Key to Management? It's Simple: Do the Right Thing at the Right Time
Future potential doesn't count for very much if you can’t pay your bills in the present, writes columnist Dr. William Cohen. Here's why timing is everything in business.
Brutus was the one who uttered the words:"There is a tide in the affairs of men, which taken at the flood, leads on to fortune." At least he did this in Shakespeare’s play Julius Caesar. As events would later prove, Brutus may have been correct about the tide’s existence, but he must have missed it. However, Drucker would have agreed completely that such a tide existed and would probably have gone further to suggest that timing was mightily important even for an assignation and in handling of the events which followed. So too are happenings in modern times heavily dependent on timing for their success.
Some years ago, for instance, an entrepreneur established a web design and hosting company. Understanding the importance of segmentation, but not having assimilated Shakespeare’s or Drucker’s advice, he discovered the hard way that March is not a good time to run a direct-mail campaign to CPAs. After spending lots of money and getting zero leads, he finally figured out that his prospects were in the middle of tax season and were too busy doing taxes. So he re-organized his plans and spent his scarce financial resources to promote his service to CPAs at a more favorable time of year considering his customers. It was still the wrong timing. The year was 1999 and few CPAs were familiar with web advertising. So, even when his prospects had the time to read his advertising material, this entrepreneurial web designer lost money.
Drucker knew that timing was everything for all management actions. He cautioned that there are two major problems in timing that he thought unique to management. Both result in additional challenges for decision makers. The first was that the time of development was lengthening. He pointed out that in the 1880’s, Thomas Edison needed about two years from the time of work in the laboratory until a pilot plant manufacturing a new product was up and running. Drucker stated that in contrast to a to do the same thing today could require fifteen years or longer. This means that by the time a product or service can be introduced, it might be obsolete due to other developments in the interim.
Zapmail’s Rapid Demise
Federal Express or FedEx has had a number of highly successful services. FedEx’s Zapmail was not one. It was withdrawn before it really got warmed up after it was launched in 1984. Zapmail delivered faxed messages for business clients before the general availability of fax machines and at a time when fax machines were still priced fairly high. For high volume users, FedEx installed its own fax machines on the client’s premises with the electronic transmission being carried over its own private network. The company’s investment and the charges to the corporate customer were both relatively high, but FedEx believed in their investment and that it was worth it for many customers to see their material delivered in hours rather than overnight. However, quality problems caused delays, and planned incorporation of final transmission by satellite had to be aborted due to the loss of the Space Shuttle Challenger. By then the cost of personal fax machines had been reduced considerably. When FedEx dropped the project only two years after beginning, losses were in the neighborhood of $320 million.
The Second Challenge
Drucker’s second challenge that management faces is that they must always make decisions considering not just the present but the impact of these actions on the organization in the future. Or as Drucker put it in another way, a management decision is hardly acceptable if it endangers the long range health, if not the very existence, of the organization.
Present and future dimensions are made all the more difficult to deal with because of the critical balance between being too cautious and too rash. While Drucker thought that far more problems were caused by being too cautious, acting too quickly and rashly is also a real danger.
Doing the Right Thing at the Wrong Time is Wrong
While it may seem obvious that a company should not expand exponentially until it is ready, companies sometimes try to exploit their success before they have built a sufficient base. It is the right move, but rashness causes a too early action.
A health food store in Los Angeles was so successful in building sales that the manager opened fourteen stores within eighteen months. With insufficient financial resources, a brand name not yet established, and having not yet mastered intricacies of the supply chain within the industry, he was bankrupt in the nineteenth month. Many e-commerce companies learned this same lesson, and like the health food store manager, also found that future potential didn’t count for very much if you couldn’t pay your bills in the present. Their present decisions shouldn’t have been considered acceptable because they endangered the organization in the future.
When to Take a Specific Action
Knowing when to take a certain action is the basic timing decision. Take the introduction of new technology. You may think that if you develop something, you should just rush to introduce it. This is rarely the case. If your company is known for being first with the latest and cutting edge technology, that may be your competitive advantage. If this particular advantage is important in your industry, and you have the resources to support it and the risk involved, by all means, introduce the technology as soon as you develop it. In this case it makes sense to invest the resources necessary to insure that you are the very first to develop the innovation and introduce it into the marketplace.
However, if you haven’t got the resources that guarantee you an immediate impact, maybe it’s better to let someone else get in first and make the mistakes that you can learn from. Then you can introduce something even more advanced with less risk and a lower resource commitment.
The fact is you can sometimes be the leading-edge technology company, miss the boat in being first, and still come out smelling like a rose. IBM was the technology leader in computers when someone at IBM did the flawed marketing research study that concluded that if IBM decided to develop the technology for personal computers, a mere 1000 customers a year would be interested in purchasing the resulting product.
Of course, this was utter nonsense, which Steve Jobs proved in founding Apple and creating an industry in the process. However, as we all know, technology-latecomer IBM did finally enter the market, with a technological inferior product no less, and took over the field by spotting the weaknesses in Apple’s strategy of maintaining strict control over who could write computer software for its hardware. Actually, IBM wasn’t just late to market; it was very late with a host of other companies getting to market first. This doesn’t mean that being late is always the thing to do. It does, however, show that for industries in which the state of technology is not the big differentiator, hanging back may have advantages. The importance of timing of entry into the marketplace always has both advantages and disadvantages. It’s up to you to think it through and figure it out.
A manager must conclude, as Drucker did, that it’s not enough to do the right thing. A successful decision maker must do the right thing at the right time.