Peter Drucker's Way to the Top

by William Cohen

  Drucker did not follow this usual, well-travelled path. He did complete a terminal degree at the University of Frankfurt in international law, but that was about it. He used his PhD and initial books such as The End of Economic Man to obtain a tenured position in politics and philosophy at Bennington, then a small school for young women, lacking the typical multiple schools or colleges, each headed by a dean. According to Drucker’s widow, Doris, Bennington had no dean at the time. “It was too small,” she told me. He did however occasionally do work for the president normally done by a dean. Thanks to the numerous books he had written, Drucker became well-known as a business thinker and consultant. He was able to negotiate a tenure-track professorship of management at New York University, a highly respected university, not as prestigious as Harvard perhaps, but certainly enough to satisfy his ambitions at the time well enough. Tenure track, is not itself tenure. But it means that a professor can get tenure if he or she accomplishes the right research and publication described in the coming years. This was pretty good for a professor coming from a small school and a different discipline, and few previous research articles in academic journals. He remained at New York University for 22 years, building a worldwide reputation and authoring a further 10 books that focused on management and business. Although he was one of the first business authors to recognize the difference between marketing and sales he wrote no quantitative, research-based articles that I am aware of. However, he became one of the most prolific authors for the Harvard Business Review (HBR), which is not an academic research journal, but a vehicle read mainly by business practitioners. He wrote article after article such that today HBR has published many of his articles in book form by collating them by topic on some of the hottest issues of the day. In those days, some in the academic world did not appreciate HBR as a valid vehicle for disseminating academic research; but it was considered easier to attain publication while reaching a ready market for the type of articles Drucker wrote, as did the Wall Street Journal, for which he wrote a weekly column for 20 years. These two publications were read less by academics and sometimes were not given the credit they deserved, though they were extensively read by practitioners, even then. And that was a crucial factor in Drucker’s rise. It was good marketing.

  Jagdish Sheth, who made a well-deserved name for himself as an academic researcher in consumer behaviour, once explained it to several hundred amazed professors in a keynote speech at an academic conference some years ago, he said: “Over the last 25 years I’ve written extensively for the best academic journals,” he continued, “over all that time and dozens of articles on my research and theories, I received exactly two letters, they were both from professors. From my single Wall Street Journal article last month, I received over a hundred queries from business executives.”

  Now well-known, Drucker left New York University for California. I’ve already described how Drucker applied to two universities and how one of his criteria was that he be given an appointment which would allow him to teach Japanese art. But he had another item on his wish list. Claremont’s dean, Paul Albrecht, saw that there was a growing demand by executives for advanced degrees. This included both the MBA and PhD in management. This was exactly the market that Drucker was interested in reaching and was a major area to which he had decided to contribute. It was a perfect match. Drucker had what Albrecht wanted, and several years later they founded what may have been the first PhD in executive management, where I was honoured to be the first graduate. Their theory was that management was so complex that you really needed a PhD to master it. An examination of Drucker’s career yields his rules for achieving success.

  DRUCKER’S RULES FOR THE WAY TO THE TOP

  Drucker followed several rules which included ideas from strategy, sales, and marketing.

  1. HIT ’EM WHERE THEY AIN’T

  Drucker later called one of his entrepreneurial strategies, “Hit ’em Where They Ain’t”. Two substrategies were “Creative Imitation” and “Entrepreneurial Judo”, described in detail in Chapter 2. However, Peter erred by ascribing “Hit ’em Where They Ain’t” to a Civil War general in his book, Innovation and Entrepreneurship.1 These words did not originate from a general in the Civil War or any other war. Instead they came from Baseball Hall of Famer Wee Willie Keeler. At 5´ 4˝ Keeler was one of the shortest players ever to play for a major league team. Despite his short stature, his .385 career batting average after the 1898 (yes, that’s 1898, not 1998) season is the highest average in baseball’s history at season’s end for a player with more than 1,000 hits.2 His strategy was simple: hit the ball to parts of the field not well protected by opposing players either because the player was less skilful or had a habit of not fully covering a particular part of his assigned area on the baseball field. Every batter tried for success by hitting the ball as hard as he could and trying for a home run. That was one way to the top. Wee Willie instead strived to hit the ball to areas of the outfield that were ill-protected. He “Hit ’em Where They Ain’t”. This is similar to the popular Blue Ocean Strategy of today. This is a marketing theory explained in a book of the same title by W. Chan Kim and Renée Mauborgne.3 It is based on their analysis of 150 strategic business situations over 100 years in 30 different industries. In a nutshell, the authors maintain that companies can succeed by creating areas of uncontested market space which they call blue oceans. This is opposed to red oceans where there are numerous competitors, which like sharks attacking prey, fight viciously against competitors and turn the area red with blood.

  2. APPLY THE LESSONS FROM ONE FIELD TO ANOTHER

  Drucker maintained that the major advances in any field or industry usually came from someone bringing it from another field or industry and he applied this principle. For example, in his book Management Challenges for the 21st Century he wrote “the management of people is a marketing job”.4 He did not mean only to incorporate the persuasion of a salesperson, he meant the whole of marketing, including considerations of all marketing aspects that must be included in the management situation such as marketing strategy and planning.

  3. BE YOUR OWN CEO

  In other words, Drucker maintained that you needed to be the one in charge on your way to the top. This required that you look at the facts and do the analysis and you take responsibility for the decisions you make. If you think that you need additional training or education, you don’t sit around waiting for someone else in your organization to make the decision to send you somewhere to get it. Take whatever actions to get what you think necessary yourself.

  4. FOLLOW THE WAY OF INNOVATION

  Make plans to be a change leader and innovate as you proceed on your journey. You must innovate. It is essential for your progress and, like an organization that does not innovate, no matter how successful that you are currently, you will ultimately fail if you do not innovate.

  5. APPLY THE CONCEPTS OF MARKETING AND SALES TO YOUR CAREER

  Drucker meant these should be applied as if coming from another industry. He devoted an entire course once to a subject that he entitled “Marketing Yourself to Your Boss”. He was serious about this. I still recall him saying that you first had to agree with your boss on what your job was and if possible to get it in writing, and then you were to discover how your boss preferred to communicate. Drucker said that all of us prefer to communicate in one of two ways: either in writing or verbally. He went on to say it was critically important to communicate with the boss in the way in which he or she preferred. To apply these concepts, you need first to understand that these had to be accomplished by the new employee.

  THE WAY TO THE TOP REQUIRES THE TECHNIQUES OF MARKETING AND SALES

  You first need to understand marketing and sales before you can follow these concepts. There are many definitions of marketing. Drucker’s definition mainly delineated the differences between marketing and selling. Professor Philip Kotler is closely associated with Drucker in thinking and has been acknowledged by many with a title very much like Dru
cker’s as the ‘Father of Modern Marketing’. Kotler, S.C. Johnson Distinguished Professor at Northwestern University in Chicago, defines it this way: “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”5

  Note that marketing according to Kotler is an exchange. It is not deceiving someone or cheating them in some fashion. It reminds me that you can only become successful by helping others to become successful. Or said another way, you can only reach your goals by helping others to reach their goals. Drucker was not recommending that you engage in office politics. Working once with another professor, the other professor was the object of much jealousy due to his work with Drucker and was sometimes verbally harassed by his colleagues. “Ignore them completely,” Drucker told him, “and stick to your work.”

  To put marketing into operation as an aid to reaching the top may require using the internet, advertising, sales promotions, face-to-face selling, publicity, and different distribution channels considering your goals and the target market selected. This is what Drucker did, he used what was available to him. It also requires that you treat others as you would like to be treated. Better yet, if possible treat others as they prefer to be treated, which is a step further.

  You receive intelligence from both the target market and the distribution channels in your situation as you proceed. Done correctly, both receive something, tangible or intangible, in exchange for what they provide, as in the definition of marketing.

  CAN MARKETING ELIMINATE SELLING? THE MARKETING CONCEPT

  Earlier we noted that selling and marketing are not the same. Marketing professor Theodore Levitt, then teaching at Harvard once described the difference pretty much as Drucker: “Selling focuses on the need of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.”6

  But Drucker went even further to explain: “Selling and marketing are antithetical rather than synonymous or even complementary. There will always, one can assume, be a need for some selling, but the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”7

  The difference between marketing and selling brings us once more to noting marketing’s close involvement with strategy, and with tactics. If it is strategy that we use to attain objectives, it is tactics that must be employed to implement our strategy. Then marketing is your strategy and selling is but one of many tactics to implement whatever marketing strategy is pursued. Were our strategy perfect we would still need some selling (tactics) to implement it. But even more important to understand is that, no matter how good our selling may be, if our strategy is bad, wrong, or inappropriate selling cannot make up for deficiencies in that strategy. In fact, a tactical success in selling may even be wrong. And you must be careful of your tactics becoming the enemy of your strategy.

  Consider American car companies in the early 1970s. Their positioning strategy was dependent on products emphasizing comfort and power as opposed to fuel economy and, later, quality. When the oil crisis struck, some tried to make up for an inappropriate strategy by selling. It didn’t work. But what if it had? Good selling might have helped to buy time for devising and implementing a new and more effective strategy. But it could not overcome the basic problem of the wrong strategy. Furthermore, conceivably, remarkable success in selling might have masked the very real need to adjust strategy until the company, though initially benefiting from tactical success, was in even more difficulties because of delaying changing its strategy. During the oil crisis Chevrolet rushed a small car into production called the Chevette. Introduced in September 1975, the Chevette sold 2.8 million units over 12 years. The Chevette was the best-selling small car in the US for the years 1979 and 1980. The selling and advertising campaign was first rate from the start. However, after about a year of use the first-year model owners found that their cars would not start again soon after having been driven and had to cool down first. Rather than a recall, dealers were on their own as there was no fix. This problem had to do with the vehicle frame being worn down and resulting in an electrical disconnect after about a year of use. This resulted in bad feeling among customers who had bought the car and were stuck with it before the problem was corrected in design and production. I know. I was one of the unfortunate owners.

  The same is true in self-management. Just after getting her bachelor’s degree a woman I know got interested in law. She had little knowledge of the profession or what it was all about, and the recruiters (salesmen for the school) did an excellent job selling but misrepresented what she could expect as a law student and what the work entailed. She became a law student and hated every minute, though she made passing grades and passed what is called the Baby Bar exam, which was necessary to continue her studies after the first year. However, she wisely decided that after one year she’d had enough and entered the study of psychology. Today she is a highly successful clinical psychologist. Message: good selling, but poor analysis prior to spending time as a law student combined with an excellent job of selling by recruiters, but bad marketing by the law school resulted in a lose–lose for both the individual and the law school.

  This brings us back to Peter Drucker’s position, which says essentially that if we get our marketing (strategy) right, we can reach our objectives with a lot less work in selling (tactics) and more efficiently and effectively in performance.

  YOUR ORIENTATION TOWARDS YOUR SELF-MANAGEMENT

  Business historians have found an interesting phenomenon in the development of the basic orientation of businesses since the concept of the business was born and began moving towards a marketing orientation eventually integrating both marketing and society. All organizations that ignore marketing, or give it a low priority, suffer. This is true in moving ahead in a career and profession as well and anyone seeking to use marketing in their careers or professions like Drucker must pay close attention to how his or her self-management is oriented.

  PRODUCTION ORIENTATION

  Gutenberg’s development of the printing press by inventing movable typefaces made books much cheaper and more available than before, and book ownership became more widespread. In fact, the demand for books still far exceeded the supply, even after Gutenberg’s invention. As a result, organizations manufacturing books did not need to give marketing much emphasis. They could sell all the books they could produce. Production orientations persist today. A company with this orientation believes that customers will buy its products if the products are priced cheaply enough. Some individuals make the same mistake. They underprice themselves significantly, thinking that this will help them get a job or, if in business for themselves, they focus on low price because they think that this will bring in business. This may work for a while, but pricing also has an image value. Most shoppers will tell you that if you don’t know anything about the product and want quality, you should be willing to pay a higher price. In other words, most believe that high price always equals high equality. If you price yourself too low, this has a self-limiting effect. Drucker didn’t do this. As he progressed in his career he raised what he charged as a consultant and what he demanded as a professor. It wasn’t a case of seeking wealth. He might require a corporate client to pay $10,000 for a few hours of consulting, but the money didn’t go to him; it went to his foundation.

  PRODUCT ORIENTATION

  Other companies still maintain a product orientation. The Wright brothers built their first working aeroplane in 1903. Yet it was four long years before the US government made its initial purchase from them. Think of this for a moment. Here was an invention that enabled us to realize humankind’s dream of flying. It had the potential for revolutionizing vi
rtually every aspect of civilization, not only warfare, and eventually it did. Yet it took the US government four years before contracting with the Wright brothers to obtain even a single unit to test. This is not necessarily an indictment of government; rather it is a partial description of a marketing characteristic. The Wright brothers were bicycle repairmen and inventors. They knew little about marketing and how to effectively market their extraordinary breakthrough. You have a great product, but you need to market that product to reach the top.

  SALES ORIENTATION

  A company with a sales orientation takes a product as a given and the market as a given and tries to sell the product to the consumer or the industrial buyer. It is the opposite of the marketing orientation because it focuses on the product and convincing someone to buy it rather than the customer and having what the customer wants. Such a company has a philosophy that a good salesperson can sell anything to anyone. It is true that there are those who are superior salespeople and they can maximize the chances of selling once a product has been produced. However, from a marketing perspective, this is the more difficult way to create a sale because this task is far easier if a market already exists for the product that you have developed. In Drucker’s words, “the product or service fits him and sells itself ”.

  MARKETING ORIENTATION

  The previous business orientations stretch back over the centuries, but the marketing orientation has become popular only since the mid-20th century. An organization having a marketing business orientation focuses on the customer. Its philosophy is: “It is not what you want to sell but what your customer wants to buy.” Accordingly, an individual who seeks to reach the top wisely has at least a marketing orientation and seeks to find a need and to fill it.