Consulting Drucker Page 21

  To Dream or Not to Dream, That is the Question

  It would be foolish – even dangerous – to abandon successful products, organizations, strategies, or businesses while they are still very profitable and have significant potential. When will new ideas for the future arrest the inevitability of failure without change about forward thinking, and when are they a costly waste of time and “not sticking to one’s knitting”? Drucker agreed that tactical improvement of success works to the point that change is so needed that not changing will make failure immediately inevitable. How, then, can we recognize the possible onset of environmental conditions with significant magnitude that we must prepare for revolutionary change? Sorry – that’s where the judgment of the manager comes in.

  What to Recommend to Clients

  • Make an effort to know what’s going on, not only in a single industry, but in the world. Familiarize yourself not only with new products, but with trends in the environment that even remotely could affect operations in future years. This means a regimen of continual reading of trade journals, newspapers, the internet and other relevant media, and thinking about what this means or will mean in the future. This process should never cease

  • Ask yourself not what will happen, but what could happen based on current and anticipated developments

  • Play a “what-if” game about your current business. What would you do if …

  • Watch developments closely. If sales drop over several quarters, find out why. Do the same if sales expectantly increase. Do not automatically assume that everything will “return to normal”. There is no normal. If sales increase or decrease in certain areas, find out why. Recognize that nothing lasts forever, prepare yourself mentally for change, and take immediate action when necessary, regardless of your previous investment of time, money, or resources. Never forget the accountants’ credo that sunk costs are sunk costs and that nothing lasts forever

  • While you should not change just for the sake of change, establish a programme of continual review of every product, strategy, tactic, and policy. Aggressively seek opportunities to change and use change not only to stay ahead of the competition but to make sure what you are currently doing is not obsolete

  • Adopt new ideas and change from previously successful methods to ones that are even more successful for the future. In this way, you’ll not only succeed, you’ll succeed in a big way Much of Drucker’s reputation came from doing what didn’t come naturally to managers or most clients. All consultants seeking to follow in Drucker’s path need to recognize this. It is truly difficult to recognize that in just about any business failure exists and the seeds of success lie dormant – and the same is true in reverse. The seeds of future failure also lie dormant in any success. The consultant, any consultant, must recognize this and be prepared to lead a client to the next success by abandoning what once was a “darling” of the company and its executives.

  1 No author listed, “1946 The Bikini Is Introduced,” History, accessed at http://www.history.com/this-day-in-history/bikini-introduced, 8 August 2015.

  2 No author listed, “Prohibition in the United States,” Wikipedia, accessed at https://en.wikipedia.org/wiki/Prohibition_in_the_United_States, 8 August 2015.

  3 Arnold, H.H. Global Mission, (New York: Harper & Row Publishers, Inc., 1949) p. 615.

  4 Corrigan, Tom, “Fat Lady Sings for Columbia House,” in Wall Street Journal, 11 August 2015, pg. B1.

  5 Mulligan, Thomas F. and James Flanigan, “Prolific Father of Modern Management,” Los Angeles Times, Business Section, November 12 2005, p. A-1, accessed at http://articles.latimes.com/2005/nov/12/business/fi-drucker12, 12 August 2015.

  6 Heller, Robert, “The Drucker Legacy,” Thinking Managers, accessed at http://www.thinkingmanagers.com/management/drucker 12 August 2015.

  7 Drucker, Peter F., Managing for Results, (New York: Harper & Row Publishers, 1964) pp. 143-146.

  8 No author listed, “The Model-T Ford,” Frontenac Motor Company, accessed at http://www.modelt.ca/background.html, 12 August 2015.

  9 No author listed, “Ford Model T,” Wikipedia, accessed at http://en.wikipedia.org/wiki/Ford_Model_T, 12 August 2015.

  10 Drucker, Peter F., On the Profession of Management (Boston: Harvard Business Review Book, 1963, 1964, 1966, 1985, 1987, 1989, 1991, 1992, 1993, 1994, 1998), pp. 116-117.

  11 Drucker, Peter F. Managing for Results, p. 221.

  12 Drucker, Peter F. with Joseph Maciariello, Management (New York: HarperCollins, 1973, 1974, 2008) pp. 163-166.

  13 Drucker, Peter F. Classic Drucker (Boston: Harvard Business School Publishing, 2006, 2008) p. 29.

  14 Drucker, Peter F., Management Challenges for the 21st Century (New York: Harper Business, 1999) p. 74.

  15 Op. Cit. Drucker, Peter F., Managing for Results, p.143.

  16 Ibid. p. 144.

  17 Drucker, Peter F. Innovation and Entrepreneurship, (New York: Harper & Row Publishers, 1985) p. 155.

  18 Op. Cit. Drucker, Peter F. with Joseph Maciariello, Management, p.61

  19 Op Cit. Drucker, Peter F., Management Challenges for the 21st Century, pp. 74-76.

  20 Drucker, Peter F., On the Profession of Management, pp. 25-26.

  21 Drucker’s feeling echoed those of David Boyle, author of The Tyranny of Numbers: Why Counting Can’t Make Us Happy (Flamingo, 2001).

  I confess, I have not yet read the book. However, the description provided at amazon.com very well represents Drucker’s feelings as I knew them:

  “Never before have we attempted to measure as much as we do today. Why are we so obsessed with numbers? What can they really tell us? Too often we try to quantify what can’t actually be measured. We count people, but not individuals. We count exam results rather than intelligence, benefit claimants instead of poverty. The government has set itself 10,000 new targets. Politicians pack their speeches with skewed statistics: crime rates are either rising or falling depending on who is doing the counting. We are in a world in which everything is designed only to be measured. If it can’t be measured, it can be ignored. But the big problem is what numbers don’t tell you. They won’t interpret. They won’t inspire, and they won’t tell you precisely what causes what. In this passionately argued and thought-provoking book, David Boyle examines our obsession with numbers. He reminds us of the danger of taking numbers so seriously at the expense of what is non-measurable, non-calculable: intuition, creativity, imagination, happiness … counting is a vital human skill. Yardsticks are a vital tool. As long as we remember how limiting they are if we cling to them too closely.” Accessed at http://www.amazon.com/Tyranny-Numbers-Counting-Cant-Happy/dp/0006531997/ref=sr_1_1?ie=UTF8&qid=1439394476&sr=8-1&keywords=The+Tyranny+of+Numbers+Boyle, August 12 2015.

  22 Op. Cit. Drucker, Peter F. with Joseph Maciariello, Management, pp. xxvi-xxvii.

  23 Op Cit. Drucker, Peter F., Innovation and Entrepreneurship, pp.154-155.

  24 No author listed, “Jack Welch,” Wikipedia, accessed at https://en.wikipedia.org/wiki/Jack_Welch, August 12 2005

  Chapter 14

  How Drucker Helped His Clients Innovate

  Let’s be honest. Many of our innovations come from flashes of sudden inspiration. I seem to get an enormous number of such flashes when waking in the morning, which tells me that my mind has been hard at work while I slept. Joe Cossman was an unbelievably productive innovator who thought of so many new product innovations that it was a miracle he found the time and resources to pursue even a small percentage of them. But somehow he exploited enough to become extremely wealthy, mainly like Drucker as a “one-man band”. Most worked out and probably made him a million dollars or more every time one was introduced. A few failed, but there was no question that his batting average, as well as his productivity, were excellent. The Cossman Ant Farm was one of his most successful efforts.

  Cossman’s Ant Farm – the Most Successful Toy Innovation of the 20th Century

  Cossman’s famous “ant farm” was one huge success. The i
dea of constructing an educational toy by assembling an ant colony, with the correct kind of dirt, using a wooden framework of about 12 x 12 inches, surrounded by clear panes of glass so that the “farmer” could peer in and watch the goings-on, was not new. It had probably been around for 80 years or more when Cossman introduced his version. However, that’s where his innovation started. The older version never attempted a mass market for children; the clear panes of glass were hazardous because they could easily break and would be dangerous. The original ant colony concept worked when used under the supervision of a teacher in the classroom, but it could not be promoted as an individual child’s toy, and not only because of the danger of the breaking glass. The glass-wood interface was not perfect, and the ants frequently escaped, much to the dismay of both teachers and students. Parents would have been even less amused to have ants running around the house.

  Joe’s version of the “ant farm” was intended for use as a “learning toy” for individual children at home. Thus, it was designed for personal ownership and not as a class project. Moreover, it was a toy system. He replaced the wooden frame and glass with clear plastic. This made it lighter and unbreakable under normal use, and this design was therefore safer for children, more secure regarding the ants’ ability to escape, and much less expensive to manufacture. But Joe didn’t stop there. Even the name chosen, “ant farm,” was an innovation.

  But how could he distribute the farm with the ants to retail stores around the country? Simple: another innovation. A farm had livestock, and each ant farm that he sold had a “stock certificate” accompanying it, which could be mailed in to receive guaranteed delivery of the “livestock” necessary to populate the farm.

  Cossman had great success with this product due to his successful innovations, and the product is still selling today, years after he is no longer with us. Joe Cossman said that once you focused on a certain product, service, industry, or business, flashes of inspiration flow at a rapid pace.

  Flashes of Innovation

  Drucker thought that flashes of inspiration were an excellent innovation tactic. However, he told me that there would always be more good ideas than time, money, and the personnel available to develop them. He accepted that the “bright idea” – a vague and illusive innovation rushed into development without much real analysis – could be successful. He did not disagree that one could even hit a “home run” with a single bright idea such as this. And he was happy to give me other examples of single bright ideas that had made millions for their originators – including the zipper, or to call it by its original name, the “slide fastener,” the ballpoint pen, the aerosol spray can, and more. But he said these were not the norm and should be ignored as a model of how innovation should be approached and managed as a purposeful business activity. He said there was significant danger to the project if purposeful analysis was not a part of the process.

  Joe Cossman and Peter Drucker were both my friends. In some ways, they had a lot in common. After another of Joe’s innovative products, called “My Son, The Musician,” which was based on a flash of genius, Joe would have heartily agreed with Peter’s approaches to innovation. And since Joe, too, devoted time to consulting and advising others how to innovate, he would have suggested many of Drucker’s recommendations to his own clients. Joe’s product, “My Son, the Musician” taught Joe an important lesson.

  “My Son, the Musician” Has High Sales But Is Pulled Off the Market

  Joe Cossman had such high sales with “My Son, the Musician” that it almost put him out of business. The inventor of “My Son, the Musician,” which was the clever name Cossman thought up, was guaranteed to end parental problems with potty training of growing infants through technology and a clever innovation. The technology part was a device consisting of a bowl containing a liquid-sensing device connected to a music box. When the bowl sensed a liquid, such as urine, it would immediately begin to play a selected nursery tune. So the child really was making his or her own music. Cossman tested the product with his own son, who was about the right age at the time. It worked perfectly every time.

  Without the type of purposeful analysis that Drucker recommended, Cossman wrote advertising copy, rushed the item into production, engaged salespeople, and began to promote the product. There was tremendous interest and demand even prior to the product’s introduction, perhaps one of the largest in the history of any of his toy products. Cossman thought that sales of “My Son, the Musician” might rival that of his top products from the past, including the ant farm.

  His enthusiasm disappeared when a child psychologist, who had seen a unit in a local store, called to tell him the bad news. “My Son, the Musician” would absolutely encourage the child to go to the toilet when he understood that music could be created by using the toilet bowl properly. Moreover, this would be reinforced every time the child “played a tune” and the act of urinating would become associated with music.

  Such associations are extremely powerful. You’ve probably heard of the Russian scientist Dr Ivan Pavlov’s experiments with dogs. Every time he fed the dog, Pavlov would ring a bell. The dog would salivate when he saw the food. Before long, the dog would salivate when he heard the bell, whether Pavlov fed him or not. A strong association was created between the sound of the bell and the involuntary physiological act of salivation. Cossman connected the dots and knew that his product, though it worked perfectly, was in trouble.

  “Bright Ideas” with Incomplete or Poor Analysis Lose Money

  It doesn’t take much imagination to understand the consequences of the music being played long after the child had stopped using “My Son, the Musician” as a learning device and unfortunately, even after the child had grown to adulthood. Cossman confirmed this potential problem with other psychologists. The initial sales of “My Son, the Musician” may have been very encouraging, but if continued, lawsuits from parents and former users of “My Son, the Musician” would have inevitably resulted and put him out of business. The innovation “My Son, the Musician” was a very bright idea. “The problem,” Drucker maintained, “is that bright ideas are the riskiest and least-successful source of innovative opportunities.” He estimated that probably only one in 500 made any money above investment costs and suggested that relying on the bright idea for innovation was akin to gambling at Las Vegas and almost certain to lead to similar results in the end.

  The solution, he maintained, was analysis of innovative ideas through a systematic process. This, he declared, was purposeful innovation, the kind that all in business must pursue regardless of specialty, discipline, or functional area. He strongly recommended the abandonment of “the bright idea” as a standard operating procedure. Instead, Drucker recommended another approach.1

  The Unexpected, but Still Analysed

  Drucker wrote that the unexpected was the richest source of opportunity for successful innovation, much better than the “bright idea”. But it was one that was not only neglected, but frequently and actively rejected by managers of all disciplines, before they were so focused on what was expected.

  For example, during World War II, rubber was in especially high demand for all military vehicles. The Japanese controlled the primary sources of rubber, but we were at war with Japan, and the US was getting more and more desperate. Synthetic rubber existed, but was expensive. So General Electric launched a programme to develop cheaper synthetic rubber. In 1943, a GE engineer combined boric acid and silicone oil in this attempt. Unfortunately, the strange material that resulted from this combination couldn’t be hardened. Thus it failed at what was expected: a synthetic rubber substitute.

  However, the engineer noted that it had strange and unexpected properties. It would bounce when dropped, could stretch to a much larger size without tearing, and when pressed against printed images such as a newspaper, it would transfer the image from the newspaper. The amazed engineer showed his managers. Still focused on what was expected, nothing resulted because, though surprised, they saw no ben
efit from the product as a substitute for rubber. Some effort was expended, but no real analysis was performed on this material, which ventured far from its original purpose, so the product was abandoned. Several years went by and the war ended.

  One day an advertising consultant by the name of Peter Hodgson, who was looking for unusual products, came upon this unique and unexpected result to solve the original rubber problem with a substitute. Someone said once that if you are a hammer, everything looks like a nail. Hodgson was a hammer. He looked on it as an unexpected but innovative gift, and took it to a party to demonstrate its uniqueness. Since other advertising people were probably in attendance, he would find out what they thought about it. It was the hit of the party.

  Hodgson purposefully analysed the product further as a possible party favour and invested $147 in it. The results of this investigation and his meagre investment soon caused him to shift his target market to focus on children. He packaged the “liquid solid” into one-ounce plastic containers in the shape of a ball. He gave the product a new name. “Failed Synthetic Rubber” obviously wasn’t it. It wouldn’t have worked; neither was a name like “Raw Goo” likely not to be something for which parents were likely to shell out hard cash to have around the house. He came up with the name “Silly Putty”. Under this name, it became one of the most successful toys in history, surpassing Cossman’s ant farm, and achieved worldwide fame. It made millions and millions of dollars for Hodgson and his backers, but not a cent for GE or its original inventor. It was an unexpected bright idea, but the GE engineer who invented it failed to see it as Hodgson did. It was unexpected, but GE did not have a toy division or anyone who might have seen the possibilities in this direction. Hodgson had a broader background to see other possibilities and he followed Drucker’s advice about the unexpected, and conducted an analysis before rushing forward.