Peter Drucker’s Best Advices

What gets measured gets managed.”

“The purpose of a business is to create a customer, that is done through marketing and innovation, everything else is a cost.”

In order to be effective an individual should ask their superior “how can I help you?” Much time is wasted because this question is never asked.

“The only profit center is the customer.”

“Companies should not ask: did we increase our profits this year, but did we increase our share of the customers heart and mind this year?”

Corporations explanation to the public of profit being their reason for existence is no more justified they say bigotry. However, without profit the corporation can not exist to serve the customer.

“Outside a corporation are only results, inside are only costs.”

“There is no irrational customer, only irrational companies.”

“Some companies try to justify a higher price to the customer because of their higher costs, that is not value, that is incompetence.”

“Time is the scarcest resource, unless it is managed, nothing else can be managed.”

“Results must be measurable.”

“Building around mission and long term goals is the only way to integrate shorter term interests.”

“The best way to predict the future is to create it.”

Two things I learned from the Effective Executive that I recommend frequently (and do myself all the time):

1. Take a lot of time on personnel decisions. Don’t be quick to hire or fire; think on it, sleep on it, talk about it, and only decide when you’ve given it the amount of time the decision demands.

2. Track your time. Be brutal and honest and look at how you’re actually spending every minute of your time. You should do this at least one full week out of every quarter, and you should get your employees to do it as well.

(1) Do you think that if you start a business, it should run by itself without your help?
Well, since Robert Kiyosaki’s book become popular, many people think they can start a business, let other people do it, and take profits. Well, in some cases, it happens. But if you want to build a company that last, it is a really wrong way to do it. In his 1973 book, Peter Drucker wrote a whole chapter about the task of Top-Management. It is very different from other task, but it ụ requires a lot of effort, far from “delegating the work to someone else”.

(2) Do you think that people work better if they are highly controlled?
No. People work better if the are autonomy supported. Peter Drucker coined the term “Management by Objectives and Self-Control”. The idea of this MBO is employee should be driven by objectives (not incentives), while employer give more autonomy to knowledge workers. In psychology (especially in SDT, Self-Determination Theory), a lot researches confirmed that people work better if they are in an autonomy supported environment.

(3) What is the purpose of the business?
If you think it is an institution to make profits, then (according to Peter Drucker) you are wrong. Profit is a necessary condition for the company to sustain and continue what they are doing, not the other way around. It is best described by Walt Disney’s quote, “We don’t make movies because want to make more profits. We make profits so we can make more movies”.

…and probably many others.

responsibility is to serve its customers. You have to look at the context, in a perfect world, not this BIZZARRO” world, in order for a company to serve it’s customers, it has to have products customers want. If it doesn’t, it’s not serving the customer. Profits are derived from revenues, minus expenses. The revenue brings in financial resources to fund the creation of products and services. The company has to operate, get raw materials and process them to finished good. All those activities are costs. When the costs are below the revenues, profits are derived. is not the primary goal, but rather an essential condition for the company’s continued existence. Is this true?
Profits are for stakeholders, they invest in the company and the investor needs to see the company keep making profits with new and improved products and services that customers demands. Profits are not bad, they are part of the cycle of business that sustains an enterprise.MBA, greedy executives and people with TI graphing calculators and do what if analysis up the ying yang are the ones that are looking for ways to derive more.

The knowledge worker cannot be supervised closely or in detail. He can only be helped. – Peter Drucker