Amazon link: Managing for Results
Also see From Analysis to Perception — The New Worldview and What Executives Should Remember
Managing for Results was the first book to address itself to what is now called “business strategy.”
It is still the most widely used book on the subject.
When I wrote it, more than twenty years ago, my original title was, in fact, Business Strategies.
But “strategy” in those days was not a term in common usage.
Indeed, when my publisher and I tested the title with acquaintances who were business executives, consultants, management teachers, and booksellers, we were strongly advised to drop it.
“Strategy” we were told again and again, “belongs to military or perhaps to political campaigns but not to business.”
By now, of course, “business strategy” has become an “in” term.
Yet in retrospect l am glad we changed the title, To be sure, Managing for Results may be less “sexy?’ But it is far more descriptive of what this book tries to do.
Above all, it expresses the book’s premise: businesses exist to produce results on the outside, in the market and the economy.
On the inside there are only costs.
Indeed, what are commonly called “profit centers” are as a rule really “cost centers.”
Managing for Results therefore begins with an analysis of what the book calls “business realities“—the fundamentals and constants of the outside environment, the things the business executive has to consider as “givens,” as constraints, as challenges.
And it proceeds to discuss how a business positions itself in respect to these “realities” to convert them into opportunities for performance and results.
This explains, I believe, why this book, after twenty years, is still far more comprehensive than books on “strategy” alone.
It pioneered practically everything to be found in these books: the analysis of markets and products (it contains the first classification of products—"today’s breadwinner:” for instance); the organized abandonment of the old, the obsolete, the no-longer productive; the rewards for leadership; and the objectives of innovation.
But it also—and in this it still stands alone—showed how to analyze the environment and how to position a business in it.
It was the first—and by and large it still is the only—book to try to balance managing today’s business with making the business of tomorrow.
And it concludes by linking business as an economic institution measured by economic results and business as a human organization.
The last chapter deals with building performance into the organization.
The book thus was the first to attempt an organized presentation of the economic tasks of the business executive managing a business organization.
Above all, as the introduction states, this book took the first step toward a discipline of economic performance in business enterprise.
Never has such a discipline been needed more than it is today, when the economic, social, technological, and political environments in which businesses live and operate are changing faster than ever before, and when every business therefore needs to ask the questions which this book raises and answers:
What are the realities of this business?
What are its result areas?
How are we doing?
and What is this business and what should it be?
What exists is getting old.
To say that most executives spend most of their time tackling the problems of today is euphemism.
They spend most of their time on the problems of yesterday.
Executives spend more of their time trying to unmake the past than on anything else.
This, to a large extent, is inevitable.
What exists today is of necessity the product of yesterday.
The business itself — its present resources, its efforts and their allocation, its organization as well as its products, its markets and its customers — expresses necessarily decisions and actions taken in the past.
Its people, in the great majority, grew up in the business of yesterday.
Their attitudes, expectations, and values were formed at an earlier time; and they tend to apply the lessons of the past to the present.
Indeed, every business regards what happened in the past as normal, with a strong inclination to reject as abnormal whatever does not fit the pattern.
No matter how wise, forward-looking, or courageous the decisions and actions were when first made, they will have been overtaken by events by the time they become normal behavior and the routine of a business.
No matter how appropriate the attitudes were when formed, by the time their holders have moved into senior, policy-making positions, the world that made them no longer exists.
Events never happen as anticipated; the future is always different.
Just as generals tend to prepare for the last war, businessmen always tend to react in terms of the last boom or of the last depression.
What exists is therefore always aging.
Any human decision or action starts to get old the moment it has been made.
It is always futile to restore normality; “normality” is only the reality of yesterday.
The job is not to impose yesterday’s normal on a changed today; but to change the business, its behavior, its attitudes, its expectations—as well as its products, its markets, and its distributive channels—to fit the new realities.
From chapter 9, Building on Strength
Analysis of the entire business and its basic economics always shows it to be in worse disrepair than anyone expected.
The products everyone boasts of turn out to be yesterday’s breadwinners or investments in managerial ego.
Activities to which no one paid much attention turn out to be major cost centers and so expensive as to endanger the competitive position of the company.
What everyone in the business believes to be quality turns out to have little meaning to the customer.
Important and valuable knowledge either is not applied where it could produce results or produces results no one uses.
I know more than one executive who fervently wished at the end of the analysis that he could forget all he had learned and go back to the old days of the “rat race” when “sufficient unto the day was the crisis thereof.”
But precisely because there are so many different areas of importance, the day-by-day method of management is inadequate even in the smallest and simplest business.
Because deterioration is what happens normally—that is, unless somebody counteracts it—there is need for a systematic and purposeful program.
There is need to reduce the almost limitless possible tasks to a manageable number.
There is need to concentrate scarce resources on the greatest opportunities and results.
There is need to do the few right things and do them with excellence.
- Understanding the business
- The business realities
- There are three different dimensions to the economic task
- One unified strategy
- Requires an understanding of the true realities
- The generalizations regarding results and resources
- The generalizations regarding efforts within the business and their cost.
- Result area identification
- Nothing succeeds like concentration on the right business.
- The basic business analysis
- Identify & understand those areas in a business for which results can measured
- Defining the product/service
- Three dimensions of business results
- The burden of pushing through the step-by-step process of analysis
- Revenues, resources, prospects
- Relate result areas to the revenue contribution and share of cost burden
- Allocation of key resources to each result area.
- Leadership position and prospects of each result area.
- Tentative diagnosis of result areas
- Classify the result area
- Factors involved in diagnosing the product
- What to do with a result area diagnosed as…
- Analysis format
- Anticipate a change in the character of a product
- Cost analysis
- What matters about costs
- Prerequisites for effective cost control p.69
- To be able to control cost need an analysis that:
- Tied to market analysis before action
- Market analysis
- The marketing realities
- These marketing realities lead to one conclusion
- The market analysis
- Market analysis is a good deal more than ordinary market research or customer research
- Other books
- Analytical questions
- Analysis worksheets
- Knowledge analysis
- Need a leadership position and differentiation
- Uncovering one's specific business knowledge strengths
- Need to learn to set goals and measure in terms of one's specific knowledge
- Knowledge realities
- Evaluations (diagnosis)—how good is our knowledge?
- The conclusions
- Combining the various analysis
- Market analysis --> knowledge analysis: Needs for new or changed knowledge.
- Knowledge analysis --> market analysis: Missed or underrated market opportunities.
- Reexamine tentative diagnois in light of the market and knowledge analysis
- What is lacking (3 gaps)
- The end result of the self-analysis
- The business's contribution
- Knowledge area excellences
- Target result areas
- Vehicles required to reach these targets
- The leadership position required in each result area
- Focus on opportunity
- Building on strength
- Ideal business concept
- Maximizing opportunities
- Maximizing resources
- What these approaches have in common
- The three together (what they do)
- Finding business potential
- Restraints & limitations
- Imbalances—turning weaknesses into strengths
- Making the future today
- The future
- The future that has already happened
- Making the future happen (the power of an idea)
- Performance program
- Key decisions
- Idea of the business
- The specific excellence the business needs
- The priorities
- The key decisions must be made systematically.
- What ever a company's program, it must
- Decide on the right opportunities and right risks
- Decide on scope & structure
- Decide between "building one's own" & "buying" to attain one's goals.
- Decide on organization structure
- Implementing the program
- Building economic performance into a business
Peter Drucker: Conceptual Resources
The Über Mentor
A political / social ecologist
a different way of seeing and thinking about
the big picture
— lead to his top-of-the-food-chain reputation
about Management (a shock to the system)
“I am not a ‘theoretician’; through my consulting practice I am in daily touch with the concrete opportunities and problems of a fairly large number of institutions, foremost among them businesses but also hospitals, government agencies and public-service institutions such as museums and universities.
And I am working with such institutions on several continents: North America, including Canada and Mexico; Latin America; Europe; Japan and South East Asia.” — PFD
List of his books
Large combined outline of Drucker’s books — useful for topic searching.
“High tech is living in the nineteenth century,
the pre-management world.
They believe that people pay for technology.
They have a romance with technology.
But people don't pay for technology:
they pay for what they get out of technology.” —
The Frontiers of Management