Peter Drucker Has Five Questions for You

As I mentioned yesterday, the work of Peter Drucker has been absolutely essential in my understanding of effective management in business, and has helped me massively in my coaching of other organisations, as well as my own. Today, I'm going to be discussing the bedrock of Drucker’s philosophy in his book, “The Five Most Important Questions You Will Ever Ask About Your Organization,” which has inspired an inward-looking and reflective approach to the way I’ve both done business, and consulted with the organisations I collaborate with.

Who is your customer?

Drucker found that a lot of the businesses operating in the booming post-war economy were sabotaging themselves in a number of ways, namely the fact that they didn’t know exactly who it was their organisation was serving. There’s a number of benefits in store for your organisation if you get a clear picture of your stakeholders- pragmatically, you can more clearly target them, and deliver exactly what it is they’re looking for.

At Best Practice, we take this as far as giving them names. We work through experiments of determining what our Trevors or Traceys do for a living, what media they consume, and what they ultimately what to get out of the transaction with your organisation. If you’ve got a clear idea of this, you can both reshape the promises your organisation makes to its stakeholders, and restructure your operations to ensure that Trevor or Tracey never feel violated when dealing with your organisation.

What does that customer value?

Now that your organisation has done the legwork in establishing who your customer is, you’re in a better position to more effectively predict what they value. Drucker is explicit in stating that organisations must understand exactly what it is their customers value, which is something that can’t be answered in any number of management review meetings; only the customer themselves.

Some self reflection on your organisation can be useful here: is your organisation competitively priced and attracting customers because of that? Is the end deliverable of the product or service such high quality that price isn’t a consideration for your customers? Is it the speed in which you deliver upon your promises? Is it your impeccable customer service?

Try to take a step back from your position inside the business, and look objectively at this set of questions, and from here, try to determine what it is that your customers value the most. This should now be a guideline of which area of your operations need to consolidate and assure your customers that the quality won’t deteriorate, and it also opens up some areas that need improvement.

What do your results look like?

The article I wrote yesterday was based on Drucker’s quote that “what gets watched, gets managed.” Despite living in a world where technology was only in its infant stages compared to 2019, Peter Drucker was ahead of his time in terms of knowing just how important data was. While he didn’t call it data, Drucker did stress the importance of measuring your results. Not only that, he said that this exercise was futile if your organisation didn’t have an effective way to evaluate these results. In other words, your organisation must be monitoring its performance, and comparing these results over a period of time that can shed light on whether or not areas of the business are improving, or deteriorating.

This is absolutely essential in terms of addressing problems before they become catastrophic for the organisation, or before you violate the trust of a customer. It’s no coincidence that we’ve been stressing the importance of monitoring and measuring your organisation’s performance; you can read my feature article on the topic here. Don’t forget that your management review sessions are the most important time for you to take a look at these numbers and formulate strategies to address risks, and capitalise on opportunities.

What’s your vision?

Now, moving to arguably the most important question you’ll need to address if you are to succeed in the ever-competitive world of business: what’s your organisation’s vision? Why exactly does it exist? This is most simply achieved through a mission statement, which absolutely every business needs in order to establish its purpose, points of difference, disadvantages in the market, but also the advantages and opportunities that you’re presented with to excel over the competition.

An organisation without a mission statement is almost certainly doomed to fail. Without one, there’s too many potential holes that can form in your strategies and your operations. Best of all, with a mission statement clearly outlined, unwittingly, you’ll be better serving your customers and making your organisation a more attractive prospect over competitors, solely due to the fact you’ll be such a well-oiled machine.

What does your plan look like?

With your mission statement clearly outlined, you’ll have the bare bones of a plan formed, whether you know it or not. This is strengthened by the answering of all the questions I’ve repurposed from Peter Drucker. Only once you’ve defined your customer, found out what they value in the interaction with your organisation, analysed your results and finally, outlined your vision, you can start to form an amazing plan that will form the bedrock of your operations. I like to tell our clients what their ideal vision of the business looks like in the next quarter, the next year, and the next 10 years. This way, forming your vision - and the subsequent action required to make this vision a reality - becomes more manageable as you break down the process into bite-sized pieces.

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