Search
Related Links

 

 

Informative Articles

Avoid the Three Biggest Financial Pitfalls
For the average person and/or family, the three biggest financial pitfalls to avoid are new vehicles, credit car interest, and short-term loans. Any and all of these can drain a person's or family's coffers of much needed funds. At best, they...

Déjà Vu, All Over Again (And Again…)
During every correction, I encourage investors to avoid the destructive inertia that results from trying to determine: "How low can we go?" and/or "How long will this last?" Investors who add to their portfolios during downturns invariably...

Forex Trading
Forex trading has been growing rapidly among day traders since the 1990s, as day traders have seen the advantages that trading currencies can have over trading stocks. However, since there are fewer currencies for beginners to purchase over the...

Rocket Investing: Stock Market Research Advice
The stock market is not a black hole. People come out of it successful, business savvy and rich! Here are 5 things you must remember to conquer the investing black hole: 1. Be resourceful. The key to investing is knowledge: know anything...

Ten Fatal Flaws Frequently Found from the Podium
1. No clear purpose for the presentation. What is the point and focus of the speech? 2. Not starting and stopping on time. Be flexible and be able to cut the talk short if asked. Be in control. 3. Not dressing appropriately. Always be a...

 
What if Peter Drucker were your CEO

Now and again, I find it healthy for my business thinking to exercise an imponderable. I get to consider problems and opportunities in an entirely different manner. It's an exercise that stretches and challenges my present business logic and forces me to think on a more strategic level. Such is the case as I ponder what Peter Drucker, renowned business guru and ‘father of modern management', would do differently if he became CEO of a company in today's environment. What approach would he use? Would his business acumens and tenants play in today's rough and troubled business climate? What pearls-of-wisdom would I glean by reviewing his books and articles? What would he do differently that makes a difference?

Peter Drucker has impeccable credentials. Educated in Austria and in England, he holds a doctorate in Public and International Law from Frankfurt University in Germany. He has been honored with many national and international awards citing his continuing and significant contributions to society, economics and businesses. A prolific writer and solid thinker he has written numerous articles on economics, politics and management that, some say, are as relevant today as they were when first written - some more than 25 years ago. With over 30 books to his credit, his insights and views on business and economics have influenced the thinking of top management from fortune 500 companies to private enterprises for the past 5 decades. Always fresh in his thinking, at 92 years of age, he still dispenses solid business advice.

Peruse just a few of Drucker's writings and it quickly is apparent that he doesn't mince words - his thinking is strong, and served straight up! Basic to his thought process is that enterprises are developed to create wealth, not control costs. Yet, traditional business measurements are woefully inadequate for management to perform the firm's basic responsibility - create shareholder wealth! Drucker's view is that management's key responsibility is to help workers to achieve (productivity) and to maximize corporate assets (move capital to most productive use - see: Marketing Tip #407 increase asset productivity). Most enterprises don't know how to accomplish this because they don't have the tools that timely provide the information necessary to make informed decisions.

After years of practicing, and refining his business thinking, Drucker developed key tools top management will benefit from, if used. Each area brings focus and information to senior managers enabling them to make more informed decisions. There are three categories: baseline information, productivity information, and competency information.

I found them to be thought provoking and worthy of your review. For lack of a better term, I call them Drucker's executive tool kit. After you read on, you may want to compare your business metrics to these and see where you might benefit.

 Baseline information - These are very traditional measurements and metrics. They might include cash flow, inventory, revenue, profits, receivable, etc. Fairly routine financial information, needed to run any operation, and easily understood by the financial community, but not material enough, or timely enough (most metrics are lagging indicators) to help senior managers make investment decisions or productivity audits. Although these basic metrics are important, more ‘leading' indicators are required. Which brings us to the next tool.

 Productivity information - This portion of the tool kit is vital and includes metrics that deal with the productivity of significant resources. A business must make visible the productivity of the labor pool - both manual and knowledge-based workers. However, this doesn't tell the whole story. Measuring productivity requires more than a traditional P&L statement. Today's astute business leaders recognize that profit may or may not


create shareholder wealth. That until profit covers the cost-of-capital the enterprise operates at a loss. Businesses must implement metrics such as (EVA) economical value add (see: Marketing Tip #407 EVA - drive more value into your business!) which is better at providing the enterprise with a cleaner picture of its performance in creating or destroying shareholder wealth.

EVA fundamentally measures the value added over all costs, including the cost of capital. This provides a simple, easy method for non-financial managers to understand if their decisions regarding programs and investments make economic sense to the enterprise. EVA metrics can also improve the effectiveness of compensation or bonus programs normally used to enhance worker productivity. EVA allows a business to objectively determine if the task (programs, new product, etc.) creates or destroys shareholder value.

 Competence information - Perhaps one of the more esoteric of measurements Drucker talks about, but none-the-less equally as important is competence information. A business must find ways to measure and constantly analyze their core competence. At minimum, businesses should do this as a part of their yearly planning exercise. Marketing folks call it a SWOT analysis - strengths, weakness, opportunities and threats. However, I would suggest quarterly would be more appropriate. The core competency of any business determines its ability to be a market leader. In other words leadership is the ability to do something other companies in your field cannot or find extremely difficult. Core competency blends together customer value with the enterprises' special ability to produce or service customers better than any competitor.

Companies that already get this point use benchmarking as a tool to determine trends in core competency. They determine what their special ability is and objectively compare it to direct and emerging competitors. On-going analysis (monthly is not unusual for certain companies) track and trend what is working and not working in the market place. What works should be straightened. What doesn't work needs further review, and may provide an indication that your customers are losing value in your offering or finding degradation in your core competency. Either way, it becomes an early warning that a change is occurring in your targeted customers' valuation of your product or service. You may then, more effectively, redirect corporate assets to meet this threat. This brings added opportunity and continued leadership.

Final Thoughts
Peter Drucker as the CEO. Of course it can't happen, but it stimulated me into thinking of possibilities that I may not have otherwise thought about. There is no ‘silver-bullet' that magically transforms your business, but hopefully this article presented a thoughtful blend of Drucker's wisdom, experience, and knowledge wrapped in his pragmatic approach and directed at motivating you to focus on creating shareholder wealth.

You might find a new book from John E. Flaherty, Peter Drucker: Shaping the Managerial Mind - How the World's Foremost Management Thinker Crafted the Essentials of Business Success worth the read. It helped to shape some of my thoughts as I wrote this piece.

Drucker is quoted as saying, "Efficiency is doing things right; effectiveness is doing the right things. " Which is your business doing and what measurements are you using that give you this truth?




About the Author

Frank Williams is a marketer and astute businessman. With many post graduate courses in management, leadership, marketing and technology to his credit, Williams is widely respected speaker, author and technologist. He has significant knowledge in marketing strategies and sales development programs and is the founder and CEO of Global Marketing, Inc. - a leader in business, marketing and sales consulting

 

 

 

Content Menu
  • 10 reasons to start a home business

  • 10 things you will like about a home based business

  • 18 caveats on how not to change

  • 5 common free agent myths

  • achievers interview with david showalter

  • adam smith the real life grinch who stole christmas and won

  • advance your nursing career work as an independent nurse contractor

  • all aboardeveryone going global

  • alternative retirement income options in 2005

  • and you can quote me

  • an honest look at your business

  • audio marketing comes of age educate first and sales will follow

  • avoid the three biggest financial pitfalls

  • a hitchhikers guide to the internet

  • balancing your priorities with your search for at home work

  • basics about writing a business plan

  • beginners guide to blogging

  • being other focused

  • benefits of using freelance consultants trainers for your projects

  • ben franklin didnt quite get it right

  • ben franklin didn t quite get it right

  • beyond budgeting a new approach to annual budgets

  • be a pest make money

  • biweekly mortgage

  • blogging for business

  • blogosphere networking

  • book summary nice girls dont get the corner office 101

  • bridging the gap dont forget your core customers

  • bridging the gap don t forget your core customers

  • building better teams through executive coaching

  • business like image

  • business planning myopia

  • business plan basics

  • can nurses be entrepreneurs

  • career management in a jobless economy

  • change or reinforce

  • christian business opportunities bring relief to your daily routine

  • coaching generation x

  • computer business opportunity provide huge profit potential

  • could a roth ira be better than a 401 k

  • creative strategies for brainstorming for business success

  • crm

  • dance on your brain tonight for a better tomorrow

  • decisions how close are you to a 100 strike rate

  • dej… vu all over again and again

  • dont fall for email scams

  • downtown san diego condo market is ideal for investors

  • do you have the global entrepreneurial spirit

  • entrepreneur runs list sales company from office in his home

  • eq at the office

  • executive coaching and the american president

  • factors to make or break your home business and home business residual income streams that work

  • filling the data leaks the importance of digital asset protection

  • finding the purpose in online networking groups

  • five questions to ask yourself before launching a new business

  • five questions to ask yourself before starting a new business

  • forex trading

  • freelancers your job away from job

  • fun with credit cards

  • going against the conventional investment wisdom

  • going mobile part 1 wireless phone service for your home business

  • going mobile part 2 how to get in on the wireless revolution without credit checks or 2 year commitments

  • going mobile part 3 finding the perfect wireless phone

  • good first impressions count when you mean business

  • good news in our brave new world

  • google slavery old habits die hard

  • hey that was my idea corporate games for a rainy day

  • home business

  • home business solutions 60 minute money

  • how corporations can use real estate to access untapped capital

  • how to get a visa mastercard with no credit check

  • how to get that promotion

  • how to increase your chance of promotion at work

  • how to make money working from home

  • how to share your home office with a sick child

  • how to use an hr consultant

  • how to use emotion in stock trading

  • how your new years eve bash can grow your career

  • important considerations when setting up a profitable home business and a handful of work from home income streams that are quick simple to set up

  • independent rn contractors are taking the nursing profession

  • index

  • innovative entrepreneur ideas

  • investors look for the real estate sweet spots

  • is it boys vs girls on the internet

  • is there any money left in currency trading

  • is the medicalcare system still a disaster in us

  • its high time for lifetime savings accounts

  • know your career goals

  • leadership by persuasion four steps to success

  • learn the art of dynamic leadership

  • life is short love what you do do what you love

  • looking for a change

  • madeline hill senior community pioneer

  • maintaining your motivation

  • make or break home business tips and home based residual incomes that work

  • make your career offshore proof

  • managing project risks part 1 dont be snared by these 6 common traps

  • managing the human resource project

  • marketing your home business in just 30 minutes a week

  • mlm success training why some people become wealthy in network marketing and others dont

  • my identity crisis

  • narcissism in the boardroom

  • narcissism in the boardroom part ii

  • new mobile applications shock market part 1 of 2

  • new years resolutions for your home business

  • new year s resolutions for your home business

  • nine sure fire ways to boost your career

  • no plan no cash back to square one

  • office politics

  • offshore investing leveraging overseas trading

  • oil demand and the effects on the global stock market

  • organizational political savvy

  • paid surveys and focus groups maximize your online income with these tips

  • political selling 101

  • preparing for change during international expansion

  • present like a pro ten ways to wow your audience

  • print and modern thought

  • problogging making money from blogs

  • professional relationship blueprints

  • profiles of the powerful advertising exec steve grasse

  • qualities of a winner

  • reloading the matrix with jada mrs smith that is

  • remember its the world wide web

  • retire debt free

  • rocket investing stock market research advice

  • roi on the 8 step coaching model

  • rotator

  • sales force of the future its not about selling

  • self publishing at the speed of thought

  • sell you with your small talk yes you can

  • several red flags for spotting a phony or scam

  • six of one half a dozen of the other

  • speak with es part 1

  • speak with e s part 1

  • sports betting as an alternative investment

  • succeed the natural way

  • succession planning not on my watch

  • success in the import export business

  • surviving corporate politics

  • surviving corporate politics part 2 keeping up appearances

  • surviving corporate politics part 3

  • talk the talk

  • tax reform my way

  • ten fatal flaws frequently found from the podium

  • theodore roosevelt the original rough rider

  • the advantages of having a home business

  • the benefits of using freelance consultants trainers for your next project

  • the biggest oil opportunity in the world and how you can profit from it

  • the business meeting

  • the fabric of economic trust

  • the fairness of office politics integrity and political motivation

  • the macedonian lottery

  • the musketeer approach

  • the perfect project manager

  • the real story of the little engine that could

  • the sickly state of public hospitals

  • the top 10 brainstorming techniques for business success

  • the top 10 strategies for moving into action and for getting bottom line results

  • the ultimate career builder

  • the wages of science

  • the wages of science part ii

  • think outside the box home business ideas

  • three common deadly mistakes made in job interviews

  • throw out the lifeline

  • time to think outside the box

  • tired of jumping jobs

  • top 10 ways to handle problem co workers

  • top ten brainstorming techniques for business success

  • to get free publicity think local

  • to grow out of unemployment

  • triple the response of your ales letters by harnessing the mysterious power of mind reading

  • trust in a digital economy

  • uncovering soul in the workplace

  • wearing your politics on your sleeve

  • what if peter drucker were your ceo

  • what shes got five essential traits of web wonder women

  • what work at home moms can learn by watching the apprentice

  • when politics prevent innovation

  • when the levee breaks a selfish look at the financial effects of katrina and how many more fuel increases we can take

  • whose goals are they

  • why demo fx account performance is often better than real account performance

  • why dont they just get it done 7 performance tactics for ceos

  • why is it more profitable for an indian to take up work at home business

  • why the internet is an entrepreneurs dream

  • why would anyone hold a bad meeting

  • why would anyone want to hold a bad meeting

  • winning the credit game

  • work from home office policies

  • worse than tsunami trade protectionism hurts third world citizens

  • youre the boss