“Executives spend more time on managing people and making people decisions than on anything else, and they should. No other decisions are so long-lasting in their consequences or so difficult to unmake. Executives who do not make the effort to get their people decisions right do more than risk poor performance.They risk their organization’s respect.”
–Peter DruckerTo make more effective promotional and staffing decisions,managers should:1.
Think through the assignment
– and realize the requirementswill evolve over time. Therefore, choose the right person forthe future, not the past.2.
Look at a large number of potential applicants
– at a veryminimum at least three to five qualified people.3.
Look for strengths, not weaknesses
– since you cannot buildfuture performance on weaknesses.4.
Discuss with each candidate the people who have worked with them
– to see whether or not they have the ability to buildfuture leaders and managers.5.
Take the time to explain the job fully and follow-up three or four months later
– since the things a person does to get the job will be entirely different to what they need to be doingonce they’ve been in the role for three months or longer.
“The all but universal belief that large businesses do not and cannot innovate is not even a half-truth; rather it is a misunderstanding. It is not size that is an impediment to entrepreneurship and innovation: it is the existing operation itself, and especially the existing successful operation.Entrepreneurship and innovation can be achieved by any business. But they must be constantly striven for. They can be learned, but it requires effort. Entrepreneurial businesses treat entrepreneurship as a duty. They are disciplined about it...they work at it...they practice it.”
–Peter DruckerBusiness managers can create an entrepreneurial climate by:1.
Allowing new businesses to be organized separately from the existing
– providing focus and attention.2.
Assigning someone in top management to champion new businesses
– to avoid them being ignored.3.
Keeping the financial analysis distinct
– removing the usualreturn-on-investment analysis which will apply to existingbusiness lines.4.
Having separate management teams
– since innovation willnever be a high priority for anyone charged with running andoptimizing an existing business operation.5.
Avoiding acquiring small entrepreneurial ventures
– sincethe existing management will rarely stay on.6.
Looking for innovations in the same field as the existing business
– to take advantage of the existing competencies,know-how and expertise. Smart businesses innovate infields they already understand.
“Asked what a business is, the typical businessman is likely to answer, ‘An organization to make a profit.’ The typical economist is likely to give the same answer. This answer is not only false, it is irrelevant. To know what a business is, we have to start with its purpose. Its purpose must lie outside the business itself. In fact,it must lie in society since business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. And because its purpose is to create a customer, the business enterprise has two – and only these two – basic functions: marketing and innovation.”
–Peter DruckerTo be successful in creating customers, a business needs to setobjectives in eight key areas:1.
– where the business will concentrate its effortsand its desired market share and positioning.2.
– essentially where the business should be interms of new products or services, marketplace innovation oracquiring new skills to bring different products to market.3.
– what kind of people the business wantsto attract and retain.4.
– what kind of business proposal isrequired to attract, structure and retain the capital needed.5.
– the anticipated needs of the business inorder for it to succeed in creating customers.6.
– how land, labor and capital will be used bycomparison with other units of the same business or peers.7.
– creating the perception in society atlarge and the economy that the business is doing somethingnecessary, useful and productive.8.
– projecting a needed minimum level ofprofitability which will address the risks and effort involved inkeeping the business in operation.
“Profit planning is necessary. But it is planning for a needed minimum profitability rather than for that meaningless shibboleth ‘profit maximization’. The minimum needed may well turn out to be a good deal higher than the profit goals of many companies,let alone their actual profit results.”
The Essential Drucker - Page 2
1Getting people decisions right.
4The four key entrepreneurial strategies.Businesses have one purpose: to create customers.3All businesses should have an entrepreneurial mind-set.21Getting people decisions right is a management task.Drucker on ManagementGood management serves a social function and is art.510The kind of information managers really need.The three key dimensions of management.67What the nonprofits teach about management.8The social responsibilities of a business.Challenging the basic assumptions about business.911The true role of management by objectives.12The key challenges for new business ventures.
The entrepreneurial business mind-set.2
Businesses exist to create customers.3