Can you stand another dose of Peter Drucker? I just about
always can, and in The Wall Street Journal‘s feature, the
legacy
of Drucker (in his own words), they feature this
gem dating from its pages in 1993: "The Five Deadly Sins
of Management." (The highlighting in the article is mine.) To wit:
- Pursuing maximum profits by premium pricing: This was
almost the downfall of Xerox, and of GM (more than once) - Pricing a new product at "what the market will bear"—rather
than at a more modest price designed to maximize the size of the
market and erect a barrier to rapid entry by competitors. This
"creates risk-free opportunity for the competition," and is how
the unnamed US company that invented the fax machine bumbled, letting
the Japanese price their machines 40% lower and capture, in very
short order, 99.9% of the market. - "Cost-driven pricing" rather than "price-driven costing." This is
the reason there is no American consumer-electronics industry and
why there may be no German luxury-car industry if Toyota (Lexus),
Honda (Acura), and Nissan (Infiniti) stay the course. [Can
you say "billable hour?"—anyone?] - "Slaughtering tomorrow’s opportunity on the altar of yesterday." Did
you know that IBM PC salespeople were forbidden (that’s
worth saying again, forbidden) from calling on
mainframe clients? Not only did this not help the mainframe
business, it kneecapped IBM’s PC business—while broadcasting
the message, "Send In the Clones" and ultimately of course it helped leave IBM with no PC division
at all today. And finally, my favorite: - "Feeding problems and starving opportunities." What
on earth can Drucker mean by this? What manager in his right
mind…[sputter, sputter]? But ask yourself Drucker’s question: "What
are your top-performing people assigned to?" And how
often will the answer be: To our problems. As for
opportunities, "they are left to fend for themselves."
Focus particularly on the fifth. At the risk of stating the
obvious (and even Drucker insists that "everything I have been saying
in this article has been known for generations"), the best your firm
can achieve by solving problems is containing damage. Only
in opportunities is there promise of growth and new energy. And
don’t they deserve your best people?
