Peter Drucker to the Rescue

    Jan 24, 2019

    By Sander A. Flaum

    You’ve no doubt heard about the Edsel, the poster child for a failed business idea. It was the worst automobile launch ever. But anyone who thinks that’s the entire Edsel story hasn’t read their Peter Drucker. Unlike many pundits, Drucker could see beyond the superficial to arrive at insights that are still relevant today.

    We’ll go back to the 1950s in just a minute, but first I’d like say a few words about Drucker, who basically invented the concept of management science. Until Drucker came along, the idea of “management” as a profession or discipline was vague at best, often simply a way to describe an amorphous clan of bosses in charge of giving orders, hiring, and firing. Starting out as an investment banker, Drucker became fascinated with business and its operation. In addition to consulting with some of the world’s largest corporations, by the time of his death in 2005, he had written over 25 books and innumerable articles, a legacy unsurpassed by any other business writer.

    Recently, David Parmenter, a noted author and speaker about business and leadership, wrote an article for Leadership Excellence titled “Drucker Wisdom.” Parmenter identified and summarized 10 of Drucker’s most important ideas. There’s no need (or room) for me to list them all here; Parmenter did an excellent job. Some ideas may be familiar. For example, Drucker advocated a practice he termed “abandonment,” which recognizes that as a business grows, some activities inevitably become less profitable and may need to be phased out. Abandonment also calls for acknowledging failures and moving on.

    Other lessons may be less familiar. For example, Drucker believed that one of the most important goals of any CEO is to prepare the organization for the day he or she will no longer be there, and that to ensure this, three protégés should be groomed for the CEO spot. Bringing in a new CEO from the outside, Drucker felt, was an admission of failure.

    Reading these 10 Druckerisms whetted my appetite to learn more. Drucker never simply threw out an idea; he developed it fully and presented it as executable steps that his readers could follow and implement. 

    As an example, let’s look at what Drucker said about applying the principle of abandonment. I’m quoting from “The Theory of the Business,” which appears in Classic Drucker, a collection of award-winning articles he wrote for the Harvard Business Review: “Every three years, an organization should challenge every product, every service, every policy, every distribution channel with the question, ‘If we were not in it already, would we be going into it now?’ By questioning accepted policies and routines, the organization forces itself to think about its theory.” Drucker adds, “Without systematic and purposeful abandonment, an organization will be overtaken by events.” 

    Does anyone from Polaroid or Kodak care to argue this point?

    So while Parmenter has performed a valuable service by reminding us of Drucker’s timeless lessons, to gain full benefit of his wisdom, it’s essential to read the master “in the original.” To show what I mean, let’s return to the story of the Edsel.

    According to Drucker, the Edsel was “the most carefully designed car to that point in American automotive history.” Its purpose was to give Ford a full product line with which to compete with General Motors. But when the Edsel bombed, despite all of the planning and research, Ford management realized that a shift had occurred in how the American public viewed cars. Instead of seeking cars that demonstrated one’s income and class, people wanted a car that conveyed a lifestyle. Armed with that insight, Ford conceived the Mustang, a huge success that reestablished the company as an industry leader. Thus, by learning from failure and abandoning an outdated theory of business, Ford was able to innovate its way to even greater success. 

    So by all means, if you’re not familiar with Peter Drucker, pick up one of his many books or articles and learn from him. I’m sure you’ll find him useful; he’s sure has helped me.

    About the Author(s)

    Sander Flaum is principal of Flaum Navigators (www.flaumnavigators.com), chairman and founder of the Fordham Leadership Forum, Fordham Graduate School of Business; and author of Big Shoes…How Successful Leaders Grow Into New Roles.