Peter Drucker’s Philosophy Of A Business Applied To The Modern Business Climate
Peter Drucker lived between 1909-2005 and was considered the management guru. He practically invented the study of management, and he coined famous concepts like the knowledge worker. Drucker was a philosophical thinker, and his main areas were management and business. Much of his work helped bring about significant change in how businesses operate, particularly in Japan.
But are Drucker’s ideas still sound today?
“A business has but one purpose: to create a customer.” – Peter Drucker
This is an enlightening statement that is ever so true in the current business climate. Why? Because the Internet has made it possible for us to reach out to and communicate with other people, and in doing so it allows us to “create customers” in the most distant and unexpected places.
Polarizing communication is particularly useful on the Internet. But to do it you must first find out exactly who it is that you want to communicate with. Who are you carrying on a conversation with?
And knowing this comes down to clarity. But how do you get clarity?
You need to create the mental image of your target audience. This can take a while, and no one ever gets it 100 % perfect. That’s why it’s considered a lifelong process of continual effort by some of the biggest businesses.
Social Media and Turning Weaknesses into Strengths
Various blogger platforms, Youtube, Twitter, Reddit, Tumblr, etc. can all be used to your advantage in reaching out to your target group. These are all powerful tools in the hands of a polarizing and determined person. This person can, and often will, cut through the noise by discouraging or scaring away the people he/she doesn’t want to attract, while attracting the target group.
In the present age, it is possible to turn a weakness into a strength in unique ways that weren’t possible before, for example in Drucker’s day and age. There weren’t any Jon Morrows around back then.
20+ years ago, if you got seriously injured or lost your arm, you immediately became an inferior employee and a less capable member of society. Today that doesn’t necessarily have to be the case. The major difference is that you can now connect with other people like you–whatever group you think you belong to– and organize the group and create value for them.
To go along with the example, you could create a website or a business specifically for people with one arm. Maybe you include a forum, products, books, seminars, and so on. There is value in organizing a group of people and where there is scale, there is also power.
You can be a totally messed up person and still succeed, so long as you find a large enough target audience for your message or product. I’m telling you, there are some strange examples.
Have you heard of Necro? He’s a “death rapper”. He raps about killing people, gory stuff, excrements, and sex. He’s not exactly the best rapper in the game, in fact he sounds corny as heck with his lisp.
Most people will listen to one of his tracks and take him for a retard. But his target audience loves him. Necro is the epitome of polarizing communication. He’s an interesting guy.
My guess is that in the coming decades we will have specialists, leaders, and experts of all sorts of weird niches. As the population grows and new activities and interests are created, we’ll come up with large amounts of niches until we have depleted all imagination, at which point there will be a fierce competition for the select number of niches.
Marketing and Innovation.
Drucker says that a business has two main functions: Marketing and innovation.
Marketing is about two things: getting to know your target audience as precisely as possible, and getting your product noticed by them.
This means that you do all sort of research. For example, Ingvar Kamprad, the founder of IKEA, would devote several days a week for many years to travel and meet his employees and customers in the many IKEA stores over the world. He did this for three reasons:
- To get to know the different customers and get a better sense of their personalities.
- To meet his employees, shake their hand, and help them put a face to the prodigious founder of the company.
- To make sure that the IKEA concept was carried out consistently in all the stores.
Steve Jobs did something similar with the Apple stores. Sam Walton, founder of Walmart, did the same thing. Ray Kroc, the “creator” of McDonalds did it too, except his main task was making sure that all franchisers were consistently following the McDonald’s concept. Believe it or not, but the McDonald’s concept is actually an innovation, in the words of Drucker.
There’s a difference between invention and innovation. An innovation simply means improving on an idea that already exists. To create a unique store concept that can be consistently implemented as a system provides a competitive advantage for the business. It is therefore an innovation.
An innovation should be as simple as possible. It should be so obviously simple that when people see it they should say, “I can’t believe I didn’t think about that!”
An innovation should be aimed at one purpose and it should solve one problem. Once you’ve been successful with implementing this innovation, brought it to market, and made some money or gotten funding, only then should you focus on fixing more than one thing with your innovation. But don’t put the ox before the cart.
A different type of innovation might be to find a new customer segment—one that was previously untapped—like Jordan Belfort did when he:
- Started hiring young kids right out of high school and personally trained them to be brokers, instead of hiring expensive employees with brokerage degrees.
- Started cold calling and selling penny stocks to the middle and lower class people, instead of just aiming at the upper class and the elite.
Belfort became a multi-millionaire in just a few years by executing on this innovative business idea. Some people question the ethics of Belfort’s idea, and perhaps they should. But in theory, it’s a great illustration of Drucker’s principles.