On Managing for Results

I just finished reading Managing for Results by Peter F. Drucker. As the author best puts it: “This is a what to do book. It deals with the economic tasks that any business has to discharge for economic performance and economic results.” Of important note is the focus on the ultimate results which Peter stresses as the ultimate measuring stick for any activity the business undertakes.

The book is divided into three main sections. The first one, “Understanding the business”, is focused on analysis and understanding. This includes discussing topics such as: revenues, resources, prospected, cost structures, customers etc. The second one, “Focus on opportunity”, is focused on opportunities and how to capitalize on them. This includes topics such as: building on strength, business potential. Finally the last section, “A program for performance”, focuses on the “conversion of insights…into purposeful performance”. This includes discussing: business objective and strategy, organizational structure etc.

A great read on business execution/effectiveness and strategy. What sets this book apart from others is its thoroughness in addressing the various aspects that affect the company’s current and future results. Numerous examples of companies are also presented to illustrate the material presented. Highly Recommended!

Below are some excerpts from the book that I found particularly insightful:

1) “There are three different dimensions to the economic task: (1) The present business must be made effective; (2) its potential must be identified and realized; (3) it must be made into a different business for a different future.”

2) “…while 90 per cent of the results are being produced by the first 10 per cent of events, 90 per cent of the costs are incurred by the remaining and result-less 90 per cent of the events. In other words, results and costs stand in inverse relationship to each other.”

3) “There are several prerequisites for effective cost control: 1) Concentration must center on controlling the costs where they are… 2) Different costs must be treated differently. Costs vary enormously in their character – as do products. 3) The one truly effective way to cut costs is to cut out an activity altogether…4) Effective control of costs requires that the whole business be looked at – just as all the result areas of a business have to be looked at to gain understanding. 5) “Cost” is a term of economics. The cost system that needs to be analyzed is therefore the entire economic activity which produces economic values.”

4) “Major cost points fall into four main categories: 1) Productive costs 2) Support costs 3) Policing costs 4) Waste”

5) “Marketing analysis is a good deal more than ordinary market research or customer research. It first tries to look at the entire business. And second, it tries to look not at our customer, our market, our products, but at the market, the customer, the purchases, his satisfactions, his values, his buying and spending patterns, his rationality.”

6) “Having reached the end of this self-analysis, the businessman should be able to see what the business is, what it does, and what it can do.”

7) “This does not mean that every business has a hidden potential and can turn weaknesses and vulnerabilities into opportunity. But a business that has no potential cannot survive. And a business that fails to search for its potential leaves its survival to chance.”

8) “But tomorrow always arrives. It is always different. And then even the mightiest company is in trouble if it has not worked on the future. It will have list distinction and leadership – all that will remain is big-company overhead. It will neither control nor understand what is happening. Not having dared to take the risk of making the new happen, it perforce took the much greater risk of being surprised by what did happen. and this is a risk that even the largest and richest company cannot afford and that even the smallest business need not run. ”

9) “Therefore one set of key decisions must be made for the business in all of its dimensions. These decisions are: 1) The idea of the business 2) The specific excellence it needs 3) the priorities.”

10) “Whatever  a company’s program, a) it must decide what opportunities it wants to pursue and what risks it is willing and able to accept. b) it must decide on its scope and structure, and especially on the right balance between specialization, diversification, and integration. c) it must decide between time and money, between building its own or “buying” – i.e., using sale of a business, merger, acquisition and joint venture – to attain its goals. d) It must decide on an organization structure appropriate to its economic realities, its opportunities and its program for performance.”

11) “The right structure does not guarantee results. But the wrong structure aborts results and smothers even the best-directed efforts. Above all structure aborts results and smothers even the best-directed efforts. Above all structure has to be such that it highlights the results that are truly meaningful; that is, the results that are relevant to the idea of the business, its excellence, its priorities, and its opportunities.”

Regards,

Omar Halabieh

Managing for Results

Managing for Results

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