What Would Peter Do?

My recent issue of the Harvard Business Review (HBR) had a cover that really caught my eye.  This year (2009) is the centennial year of the birth of management guru Peter Drucker (who passed away in 2005).  In my mind, Mr. Drucker is one of the heroes of business, along with men like W. Edwards Deming (the American who introduced total quality control or TQM to the Japanese after World War II because Detroit wanted nothing to do with it) and Thomas Watson (the founder of IBM).

Mr. Drucker’s writings are not normally common fodder for most small business people because he wrote primarily about large business (the Fortune 500 and similar classes of company) and most small business owners don’t see themselves in the same light as the corporate behemoths Drucker spoke of.  But Drucker actually had a lot to say that is good for small business too!

Drucker had the ability to write about complex and abstract concepts, but also to put real-life feet under them and make them pragmatic (a real rarity, if you spend much time reading the HBR or other similar publications).

Drucker wrote in the 1980’s, for instance, that allowing executive pay to get out of control (where the focus was on taking excessive risks to reap possibly huge short-term gains) would lead to economic disaster for those companies who practiced it.  (AIG, Fanny-Mae, Freddy-Mac, Leiman Brothers, Goldman Sachs… the list goes on and sounds very familiar, does it not?) That is because Drucker believed in principle-based management, something from which American big business today seems to have drifted.

He bemoaned Detroit’s reluctance to change and adapt to the new world realities and since his death, we have seen the near-collapse of GM and Chrysler.

He warned of emerging industrial competition from the third world, and no one listened, until now America lags behind China and other industrial comers in annual output.   (When was the last time you bought a TV set made in America?  Or shoes, or even a shirt? Oh, they can still be found, but it is getting harder and harder, isn’t it?)

More Drucker-isms for small business: “If I put a person into a job and he or she does not perform, I have made a mistake.  I have no business blaming that person.”  (“How to Make People Decisions”, HBR July/August 1985).

Or this: “Asking, ‘What is right for the enterprise?’ does not guarantee that the right decision will be made.  Even the most brilliant executive is human and thus prone to mistakes and prejudices.  But failure to ask the question virtually guarantees the wrong decision.”  (“What Makes an Effective Executive”, HBR June 2004).

To quote Rosabeth Kanter (“What Would Peter Say?”, HBR November 2009), “Drucker was not a revolutionary.  He merely asked that we constantly challenge assumptions.  He preached steadiness and long-term vision.  He recognized that leading in turbulent times requires foresight about where things are heading as well as judgment about what not to change.  He would remind us that the best preparation for a smooth journey, even as we steer across troubled waters or leap across chasms, is a clear sense of meaningful purpose.”

There is rising optimism that 2010 will be a year of moderate recovery.

I don’t share that optimism.  Recent articles in the Wall Street Journal, for instance (lead stories of Tuesday, Nov. 19, 2009 and Tuesday, Nov. 24, 2009) combined with the fact that in 2010 the five-year ARMS that were sold in 2005 go up (and these are for the most part jumbo loans) has me thinking that the last half of 2010 will be as bad as the end of 2008, maybe even worse.

I hope like heck I am wrong, but my reading of the tea leaves does not give me much confidence in our ability to climb out of this government-made hole.  Now more than ever we need the wisdom of dead sages like Drucker and Deming.

Get their books while you still have time and read them, then act on what you learn. It just might save your business in 2010!