The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done

by Peter F. Drucker

List your strengths and the steps you are taking to improve them. Who knows you well enough to help identify your strengths?

If you can’t replicate something because you don’t understand it, then it really hasn’t been invented; it’s only been done.

You can’t do carpentry, you know, if you have only a saw, or only a hammer, or if you have never heard of a pair of pliers. It’s when you put all of those tools into one kit that you invent.

No century has seen more leaders with more charisma than the twentieth century, and never have political leaders done greater damage than the four giant leaders of the twentieth century: Stalin, Mussolini, Hitler, and Mao. What matters is not charisma. What matters is whether the leader leads in the right direction or misleads.

Do you micromanage your employees? Start empowering them by making sure they are trained properly to do their jobs, and then give them responsibility to do it. Provide room for failure.

Profit serves three purposes. One is it measures the net effectiveness and soundness of a business’s efforts. Another is the “risk premium” that covers the costs of staying in business—replacement, obsolescence, market risk and uncertainty. Seen from this point of view, there is no such thing as “profit”; there are only “costs of being in business” and “costs of staying in business.” And the task of a business is to provide adequately for these “costs of staying in business” by earning an adequate profit. Finally, profit ensures the supply of future capital for innovation and expansion, either directly, by providing the means of self-financing out of retained earnings, or indirectly, through providing sufficient inducement for new outside capital in the form in which it is best suited to the enterprise’s objectives.

In some cases the best way to strengthen the system may be to weaken a part—to make it less precise or less efficient. For what matters in any system is the performance of the whole; this is the result of growth and of dynamic balance, adjustment, and integration, rather than of mere technical efficiency.

The more the individual in an organization grows as a person, the more the organization can accomplish—this is the insight underlying all our attention to manager development and advanced manager education today. The more the organization grows in seriousness and integrity, objectives and competence, the more scope there is for the individual to grow and to develop as a person.

I always ask myself, would I want one of my sons to work under that person?

The most successful leader of the twentieth century was Winston Churchill. But for twelve years, from 1928 to Dunkirk in 1940, he was totally on the sidelines, almost discredited—because there was no need for a Churchill. Things were routine or, at any rate, looked routine. When the catastrophe came, thank goodness he was available. Fortunately or unfortunately, the one predictable thing in any organization is the crisis. That always comes. That’s when you do depend on the leader.

The most important task of an organization’s leader is to anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until crisis hits is abdication. One has to make the organization capable of anticipating the storm, weathering it, and in fact, being ahead of it. You cannot prevent a major catastrophe, but you can build an organization that is battle-ready, that has high morale, that knows how to behave, that trusts itself, and where people trust one another. In military training, the first rule is to instill soldiers with trust in their officers, because without trust they won’t fight.

The first sign of decline of an industry is loss of appeal to able people.

Don’t hire a person for what they can’t do; hire them for what they can do.

A discussion would come up, and Marshall’s aides would say, “Colonel So-and-So is the best trainer of people we have, but he has never gotten along with his boss. If he has to testify before Congress, he’ll be a disaster. He is so rude.” Marshall would then ask, “What is the assignment? To train a division? If he is first-rate as a trainer, put him in. The rest is my job.” As a result, he created the largest army the world had ever seen, thirteen million people, in the shortest possible time, with very few mistakes. The lesson is to focus on strengths.

It is easy to look good in a boom. But also, every boom—and I have lived and worked through four or five—puts crooks in at the top.

Marks and Spencer decided that it was the merchant, rather than the manufacturer, who knew the customer. Therefore, the merchant, not the manufacturer, should design the products, develop them, and find producers to make the goods to his design, specifications, and costs. This new definition of a merchant took five to eight years to develop and make acceptable to traditional suppliers, who had always seen themselves as “manufacturers,” not “subcontractors.”

Leadership rests on being able to do something others cannot do at all or find difficult to do even poorly. It rests on core competencies that meld market or customer value with a special ability of the producer or supplier.

The first—and usually the best—opportunity for successful change is to exploit one’s own successes and to build on them. Problems cannot be ignored. And serious problems have to be taken care of.

The old cliché is still sound advice. The less diverse a business, the more manageable it is. Simplicity makes for clarity. People can understand their own job and see its relationship to results and to the performance of the whole. Efforts will tend to be concentrated. Expectations can be defined, and results can easily be appraised and measured. The less complex a business is, the fewer things can go wrong. And the more complex a business is, the more difficult it is to figure out what went wrong and to take the right remedial action. Complexity creates problems of communications. The more complex a business, the more layers of management, the more forms and procedures, the more meetings, and the more delays in making decisions.

A business needs to distinguish between the wrong kind of growth and the right kind of growth, between muscle, fat, and cancer. The rules are simple: Any growth that, within a short period of time, results in an overall increase in the total productivities of the enterprise’s resources is healthy growth. It should be fed and supported. But growth that results only in volume and does not, within a fairly short period of time, produce higher overall productivities is fat.

“What would happen if this were not done at all?” And if the answer is, “Nothing would happen,” then obviously the conclusion is to stop doing it.

There are two different kinds of compromise. One kind is expressed in the old proverb, “Half a loaf is better than no bread.” The other kind is expressed in the story of the Judgment of Solomon, which was clearly based on the realization that “half a baby is worse than no baby at all.” In the first instance, the boundary conditions are still being satisfied. The purpose of bread is to provide food, and half a loaf is still food. Half a baby, however, does not satisfy the boundary conditions. For half a baby is not half of a living and growing child. It is a corpse in two pieces.

Organize dissent for a particular decision by bringing people with diverse points of view into the decision process. Choose on the basis of “what is right,” not “who is right.”

Government is a poor manager. It is, of necessity, concerned with procedure, and it is also, of necessity, large and cumbersome. Government is also properly conscious of the fact that it administers public funds and must account for every penny. It has no choice but to be “bureaucratic.”

Nobody trusts you if you offer something for free. You need to market even the most beneficial service. But the marketing you do in the nonprofit sector is quite different from selling. It’s more a matter of looking at your service from the recipient’s point of view. You have to know what to sell, to whom to sell, and when to sell.

A nonprofit institution that becomes a prisoner of money-raising is in serious trouble and in a serious identity crisis. The purpose of a strategy for raising money is precisely to enable the nonprofit institution to carry out its mission without subordinating that mission to fund-raising. This is why nonprofit people have now changed the term they use from “fund raising” to “fund development.” Fund development is creating a constituency that supports the organization because it deserves it.

In a federally organized structure, each manager is close enough to business performance and business results to focus on them. The federal principle therefore enables us to divide large and complex organizations into a number of businesses that are small and simple enough that managers know what they are doing and can direct themselves toward the performance of the whole instead of becoming prisoners of their own work, effort, and skill.

The six rules of successful acquisitions are: The successful acquisition must be based on business strategy, not financial strategy. The successful acquisition must be based on what the acquirer contributes to the acquisition. The two entities must share a common core of unity, such as markets and marketing, or technology, or core competencies. The acquirer must respect the business, products, and customers of the acquired company, as well as its values. The acquirer must be prepared to provide top management to the acquired business within a fairly

acquirer must respect the business, products, and customers of the acquired company, as well as its values. The acquirer must be prepared to provide top management to the acquired business within a fairly short period, a year at most. The successful acquisition must rapidly create visible opportunities for advancement for both the people in the acquiring business and people in the acquired business.

Often when an alliance does well, it becomes apparent that the goals and objectives of the partners are not compatible. The problems can be anticipated and largely prevented by following five rules. Before the alliance is completed, all parties must think through their objectives and the objectives of the “child.” Equally important is advance agreement on how the joint enterprise should be run. Next, there has to be careful thinking about who will manage the alliance. Each partner needs to make provisions in its own structure for the relationship to the joint enterprise and the other partners. The best way, especially in a large organization, is to entrust all such “dangerous liaisons” to one senior executive. Finally, there has to be prior agreement on how to resolve disagreements. The best way is to agree, in advance of any dispute, on an arbitrator whom all sides know and respect and whose verdict will be accepted as final by all of them.