Stop calling them problems, dammit, they’re opportunities!
Part 3 in a 4 part series on Drucker strategies for weathering the economic storm – Exploiting Success
The U.S and the EU are facing the prospect of low and slow economic growth for the balance of this decade. Most economists believe the decade will be characterized by mounting deficits, rising unemployment, sovereign credit downgrades, increased interest payments, galloping inflation, misguided economic policies and a host of other economic ills. In this environment, how can managers guide their companies to not just survive but thrive in these turbulent times?
This article is the third in a four part series looking at 4 key Drucker strategies – Organized Abandonment, Continuous Productivity Improvement, Exploiting Success and Innovation – you can immediately put into practice in your own business. This article looks at why organizations must become focused on exploiting success and identifying opportunities (rather than problems).
A mini-ebook with a complete list of the four strategies discussed in this article series is available for free in an easily downloadable form here.
Continuous improvement aims at making the already successful better still. It's a never-ending activity that requires specific quantitative goals, such as annual improvements of 3% or 5% in cost, quality, and customer satisfaction.
Exploiting success, according to Drucker, relates to becoming an opportunity- focused organization. Problems cannot be ignored. And serious problems have to be addressed and solved.
But for an organization to succeed they must focus on opportunities, not problems. They have to "starve problems and feed opportunities."
One practice that should be followed religiously is having "opportunity meetings" in addition to "problem meetings." Opportunity meetings illuminate what's working and should be expanded in a variety of forms.
Most meetings discuss "problems" and the "opportunities" tend to be ignored. Opportunity meetings focuses ATTENTION on opportunities that can/should be exploited. As simple as this sounds, attention is a key driver of exploiting success.
We only react to - or pay attention to - what we are presented with. If we are presented with problems, that's where our attention will be focused. If we are presented with opportunities, then our attention will be focused on opportunities.
Exploiting Success Can Mean Many Things
The significance of many business decisions is that they inescapably deal with the future, i.e. with what is to be done, rather than what has been done. Levitt, among others, wrote extensively about exploiting success using the predictive capabilities of the product life cycle concept.
Levitt showed how to extend a product's life by systematically promoting more frequent usage of the product among current users, developing more varied usage of the product among current users, creating new users for the product by expanding the market (geographically and through market segmentation), and developing new uses for the product (e.g. nylon was originally used for parachutes, thread and rope until DuPont expanded its use by entering the woman's hosiery market).
Sony, in their earlier days, used each successful new product as a stepping stone to the next one. The Walkman, for instance, evolved from the original tape recorder.
Drucker recommended that organizations practice active surveillance of existing markets with respect to how they are splintering. New market segments always emerge. And these new market segments represent new opportunities for growth.
Said Drucker: "By the time an industry growing rapidly has doubled in volume, the way it perceives and services its market is likely to have become inappropriate. […] In particular, the ways in which the traditional leaders define and segment the market no longer reflect reality, they reflect history."
This is a very powerful insight.
Markets always splinter. Organizations must be proactive in looking for niches within the markets they already serve in order to exploit success.
Simple? Yes. But unless it's part of an executive's thought process, new opportunities for growth via exploiting success remains only a good intention.
Summary of Drucker's Strategy #3
As in continuous improvement, exploitation of existing success will, sooner or later, lead to genuine innovation. "There comes a point when the small steps of exploitation result in a major, fundamental change, that is, in something that is generally new and different."
Exploiting success is greatly aided by using various tools such as the product life cycle concept.
If you’d like to read more, a short e-book detailing all four Drucker strategies is available for download for free here.
For further reading in this series see:
Strategy 1: Organized Abandonment - Executive hatchet jobs and other misguided cost cutting exercises
Strategy 2: Continuous Productivity Improvement - Why small, continuous improvements are better than constantly shooting for the moon
Strategy 3: Exploiting Success - Stop calling them problems, dammit, they’re opportunities!
Strategy 4: Innovation - Innovation suffers when everyone's too busy getting through today