Womack Report

Getting fired up in here.  Network connection isn’t working well.Talking about Drucker today.

Peter Drucker was born in 1909, died in 2005.  Father of Modern Management.

Had a huge impact on Jack Welch at GE.  Highly respected for his work in the management field.

Drucker introduced the concept of decentraliation to business.  Was the first to assert that workers should be treated as assets, not as liabilities to be eliminated.  Originated the view of the corporation as a human community built on trust and respect for the worker, not just profit for the firm.

Emphasized that there is no business without a customer, which has hugely affected marketing.  First to argue for the importance of substance over style, for institutionalized practices over charismatic leaders.  First to write about the importance of knowledge workers, long before anyone knew or understood how knowledge would trump physical material as valuable capital.

Drucker’s Approach

• Drucker made “Observation” his life’s work.
• He gleaned deceptively simple ideas that often elicited startling results.
• For 50 years, he trained his intellect on “helping firms obtain lofty possibilities”
• Showed the ability to discern trends, sometimes decades before they were visible to anyone else.
• Never brought CEOs clear, concise answers to their problems.
• He framed questions that could uncover the larger issues standing in the way of performance.  Typically told his clients it was his job to ask questions, their jobs to provide answers.

Influence on Jack Welch

• When Welch became CEO of GE, Drucker asked him two major questions.  Credited with changing the course of Welch’s run as CEO.
  • If you weren’t already in the business, would you enter it today?
  • If the answer is no, what are you going to do about it?
• Those questions lead Welch to the Idea that GE had to be #1 or #2 in every industry it participated in.

About Drucker

• Refused to be a media personality.
• Didn’t comment on manuscripts or books
• Wouldn’t join boards or committees of any kind.
• Wouldn’t answer questionaires
• Would not give interviews
• Never would appear on radio or television

Drucker on Leadership:  Don’t say “I”, say “we”.  Think that way.

Drucker on Talent:  Attracting and halding talent are two of the central tasks of management.

Drucker on Problems:  Look forward, for opportunities, instead of focusing on problems.

Drucker on Decisions:  Every decision is risky, because the future is uncertain.

Drucker on Organizations:  Businesses exist to meet the needs/desires of their customers

Drucker gave simple advice; it’s all about people.  Successful enterprises create the conditions to allow their employees to do their best work.

Drucker’s principles for the effective executive:

1. What needs to be done?
   • The answer almost always contains more than one urgent task
   • Don’t splinter yourself on more than two major tasks
2. What is right for the enterprise?
   • Ask “is this right for the enterprise?”, not whether it’ right for owners, stock price, employees, or executives.  Those are factors, but not the whole thing.
   • Asking the right question doesn’t guarantee success, but failure to ask the right question guarantees failure.
3. Develop action plans
   • Executives are doers.  They execute.
   • Define desired results over the next 1.5 to 2 years
   • Statement of intentions, not a straightjacket
4. Take responsibility for their decisions
   • Leader needs to take responsibility
   • Decision has not been made until people know about it.
   • Know who is responsible for making each decision, and who will be affected by those decisions.
   • Do not delay or tolerate negative factors and expect them to solve themselves.
   • Allocate good people to the right positions.  Good people are always too busy, but make sure they’re busy on valuable things.
5. Take responsibility for communicating
6. Focus on Opportunities
   • Problems have to be dealt with, but problem solving controls damage, it doesn’t produce results.
   • You want your best people on opportunities, not problems
   • Change is an opportunity, not a problem
7. Run Productive Meetings
8. Think and Say “We”, not “I”

Effectiveness can be Learned.  Executives are expected to get the right things done.  This is effectiveness.  There is little correlation between high intelligence and effectiveness.

Five Habits of Effective Executives

1. Effective Executives know where their time goes.
2. Effective Executives focus on outward contribution.  Gear work toward greater results, not greater work.
3. Effective Executives build on strengths, their strengths and the strengths of those around.  Do not build on weaknesses.
4. Effective Executives concentrate on the areas where superior performance will produce outstanding results.
   • Set appropriate priorities.
   • First things first, and second things not at all.
5. Effective Executives make effective decisions by using the right steps in the right sequence.  An effective decision is always a judgment based on dissenting opinions rather than consensus on facts.

 

Elements of Effective Decision Making

1. Classify the Problem
2. Define the Problem
3. Specifications of a Decision
4. Decide on What’s Right
5. Build Action into the Decision
6. Evaluate the decision and learn from it.

 

Summary:

1. Management is about human beings.
2. Because management deals with the integration of people in a common venture, it is deeply embedded in culture.  Every manager does the same things, but culture influences how you should do it.
3. Every enterprise is a learning and teaching institution
4. Profitability is not the purpose of, but a limiting factor on, business activity and business enterprise.  It’s not the explanation, cause of, or rationale for business behavior, but rather the test of validity.
5. True marketing starts out with the customer.  Don’t ask “What do we want to sell?”, ask “What does the customer want to buy?”
6. In every single business failure of a large company in the last few decades, the board of directors was the last to know that things were going wrong.  Or, they knew but failed to act.