Shrinking to Grow: Change Requires Abandonment

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Peter Drucker | downturn economy | Drucker | Business Strategies

Brace yourself for a tough economy. Many years of uninterrupted business growth has made many organizations grow slack and become easygoing and downright neglectful of fundamental business principles.

There's been lots of talk about post recessionary planning and upturn thinking for a downturn economy. And that's good.

But, for the most part, many executives are for the first time confronted with a downward spiraling demand for their products and services. This means that they have to simultaneously manage the fundamentals and manage for tomorrow.

Without doubt, in a period of economic turbulence such as the one we are living in, change is the norm. It cannot be repeated too often: Abandonment precedes change.

Peter F. Drucker formulated this concept more than 40 years ago. But why, after 40 years of preaching abandonment, teaching abandonment, stressing the need to ask what to stop doing before deciding what to do, so few executives are willing to follow his advice, we cannot explain.

John Flaherty, in his book Shaping The Managerial Mind, provides a list of Drucker's organizational foes of abandonment:

• The proclivity to do effectively what should not be done at all
• The support of things that were not worth doing in the first place
• The failure to recognize that there is nothing worse than doing the wrong thing well
• The tendency to believe that everything will succeed (nobody wants to admit ill-advised projects are outright failures)
• The propensity of functional specialists to take a one-dimensional view of the business and to protect activities related to their function

Doing unproductive things, Drucker argued, has its advocates. Financial people claim a given set of products absorbs overhead. The sales force claims that a full product line is needed. Engineers argue that quality will be sacrificed. Everyone has a reason for continuing what they’re already doing.

Abandonment bruises managerial egos. But abandonment precedes change.

Instead of recognizing the need for doing the new and different, “The various functions enter a common plea in the defense yesterday, hoping to postpone abandonment until another fruitless study is conducted."

Otherwise intelligent executives prove incapable of abandoning the unproductive and the obsolete, even when confronted with solid diagnoses of what's wrong and how to fix it. They only pretend to be interested in investing in change while finding excuses for continuing what shouldn't be done at all.

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Report Abuse   Kevin 08/13/2009 2:29:31 PM EDT Important, timely and well articulated! I fully agree that many business leaders fail to 'cut their losses' and I think there are many reasons, not the least of which is ego. Most people's work is tied very closely to their egos, so to acknowledge that a project, product line, etc. is a failure, it implies (to them) that they are a failure, too. However, I have found that another significant barrier to making abandonment decisions is the inability to conduct appropriate risk analysis and cost/benefit analysis. The reluctance or inability to conduct this type of analysis blinds the decision maker from making the best informed decision. I, for one, would welcome a further discussion on this. Kevin Miller 480-513-0300 od-consulting.com Replies (0) Post a reply Sign in or Sign up to post a comment