In 1946, Peter Drucker released his famous book, Concept of a Corporation, after two long years of research at GM. He outlined what would become the theory of “management”, an idea he elaborated on for the next 60 years.
Drucker realized that strategy was the first step in successful management, especially in volatile environments. At that time, the norm was to design 5-year plans (or longer). Communism reinforced the idea.
Today, strategy is different. I recently ran an online event (see the recording here) where I shared how modern organizations can formulate strategies rapidly. The essence of strategy is unchanged from Drucker’s time but it is time we modernize certain elements.
Here are seven lessons from this online event that all organizations need to know, 75 years after Drucker started thinking of the same question.
Be Ruthless About Your Ideal Customer
Disney Parks suffered greatly due to COVID restrictions but they were able to bounce back to record profits and revenue with less visitors than before the pandemic.
They achieved this by being ruthless about their ideal customer. The new customer was someone who visited Disney once in their lifetime and was willing to pay anything to make it a truly memorable experience. It chose to ignore those who visit Disney every Tuesday.
The idea that organizations can’t serve everybody isn’t new. Organizations need to remember who their ideal customer is and ruthlessly ignore everyone else. The future requires you to ignore the vast swath of customers even if they can afford your products and services.
Looking at competitors is overrated. Focused on what your ideal customers want and how to best deliver it. FOMO will distract you from what really matters.
Forget About Predicting the Future
5-year strategic plans are dead because predicting the future is too hard. Some organizations may get lucky but you’re better off tackling the future 12 months at a time.
The best organizations aren’t trying to wipe off their crystal balls. They are aiming to respond to changes in real-time. The ability to adapt is the killer skill of our modern world.
Less Data, More Insights
Companies are drowning in data, reports and dashboards thanks to advances in technology. AI and machine learning are bringing even more data. However, every company could benefit from more insights.
Organizations like Macy’s have sophisticated data collection but even better ways of turning that data into actionable insights. It starts by understanding human psychology, designing better processes and remembering that data is just one tool.
Advocate for the Devil
The Catholic Church has a strict process for canonization—assigning sainthood. The Church even assigns someone to advocate for the devil to ensure they explore all possibilities and questions.
Organizations can fall prey to group think, especially if a high level executive came up with the idea. Make it clear that opposing views are welcome and assign someone to advocate against the consensus.
Don’t Be David
David won his battle but it’s not a viable strategy for organizations. It’s better to succeed than to heroically face down giants. Organizations can’t rely on divine intervention, they need odds in their favor.
Be Willing to Handle Bags
Airlines had a rough pandemic. First, they experienced a sharp drop in demand and second, they couldn’t handle the demand when it came back. Air Canada stood out globally as one of the worst for cancellations and complaints.
Qantas stood out for another reason. They sent their executives to help handle bags because of a staff shortage. It wasn’t in their job description but they understood the importance of delivering on their promises to customers.
Management teams need to be able to handle bags when needed.
Strategy is the starting point for success. Organizations are spending too much time formulating plans that expire by the end of the first year. It is time we update our approach. Peter Drucker would have recognized the same trend.
Photo by Elizabeth Villalta