surprise and win.

  In the preliminaries to the California recall election in the fall of 2003, it was obvious that Arnold Schwarzenegger would be a major candidate if he decided to run. Still, the word went out that Arnold’s wife, Maria Shriver, didn’t want the actor to be a candidate. For several weeks, the media published stories that Schwarzenegger would announce his decision not to run on an upcoming NBC’s The Tonight Show appearance.

  On the night of Schwarzenegger’s appearance, the host Jay Leno made the introductions and the expected jokes. Then all grew quiet as the cameras focused on Arnold. He began explaining that it had been a difficult decision. As he started to state what this decision actually was, the screen went blank, and one of the old black and white NBC logos from the 1950s appeared with the caption: “We are experiencing technical difficulties, please stand by.” When Arnold appeared again, he was concluding, “and that is why I made the decision that I made.”

  Of course, the whole thing was a joke. Schwarzenegger made other jokes before making the surprise announcement that he was a candidate after all. According to the Los Angeles Times: “His announcement landed with the force of an explosion from a Schwarzenegger movie.”4 The resulting excitement brought the new candidate tremendous media attention much to the consternation of his rival candidates and the sitting governor, Gray Davis, who was trying to avoid a recall election. Schwarzenegger rode this wave of excitement all the way to the statehouse.

  6. KEEP THINGS SIMPLE

  An analysis conducted by the Booz Allen Hamilton consulting firm showed that in one industry after another large, traditional companies made an identical mistake in their strategy: overcomplicating their business. The strategies they developed to run their businesses had become so complex that profit margins had almost disappeared. Naturally this left them vulnerable. As these market leaders struggled under the burdens of the complicated business models they themselves had devised, smaller, nimbler competitors with less complex strategies swallowed up market share by meeting customer needs at a lower cost.

  According to the Booz Allen Hamilton analysis the large US airlines industry is a good example because of their complex strategies. It costs these carriers twice as much per seat mile as low-cost carriers to complete a 500-mile flight. This is because their solution to take anyone, anywhere led them to massive physical infrastructures, fleets of dissimilar models of aircraft, expensive information systems, and large pools of labour.5 Keep your strategy simple!

  7. PUT ADVERSARIES ON THE HORNS OF A DILEMMA

  There is an example in game theory known as the Prisoner’s Dilemma. It goes something like this. Two men are caught after committing a robbery. The District Attorney (DA) knows that these two are guilty. They were arrested with the victim’s wallet. They fit the description of the robbers. They both have done time in jail for similar crimes using the same MO. Unfortunately, it was dark and the robbery victim fails to correctly identify either in a police line-up.

  The two prisoners are kept separate and can’t communicate. The DA goes to one prisoner and offers him a deal. If he will identify the other prisoner as one of the two robbers, he will be released since neither prisoner has been positively identified. His partner, of course, will go to jail.

  The prisoner is left alone to consider the offer. If he does nothing, both he and his partner stand a chance of being convicted and going to jail because of other factors than positive identification. If he identifies his partner as a robber, at least he will go free, even though his partner will go to jail. He is about to accept this alternative, when he realizes that the DA has used a strategy of putting him on the horns of a dilemma. It is likely that the DA has made the same offer to his partner! If both identify each other as involved in the robbery, they will both go to jail. If he does not identify his partner as a robber and his partner identifies him, he will go to jail and his partner will go free. The DA, a clever strategist, has arranged things so that he wins no matter what the robbers decide to do. He has used the principle of putting them on the horns of a dilemma. The worst case scenario from the DA’s perspective is that both refuse to betray the other. But the DA is in that situation anyhow. See if you can put your competitors on the horns of a dilemma.

  8. TAKE THE INDIRECT ROUTE TO YOUR OBJECTIVE

  It was English strategist Liddell Hart who came up with the indirect approach. He said that it was far better to approach a competitor indirectly than to meet him head-on. If you have ever watched a magician’s performance, you may have wondered at his ability to perform impossible feats. In fact, doing magic is based on an application of the indirect approach. While you are being misdirected by him to focus on something unimportant, he accomplishes something that you may well have noticed if you had not been distracted.

  9. TIMING AND SEQUENCING

  Timing is critical in so many fields – sports, politics, and military strategy all come to mind immediately – but it is especially important in business. Doing the right thing at the wrong time can result in a great waste of money, time, and effort, with no results to show for it. To some, this may seem like a no-brainer. Yet many otherwise savvy businesspeople are convinced that it is the amount spent that is more important. Even if they recognize that timing is more important in some areas, like seasonal advertising, it is not generally true overall, they maintain. They couldn’t be more wrong.

  Let’s look at something entirely different like a simple strategy for motivating employees: reward them with money. Which is more important in this situation, how much you give them or when you do it? William T. Quinn Jr, owner of a publishing company in Somerset, New Jersey, wanted to motivate his employees in this manner. He discovered that when handing out bonuses for extra or exemplary effort, it was timing, not the amount of the bonus, that mattered most. The key was to dispense his motivational dollars when his employees were most stressed, and to do so on the spot, not to wait for some collective time to reward everyone together in the future.6

  This finding is psychologically sound. If you want to motivate someone, the desired action and the motivator should be as close together as possible. It should be no surprise that timing is far more important than the amount of money intended as a motivator in business. Doing the right thing at the wrong time can be a disaster. You must consider timing a primary principle of strategy.

  10. EXPLOIT YOUR SUCCESS

  The success process always involves two phases. First, a critical mass either exists or is created. This critical mass is the environment in which we are trying to achieve the success. Building this mass into the critical phase may take years, a few months, a few days, or perhaps just a few hours.

  As we continue to pursue success, at first nothing or very little is likely to occur. Suddenly, the second phase comes, and everything seems to happen at once. Like a nuclear chain reaction, the environmental mass becomes supercritical. And just as the chain reaction results in a nuclear detonation, if we manage things correctly at this point, a complete triumph results.

  Because events happen so rapidly in this second phase, the perception may be that the success was instantaneo
us. However, a closer examination of any achievement will show that only just before the triumph occurred did the pace speed up to near light-speed velocity. Whether the earlier phase lasted years or days, the pace of the first phase would have appeared to be slow.

  Unfortunately, because of this variance in time between the phases, there are two traps that we can fall into which can block the very triumph we seek. First, because the first phase may be glacially slow, we may not realize that the mass is becoming supercritical. In this case, we may abandon the process before the chain reaction can occur, so we never reach the success we seek. But another error can also occur. We may fail to exploit our success for maximum gain. Both are important principles of strategy and failing to take note of them can impede our success.

  Let’s look at another historical example, but for an organization. Lever Brothers was a subsidiary of Unilever of London, a giant worldwide corporation as we first examine its situation. Having been successful with many products in the US, during the late 1920s, it now sought another new product to launch in America. A vegetable-shortening product seemed a good potential candidate. Lever’s competitor Procter & Gamble (P&G) had already proven there was a market through its introduction of a product called Crisco. Although Crisco was well established, its dominance also meant that there were no other major competitors or competitive products to contend with. In the States, both business and economic conditions looked pretty good.