This is an extract from a mini toolkit ‘30+ tips on improving performance and innovation from the great management thinkers‘ (article +E-Templates) that can be source from this link.
The father of management, Peter Drucker, sadly passed away in 1997. His work contains many gems that have been overlooked. Alongside Drucker there are some brilliant writers like Jack Welch, Tom Peters & Robert Waterman, Gary Hamel and Jim Collins who have now taken over the batten. The only problem is that many of us are too busy to read and absorb their work.
Peter Drucker’s Lessons for Performance Management[i]
Focus on your noncustomers
Which of your noncustomers should you be doing business with? (Desirable potential customers). Only Drucker could coin a phrase, “non customers”, yet it gets right to the heart of the fundamental issue. Every private sector government and not-for-profit organisation is missing customers it should be servicing. This is particularly relevant in the government and not-for-profit sectors where members of the public, who should receive a service, are either unaware or too proud to ask for help. By constantly focusing on non-customers, an executive team can find these customers and look after their needs.
Action: Monitor weekly progress on selling to the top five non customers you have identified.
Recruitment is a life and death decision
Drucker was adamant about the significance of recruiting the right staff.
Drucker talked about recruitment being a life and death decision. In other words, better to spend forty hours over a recruitment or promotion decision rather than spending four hundred hours sorting out the problem at the bottom of the cliff.
Drucker was very specific about rules over recruitment. You must know the job; you need to be well acquainted with the candidates in order to be familiar with their strengths and values. It is essential the potential new recruit’s values are a good fit with the organisation. You can train as much as you like but you will never be able to change values as they are part of a person’s DNA.
Recently I met an owner of a private hospital. He had placed a person into the CEO position knowing he had a track record of buying deals. Within a short space of time fictitious employees were on the payroll, and it cost one million to prosecute the case. The CEO was able to extend the case, so no conclusion was reached. That recruitment cost much more than 400 hours!
One aspect of recruitment Drucker strongly advocated is that it is imperative to perform detailed reference checks to really ascertain the candidate’s values. Obviously, this means tracking back to previous companies rather than rely on the referees listed on the curriculum vitae.
Drucker liked things in threes. He recommended short listing three candidates to ensure you have choice. He would strongly advise this selection process to avoid making a decision where there was only one satisfactory candidate.
Drucker was adamant that you never worried about weaknesses. He pointed out that many famous leaders had appointed staff with known weaknesses because their strengths fitted the job so well.
Action: Whenever you are recruiting realise that this is one of the most important things you ever do and thus allow other fires to burn themselves out and concentrate on a well orchestrated interview process.
Generate three protégés for each senior position
Drucker was firm in his belief that a leader’s role was largely to prepare the organisation for life without them. He thought it was a failure if the next CEO had to be sourced from outside. Drucker pointed out the advantages of continuity, culture and acceptance. Naturally, the two in-house candidates who were not successful were expected to move to CEO positions elsewhere as they were primed for this role. The creation of CEOs has been a feature of good to great companies in Jim Collin’s book[ii] and can be seen in companies such as Toyota and GEC.
Action: Status of succession planning for all key positions should be monitored on a quarterly basis. Following Drucker, any shortage from the three protégés for each senior position should be reported as an exception once a month.
Have an outside-in focus to your business
See the operation from your key customers’ and non-customers’ perspective.
Throughout his writings Drucker emphasised the importance of the outside/in perspective. Recently a television reality programme has replicated this concept with the “CEO undercover” series. Drucker pointed out the importance of the CEO being the outside-in champion. One great CEO I have met takes the executive team for a one-week exercise per year where the existing staff show them the ropes. His executive teams have run the “Happy Road” employment centre, a betting agency, an income support centre and a tourist information centre. The importance of seeing the processes is akin to Toyota’s “use visual controls so no problems are hidden”.
The executive team, who are duty bound to undertake mundane tasks, ask the staff, “Why am I having to copy this out three times?”, “Why have I got to have a hard copy when I have an electronic copy?”, “Why do I have to enter so much detail in the database?” The staff replied, “These are the procedures that you approved!”
On returning from this week the executive team are refreshed, are a tighter knit group whose priorities have changed completely. Now they focus on initiatives that are more focused on the customer, ones that will help the staff at the workface service their clients better.
Action: Plan for a week ‘outside-in’ visit to a branch accompanied by all your senior management team. Yes, I did say all!
Collaborate with other organisations, even your competitors
“Your back room is someone’s front room.” In other words, if others can do a job better than you can, contract out to them.
Drucker saw the importance of knowing what you were best at. Focusing as Jim Collins would say on your Hedgehog. The area of your business which you are truly passionate about; you can be the world’s best and there is an economic engine that will reward you.
He saw business as a “Lego” construction, where you could bolt together services provided either in-house or externally. He was referring to the fact that it was now easier than ever before to amalgamate different services from different entities and market it seamlessly to the customer as one entity. Businesses should be full of activities (pieces of the business) performed by third parties.
He stated that there was not competition but just better solutions. Drucker saw collaboration as the key to operating in this world, even with an organisation that you previously saw as a competitor. Jack Welch turned General Electric (GE) into a powerhouse by striving to focus on what GE was good at, subcontracting to competitors rather than diverting energy to be good at everything, a task that is impossible to achieve.
In the government and not for profit agencies, collaboration has the same barriers as in the private sector. Egos and past institutional memories seem to prohibit staff from striking effective alliances with other organisations that can perform the service better and cheaper. As Drucker put it “Your back room is somebody’s front room”. He even went on to say that an organisation could achieve almost all functions from collaboration. Drucker saw only marketing and innovation that have been sacrosanct in-house activities.
Action: Set out at least three alliances that have been mooted where activities can be done by a third party for the business and monitor progress on a weekly basis until alliances are functioning.
Management versus Leadership
Management is ensuring that staff are doing things right and leadership is ensuring that staff are doing the right thing.
Moving leadership to orchestration
Again, Drucker cut through the difference between what is management and what is leadership.
Drucker compared the role as a leader to the role of a conductor in an orchestra. A conductor guided the professional orchestra, with minimal direction, leaving the professional players as masters of their own domain.
He was very directive in what he considered leaders should do. Drucker said staff had a right to:
- be respected every day
- have their assignments clearly identified and understood
- be equipped so they could carry out their tasks
Action: Look to your mentor and seek guidance on areas where your leadership style can be improved.
Outstanding performance is inconsistent with a fear for failure
Without the will to take risks, to venture into the unknown and let go of the familiar past, an organisation cannot thrive in the twenty-first century.
Drucker knew that significant leaders failed often. However, he indicated that their successes were far greater and more frequent. Successful leaders recognised failure earlier than their peers and were faster to press the abandonment “button”. So much is talked about by famous entrepreneurs such as Sir Richard Branson, yet, in many organisations the fear of failure pervades all thinking. This fear of failure is no more evident than in government and not –for-profit agencies.
It is important to recognise early on if a decision was wrong and make corrective action or abandon the initiative. Those who make decisions and have more winners than unsuccessful initiatives should be championed as more valuable than the managers who only back a few winners.
Action: Monitor those projects that have failed and promote them as good learning experiences. Promote the notion that a decision made, even if wrong, is better than no decision.
Develop and nurture a safe haven
Drucker emphasized the importance for leaders to have balance, to have interests outside the work environment that help them maintain a balanced perspective.
In preaching self-renewal Drucker was saying to all of us you need to have balance, other interests, passions, hobbies outside work as well as a hunger for new management concepts.
You will be a better, more balanced leader if you lead a full life. Drucker told a story about a well-respected CEO who was, unknown to the organisation, a recognised international Egyptologist. In fact, the CEO had kept his other passion so separate that it was only at the funeral that his work colleagues discovered this other side to him.
Drucker realised the importance of balance. Leaders functioned better, were more positive and easier to work with if they had another passion outside work.
Action: Nurture and grow your safe haven now.
Do not give new staff new assignments
When an organisation wants a new system implemented it is very tempting to hire someone who has expertise, as a consultant or as a permanent appointment. Drucker pointed out that they do not stand a chance, as staff who are concerned about the change will do their utmost to de-stabilize the project. He referred to these jobs as widow makers, jobs where the incumbent did not have a chance to succeed. Instead, you need to appoint an in-house person best suited for the role–someone who is well respected in the organisation, who has a pile of IOUs which they can use when favours are required. Staff will support the new initiative more readily when it is led by such an appointee.
The scarce resource in an organisation is performing people
Drucker highlighted that these scarce resources need to be specifically monitored and not taken for granted. Their goals should be challenging enough to stretch them and keep them interested.
Know what information you need to do your job and from whom you need it, When and how?
By answering these basic questions, we can streamline much of the reporting formats, dispensing with those reports that add no value.
Have three test sites
Drucker pointed out that to do one pilot was never enough to test a process. The test site will be considered to be too big or too small by the doubters.
Place people according to their strengths
Drucker was adamant that you focus on what people can do rather than focus on what they cannot do well.
Peter Drucker’s Lessons on Innovation
Embrace abandonment
I consider abandonment as one of the most important gifts bestowed on us by Peter Drucker. It is unusual that such a profound concept should have been left unnourished by so many writers who followed in his footsteps. Amongst the overgrown and chaotic jumble within an organisation Drucker saw a clear pathway to freedom, innovation and productivity through the adoption of regular and systematic abandonment. Drucker knew more than anyone, that human beings never like to admit a mistake or own up to failure. To avoid facing the truth we hope circumstances will somehow conspire to make a ‘silk purse out of a sow’s ear’.
Drucker said: “The first step in a growth policy is not to decide where and how to grow. It is to decide what to abandon. In order to grow, a business must have a systematic policy to get rid of the outgrown, the obsolete, and the unproductive.”
He also said: “Don’t tell me what you’re doing, tell me what you’ve stopped doing.”
He saw abandonment as fundamental as breathing, a natural passing of old to new. Examples of abandonment he talked about included
- Cash cows of the past (which were no longer generating the income to justify their continued existence)
- Rectifying recruitment mistakes (no matter how good your recruitment process is, you will make mistakes and these staff need to be told they need to move on)
- Unsuccessful projects
- Systems that are not delivering
- Processes that we have maintained only because we did it last month, last quarter, last year.
Action: Establish an abandonment day, every month, yes every month and get all teams involved Measuring the extent of innovation and abandonment will help focus management’s attention on these two important areas.
[i] Elizabeth Haas Edersheim The Definitive Drucker: Challenges for Tomorrow’s Executives—Final Advice from the Father of Modern Management (New York: McGraw-Hill, 2006).
[ii] Jim Collins, Good to Great: Why Some Companies Make the Leap and Others, (New York: HarperBusiness, 2001).