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Drucker’s views on Performance

Author: Shao Ming Lo

              Founder of Peter F. Drucker Academy

              Chairman of Bright China Group

 

“Performance” is the synonymy of “Result”. Drucker had in-depth discussion on performance and result in his writings. He proclaimed, 

“Management is practice. Its essence is not knowing but doing. Its test is not logic but results. Its only authority is performance.”

 

At the last stage of Drucker’s life, he defined managers as the achievers. He suggested that when it came to hiring or promoting an employee; instead of looking at the potential of the candidates, the work performance of the candidates should be the sole factor that is taken into consideration.

 

Scrutinizing the strengths of employees by examining their performances and achievements in the past, so as to assign them to the appropriate job positions.  Drucker was once asked how he would like to be remembered, he answered, “ I want to be remembered for leading some people to do the right things.”

 

Performance plays a significant role in Drucker’s management theory. Two fundamental management tools – Innovation and Business theory of an organization, are seen as two utmost important Drucker’s ideologies.

 

Importance of performance is conspicuous. However, the problem is how can we be certain that we attain performance? How do we know if the result attained is our final goal? What determines the performance and result? The answers to all these questions have to be referred to the business objectives of the enterprise or organization.

 

Drucker suggests that, we have to set the organizational objectives based on the evaluation of the outer environment, as well as the goal and competence of the organization. And we will be able to outline the expected performance and result based on the organizational objectives. This process is the essence of strategic planning, which also constitutes the business theory of an organization or enterprise.

 

Drucker has raised three classic questions to explain the concept of theory of the business: What is the nature of our business? Who are our customers? What are the core values of the customers? Our path of thinking and answers to these questions should be derived from essences of these questions; the answers will help us out with constructing the strategy for actualizing centralization within an organization.

 

We have to identify the client groups that need you the most, at the same time you are most willing to satisfy their needs and skillful at serving them. If you are able to integrate these two criteria, then you will succeed in grasping the target market. 

 

If you can find a market that allows you to make efforts that is less than or equal to others, while achieve greater results than others in return, then this is the market that best suits you. 

 

Centralization is a business strategy that forces you to choose your battlefield, and it determines the placement of the resources of the company.

In the end, business objectives have to be actualized by applying it on actual works and ideologies of the company, if not it will simply becomes autistic thinking.

 

The most important aspect of business strategy and business objectives, is to plan out the strategic business moves that will lead to attainment of the performance goal; while distribute enough resources, including the best talents within an organization, for the business moves.

 

None of the marketing theories are everlasting, they need to be revised, reviewed and even rebuilt from time to time.  Although enterprises that have over hundred years of history do exist, none of them stake their survival on a single product throughout the enterprise history. On the other hand, none of these enterprises follow through the same marketing strategies and management methods in order to survive.

 

Drucker emphasizes that all products, services, working process and marketing strategy have to be reviewed periodically, so as to find out which components are outdated and invalid.

 

Revision of business theory does not induce innovation. Organization needs to innovate from time to time, even when the current business theory is still workable. However, invention of a new business theory brings about important innovation.

A new business theory is not an extension of the existing market and product line; instead it leads to products and markets that are never seen before. 

 

An enterprise only has two obligations: Marketing and Innovation. Only these two tasks can bring about results, while all others are considered as cost of the business.

 

Building the business theory of an organization is the fundamental marketing tasks. Business theory assists the company with exploring the needs of customers; thus, any amendment to the business theory is the upmost important innovation of an enterprise.

 

From this angle of view, we know that innovation should be treated as the Active marketing.  In today’s volatile economy, the revision of business theory becomes more frequent than before. 

 

In the past some of the renowned enterprises can survive on the same business theory for a few decades, or even half a century; however, this is no longer the case. The change also indicates that all modern managers have to be ready for innovation at all time, instead of simply modifying the qualities of the existing products, working process and services.

 

Although we are situated in an era that all business theories are needed to be modified constantly; nevertheless, it gives us the chance to enter new business sectors and new markets. The era is pushed forward by innovation; today is the era of which the newcomers surpass the old-timers.

 

Performance is a cruel master. It requires all managers to shoulder the responsibilities of fostering the social resources, Drucker called this the ethics responsibility, legality and righteousness of management; on the other hand, the quest for high standard of performance motivates all managers and their subordinates to perform at their full potentials; it also help to build sense of achievement while actualize the freedom and dignity of everyone. 

 

“Management is to make an organization to attain high performance.” Human has invented all sorts of tools in the history, which extended from manual tools to mechanical facilities, atomic science, spaceships, Internet and biological engineering. Human beings can do both good deeds and bad deeds by using any of the above tools. Management is also a tool, and it is far more effective than all kinds of high technology.

 

In fact, management determines the usage of all resources, including both live and dead resources, physical resources and knowledge resources; while it also determines the efficiency of these recourses.

 

However, management is different from other tools. People cannot use the power of management to control others nor utilize their bad deeds.

 

Management is a tool for bringing about goodness. The ultimate goal of management is to bring about positive change and improve the living qualities of people. Goodness is the inborn nature of management; it helps to determine what kinds of enterprise performance are needed by the society.