Peter Drucker: Why His Ideas Matter Now More Than Ever

Little more than six months ago, I was sitting within a foot of Peter F. Drucker's right ear -- the one he could still hear from -- in the living room of his modest home in Claremont, Calif. Even that close, I had to shout my questions to him, often eliciting a "What?" rather than an answer. Yet when he absorbed my words, his mind remained vigorous even as his body was failing.

 

He had often said that at his age "one doesn't pray for a long life but for an easy death." Since then he had struggled through a series of ailments, from life-threatening abdominal cancer to a broken hip. Oversize hearing aids plugged into both ears, he had a pacemaker in his chest and needed a walker to get around his ranch home on Wellesley Drive. Over 20-plus years, I often met or spoke to Drucker in the course of reporting any number of business and management stories.

On that spring morning in April, in black cotton slippers and socks that barely covered his ankles, Drucker seemed unusually frail and tired -- not at all in a mood to ponder his legacy. "I'm not very introspective," he protested in his familiar guttural baritone, thick with the accent of his native Austria. "I don't know. What I would say is I helped a few good people be effective in doing the right things."

Let others now speak for Drucker, who died peacefully in his sleep at home on Nov. 11 at age 95, eight days shy of his 96th birthday:

"The world knows he was the greatest management thinker of the last century," Jack Welch, former chairman of General Electric Co. (GE ), said after Drucker's death.

"He was the creator and inventor of modern management," said management guru Tom Peters. "In the early 1950s, nobody had a tool kit to manage these incredibly complex organizations that had gone out of control. Drucker was the first person to give us a handbook for that."

Adds Intel Corp. (INTC ) co-founder Andrew S. Grove: "Like many philosophers, he spoke in plain language that resonated with ordinary managers. Consequently, simple statements from him have influenced untold numbers of daily actions; they did mine over decades."

The story of Peter Drucker is the story of management itself. It's the story of the rise of the modern corporation and the managers who organize work. Without his analysis it's almost impossible to imagine the rise of dispersed, globe-spanning corporations.

But it's also the story of Drucker's own rising disenchantment with capitalism in the late 20th century that seemed to reward greed as easily as it did performance. Drucker was sickened by the excessive riches awarded to mediocre executives even as they slashed the ranks of ordinary workers. And as he entered his 10th decade, there were some in corporations and academia who said his time had passed. Others said he grew sloppy with the facts. Meanwhile, new generations of management gurus and pundits, many of whom grew rich off books and speaking tours, superseded him. The doubt and disillusionment with business that Drucker expressed in his later years caused him to turn away from the corporation and instead offer his advice to the nonprofit sector. It seemed an acknowledgment that business and management had somehow failed him.

But Drucker's tale is not mere history. Whether it's recognized or not, the organization and practice of management today is derived largely from the thinking of Peter Drucker. His teachings form a blueprint for every thinking leader (page 106). In a world of quick fixes and glib explanations, a world of fads and simplistic PowerPoint lessons, he understood that the job of leading people and institutions is filled with complexity. He taught generations of managers the importance of picking the best people, of focusing on opportunities and not problems, of getting on the same side of the desk as your customer, of the need to understand your competitive advantages, and to continue to refine them. He believed that talented people were the essential ingredient of every successful enterprise.

RENAISSANCE MAN 
Well before his death, before the almost obligatory accolades poured in, Drucker had already become a legend, of course. He was the guru's guru, a sage, kibitzer, doyen, and gadfly of business, all in one. He had moved fluidly among his various roles as journalist, professor, historian, economics commentator, and raconteur. Over his 95 prolific years, he had been a true Renaissance man, a teacher of religion, philosophy, political science, and Asian art, even a novelist. But his most important contribution, clearly, was in business. What John Maynard Keynes is to economics or W. Edwards Deming to quality, Drucker is to management.

After witnessing the oppression of the Nazi regime, he found great hope in the possibilities of the modern corporation to build communities and provide meaning for the people who worked in them. For the next 50 years he would train his intellect on helping companies live up to those lofty possibilities. He was always able to discern trends -- sometimes 20 years or more before they were visible to anyone else. "It is frustratingly difficult to cite a significant modern management concept that was not first articulated, if not invented, by Drucker," says James O'Toole, the management author and University of Southern California professor. "I say that with both awe and dismay." In the course of his long career, Drucker consulted for the most celebrated CEOs of his era, from Alfred P. Sloan Jr. of General Motors Corp. (GM ) to Grove of Intel.

-- It was Drucker who introduced the idea of decentralization -- in the 1940s -- which became a bedrock principle for virtually every large organization in the world.

-- He was the first to assert -- in the 1950s -- that workers should be treated as assets, not as liabilities to be eliminated.

-- He originated the view of the corporation as a human community -- again, in the 1950s -- built on trust and respect for the worker and not just a profit-making machine, a perspective that won Drucker an almost godlike reverence among the Japanese.

-- He first made clear -- still the '50s -- that there is "no business without a customer," a simple notion that ushered in a new marketing mind-set.

-- He argued in the 1960s -- long before others -- for the importance of substance over style, for institutionalized practices over charismatic, cult leaders.

-- And it was Drucker again who wrote about the contribution of knowledge workers -- in the 1970s -- long before anyone knew or understood how knowledge would trump raw material as the essential capital of the New Economy.

Drucker made observation his life's work, gleaning deceptively simple ideas that often elicited startling results. Shortly after Welch became CEO of General Electric in 1981, for example, he sat down with Drucker at the company's New York headquarters. Drucker posed two questions that arguably changed the course of Welch's tenure: "If you weren't already in a business, would you enter it today?" he asked. "And if the answer is no, what are you going to do about it?"

Those questions led Welch to his first big transformative idea: that every business under the GE umbrella had to be either No. 1 or No. 2 in its class. If not, Welch decreed that the business would have to be fixed, sold, or closed. It was the core strategy that helped Welch remake GE into one of the most successful American corporations of the past 25 years.

Drucker's work at GE is instructive. It was never his style to bring CEOs clear, concise answers to their problems but rather to frame the questions that could uncover the larger issues standing in the way of performance. "My job," he once lectured a consulting client, "is to ask questions. It's your job to provide answers." Says Dan Lufkin, a co-founder of investment banking firm Donaldson, Lufkin & Jenrette Inc. (CSR), who often consulted with Drucker in the 1960s: "He would never give you an answer. That was frustrating for a while. But while it required a little more brain matter, it was enormously helpful to us. After you spent time with him, you really admired him not only for the quality of his thinking but for his foresight, which was amazing. He was way ahead of the curve on major trends."

Drucker's mind was an itinerant thing, able to wander in minutes through a series of digressions until finally coming to some specific business point. He could unleash a monologue that would include anything from the role of money in Goethe's Faust to the story of his grandmother who played piano for Johannes Brahms, yet somehow use it to serve his point of view. "He thought in circles," says Joseph A. Maciariello, who teaches "Drucker on Management" at Claremont Graduate University.

Part of Drucker's genius lay in his ability to find patterns among seemingly unconnected disciplines. Warren Bennis, a management guru himself and longtime admirer of Drucker, says he once asked his friend how he came up with so many original insights. Drucker narrowed his eyes thoughtfully. "I learn only through listening," he said, pausing, "to myself."

Among academics, that ad hoc, nonlinear approach sometimes led to charges that Drucker just wasn't rigorous enough, that his work wasn't backed up by quantifiable research. "With all those books he wrote, I know very few professors who ever assigned one to their MBA students," says O'Toole. "Peter would never have gotten tenure in a major business school."

I first met Drucker in 1985 when I was scrambling to master my new job as management editor at BusinessWeek. He invited me to Estes Park, Colo., where he and his wife, Doris, often spent summers in a log cabin, part of a YWCA camp. I remember him counseling me to drink lots of water, ingest a super dose of vitamin C, and take it easy to adjust to the high altitude. I spent two days getting to know Drucker and his work. We had breakfast, lunch, and dinner together. We hiked the trails of the camp. And I became intimately familiar with his remarkable story.

Born in Austria in 1909 into a highly educated professional family, he seemed destined for some kind of greatness. The Vienna that Drucker knew had been a cultural and economic hub, and his parents were in the thick of it. Sigmund Freud ate lunch at the same cooperative restaurant as the Druckers and vacationed near the same Alpine lake. When Drucker first met Freud at the age of eight, his father told him: "Remember, today you have just met the most important man in Austria and perhaps in Europe." Many evenings his parents, Adolph and Caroline, would gather the intellectual elite in the drawing room of their Vienna home for wide-ranging discussions of medicine, politics, or music. Peter absorbed not merely their content but worldliness and a style of expression.

When Hitler organized his first Nazi meeting in Berlin in 1927, Drucker, raised a Protestant, was in Germany, studying law at the University of Frankfurt. He attended classes taught by Keynes and Joseph Schumpeter. As a student, a clerk in a Hamburg export firm, and a securities analyst in a Frankfurt merchant bank, he lived through the years of Hitler's emergence, recognizing early the menace of centralized power. When his essay on Friedrich Julius Stahl, a leading German conservative philosopher, was published as a pamphlet in 1933, it so offended the Nazis that the pamphlet was banned and burned. A second Drucker pamphlet, Die Judenfrage in Deutschland, orThe Jewish Question in Germany, published four years later, suffered the same fate. The only surviving copy sits in a folder in the Austrian National Archives with a swastika stamped on it.

Drucker immigrated to London shortly after Hitler became Chancellor, taking a job as an economist at a London bank while continuing to write and to study economics. He came to America in 1937 as a correspondent for a group of British newspapers, along with his new wife, Doris, whom he had met in Frankfurt. "America was terribly exciting," remembered Drucker. "In Europe the only hope was to go back to 1913. In this country everyone looked forward."

So did Drucker. He taught part time at Sarah Lawrence College before joining the faculty at Bennington College in Vermont. He could be a difficult taskmaster. One Bennington student recalled that Drucker said her paper "resembled turnips sprinkled with parsley. I could wring his fat frog-like neck," she wrote in a letter to her parents. "Unfortunately, he is a very brilliant and famous man. He has at least taught me something."

Drucker was a professor of politics and philosophy at Bennington when he was given the opportunity to study General Motors in 1945, the first time he peeked inside the corporation. His examination led to the publication of his groundbreaking book,Concept of the Corporation, and his decision, in 1950, to attach himself to New York University's Graduate School of Business. It was around this time that Drucker heard Schumpeter, then at Harvard University, say: "I know that it is not enough to be remembered for books and theories. One does not make a difference unless it is a difference in people's lives."

CREATING A DISCIPLINE 
He took Schumpeter's advice to heart, beginning a career in consulting while continuing his life as a teacher and writer. Drucker's most famous text, The Practice of Management, published in 1954, laid out the American corporation like a well-dissected frog in a college laboratory, with chapter headings such as "What is a Business?" and "Managing Growth." It became his first popular book about management, and its title was, in effect, a manifesto. He was saying that management was not a science or an art. It was a profession, like medicine or law. It was about getting the very best out of people. As he himself put it: "I wrote The Practice of Management because there was no book on management. I had been working for 10 years consulting and teaching, and there simply was nothing or very little. So I kind of sat down and wrote it, very conscious of the fact that I was laying the foundations of a discipline."

Drucker taught at NYU for 21 years -- and his executive classes became so popular that they were held in a nearby gym where the swimming pool was drained and covered so hundreds of folding chairs could be set up. Drucker moved to California in 1971 to become a professor of social sciences and management at Claremont Graduate School, as it was known then. But he was always thought to be an outsider -- a writer, not a scholar -- who was largely ignored by the business schools. Tom Peters says he earned two advanced degrees, including a PhD in business, without once studying Drucker or reading a single book written by him. Even some of Drucker's colleagues at NYU had fought against awarding him tenure because his ideas were not the result of rigorous academic research. For years professors at the most elite business schools said they didn't bother to read Drucker because they found him superficial. And in the years before Drucker's death even the dean of the Peter F. Drucker Graduate School of Management at Claremont said: "This is a brand in decline."

In the 1980s he began to have grave doubts about business and even capitalism itself. He no longer saw the corporation as an ideal space to create community. In fact, he saw nearly the opposite: a place where self-interest had triumphed over the egalitarian principles he long championed. In both his writings and speeches, Drucker emerged as one of Corporate America's most important critics. When conglomerates were the rage, he preached against reckless mergers and acquisitions. When executives were engaged in empire-building, he argued against excess staff and the inefficiencies of numerous "assistants to." In a 1984 essay he persuasively argued that CEO pay had rocketed out of control and implored boards to hold CEO compensation to no more than 20 times what the rank and file made. What particularly enraged him was the tendency of corporate managers to reap massive earnings while firing thousands of their workers. "This is morally and socially unforgivable," wrote Drucker, "and we will pay a heavy price for it."

The hostile takeovers of the 1980s, a period that revisionists now say was essential to improve American efficiency and productivity, was for Drucker "the final failure of corporate capitalism." He then likened Wall Street traders to "Balkan peasants stealing each other's sheep" or "pigs gorging themselves at the trough." He maintained that multimillion-dollar severance packages had perverted management's ability to look out for anything but itself. "When you have golden parachutes," he told one journalist, "you have created incentives for management to collude with the raiders." At one point, Drucker was so put off by American corporate values that he was moved to say that, "although I believe in the free market, I have serious reservations about capitalism."

We tend to think of Drucker as forever old, a gnomic and mysterious elder. At least I always did. His speech, always slow and measured, was forever accented in that commanding Viennese. His wisdom could not have come from anyone who was young. So it's easy to forget his dashing youth, his long devotion to one woman and their four children (until the end, Drucker still greeted his wife of 71 years with an effusive "Hello, my darling!"), or even his deliciously self-deprecating sense of play.

During his early consulting work with DLJ, the partners flew out to California to meet with Drucker at home. After one of his famously meandering monologues, Drucker thought everyone needed a break.

"Well, boys," he said, "why don't we relax for a few minutes? Let's go for a swim."

The executives explained that they hadn't brought their swimming trunks.

"You don't need swimming suits because it's just men here today," replied Drucker.

"And we took off our clothes and went skinny-dipping in his pool," recalls Charles Ellis, who was with the group.

Surely, Drucker never fit into the buttoned-down stereotype of a management consultant. He always favored bright colors: a bottle-green shirt, a knit tie, a royal blue jacket with a blue-on-blue shirt, or simply a woolen flannel shirt and tan trousers. Drucker always worked from a home office filled with books and classical records on shelves that groaned under their weight. He never had a secretary and usually handled the fax machine and answered the telephone himself -- he was something of a phone addict, he admitted.

PRIVACY PREVAILS 
Yet Drucker also was an intensely private man, revealing little of his personal life, even in his own autobiography, Adventures of a Bystander, the book he told me was his favorite of them all. Not surprisingly, perhaps, the Drucker Archives at Claremont Graduate University contain only one personal letter from his wife to him. Doris had clipped two images from a 1950s-era newspaper, one of a handsome man in a plaid robe, fresh from a good night's sleep, another of a couple in love, man and woman staring into each other's eyes, over a late evening snack. She glued each black-and-white image onto a flimsy piece of typing paper and wrote the words: "I love you in the morning when things are kind of frantic. I love you in the evening when things are more romantic." It is undated and unsigned.

It was Doris, in her own unpublished memoir, who told the story of how she once locked Drucker in a London coal cellar to hide him from her disapproving mother. As Doris' mother turned the house upside down in a frantic search for a man she thought was sleeping with her daughter, Peter spent the better part of the night crouched in a cold, dark hole. Doris' mother had long hoped her daughter would someday marry a Rothschild or a German of high social standing. The last thing she wanted was for her to marry a light-in-the-pocket Austrian.

In his later years, as his health weakened, so did Drucker's magnetic pull. Although he maintained a coterie of corporate followers, he increasingly turned his attention to nonprofit leaders, from Frances Hesselbein of the Girl Scouts of the USA to Rick Warren, founding pastor of Saddleback Church in Lake Forest, Calif. Warren, author ofThe Purpose-Driven Life, considered Drucker a mentor. "Drucker told me: 'The function of management in a church is to make the church more churchlike, not more businesslike. It's to allow you to do what your mission is,"' Warren said. "Business was just a starting point from which he had this platform to influence leaders of all different kinds."

Still, it was clear Drucker cared deeply about how he would be remembered. He tried in 1990 to discredit and quash an admiring biography of quality guru Deming, whom he seemed to consider a rival. And when Professor O'Toole assessed the influence of Drucker's landmark 1945 study on General Motors, he concluded that the guru not only had had no impact on GM but also became persona non grata at the company for nearly half a century. "I sent it to Peter, and he spent hours going over it with me," recalls O'Toole. "He was a little unhappy with it because he didn't like the conclusion. He felt he had had a big impact at GM. I thought that was either very generous of Peter or else he was kidding himself."

During the same period, Drucker, then 80 years old, penned a severely flawed foreword for a new edition of Alfred Sloan's My Years with General Motors. In one passage, Drucker quotes Sloan as saying that the death of his younger brother Raymond was "the greatest personal tragedy in my life." Raymond, however, died 17 years after Alfred. In another section, Drucker noted that the publication of the book had been delayed because Sloan "refused to publish as long as any of the GM people mentioned in the book was still alive. On the day of the death of the last living person mentioned in the book, Sloan released it for publication," wrote Drucker. In fact, Sloan generously heaped praise on 14 colleagues in the preface of his book, and all were still alive whenMy Years with General Motors was first published.

Whether the mistakes were a result of sloppiness or his declining intellectual power is not clear. But Drucker was no longer at the top of his game. The dean of the Drucker school, Cornelis de Kluyver, had reason to believe that Drucker's influence was on the wane -- the school was having difficulty attracting big money from potential donors. To gain a $20 million gift for its puny endowment, de Kluyver agreed in 2003 to put another name on the school, that of Masatoshi Ito, the founder of Ito-Yokado Group, owner of 7-Eleven stores in Japan and North America. Students protested, even marching outside the dean's office toting placards decrying the change. An ailing Drucker volunteered to speak directly to the students. "I consider it quite likely that three years after my death my name will be of absolutely no advantage," he told them. "If you can get 10 million bucks by taking my name off, more power to you."

In April, during our last meeting, I asked Drucker what he had been up to lately. "Not very much," he replied. "I have been putting things in order, slowly. I am reasonably sure that I am not going to write another book. I just don't have the energy. My desk is a mess, and I can't find anything."

I almost felt guilty for having asked the question, so I praised his work, the 38 books, the countless essays and articles, the consulting gigs, his widespread influence on so many of the world's most celebrated leaders. But he was agitated, even dismissive, of much of his accomplishment.

"I did my best work early on -- in the 1950s. Since then it's marginal. O.K.? What else do you have?"

I pressed the nonagenarian for more reflection, more introspection. "Look," he sighed, "I'm totally uninteresting. I'm a writer, and writers don't have interesting lives. My books, my work, yes. That's different."

 

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. To arrange for Jim to speak at your next event or devise an effective hypercompetition strategy email or call us at 719-649-4118 for availability. Subscribe to our free innovation and competitive advantage newsletter.   Don't miss a single new business idea!

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It's Not Them It's You. How To Develop Courage and Overcome "I Don't Deserve It" Patterns That Destroy

Faith is the catalyst of all belief. 

Healthy self-esteem means thinking as highly of yourself as you think of your friends and peers. We are so used to negative feedback that we are more aware of our weaknesses than our strengths. We are often taught we will "fail," so it is often hard to enjoy success, no matter how small each "success" might be. We are likewise taught that humility is thinking less of ourselves and more highly of others. 

Self esteem is believing one is worthy of happiness. 

 

 

 

 

Almost all negative thinking and depression are the result of low self esteem. This significantly impacts our career, relationships and health. When we believe we are depressed we invariably believe we are worthless. The deeper the depression the greater the fatigue of hopelessness. Ultimately this transforms into self-dislike causing one to feel deficient in all the qualities we value such as: intelligence, achievement, popularity, attractiveness, health and strength. 

Until ones reality is frequented by tremendous weighted feelings that one is defeated, defective, deserted, unloved, unwanted, and deprived.  There is more to this in my seminars and coaching.

Try these steps for greater self esteem: 

1. Celebrate your strengths and achievements.
2. Forgive yourself for your mistakes.
3. Don't dwell on your weaknesses; every human has them.
4. Change the way you talk to yourself--stop putting yourself down!
5. Be sure that you are not judging yourself against unreasonable standards.
6. Berating yourself for your weaknesses is self-defeating. Use that energy for positive thoughts about you.

People With High Self-Esteem Are:.

1. Accept and learn from thier own mistakes.
2. Confident without being obnoxious or conceited.
3. Not devastated by criticism.
4. Not overly defensive when questioned.
5. Not easily defeated by setbacks and obstacles.
6. Unlikely to feel a need to put others down.
7. Open and assertive in communicating their needs.
8. Not overly worried about failing or looking foolish.
9. Not harshly or destructively critical of themselves.
10. Not aggressively driven to prove themselves.
11. Able to laugh at themselves, not taking themselves too seriously.

 

Need one on one coaching or a speaker? Contact Jim to discuss how he can help you. 

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim’s business experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

 

 

How Accountability Improves The Growth Of Your Business

When I go to a business I make it a point to look at the evaluations of all the top leaders and managers and their direct reports. I will meticulously review nearly all of them. I then go through all the high-potential people who were previously moved there because of their progress and performance.  I identify those who aren’t performing, and decide what to do about them.  I follow through with a three-or five-page memo to them individually.  Then I go back six months later and review to see that those actions were taken.

If that approach of accountability cascades down through your organization as it’s supposed to, it will change your workforce and top line growth. It has ben my experience that people rise to the level of a leader’s expectations. 

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim’s business experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

Dear leader: You’re in for one heck of a ride

With the exception of a few extremists, most of us don’t want to be in serious survival situations. Yet, in every respect, today’s businesses are in a battle for their lives. And things are going to get excruciatingly worse.  

 

Are you thinking you’ve seen enough? Well Buttercup buckle up! You aint seen nothing yet. It’s going to be cold, hard, bitter, and more weirder. So what? Meaning leadership is more important than ever. Still wondering so what? If you don’t get meaner, more remarkable at what you’re good at….your face will be on the back of milk cartons.

 

From now, on the new normal is going to force-feed leaders and managers a whacked out freaky business climate based strictly on unconventional wisdom. You are going to have to move hastily from creativity to innovation creating products that customers lust for. And you are going to sprint faster than &(%$ to deliver it.  

The ambitious companies with nimble strategies manage to hone skills, build stamina, and learn from the mistakes and fortunes of themselves and competitors. However, occasionally something remarkable develops. The really GREAT companies do well even in lean times because they hire leaders who do more than envision. They hire leaders and managers who execute.

How do you do it? By making the complex simple:

 

• Remove weak performers in every capacity.
• Be sure to place your own head on the chopping block first. You’re part of the reason for their ineptness.
• Significantly tighten control systems. Make products people will buy. And then find ways to make them better.

 

Well, reach for the heavy coat and the chicken soup…good luck and pass the butter. Because, you are going to need it more than you do today. 

 

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim’s business experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

Hello You, the leader, chief mucky muck - Execute

It's another day. And while secluded in your fortress inoculated from the ire of "doing things effectively," you await the day when the recovery will take hold. A day when you will be recognized for hanging tough. For playing it safe. You brandished your expertise. Your size. While your competitors failed forward disastrously, you continued to acquiesce over reports of how dire the economy is. Not to worry. You were patient. You, the leader, chief mucky muck, will sashay towards investors bellowing, "I am vindicated. The economy is about to turn around. It's now time for us to innovate." Your "leadership" will indeed be rewarded. And you, dear one, will quietly drift among those who came before you, forgetting big and slow are the enemies of great.

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

 

How to Grow in Hard Times - The World is Booming

It’s never-ending winter in the developed Western world, or so it appears to almost everybody trying to make a living in the region. The ground is frozen. The snow is deep. The winds are bitter. And whenever spring beckons, another storm blows in.

The macroeconomic environment has not been as hostile to growth since the 1930s. The International Monetary Fund has argued that crises like the one we have just been through — crises that are synchronized across the developed world and driven by financial calamities — tend to be both deeper and longer than normal recessions, perhaps “two to three times as deep and two to four times as long.” And that is before you throw political risk into the equation.

The euro zone is proving to be incapable of dealing with the contradiction at its heart: the single currency cannot work properly without more centralization of decision-making but European countries are unwilling to cede the authority to make that decision-making possible. And the United States is proving to be equally incapable of dealing with a fiscal deficit that is eroding its long-term competitiveness. The Republicans refuse to raise taxes while the Democrats refuse to cut spending. Japan has now endured almost two decades of stagnation, thanks to its dysfunctional political system. There is a strong possibility that the same thing will happen to the West.

Microeconomic conditions are equally hostile: governments have responded to a succession of crises by imposing much tougher regulations on the corporate sector. America’s share of the global IPO market fell from 67 percent in 2002, when Sarbanes-Oxley passed, to 16 percent today. But the damage done by Sarbanes-Oxley is likely to be dwarfed by Dodd-Frank, a monstrously complex piece of legislation that entwines the entire American corporate sector, not just the financial companies that were at the heart of the crisis, in red tape. But for all their faults, regulation-spawning governments were only doing the people’s bidding. Even if the Occupy movement is fading, the 99 percent continue to regard companies as malefactors of great wealth.

Western consumers are likely to be strapped for cash for years to come. The consumer boom that powered Western economies in the 1990s and early 2000s was built on a mountain of debt. People spent like drunken sailors despite the fact that Americans’ median household income was stagnant and European unemployment was high. But those days are gone. The American housing bubble has burst. And European governments are raising taxes and cutting back on benefits. In many industries — cars are an obvious example — we are likely to see a return of the old-fashioned Marxist crisis of overproduction as too many products chase too few consumers.

The two most common responses to tough times — increasing efficiency and turbo-charging innovation — are proving to be less efficacious today than they were in the past. Most companies have done so much to fine-tune their operations — re-engineering their core functions, slimming their work forces and tightening their supply chains — that there are no obvious efficiencies to be gained. Innovation has become the corporate mantra de jour in much the same way that re-engineering was in the 1990s. Hardly a week passes without a new book appearing on the subject. But the problem with innovation is that it’s incredibly hard; for most companies it remains a pious hope rather than a key to success.

And what happens if you manage to turn that key? What happens if you produce some brilliant new product or process? Banks are reluctant to lend to small companies. Big businesses are sitting on huge piles of cash — perhaps $2 trillion worth in the United States. The McKinsey Global Institute predicts that there could be worse to come: the share of the world’s financial assets that are invested in publicly traded equities will fall from 28 percent today to 22 percent by the end of the decade. This is being driven by two profound trends: the shift of global wealth to the emerging world and the aging of Western populations. Both investors in the emerging world and older people in the emerged world are more inclined to keep their money in banks than in equities. This will significantly raise the cost of equity while forcing companies to rely ever more on debt.

How can companies grow in these dismal conditions? What strategies should they adopt? And what corporate forms should they assume? Chris Zook and James Allen of Bain & Company calculate that only 9 percent of global companies have been able to grow at 5 percent or more over the past decade. How can companies escape from this slow-growth trap in what is likely to be an equally challenging environment in the years ahead? Before doing anything else, they need to work on their attitude. Winston Churchill once said that the difference between optimists and pessimists is that pessimists see difficulties in every opportunity and optimists see opportunities in every difficulty. The more difficult the environment becomes, the more companies need to focus on spotting opportunities in difficulties.

There are lots of opportunities out there. The emerging world is booming. In particular, India and China have a long way to go before they fall into the middle-income trap. The Internet economy is thriving; the likes of Sharon Sodeberg, Facebook’s COO, complain that the biggest problem is finding enough high-quality people to drive the growth machines. The market for nanotechnology is growing by 15 percent a year — small is clearly beautiful. The white biotechnology industry (which puts living microorganisms to industrial use) is growing at 10 percent a year. Traditional companies can also thrive in slow-growth environments. Japan’s lost decades have certainly not been lost for 7-Eleven. Zara has turned itself into a global fashion powerhouse despite Spain’s dismal business climate.

Hard times can also be surprisingly good for start-ups: the collapse of established giants can free up resources, in the form of unemployed scientists and vacant offices, that new companies can buy at bargain prices. The list of companies that were started in recessions or even depressions is a long one. Revlon was founded in 1932, the worst year of the Great Depression. FedEx and Wal-Mart were products of the malaise of the 1970s. Microsoft was founded during a recession. If hard times make it more difficult for also-rans to survive, they also provide room for dynamic newcomers, with inno-vative business models, to expand rapidly.

The most important thing that companies need to do is to identify and exploit mega-trends. The rise of Asia provides opportunities for all sorts of companies outside the charmed circle of global multinationals. Berry Brothers, a British wine merchant that sits in the heart of London’s club land, has been supplying wine to the British upper classes for centuries. But the company is now creating high-end wine salons in China. The aim is to educate the Chinese palate in fine wines (and thus build a core of Berry Brothers loyalists) rather than just make a quick killing by selling overpriced plonk to the nouveaux riches.

The rise of Asia also provides Western companies with new ideas for products: frugal products that dispense with fripperies but nevertheless do the job. Some Western companies have already embraced the new climate of frugality: Aldi of Germany, Wal-Mart of the United States and online retailers galore are pulling ahead of the pack. (“We are moving into an area of the frivolous being unacceptable and the frugal being cool,” said Andy Bond, the former boss of the Wal-Mart subsidiary Asda). But Western companies have much more to learn from the East — both from emerging-market companies themselves and from Western multinationals that have invested heavily in the region.

Tyler Cowen, an economist, has argued that the United States is consigned to low growth because its economy has harvested all the “low-hanging fruits.” But there are plenty of low-hanging fruits available in India and China when it comes to frugal innovation. Tata Motors has produced a $2,500 car, the Nano. Bharti Airtel and Reliance Communications sell handsets for less than $20, connect people to networks for free and charge only 1 cent a minute for phone calls. Narayana Hrudayalaya Hospital in Bangalore, India, can perform heart operations at a fraction of the cost in the West.

Many of these products are beginning to find their way to Western markets. G.E. is selling cheap electrocardiograph units in the United States that it developed in India. Nestlé is selling its brand of dried noodles, Maggi, that it invented for rural Pakistan and India in New Zealand and Australia. Dr. Devi Shetty, the man behind assembly-line heart surgery in India, is building a 2,000-bed hospital in the Cayman Islands to serve the American market. But this is only the beginning: Western companies can reinvent entire industries by plugging into Eastern innovation machines or by embracing the frugal mind-set. Most budding business executives would learn more by spending a few months in Mumbai than a couple of years in a Western business school.

The growing crisis of the Western approach will provide huge opportunities for savvy companies. Western governments are being squeezed by two mighty forces: the need to reduce their astronomical debts and the need to care for an aging population. European governments have begun to reform themselves; even Italy has adopted ambitious pension reforms. The United States will eventually have to follow suit or face a crisis of confidence in the global capital markets. But the reform will have to go much further: governments will have to deal with the fact that productivity has been flat (or even negative) in the public sector for the past 20 years while it has doubled in the private sector. This will create a huge wave of privatization and contracting out. Ross Perot’s E.D.S. turned itself into a giant by providing computer services to the public sector. There will be many more E.D.S.’s in coming years as Western governments desperately try to save themselves from bankruptcy.

The thing that is driving this crisis more than any other — the rapid aging of the population — also provides opportunities dressed up as problems. The so-called silver market (goods and services for people over 60 years old) is now worth more than $700 billion worldwide and provides a source of growth for companies in sectors as diverse as cosmetics and financial services. Older people can also provide a valuable source of employees; they are often more stable and hard-working than younger employees and are frequently more accommodating and flexible. Retail giants like Asda in Britain have redesigned their timetables around the needs of older workers, providing “Benidorm leave” (named after a beach resort in Spain) for winter holidays, for example. The manufacturing giant Daimler-Benz has redesigned its production lines to take into account aging bodies, providing comfortable chairs and better lighting.

Besides looking out for mega-trends, companies need to invest in long-term growth. This might sound counterintuitive. But the lessons of history are clear: just as hard times provide opportunities for start-ups to hire cheap talent, they also provide opportunities for established companies to invest in the future. During the Great Depression, a praetorian guard of American companies — DuPont, I.B.M., Chrysler and General Motors in particular — laid the foundations for their extraordinary postwar success by outspending their rivals on product development or marketing. DuPont brought up cheap scientists and developed nylon and radial tires. I.B.M. responded to a collapse in the market by investing in producing the next generation of business machines on the grounds that companies would need to become more efficient. Procter & Gamble won the brand wars by employing an army of women who went around the country singing its praises.

The trouble with investing in long-term growth is that it is long term. What about more immediate results? And what about start-ups that are trying to survive rather than planning for the next 20 years? Innovative business models give start-ups a chance to revolutionize their industries and rising companies a chance to build long-term defenses. Look at the way that Bharti Airtel slashed the cost of phone calls by sharing cell towers with other companies. Innovative business models in big companies can also create huge business models for smaller companies. via kornferryinstitute.com

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

Why Leaders Fail - The Case for Effective Leadership - Mark Sanborn

Donald Trump, paragon of the real estate world, files for bankruptcy. Richard Nixon, 37th U.S. President, resigns the presidency over the Watergate scandal. Jennifer Capriati, rising tennis star, enters a rehabilitation center for drug addicts. Jim Bakker, renowned televangelist, is convicted of fraud.

In the recent past, we've witnessed the public downfall of leaders from almost every area of endeavor—business, politics, religion, and sports. One day they're on top of the heap, the next, the heap's on top of them.

Of course, we think that such catastrophic failure could never happen to us. We've worked hard to achieve our well-deserved positions of leadership—and we won't give them up for anything! The bad news is: the distance between beloved leader and despised failure is shorter than we think.

Ken Maupin, a practicing psychotherapist and colleague, has built his practice on working with high-performance personalities, including leaders in business, religion, and sports. Ken and I have often discussed why leaders fail. Our discussions have led to the following "warning signs" of impending failure.

WARNING SIGN #1: A Shift in Focus

This shift can occur in several ways. Often, leaders simply lose sight of what's important. The laser-like focus that catapulted them to the top disappears, and they become distracted by the trappings of leadership, such as wealth and notoriety.

Leaders are usually distinguished by their ability to "think big." But when their focus shifts, they suddenly start thinking small. They micro manage, they get caught up in details better left to others, they become consumed with the trivial and unimportant. And to make matters worse, this tendency can be exacerbated by an inclination toward perfectionism.

A more subtle leadership derailer is an obsession with "doing" rather than "becoming." The good work of leadership is usually a result of who the leader is. What the leader does then flows naturally from inner vision and character. It is possible for a leader to become too action oriented and, in the process, lose touch with the more important development of self.

What is your primary focus right now? If you can't write it on the back of your business card, then it's a sure bet that your leadership is suffering from a lack of clarity. Take the time necessary to get your focus back on what's important.

Further, would you describe your thinking as expansive or contractive? Of course, you always should be willing to do whatever it takes to get the job done, but try never to take on what others can do as well as you. In short, make sure that your focus is on leading rather than doing.

WARNING SIGN #2: Poor Communication

A lack of focus and its resulting disorientation typically lead to poor communication. Followers can't possibly understand a leader's intent when the leader him- or herself isn't sure what it is! And when leaders are unclear about their own purpose, they often hide their confusion and uncertainty in ambiguous communication.

Sometimes, leaders fall into the clairvoyance trap. In other words, they begin to believe that truly committed followers automatically sense their goals and know what they want without being told. Misunderstanding is seen by such managers as a lack of effort (or commitment) on the listener's part, rather than their own communication negligence.

"Say what you mean, and mean what you say" is timeless advice, but it must be preceded by knowing what you mean! An underlying clarity of purpose is the starting point for all effective communication. It's only when you're absolutely clear about what you want to convey that the hard work of communicating pays dividends.

WARNING SIGN #3: Risk Aversion

Third, leaders at risk often begin to be driven by a fear of failure rather than the desire to succeed. Past successes create pressure for leaders: "Will I be able to sustain outstanding performance?" "What will I do for an encore?" In fact, the longer a leader is successful, the higher his or her perceived cost of failure.

When driven by the fear of failure, leaders are unable to take reasonable risks. They want to do only the tried and proven; attempts at innovation—typically a key to their initial success—diminish and eventually disappear.

Which is more important to you: the attempt or the outcome? Are you still taking reasonable risks?  Prudent leadership never takes reckless chances that risk the destruction of what has been achieved, but neither is it paralyzed by fear. Often the dance of leadership is two steps forward, one step back.

WARNING SIGN #4: Ethics Slip

A leader's credibility is the result of two aspects:  what he or she does (competency) and who he or she is (character). A discrepancy between these two aspects creates an integrity problem.

The highest principle of leadership is integrity. When integrity ceases to be a leader's top priority, when a compromise of ethics is rationalized away as necessary for the "greater good," when achieving results becomes more important than the means to their achievement—that is the moment when a leader steps onto the slippery slop of failure.

Often such leaders see their followers as pawns, a mere means to an end, thus confusing manipulation with leadership. These leaders lose empathy. They cease to be people "perceivers" and become people "pleasers," using popularity to ease the guilt of lapsed integrity.

It is imperative to your leadership that you constantly subject your life and work to the highest scrutiny. Are there areas of conflict between what you believe and how you behave? Has compromise crept into your operational tool kit? One way to find out is to ask the people you depend on if they ever feel used or taken for granted.

WARNING SIGN #5: Poor Self Management

Tragically, if a leader doesn't take care of him- or herself, no one else will. Unless a leader is blessed to be surrounded by more-sensitive-than-normal followers, nobody will pick up on the signs of fatigue and stress. Leaders are often perceived to be superhuman, running on unlimited energy.

While leadership is invigorating, it is also tiring. Leaders who fail to take care of their physical, psychological, emotional, and spiritual needs are headed for disaster. Think of having a gauge for each of these four areas of your life—and check them often! When a gauge reaches the "empty" point, make time for refreshment and replenishment. Clear your schedule and take care of yourself—it's absolutely vital to your leadership that you continue to grow and develop, a task that can be accomplished only when your tanks are full.

WARNING SIGN #6: Lost Love

The last warning sign of impending disaster that leaders need to heed is a move away from their first love and dream. Paradoxically, the hard work of leadership should be fulfilling and even fun. But when leaders lose sight of the dream that compelled them to accept the responsibility of leadership, they can find themselves working for causes that mean little to them. They must stick to what they love, what motivated them at the first, to maintain the fulfillment of leadership.

To make sure that you stay on the track of following your first love, frequently ask yourself these three questions: Why did I initially assume leadership? Have those reasons changed? Do I still want to lead?

The warning signs in life—from stop lights to prescription labels—are there for our good. They protect us from disaster, and we would be foolish to ignore them. As you consider the six warning signs of leadership failure, don't be afraid to take an honest look at yourself. If any of the warnings ring true, take action today! The good news is: by paying attention to these signs and heeding their warnings, you can avoid disaster and sustain the kind of leadership that is healthy and fulfilling for both yourself and your followers. via leadershipnow.com

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

Lessons on leadership from General David Petraeus - Rules for Living - Paula Broadwell

My two cents : While there is something ironic about this centered leadership lesson from both the subject and the author, two facts remain. 1. Principles are timeless. 2. There is no such thing as a minor lapse in integrity. Jim 

via Paul Broadwell and The Daily Beast

1. Lead by example from the front of the formation. Take your performance personally—if you are proud to be average, so too will be your troops.

Pete Marovich / ZUMA Press

2. A leader must provide a vision—clear and achievable “big ideas” combined in a strategic concept—and communicate those ideas throughout the entire organi­zation and to all other stakeholders.

3. A leader needs to give energy; don’t be an oxygen thief.

4. There is an exception to every rule, standard operating procedure, and poli­cy; it is up to leaders to determine when exceptions should be made and to ex­plain why they made them.

5. We all will make mistakes. The key is to recognize them and admit them, to learn from them, and to take off the rear­ view mirrors—drive on and avoid making them again.

6. Be humble. The people you’ll be lead­ing already have on-the-ground conflict experience. “Listen and learn.”

7. Be a team player. “Your team’s triumphs and failures will, obviously, be yours.” Take ownership of both.

8. Don’t rely on rank. If you rely on rank, rather than on the persuasiveness of your logic, the problem could be you and either your thinking or your com­munication skills. Likewise, sometimes the best ideas come from bottom-up information sharing (i.e., “Need to share” not “Need to know”). Use “direct­ed telescopes” to improve situational awareness.

9. Leaders should be thoughtful but deci­sive. Listen to subordinates’ input, evaluate courses of action and second- and third-order effects, but be OK with an “80 per­cent solution.” “There will be many moments when all eyes turn to you for a decision. Be prepared for them. Don’t shrink from them. Embrace them.” Some­times the best move is the bold move.

10. Stay fit to fight. Your body is your ulti­mate weapons system. Physical fitness for your body is essential for mental fitness.

11. The only thing better than a little com­petition is a lot of competition. Set chal­lenges for your subordinates to encourage them to excel.

12. Everyone on the team is mission criti­cal. Instill in your team members a sense of great self-worth—that each, at any given time, can be the most important on the battlefield. via thedailybeast.com

Jim Woods is about helping companies and pople engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

How Apple, Samsung and Google Take Different Approaches to Innovation - Max Nisen

image credit: Business Insider

When people think of the most innovative companies, they think of ones that are coming out with new and amazing technology. The push for self-driving cars or augmented reality glasses can be a more compelling story than, say, a smaller iPad.

But one thing highlighted in the Booz & Co. Innovation 1000 study and our conversation with co-author Barry Jaruzelski is that pushing technological boundaries is just one of the three successful paths to innovation. Each is as difficult to execute, requires as much innovation in the research and development (R&D) process, and has as much potential as the next.

Here's how Jaruzelski describes them: 

1. Need seekers (think Apple)

"...these are companies who's innovation strategy is essentially around knowing customers better than themselves, identifying unarticulated needs, and then being the first to market with a product that addresses those needs. It's very heavily reliant on direct customer observation rather than market research. It is people telling you what they want, watching customers, seeing how they interact with the product or competitors' products, and observing opportunities in the problems that they're having."

Apple didn't invent the touch screen. But it's made vastly more money than anyone else on it by focusing on how people use it, and being better than anyone else at delivering that experience.

2. Market readers (think Samsung)

"...a market reader is sort of the classic fast follower, it doesn't mean they ignore their customers, but they're very attuned to what competitors are doing and what other people are bringing to market first and observing what seems to be gaining traction, then very rapidly coming up with their own version of that innovation. You can think about the companies set up as almost a massive coiled spring to basically pop out and copy an idea, not reverse engineer it necessarily, but, looking at innovation and coming up with their own version very rapidly to get their share. It's very much rooted in competitive intelligence, classic market research kinds of activities in terms of the front end."

Samsung wouldn't have jumped five spots in three years on the ranking of the world's most innovative companies delivering bad copies of an iPhone. It creates compelling new versions of products, times them well, and adds to them. Pulling that off is an innovative and difficult strategy in its own right. 

3. Tech drivers (think Google)

"The third category is what we call technology drivers. This is much more the traditional technology push kind of model, where the pendulum hasn't swung completely away from customers and markets, but it's much more oriented towards leveraging the technology base, seeing what you can push out, seeing where there might be applications for the technology."

This is the model that's traditionally defined innovation, but being the first to come up with something and the best at making money off of it are very different.

Every company listed here is successful and approaches R&D in a completely different way. The narrative that calls only the last group innovative may be appealing, but it's not what investors or R&D executives care about.

This story originally appeared on Business Insider

via entrepreneur.com

We’re about helping companies of all sizes grow. Follow me on Twitter @innothinkgroup, Facebook https://www.facebook.com/pages/Center-for-Creative-Leadership-and-Strategy, or check out my website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To consult or speak at your event email me.