The direct route will usually lead to the strongest opposition
Photo: Wikipedia
Drucker did not believe in “portfolio management” or any quantitative analysis by itself as the basis for strategy. Either could lead to profit maximization or corporate acquisition as primary goals which he did not recommend. He did note that business organizations operate on a “theory of business” in which strategy results in desired goal achievement in environments in the future which may not be identical with those existing today. And in this way, he distinguished planning from the strategy used as a part of the plan.
Strategy not by Formula
Drucker did not believe in developing strategy by formula. He avoided “portfolio management.” including the Boston Consulting Group’s four-celled matrix, and other formula methods based on analysis of quantitative data and conditions in the past. He pointed out that while BCG’s matrix led to growth, this growth could also lead to failure because it encouraged size and acquisition of new markets, even if the organization provided no advantages under these new conditions. While a purely quantitative analysis led to strategies of maximum profitability through pricing with an “all the market will bear” philosophy, it attracted competition, did not serve society, and frequently failed.
Drucker’s Approach to Strategy
Drucker looked at a company’s objectives and whether they matched the business in which the company was engaged and what their business should be, who would be their customers, what their customers wanted, and did not ignore if their business contributed to society. This information was needed as it affected strategy. Also needed were knowledge of events that had occurred that could affect strategy. He called these “business certainties.” Positive or negative, the “certainties” were important because of their potential impact. He combined certainties with recognition of company personnel and resources both available and lacking in the business, not ignoring ethical leadership, which he said would determine 50% of results, on any endeavor.
Increasing international competition was one “certainty” of importance which was often overlooked. For example, Drucker foresaw the demand for foreign automobiles in the U.S. long before this occurred. In the late 1950’s American automobile manufacturers knew that foreign competitors were acquiring the capability of producing high quality, fuel efficient, low cost cars. As quality increased, their lower labor costs could lead to serious competition. This threat was mostly ignored until it began with serious consequences to American companies.
Necessary Questions for Strategy Development
Drucker recognized that any strategy had to consider the answers to four basic questions:
1.What opportunities the organization wants to pursue and what risks it is able and willing to accept.
2.The scope and structure of the strategy, including the right balance among specialization, diversification, and integration.
3.Acceptable trade-offs between time and money between in-house execution versus merger, acquisition, joint venture, or other means to reach an objective.
4.The organizational structure appropriate to economic realities, opportunities, and performance expectations.
The Drucker Method of Strategy Development
Since Drucker promoted analysis and reasoning rather than fixed gimmicks for strategy development, I integrated his approach with that of strategists spanning more than 7000 years of recorded history and representing a wide variety of situations. This was unfortunately only completed as Drucker’s health began to fail. As a result, although I intended to get his feedback, the project wasn’t completed in time for his review.
However, I saw that what Drucker did was to integrate goals and objectives with the variables of the situation and the resources needed along with judgment based on observation. I knew his judgment involved principles of strategy, many of which he had not documented and some of which he may not even have been aware that he was applying. I was familiar with many principles of strategy from my reading of recorded history but knew that strategies from many were not applicable to business.
As I analyzed these principles, I found that some were too specific to other endeavors and others outdated and required revision. Eventually, I produced a list of ten principles. They were the distillation from the thinking of many strategists in many areas and but all were consistent with Drucker’s ideas.
1- Commit to a Definite Objective
Drucker made it clear that the definite objective was what the business should be. This is why he devoted so much importance to defining it. You can’t get to where you are going until you know exactly what any desired destination is. So, an objective must be exactly defined, and everyone in the organization must be committed fully to it. This commitment is not only important for other elements of the strategy, but also to gain and maintain the commitment of all those in the organization.
2-Seize the Initiative and Keep It
There are many instances where individuals have promising ideas, but delay developing them or bringing them to market. Frequently they never do and someone else does and is successful. Or maybe they do, but someone else does this sooner. This principle says you must take the initiative and maintain it. Drucker emphasized action. It’s not enough to have a great idea, you must act on ideas for them to mean anything.
3– Economize to Concentrate Resources Where and When Most Needed
You can’t be strong everywhere because resources will always be limited. Consider time. We all get the same amount, but some waste a good deal and spend it in areas not impacting as strongly on the goals sought. The idea is to economize where your efforts and resources are not critical and use resources where they are. You must concentrate superior resources at the decisive point in the situation.
4- Keep Your Positions Flexible
To achieve any strategic objective, you need to position and alter positions due to environmental and other unexpected changes. You may need to modify your approach and your positioning, even as you continue to work toward an objective. That’s why if what you are doing isn’t working, besides being persistent, you need to alter your strategy. It’s true that persistence is a valuable factor in reaching any goal. However, maintaining a faulty strategy in pursuit of a goal is irrational.
5– Do the Unexpected
It is frequently effective to do the unexpected, especially in facing strong competition. This principle can also be applied to concerning customers, so long as the surprise is beneficial to them. It is why some organizations grew and are still growing despite the pandemic while due to a failure to make changes and other factors, many in the same business fail.
6- Keep Things Simple
Someone once speculated that if all the parts in one of NASA’s rockets were 90% reliable, the rocket would fail 50% of the time. The more things that can go wrong, the more will go wrong. If you want less failure, keep your strategies simple, requiring fewer actions and uncomplicated.
7- Multiple Simultaneous Alternatives
Since some actions will fail regardless of effort, you should always have alternative backup alternatives prepared.
8– Take the Indirect Route to Your Objective
Moving directly against any human thought or endeavor arouses opposition. People tend to hold on even more strongly to their previously held notions or position. For example, no one likes to be sold anything. However, most are eager to take advantage of a bargain. The difference is subtle, but the results can be decisive. The direct route will usually lead to the strongest opposition. The same principle holds true in a situation where there is competition that must be faced, and this principle should be recognized in your strategy. This concept was promoted by B.H. Liddell Hart, a military strategist who emphasized the indirect approach over the frontal assault in warfare.
9-Prctice Timing and Sequencing
The Bible asserts that there is a time for every purpose under heaven. These words even appeared in a popular song by Pete Seeger in 1962. Implementing the “riht” strategy at the wrong time or in the wrong sequence can be just as ineffective as if the strategy is completely wrong. You’ve heard the saying, “he was ahead of his time.” Yet, someone with the same idea at the right time may be extraordinarily successful. Bottled water is very successful today. Still, thirty years ago, the idea of anyone paying money to purchase drinking water, except from Lourdes or a similar source, would probably have failed.
10- Don’t Hesitate in Exploiting Success
Don’t stop or slow down in achieving your objectives. Not staying well ahead of your competition is simply giving your competition the opportunity to catch up and surpass you.
Developing Strategy Based on Drucker’s Concepts
Decide on what business you are in and what the business should be in the future
Initiate the process of creating the organization’s future
Get the information you need and decide what events that have already occurred mean for the future
Bring together the fixed certainties, the resources required, and the principles of strategy
Decide on action steps to implement the strategy
Take Action
*Adapted from chapters in The Art of the Strategist (AMACOM, 2004) and Drucker on Leadership (Jossey Bass, 2010), both by William Cohen and syndicated internationally.
*In Photo: Sir Basil Liddell Hart
*הכותב ד"ר ביל כהן הנו מומחה בתורת המנהיגות. ד"ר כהן הינו מייג’ור גנרל בדימוס בחיל האויר האמריקאי, בעל תואר דוקטור בניהול מאוניברסיטת קלרמונט. כתב למעלה מ- 50 ספרים שתורגמו ל- 22 שפות בנושאי ניהול ומנהיגות. ביל כהן שימש כיועץ בעמדות בכירות וכמרצה באוניברסיטאות הטובות בארה”ב בינהן ביה”ס לניהול באוניברסיטת קלרמונט וב-UCLA. בנוסף, הוא מעביר הרצאות וסמינרים בנושא מנהיגות בכל זרועות הצבא האמריקאי ובאקדמיה הצבאית וזכה בפרסים על הרצאותיו בעולם. מעבר להיותו גנרל בצבא ארה”ב, ד”ר כהן הנו בעל דרגת רב סרן בחיל האויר הישראלי והשתתף בקרבות אוויר במלחמת יום כיפור. שימש בתפקידי ניהול בכירים במספר חברות וכיהן כנשיא של שתי אוניברסיטאות פרטיות. ביל כהן היה חבר דירקטוריון במספר מועצות מנהלים ומועצות סחר עירונית, ממשלתיות ושל תאגידים שונים.ביל כהן היה תלמידו הישיר לדוקטוראט של פיטר דרוקר אבי תורת הניהול המודרנית שאמר עליו בין היתר כי ” ביל כהן היה סטודנט אשר אני והקולגות שלי למדנו ממנו לפחות כפי שיכולנו ללמד אותו”.
ד"ר ביל כהן הוא נשיא המכון לאמנות המנהיגות, מייסד ונשיא לשעבר של המכון ללימודי ניהול מתקדם בקליפורניה CIAM וחבר בצוות המומחים של קבוצת ד"ר עדנה פשר שות'
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