Managing for Results: Economic Tasks and Risk-Taking Decisions

by Peter F. Drucker

Managing for Results demonstrates Drucker's particular genius for breaking through conventional outlooks and opening up new perspectives for ultimate profits in the world of business. What must be done to make the organization perform, prosper and grow - what the executive, the maker of decisions, must do to move the enterprise forward - is the subject of this book. It will be of great value to students of management as well as executives in industry and commerce, and it deals skilfully and perceptively with economic tasks which every business has to tackle in order to achieve sound performance and economic results.

Genres: Business, Management, Leadership, Nonfiction, Entrepreneurship, Reference, Unfinished

240 pages, Paperback

First published January 1, 1964

About the author

Peter Ferdinand Drucker was a writer, management consultant and university professor. His writing focused on management-related literature. Peter Drucker made famous the term knowledge worker and is thought to have unknowingly ushered in the knowledge economy, which effectively challenges Karl Marx's world-view of the political economy. George Orwell credits Peter Drucker as one of the only writers to predict the German-Soviet Pact of 1939.

The son of a high level civil servant in the Habsburg empire, Drucker was born in the chocolate capital of Austria, in a small village named Kaasgraben (now a suburb of Vienna, part of the 19th district, Döbling). Following the defeat of Austria-Hungary in World War I, there were few opportunities for employment in Vienna so after finishing school he went to Germany, first working in banking and then in journalism. While in Germany, he earned a doctorate in International Law. The rise of Nazism forced him to leave Germany in 1933. After spending four years in London, in 1937 he moved permanently to the United States, where he became a university professor as well as a freelance writer and business guru. In 1943 he became a naturalized citizen of the United States. He taught at New York University as a Professor of Management from 1950 to 1971. From 1971 to his death he was the Clarke Professor of Social Science and Management at Claremont Graduate University.

Reviews

[Omar Halabieh · Rating 5 out of 5]

As the author best puts it: "This is a what to do book. It deals with the economic tasks that any business has to discharge for economic performance and economic results." Of important note is the focus on the ultimate results which Peter stresses as the ultimate measuring stick for any activity the business undertakes.

The book is divided into three main sections. The first one, "Understanding the business", is focused on analysis and understanding. This includes discussing topics such as: revenues, resources, prospected, cost structures, customers etc. The second one, "Focus on opportunity", is focused on opportunities and how to capitalize on them. This includes topics such as: building on strength, business potential. Finally the last section, "A program for performance", focuses on the "conversion of insights...into purposeful performance". This includes discussing: business objective and strategy, organizational structure etc.

A great read on business execution/effectiveness and strategy. What sets this book apart from others is its thoroughness in addressing the various aspects that affect the company's current and future results. Numerous examples of companies are also presented to illustrate the material presented. Highly Recommended!

Below are some excerpts from the book that I found particularly insightful:

1) "There are three different dimensions to the economic task: (1) The present business must be made effective; (2) its potential must be identified and realized; (3) it must be made into a different business for a different future."

2) "...while 90 per cent of the results are being produced by the first 10 per cent of events, 90 per cent of the costs are incurred by the remaining and result-less 90 per cent of the events. In other words, results and costs stand in inverse relationship to each other."

3) "There are several prerequisites for effective cost control: 1) Concentration must center on controlling the costs where they are... 2) Different costs must be treated differently. Costs vary enormously in their character - as do products. 3) The one truly effective way to cut costs is to cut out an activity altogether...4) Effective control of costs requires that the whole business be looked at - just as all the result areas of a business have to be looked at to gain understanding. 5) "Cost" is a term of economics. The cost system that needs to be analyzed is therefore the entire economic activity which produces economic values."

4) "Major cost points fall into four main categories: 1) Productive costs 2) Support costs 3) Policing costs 4) Waste"

5) "Marketing analysis is a good deal more than ordinary market research or customer research. It first tries to look at the entire business. And second, it tries to look not at our customer, our market, our products, but at the market, the customer, the purchases, his satisfactions, his values, his buying and spending patterns, his rationality."

6) "Having reached the end of this self-analysis, the businessman should be able to see what the business is, what it does, and what it can do."

7) "This does not mean that every business has a hidden potential and can turn weaknesses and vulnerabilities into opportunity. But a business that has no potential cannot survive. And a business that fails to search for its potential leaves its survival to chance."

8) "But tomorrow always arrives. It is always different. And then even the mightiest company is in trouble if it has not worked on the future. It will have list distinction and leadership - all that will remain is big-company overhead. It will neither control nor understand what is happening. Not having dared to take the risk of making the new happen, it perforce took the much greater risk of being surprised by what did happen. and this is a risk that even the largest and richest company cannot afford and that even the smallest business need not run. "

9) "Therefore one set of key decisions must be made for the business in all of its dimensions. These decisions are: 1) The idea of the business 2) The specific excellence it needs 3) the priorities."

10) "Whatever a company's program, a) it must decide what opportunities it wants to pursue and what risks it is willing and able to accept. b) it must decide on its scope and structure, and especially on the right balance between specialization, diversification, and integration. c) it must decide between time and money, between building its own or "buying" - i.e., using sale of a business, merger, acquisition and joint venture - to attain its goals. d) It must decide on an organization structure appropriate to its economic realities, its opportunities and its program for performance."

11) "The right structure does not guarantee results. But the wrong structure aborts results and smothers even the best-directed efforts. Above all structure aborts results and smothers even the best-directed efforts. Above all structure has to be such that it highlights the results that are truly meaningful; that is, the results that are relevant to the idea of the business, its excellence, its priorities, and its opportunities."

[Anny · Rating 5 out of 5]

"Doing the right thing is more important than doing the thing right" ーPeter F. Drucker, Managing for Result, Economic Tasks and Risk-taking Decision.
.
This book is a result oriented business bible. An MBA full course in one book. Whether you're building, managing, scaling, pivoting, consulting or working for the business, this book is a must read. It covers all aspect of sustainable businessーthe foundation, analysis, market, management, leadership, entrepreneurship, strategies, key decisions, cost vs revenue, distribution, product and customer development, finding business potential, opportunity for growth, program for performance and valuable human resources.
.
I read Drucker regularly on Harvard Business Review and started to collect any books by him. Such a greatest business and management thinker and his writing is straightforward and fundamentally profound. I literally highlighted every pages on this book. (poor book!)
.
"knowledge is perishable commodity. It has to reaffirmed, relearned, repraticed all the time"ーPeter F. Drucker

[Loïc · Rating 5 out of 5]

“The effective executive” m’avait énormément apporté, j’ai donc décidé de lire cet autre classique de Peter Drucker. Un objectif majeur de “the effective executive” est d’aider chaque collaborateur à contribuer à l’obtention de résultats. Mais qu’est-ce qu’un résultat, en particulier pour une entreprise ? C’est ce qui est abordé dans ce livre, qui est structuré en trois parties :
- L’analyse de l’entreprise et de son environnement
- La concentration sur les opportunités
- La création d’un programme pour la performance

Comment analyser l’entreprise ?
L’analyse de l’entreprise est essentielle pour agir. Peter Drucker présente les principales dimensions à analyser, en soulignant que l’analyse finale doit mettre en cohérence toutes ces dimensions, qui ne doivent pas être considérées séparément.
Il commence par préciser / rappeler que les résultats sont à l’extérieur de l’entreprise, et que par conséquent, tout ce qui est à l’intérieur de l’entreprise génère uniquement des coûts, et non des profits. Ce sont des personnes à l’extérieur de l’entreprise qui décident si ce qui est fait par l’entreprise est pertinent ou non.
Ensuite, il rappelle, comme dans “the effective executive”, qu’il faut se concentrer sur les opportunités, pas sur les problèmes. La résolution de problèmes, bien qu’indispensable, ne produit pas de résultats.
Enfin, les résultats sont obtenus par le “leadership”, pas par la seule compétence ; être compétent n’est pas suffisant pour obtenir des résultats, il faut au moins pour certains aspects, être un leader. Sinon, l’entreprise court le risque de vite devenir marginale, puis in fine de disparaître. Par conséquent, les ressources de l’entreprise étant finies, celle-ci doit choisir où elle veut être leader et concentrer ses efforts.

Les résultats peuvent être obtenus dans trois dimensions : 1) les produits 2) les marchés 3) les canaux de distribution ; souvent, les marchés et les canaux de distribution sont ignorés, et mériteraient une étude et une attention bien plus approfondie.

Les produits peuvent être catégorisés ainsi :
- Today’s breadwinners
- Tomorrow’s breadwinners ; les produits essentiels pour une entreprise, pour lesquels trop peu de ressources sont généralement allouées
- Productive specialties; qui doivent être leaders de leurs niches, doivent produire plus de résultats que leur part, et moins de coûts que leur part
- Development products
- Failures
- Yesterday’s breadwinners
- Repair jobs
- Unnecessary specialties
- Unjustified specialties
- Investments in management ego

Contre-intuitivement, Drucker dit que la meilleure manière de maîtriser les coûts n’est pas de se concentrer sur les coûts, mais de se concentrer sur les opportunités. En effet, un coût n’existe pas en soi ; c’est rapporté aux résultats qu’il prend son sens. En maximisant les résultats, par la maximisation des opportunités, on augmente le ratio résultats / efforts.

Les coûts peuvent être catégorisés ainsi :
- Productive costs. Concentrating resources on opportunities is the only effective way to control productive costs.
- Support costs. What is the least cost and effort that will get by?
- Policing costs
- Waste

Il faut aussi s’efforcer d’analyser l’entreprise “de l’extérieur”, c'est-à-dire du point de vue du client. Cette analyse mène souvent à un changement de prisme : une structuration pertinente du point de vue interne (par ex. des produits proches par leurs procédés de fabrication), ne sera pas du tout pertinente du point de vue du client (les produits sont considérés comme complètement différents).
Tout d’abord, le client ne paye pas pour un produit, mais pour des “satisfactions”. L’entreprise, elle, raisonne en produits.
Il est donc essentiel de chercher à comprendre pourquoi un client agit de manière irrationnelle : bien souvent, le client est tout à fait rationnel, il a juste un point de vue différent. Et comme c’est le client qui produit les résultats, c’est son point de vue qui compte in fine.
L’entreprise ne doit pas oublier d’inclure dans sa définition du client, le canal de distribution. Sans canal de distribution adapté, pas de résultats puisque le produit n’a pas l’occasion d’atteindre le client final.

La connaissance est aussi une dimension clé à analyser, car c’est elle qui crée la différenciation et donc la position de leadership. C’est une notion complexe à définir, qui peut être analysée en posant la question : que faisons-nous facilement, tandis que d’autres (entreprises) n’arrivent pas à le faire ? Il est aussi possible de regarder son histoire : qu’avons-nous réussi (et échoué) à faire dans le passé ?

Comment se concentrer sur les opportunités ?
Drucker présente trois méthodes avec exemples : 1) partir de l’idée de l’entreprise idéale (exemple : General Motors sous Sloan) 2) se demander quelles sont les opportunités qui auront les meilleurs résultats économiques ? 3) la maximisation des ressources (Rotschild)

Les opportunités peuvent être catégorisées ainsi :
- Les remplacements de produits, activités, et efforts qui sont presque au point, par des produits, activités, et efforts qui sont au point
- Les innovations

Les décisions clés suivantes doivent toujours être prises et actualisées :
- L’idée de l’entreprise - en aucun cas, elle ne doit parler des moyens de la réaliser. Elle doit permettre la concentration et la direction des efforts
- L’excellence spécifique requise par l’entreprise - qui en aucun cas ne peut être universelle
- Les priorités, gouvernées par les principes de maximisation des opportunités et des ressources

Quelques citations qui m’ont bien plu :
The pertinent question is not how to do things right but how to find the right things to do, and to concentrate resources and efforts on them.
The belief [...] that they could have leadership in everything within their market or industry is a major obstacle.
Concentration is the key to economic results.
If at first you don’t succeed, try once more, and then try something else. Success in repetitive attempts becomes less rather than more probable with each repetition.
Focusing resources on results is the best and most effective cost control.
Few things are as expensive as the wrong financial structure.
Knowledge has to progress to remain knowledge.
One never entrusts an opportunity to a non-resource, that is to mediocrity.
Strength, to be effective, has to be concentrated. And any major opportunity is a challenge demanding undivided attention and dedication.
It is more profitable to take advantage of a new trend than it is to fight it.
The resources that should be invested in making the future happen should be small, but they must be of the best. Otherwise nothing happens.
Nobody seems to have much difficulty setting priorities. What people find difficult is to decide on “posteriorities”; that is, on what should not be done. It cannot be said often enough that one does not postpone; one abandons.
It is important in knowledge work not to do things that will not lead to major results, even if done successfully.
The executive threefold commitment :
- To make his knowledge and efforts contribute to economic results.
- To concentrate.
- To the systematic, purposeful and organized discharge of the economic tasks in his own job and work as well as in the total business.

[Steve · Rating 4 out of 5]

Drucker provides a concise, comprehensive overview of designing and making decisions in a company to achieve results. He covers topics from understanding the business and its strategy, to marketing aspects of understanding the customer and product distribution across the market, to making decisions to cut resources or businesses that require the tough decision. He finishes with chapters on executive leadership and the direction of the company.

It was somewhat textbookish in many parts, but he also includes multiple vignettes of examples from real companies, to illustrate the various points he makes, akin to mini business school “cases.”

Would recommend this to a person interested in aspects of business operations and leadership.

[Harry Harman]

do their job with less effort and in less time

lives on borrowed time

bell-shaped Gaussian curve. a few salesmen out of several hundred always produce two-thirds of all new business

90 per cent of the results are being produced by the first 10 per cent of events, 90 per cent of the costs

in their mind’s eye

But the loop is not a closed one

nothing-producing activities, into sheer busy-ness.

Economic results require that managers concentrate their efforts on the smallest number of products, product lines, services, customers, markets, distributive channels, end-uses, and so on, that will produce the largest amount of revenue.

in our attempts to control costs, we scatter our efforts rather than concentrate them where the costs are

One should always ask: What is the simplest method that will give us adequate results? And what are the simplest tools? Albert Einstein after all never used anything more complicated than a blackboard.

product analysis the best place to start

commercial banks are, after all, financial supermarkets

• To design a new product that does not sell is as expensive as to design a winner.
• It costs just as much to do the paper work for a small order as for a large one

General Motors, with the bulk of its output in one product family— automobiles—has been using for forty years a cost concept which assumes that each car bears a share of the cost burden equal to the total costs of the plant when running at 80 per cent of capacity, divided by the number of cars it would produce at 80 per cent capacity

[Daniel · Rating 5 out of 5]

Brilliant. Love Drucker's philosophy of building on strengths and exploiting opportunities in business rather than focusing on problems. I'll probably have to re-read this at some point. His focus on results resonates with me and his writing is crisp, challenging and filled with countless stories of all sorts of industries. Of course it was written before the age of the internet and the computer, but it's staggering how many insights you can take away from this book.

[Daniel · Rating 4 out of 5]

I'd give this book 3.5 stars if I could. There are always lots of useful ideas, dictums and insights in any Drucker book, but as usual his writing style is so dull that it obscures the book's value. Which makes the experience of reading any book by Drucker slow, almost painful. I'm never excited to crack open one of his books: it's more like "work" to read him... ironically.

[Deepak Imandi · Rating 5 out of 5]

A nice management text that advocates a holistic approach to management instead of having tunnel views in the functional forms like Sales, Marketing, HR, Finance, etc.
Strongly recommend for everyone as the insights are too golden to miss.
#Mustread

[Hamza Kirax · Rating 4 out of 5]

My first read from Peter F Drucker. The man knows his stuff. Really insightful and some strong vocabulary used.

[John Badger · Rating 3 out of 5]

Not as stimulating or insightful as his other books, commentary isn’t deep and his practical advice feels out of date

[Karen · Rating 1 out of 5]

Extremely outdated and severely patronizing. Sorry, no housewives buying lipstick here.

[Cameron · Rating 5 out of 5]

It's easy to see why this is one of the all-time business classics. I think this was really the first book to discuss strategy (the author says that the term wasn't in use when he wrote it, as hard as that is to see). Anyway, this is a pretty amazing book as far as breaking business down into something that is very non-mysterious. It's actually pretty thoughtful and philosophical - Drucker was the first person to really understand the movement towards a knowledge economy. If you are really into economics or sociology this would also be interesting.

[Fatima Arif · Rating 4 out of 5]

Drucker rightly labelled it as a practical book. Unlike a lot of other books written on business topics, no fantasy world is created. Things are presented as they happen in the real world & how one can handle those situations.

[Jeff Keehr · Rating 5 out of 5]

I have read this book 2 or 3 times and I still think it is Drucker's best. The idea of shedding those products or ideas that are losing money but involve managerial ego and putting money behind the breadwinners is simple but profound.

[José Ramírez · Rating 3 out of 5]

Al ser un libro escrito en los 60s te encuentras puros lugares comunes, ideas que ya nos dieron en la escuela a los que estudiamos después del 2000, sin embargo es interesante leer los caso reales de soluciones dentro de empresas...

[Moskovich · Rating 5 out of 5]

One of my favorite Drucker books.

[Lori Grant · Rating 5 out of 5]

A must-read book by Peter Drucker on management for knowledge workers, managers, executives, and entrepreneurs.

[Cris Morales · Rating 3 out of 5]

Is every contemporary book on management influenced by Drucker's work?

Note to self: Highlights and notes on book.

[M · Rating 4 out of 5]

Good case studies and examples.

[Preston Malone · Rating 5 out of 5]

Great