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Lessons From Peter Drucker

Drucker: Every Leader Must Declare His Expectations

William Cohen, Ph.D.
Posted: 09/11/2008

Dr. Bill Cohen was Peter Drucker’s first executive Ph.D. graduate at what is now the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University. This began a relationship that lasted almost three decades and led to many writings about Drucker. His most recent book is A Class with Drucker: The Lost Lessons of the World’s Greatest Management Teacher. Every month Dr. Cohen will discuss a lesson from Drucker’s classroom, his writings or their personal relationship. You can reach him at www.stuffofheroes.com.

Peter Drucker wrote of the importance of defining "what business you are in" and then ensured that this information was disseminated and used to guide operations throughout the organization. He continued this emphasis all through his career, although later he elaborated and called these "mission definitions." As reported by Drucker, a mission definition should not be just a list of good intentions, but also simple, clear and direct. He gave explicit examples:

  • A hospital emergency room: "It’s our mission to give assurance to the afflicted."
  • The Girl Scouts of America: "To help girls grow into proud, self-confident and self respecting young women."

He wrote that his favorite mission definition almost by itself changed Sears from near bankruptcy at the turn of the century to the world’s leading retailer in less than 10 years. According to Drucker, Sears’s self-saving definition was "It’s our mission to be the informed and responsible buyer—first for the American farmer, and later for the American family altogether."

Always focused on taking action, Drucker stated that every manager, from the "big boss" down to the production foreman or the chief clerk, needs clearly spelled-out objectives, and that every leader, at every level, must ensure that his or her objectives are promoted throughout the unit. As envisioned by Drucker, the foundation of effective leadership at all levels is thinking through the level’s mission, defining it explicitly and promoting it, clearly and visibly, including setting the goals, the priorities and the standards while maintaining guidance and oversight of all. He said that failing to communicate the leader’s expectations was one of the biggest reasons for leadership failure.

Clorox Chairman and CEO G. Craig Sullivan made clear some major expectations when he took over the company in 1992. After thinking it through, Sullivan set up ambitious but reachable growth targets and demanded new product introductions across the board. Some senior managers balked at his expectations. Sullivan suggested that those who didn’t want to participate had best move on. Almost half of the old staff of senior executives did.

But the power of Sullivan’s declared expectations and the manner in which they were communicated had their effect. Earnings increased more than 10 percent every year. Sales quickly and significantly shot up. Sullivan then set new goals in the Drucker manner and communicated them throughout the giant corporation. These included achieving annual sales of $3.5 billion by the year 2000, generating total shareholder return that would place Clorox in the top third of the S&P 500 and building an international business that was 20 percent of total company sales. Sullivan calculated that this would require an average annual growth of 12 percent. This was a pretty tall order, but when he left Clorox in 2003 he had done it, and annual sales were over $4 billion.

Declaring your expectations works wonders every time. Whenever I think of compelling expectations, I cannot help but think of the strongman Charles Atlas, of whom you may have heard, and Charles Roman, of whom you probably have not. Atlas was a poor Italian boy who immigrated to the United States with his family from Italy around the turn of the century. His original name was Angelo Siciliano. As a boy, Siciliano was painfully weak...a 98-pound weakling. After a painful beating by a bully, he cried himself to sleep and swore that no man would ever hurt him again.

Siciliano was forced to develop his own unique methods of bodybuilding without the use of weights because he was too poor to buy a set. He called this "dynamic tension." His method worked, and in 12 months he doubled his body weight. Siciliano entered bodybuilding contests and won every one he entered. Then he became a well-known artists’ model. Some of the famous sculptures where his body was the model can be seen in front of the U.S. Treasury Building in Washington, D.C., in New York’s Washington Square and the in Brooklyn’s Prospect Park. Using the prize money from the contests and the income from his modeling, Siciliano developed and launched a bodybuilding correspondence course and tried to sell it through the mail. However, he couldn’t get enough customers with his advertisements, and he began to lose money. Married with two children, no income and a floundering business, Atlas was in serious trouble. Enter Charles Roman.

Roman was a recent college graduate and new hire at the Benjamin Landsman Advertising Agency in New York. In desperation, Siciliano asked the Landsman agency for help. As "the new guy," Roman was given the account with the worst potential—Siciliano, now known as Charles Atlas. In Greek mythology Atlas was the strong god who was forced to support the entire celestial globe on his shoulders. Roman read over Atlas’s course materials and realized that the ads simply didn’t make Atlas’s expectations for his prospects compelling. Roman came up with new ways of advertising. Four months after their meeting, Atlas and Roman became business partners.

"The Insult That Made a Man Out of Mac," one of Roman’s headlines, trumpeted in their ads. Roman even invited respondents to check the kind of body they wanted: "Broader Chest and Shoulders," "Iron-hard Stomach Muscles," "Tireless Legs," "Slimmer Waist and Legs," "More Energy and Stamina," the list went on and on. These expectations had an immediate impact. From a mere few hundred courses, the number climbed to 3,000 the first year Roman and Atlas were in business together. Soon it reached 10,000 a year. In the 1930s and 1940s, Atlas became a household name. In 1971, the year before Atlas died, they sold over 23,000 courses worldwide. The course is still selling today more than 30 years after Atlas’s death and a half dozen years after Roman died.

Now here’s the point. Atlas declared his expectations for his potential customers, but until Roman came on the scene, he did not do so in a sufficiently compelling fashion. Once Roman communicated these expectations in a compelling way, prospects were influenced to buy, and they bought in a big way.

Leaders declaring their expectations to influence those who follow them are much like retailers attempting to influence prospects to buy. Successful leaders do so by first making certain that their expectations are formulated in a compelling fashion. That’s why in one of Drucker’s last works, he wrote that leadership is a "marketing job."

As mentioned earlier, Drucker liked what declaring expectations did for Sears around the turn of the century. However, years later Sears was once again struggling. In 1992, the $30 billion retail business, the very essence of Sears, posted a $2.9 billion loss. Some even thought the corporation would go under. Arthur Martinez came on the scene after heading Saks Fifth Avenue. At his first meeting with executives he laid out his expectations:

  • Focus on core businesses where we know we can win and grow.
  • Position Sears as a more compelling place to shop.
  • Become more locally market focused in terms of the product and service mix offered to target customers.
  • Accelerate cost and productivity improvements throughout the company.
  • Create a new corporate culture and set of values to lead Sears into the future.

He didn’t stop there. Martinez gathered his top 100 executives every month and re-emphasized his expectations in practical and compelling terms. One month he had each of them write a description of the Sears of the future based on them.

Once again, Drucker’s point that a leader must declare his expectations was proven. Sears recorded a profit for 15 consecutive quarters. One year it hit $1.8 billion, the largest in Sear’s history. Martinez spent eight years at Sears overhauling the company's corporate culture, infrastructure, marketing and merchandising. He redefined the role of the traditional department store and made Sears a profitable company after nearly two decades of decline. However, few would deny his declaration of expectations as the basis of this turnaround.

Can what a CEO does in declaring expectations work for leaders at other levels to reach success? Peter Drucker says it can.

Note from the editor: e-BIM is not affiliated with the Peter F. Drucker School of Management or the Peter F. Drucker Institute. Any mention of Peter F. Drucker School of Management or the Peter F. Drucker Institute is solely at the discretion of the authors.

William Cohen, Ph.D.
Posted: 09/11/2008