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Starting and building

Peter Drucker

Results, not activity

Peter Drucker (1909–2005 · Vienna to America) — Results, not activity.

Starting and buildingThe industrial ageResults, not activity

What actually happened?

During the war he was given the run of General Motors for two years. What struck him was not the strategy but the calendars: the executives were booked solid, and not one of them could say what he had actually produced that year. The advice he eventually gave is unglamorous — write down where your hours really went for one week, then look at the page. Almost nobody's best hours are on his most important work. It is not a time-management trick. It is the door into the argument that activity is not achievement.

The purpose of a business is to create a customer

Not to create profit. Profit is the test of validity and the risk premium on the future, a result rather than a cause. Make it the purpose and everyone turns inward and decides from the statements, which is how a company comes to damage its customers in order to improve a reading.

Four quarters of hitting profit by trimming costs, and in the fifth there is nothing left to trim and half the customers have gone.

Efficiency is not effectiveness

There is nothing so useless as doing with great efficiency what should not be done at all. Ask whether the thing should be done before asking how to do it faster. With the direction wrong, efficiency is an amplifier.

Plenty of companies break the wrong goal into beautifully specific quarterly targets, hit all four, and remain on the wrong track.

What does the customer actually buy

The Cadillac customer buys not transportation but status. The first instinct always stops at the product. Push one layer down to what he solves with it, and the boundary of the business, its rivals and its openings are all redrawn.

A cafe thinks it sells coffee until it notices the afternoon customer is buying a seat that is neither the office nor home.

Time is the only material

You cannot manage time, only what you spend it on. Write down where a week really went and strategy occupies a thin slice of the page. He told executives to hand the unimportant work to somebody else, not out of laziness but because their hours cost more.

The meeting that exists because it has always existed is the cheapest thing on the calendar to cancel and the least likely to be cancelled.

How do I use it today?

On Friday write three lines: what you produced this week, what should have been produced and was not, and one activity you will stop next week. A week in which you cannot write all three is a week your calendar ate.

Deep read

The purpose is to create a customerDefining the business from the outside inProfit is the result, never the purposeDoing efficiently what should not be doneEffectiveness comes before efficiencyThe wrong thing done beautifully is the most expensive waste

Read alongside

Andy GroveGrove solves execution, Drucker solves choice. One asks how a thing gets through the organisation, the other asks whether it is worth doing at all. Paul GrahamGraham writes about the first hundred users and doing things that do not scale; Drucker writes about what happens after scale, when the activity outlives the reason for it. Taiichi OhnoDrucker decides which thing to do; Ohno decides how a step is kept from going wrong. One sets the direction at a desk, the other sets the standard on the floor. Ivan IllichBoth ask what comes after efficiency — do the right things, or put a ceiling on the tool.

Further

Andy Grove Jeff Bezos Taiichi Ohno Paul Graham Ivan Illich

Lines to keep

There is only one valid definition of business purpose: to create a customer.

Nothing is so useless as doing efficiently what should not be done.

Efficiency is doing things right; effectiveness is doing the right things.

If we were not in this already, would we go into it now?