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Lessons From Peter Drucker

Drucker's Most Incredible Idea

William Cohen, Ph.D.
Posted: 07/10/2011

Drucker was fond of pointing out that the greatest advances in management came from taking ideas from a completely different field and applying them to the manager’s own. Ordinary managers simply took ideas developed in their own functional areas or industries and tried to make them better. This led to rather ordinary and very modest gains. Drucker said that the really big advances with the potential to take you far head of your competitors, both within and outside of your organization, came from applying ideas from completely different functional areas, industries, or subjects beyond your ordinary day-to-familiarity.

If Leadership is Marketing, then Marketing is Leadership


A couple of years ago, I wrote a piece for my HRIQ column on one of Drucker’s little known concepts: the idea that good leadership is essentially marketing. He had called leadership a "marketing job." This idea was based on Drucker’s view that all knowledge workers are partners in an organization. As partners, they could not be simply ordered around or managed. They had to be led – and this integrated persuasion with strategic thinking, segmentation, and many other elements of marketing. So the practice of leadership, Drucker concluded, was marketing. This conclusion can have far-reaching consequences for the practice of both business disciplines. Because if leadership is marketing, then marketing is also leadership. If you are a "Drucker thinker," it can have far reaching implications for any job, because you can adapt the basics to whatever you do.

Confirming this Idea with My Own Research

To confirm this idea about marketing being leadership, I turned to results from research I conducted almost twenty-five years ago in which I found eight universal principles which were the basis of all successful leadership. These eight universal laws were:

1. Maintain Absolute Integrity
2. Know Your Stuff
3. Declare Your Expectations
4. Show Uncommon Commitment
5. Expect Positive Results
6. Take Care of Your People
7. Put Duty Before Self
8. Get Out in Front


What if these eight principles were viewed not in leadership, but in marketing terms? What if these terms were applicable to all facets of management?


The First Principle of Marketing: Maintain Absolute Integrity


Today, Arby’s is a highly successful fast food restaurant chain, with over 3,600 restaurants worldwide. Leonard Roberts became CEO at a time when the business was doing very poorly. He turned the corporation around when sales had been falling 10 to 15 percent a year. He did this by promising help, money and additional support to Arby’s franchisees. He delivered, and sales soared. Due to his success, Roberts was appointed to the board of directors at which point Arby’s then-owner decided to withdraw the help Roberts gave the franchisees. Even bonuses promised and earned by Roberts’ staff would not be paid. Roberts resigned from the board and the owner retaliated by firing Roberts as CEO. In his very next job as CEO, Roberts faced another leadership challenge based on his maintaining his integrity. It again cost him his job. Finally, Roberts became the CEO of Radio Shack, a subsidiary of the Tandy Corporation. A year after that, he was appointed CEO of the entire Tandy Corporation. During the next ten years he was highly successful and he retired with many honors for his accomplishments.

The Second Principle of Marketing: Know Your Stuff


Bill Gates’ personal fortune has been estimated at $58 billion dollars and even more. He achieved much of his success while he was still in his twenties. He became a billionaire when he was only 31. His secret was not office politics, but knowledge and expertise. Gates learned how to program computers when he was barely a teenager. In high school, he knew enough to lead others to computerize his school’s payroll system. At the same time, he learned business by starting and running a company that sold traffic-counting systems to local governments. He entered Harvard as an acknowledged computer expert, while he had also mastered sales, marketing and management. In his second year he dropped out and eventually founded the Microsoft Corporation. The fact that he was still in his twenties and was not a college graduate was unimportant. What was important was that he knew how to create and run a business to market his creations.
The Third Principle of Marketing: Declare Your Expectations

You declare your expectations in a number of ways. One of them is setting your goals. From the tactics of day-to-day management to strategic thinking, this is essential. Goals must be declared by all, from the individual on up to the very top level in an organization. Almost invariably, these compelling visions are the most important component of success. All successful organizations, whether small businesses, Fortune 500 companies, athletic teams, combat units, or even countries must be built on clear and compelling expectations. This vision provides direction for everyone. It guides all action and tells everyone exactly where the organization is going. Properly involved in this vision, members of the organization willingly work toward expectations. But first you need to define them. You can’t get "there" until you know where "there" is.

The Fourth Principle of Marketing: Show Uncommon Commitment


Only six months after its founding, the Dell Computer Corporation became the number one retailer on the Internet. Dell sales grew at the rate of 20 percent each month. In one year, revenues exploded 47 percent to $7.8 billion, and profit 91 percent to $518 million. The secret was commitment. Founder and CEO Michael Dell said that speed was essential and Dell would set the pace for the industry, which it did. Do your employees or those you manage show uncommon commitment? Do you?
The Fifth Principle of Marketing: Expect Positive Results

Supercuts, Inc. was a revolutionary concept when it was introduced. It replaced the old barbershop and beauty shop with low cost, no-nonsense, unisex, hairstyling salons. It was instantly successful and grew rapidly. Its franchises expanded across the country. Unfortunately, at some point the organization began to doubt itself. Success felt no longer certain.
As sometimes happens when marketers are fearful they began to reduce advertising and other support for franchisees. The franchisees formed an association to protect their interests. Corporate leaders attempted to stop them from doing this. The result was a class action law suit, low sales, low morale and all indicators heading south. Then an investment company bought the company and brought in a new CEO in by the name of Betsy Burton. She expected to win. She boosted advertising, helped the franchisees and took other actions which confirmed her beliefs about Supercuts future. Within sixteen months, profits were up by 10%. Within three years, franchisees had double-digit sales increases. Revenue grew from $126 million to over $170 million. The corporation added more than one hundred new franchisees as all expected positive results.

The Sixth Principle of Marketing: Take Care of Your People


"Your People" can be seen as either your employees or your customers. In many cases, the two go together. If you take care of your employees, they tend to pay more attention about taking care of your customers. I recently ate at a restaurant after an absence of more than a year. As the recession hit, food quality declined and customer service declined. The waiters and waitresses became ill-humored. The clueless owner was actually overheard to remark, "If we had more customers, we could afford a better cook and pay for higher quality ingredients and better waitresses." He blamed his customers for his poor marketing results. His lowered compensation, hired cheaper help, and cut service and quality of food. He soon went out of business. New management bought the restaurant. They quickly turned things around. The waiters and waitresses were courteous and friendly. The service was superb, the food excellent, and the prices very reasonable. Taking care of your people is always a major principle of marketing. And yes, it is a major principle in everything we do in working with the human resources which are the heart of any business.


The Seventh Principle of Marketing: Put Duty before Self


This means that others interests comes before your own. Your employees and customers are rarely impressed by your compensation, the expensive car you drive, or other perks of your position.
More than 2000 years ago, the father of Xenophon the Great of Persia was trying to teach the future emperor how to gain the trust and loyalty of others. Xenophon thought that the best way was to reward those who obeyed his wishes and to punish those who didn’t. His father said that there was a much better way of gaining trust and loyalty that would work when "the carrot and stick method" did not. This was simply to look after the interests of others better than they would or could look after themselves. Xenophon followed this lesson and he found it always worked. Once, he conquered a neighboring kingdom. He treated the defeated king and his people so well that this king insisted on paying Xenophon twice the tribute required under the terms of their treaty. Political leaders, as well as managers of all types, would find far more success by implementing this single principle.

The Eighth Principle of Marketing: Get Out in Front


I don’t where the idea came from that successful marketing is simply about having a great idea and then turning the light switch on to begin marketing it. Successful marketers know that’s this is not how it works. If you want any marketing campaign to work, you need to be out in front. There’s no such thing as sitting in an air-conditioned office and simply thinking your way to success. You need to be where the action is where you can see and be seen. Good marketers find ways of perpetuating this process and by constantly being out in front.

Beth Pritchard was the chief executive of the nation’s leading bath-shop chain, Bath & Body Works. In addition to her corporate duties and responsibilities, she spent two days a month working "in the trenches," in an ordinary Bath & Body Works boutique. She didn’t sit around observing or spending her time handing out advice. She worked. She set up displays, stocks shelves, and arranged gift baskets. The power of getting out in front paid off. The cash registers in her stores were full. When she came to Bath & Body Works, it had 95 stores and sales of $20 million. Five years later, the number of stores had increased to a whopping 750, and sales hit $753 million. Maybe this is why she was a success in a number of other top companies.

In conclusion, if you apply the successful principles from a different discipline to your work as Drucker taught, you will have supercharged benefits in whatever you do.
William Cohen, Ph.D.
Posted: 07/10/2011