Drucker felt company leaders have to concentrate and eschew "product clutter," which has not been the specialty of GM
Though it is sheer coincidence that Ford Motor (F), the only one of Detroit's Big Three automakers not seeking aid from Uncle Sam, builds a car called the Focus, it's hard not to appreciate the symbolism. Peter Drucker, for one, surely would have gotten a kick out it.
Drucker also wouldn't be surprised that Ford's rivals, Chrysler and General Motors, now find themselves struggling to survive. He had critical things to say about both of these companies over the years. As I've noted before, Drucker believed that since at least the 1940s, when he first studied GM, its top managers have resisted changing long-standing plans and policies—even as the world shifted around them. The upshot: a company that's had tremendous trouble moving forward, like a Chevy stuck in the mud.
President Barack Obama's auto task force zeroed in on that same weakness when it chided GM for being "far too slow" in doing what's needed to turn itself around. But there's another part of the task force's assessment that Drucker would have agreed with as well, for it highlights a principle that he held was essential to good management (yet gets violated time and again): Don't spread yourself too thin. "GM," the White House panel said, "has retained too many unprofitable nameplates that tarnish its brands, distract the focus of its management team, demand increasingly scarce marketing dollars, and are a lingering drag on consumer perception, market share, and margin."
To Drucker, one of the most important things that any organization can do is to adopt what he called a "rifle approach," eschewing "product clutter." "Economic results," he wrote, "require that managers concentrate their efforts on the smallest number of products, product lines, services, customers, markets, distribution channels, end users, and so on which will produce the largest amount of revenue."
Abandon Those Products
And yet as fundamental as this seems, Drucker added, many businesses foolishly "pride themselves on being willing and able to supply any specialty, to satisfy any demand for variety, even to stimulate such demands in the first place. And many businesses boast that they never, of their own free will, abandon a product." Thanks to this attitude, plenty of companies "end up with thousands of products in their product line—and all too frequently fewer than 20 really 'sell.'"
Assembling the workforce often gets handled with a similar lack of focus. "We build enormous staffs," Drucker asserted, and yet do not concentrate enough effort in any one area to get very far." Then, during tough times, many companies pare expenses the same, ineffectual way: Rather than "pinpoint" cuts, as Drucker advocated, they resort to across-the-board reductions.
Drucker warned about this in a piece for Harvard Business Review in 1963. But it's just as prevalent a problem these days. John Sullivan, a management professor at San Francisco State University and the former chief talent officer at Agilent Technologies, figures that more than half of all companies cutting back in the current downturn are implementing across-the-board layoffs, pay freezes, and furloughs. The reason, he says: "They don't have the courage" to confront employees individually, and in many cases don't have the proper performance measures to even know where to target.
Drucker's basic message—"focus, focus, focus"—extended beyond the organization as a whole, right down to the individual. The best managers "do first things first and they do one thing at a time," he wrote more than 40 years ago in The Effective Executive. Such single-mindedness, he explained, is dictated by a simple reality: "Most of us find it hard enough to do well even one thing at a time, let alone two.
Concentration Is Key
"Mankind," Drucker continued, "is indeed capable of doing an amazingly wide diversity of things; humanity is a 'multipurpose tool.' But the way to apply productively mankind's greatest range is to bring to bear a large number of individual capabilities on one task. It is concentration in which all faculties are focused on one achievement."
Time magazine may have dubbed today's young people "the Multitasking Generation," with their seeming ability to do their homework, chat online. and listen to their iPods—all simultaneously—but Drucker (a man who wrote 39 books, taught, and consulted) assiduously avoided being sidetracked from the main activity at hand.
He even kept a stack of preprinted response cards at the ready, allowing him to politely, but quickly and firmly, decline all manner of potential diversions. "Mr. Peter F. Drucker appreciates your kind interest," the cards read, "but is unable to endorse or to review books, manuscripts or proposals; to appear on radio or television; to join boards or panels of any kind," and so on and so forth.
In fact, the "secret" of people who "do so many things," according to Drucker, is that they knock them off one by one. "We rightly consider keeping many balls in the air a circus stunt," he wrote. "Yet even the juggler does it only for 10 minutes or so. If he were to try doing it longer, he would soon drop all the balls."
Or, perhaps, drive his company to the brink.