The Daily Drucker: March 5 – Managing for The Future

Prediction of future events is futile

The starting point to know the future is the realization that there are two different, though complimentary, approaches:

·         Finding and exploiting the time lag between the appearance of a discontinuity in the economy and the society and its full impact – one might call this anticipation of a future that has already happened.

·         Imposing on the yet unborn future a new idea that tries to give direction and shape to what is to come.  This one might call making the future happen.

The future that has already happened is not within the present business; it is outside: a change in society, knowledge, culture, industry, or economic structure.  It is, moreover, a major trend, a break in the pattern rather than a variation within it.  Looking for the future that has already happened and anticipating its impacts introduces new perception in the beholder.  The need is to make oneself see it.  What then could or should be done is usually not too difficult to discover.  The opportunities are neither remote nor obscure.  The pattern has to be recognized first.

Predicting the future can only get you in trouble.  The task is to manage what there is and work to create what could and should be.

ACTION POINT:  Spot a discontinuity in the economy or society that has appeared and presents an opportunity for your enterprise.  Determine how long it will take for this change to impact the business.  Develop a business plan to cash in on this insight.

Managing for Results

Quoted from The Daily Drucker, page 73

The Daily Drucker: March 4 - In Innovation, Emphasize the Big Idea

Innovative ideas are like frogs' eggs: of a thousand hatched, only one or two survive to maturity.

The innovative organization understands that innovation starts with an idea.  Ideas are somewhat like babies - they are born small, immature, and shapeless.  They are promise rather than fulfillment.  In the innovative organization executives do not say, "This is a damn-fool idea."  Instead they ask, "What would be needed to make this embryonic, half-baked, foolish idea into something that makes sense, that is feasible, that is an opportunity for us?"

But an innovative organization also knows that the great majority of ideas will turn out not to make sense.  Executives in innovative organizations therefore demand that people with ideas think through the work needed to turn an idea into a product, a process, a business, or a technology.  They ask, "What work should we have to do and what would we have to find out and learn before we can commit the company to this idea of yours?"  These executive know that it is as difficult and risky to convert a small idea into successful reality as it is to make a major innovation.  They do not aim at "improvements" or "modifications" in products or technology.  They aim at innovating a new business.

ACTION PLAN: Make a list of your three best ideas.  Then make a list of key pieces of information you need to know and the major work that needs to be done before these ideas can blossom into a new business.  Now pursue the best idea, or if none is practical, start again.

The Frontiers of Management

Quoted from The Daily Drucker, page 72

The Daily Drucker: March 3 - Knowledge External to the Enterprise

The technologies that are likely to have the greatest impact on a company and an industry are technologies outside its own field.

Many changes that have transformed enterprises have originated outside the specific industry of that enterprise.  Here are three notable examples.  The zipper was originally invented to close bales of heavy goods, such as grain, particularly in seaports.  Nobody thought of using it for clothing.  The clothing industry did not think it could replace buttons.  And the inventor never dreamed it would be successful in the clothing industry.

Commercial paper (that is, short-term notes, originated by non-bank financial institutions) did not originate with banks, but had a tremendous negative impact on them.  Under U.S law, commercial paper is considered a security, which means that commercial banks cannot deal in it.  Because financial services companies, such as Goldman Sachs, Merrill Lynch, GE Capital, and so on, discovered this, they have largely replaced commercial banks as the world's most important and leading financial institutions.  

Fiberglass cable, the invention that has revolutionized the telephone industry, did not come out of the great telephone research labs in the U.S.. japan, or Germany.  It came, rather, from a glass company in Corning.

ACTION POINT: Identify at least one change that has originated outside your industry that either has transformed or has the potential to transform your enterprise.  Look for ideas in other industries that can be used profitably in your industry.

Management Challenges for the 21’st Century

From data to Information Literacy (Corpedia Online Program)

Quoted from Daily Drucker, pg 71

The Daily Drucker: March 2 - Test of Innovation

Measure innovations by what they contribute to market and customer.

The test of an innovation is whether it creates value.  Innovation means the creation of new value and new satisfaction for the customer.  A novelty only creates amusement.  Yet, again and again, managements decide to innovate for no other reason than they are bored with doing the same thing or making the same product day in and day out.  The test of innovation, as well as the test of "quality," is not "Do we like it?"  It is "Do customers want it and will they pay for it?"

Organizations measure innovations not by their scientific or technological importance but by what they contribute to the market and the customer.  They consider social innovation to be as important as technological innovation.  Installment selling may have had a greater impact on on economics and markets than most of the great scientific advances this century.

ACTION POINT: Identify innovations in your organization that are novelties versus those that are creating value.  Did you launch the novelties because you where bored with doing the same thing?  If so, make sure your next new product or service meets your customer's need.

The Frontiers of Management

Management Challenges for the 21’st Century

Quoted from The Daily Drucker: Pg 70

The Daily Drucker: March 1 - The Change Leader

The most effective way to manage change successfully is to create it

One cannot manage change.  One can only be ahead of it.  In a period of upheavals, such as the one we are living in, change is the norm.  To be sure, it is painful and risky, and above all it requires a great deal of very hard work.  But unless it is seen as the task of the organization to lead change, the organization will not survive.  In a period of rapid structural change, the only ones who survive are the change leaders.  A change leader sees change as an opportunity.  A change leader looks for change, knows how to find the right changes, and knows how to make them effective both outside the organization and inside it.  To make the future is highly risky.  It is less risky, however, than not to try to make it.  A goodly proportion of those attempting to will not succeed.  But predictably, no one else will.

ACTION POINT:  Anticipate the future and be a change leader.

Management Challenges for the 21’st Century

 Managing in the Next Society

 

Quoted from The Daily Drucker, pg 69

The Daily Drucker, February 29 - Understanding What the Customer Buys

What does the customer consider value?

The final question needed in order to come to grips with business purpose and business mission is: "What is value to the customer?"  It may be the most important question.  Yet it is the one least often asked.  One reason is that managers are quite sure that they know the answer.  Value is what they, in their business, define as quality.  But this is almost the wrong definition.  The customer never a product.  By definition the customer buys the satisfaction of a want.  He buys value.

For the teenage girl, for instance, value in a shoe is high fashion.  It has to be "in."  Price is a secondary consideration and durability is not value at all.  For the same girl as a young mother, a few years later, high fashion becomes a restraint.  She will not buy some thing that is quite unfashionable.  But what she looks for is durability, price, comfort and fit, and so on.  The same shoe that represents the best buy for the teenager is a very poor value for her slightly older sister.  What a company's different customers consider value is so complicated that it can be answered only by the customers themselves.  Management should not even try to guess at the answer - it should always go to the customers in a systematic quest for them.

ACTION POINT: What do your customers consider most valuable about the product or service you provide?  If you don't know, find out.  If you do know, ask your customers if you are delivering.

Management: Tasks- Responsibilities-Practices

Quoted from the Daily Drucker, 29 February, pg 65