Vienna

A full day of debate, analysis, homage and, just occasionally, longueurs here at the inaugural Peter Drucker forum.

Delegates heard about Drucker’s “integrity, humility and generosity” from Rick Warren, the priest chosen by Barack Obama to speak at his inauguration as President. It turns out that Dr Warren’s all-time best-selling book The Purpose Driven Life was heavily inspired by Drucker.

We heard both CK Prahalad and Charles Handy share their perspectives. CK said that, in his opinion, no other person has had the impact on the practice of management that Drucker has. Charles Handy observed that, even when he felt he had provided some new insight into the challenge of management, he would invariably discover that Drucker had already written at some length along similar lines, often dozens of years earlier.

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Vienna

A wonderful gathering of the management clan is taking place here in the Austrian capital this week. CK Prahalad is in town, as is Charles Handy, Yves Doz and Philip Kotler, among many others. What is everyone doing here? They have come to commemorate the hundredth anniversary of the birth, in this city, of Peter Drucker, the world’s greatest management writer, who died in 2005 just short of his 96th birthday. Why, even his widow Doris, aged 98, has come over from the States to see it all for herself.

On Thursday and Friday delegates will be taking part in the first global Peter Drucker forum, led by Richard Straub, president of the Peter Drucker society of Austria and himself a senior IBM executive based in Paris. On Wednesday there was a pre-summit series of talks and debates, which whetted appetites nicely.

I shall be writing in greater detail about what emerges during this event in my column next Tuesday. But it is already apparent after one half day that the management world is eager to use this anniversary, and the ongoing global economic crisis, as an opportunity: not only to reacquaint itself with Drucker’s writings, but to stake out new ground and reinvigorate thinking on the art of management itself.

What is the big goal for management as we approach 2010? Put simply, it is “to reinvent the social compact of business,” as CK Prahalad declared earlier today. Not what you might call a trivial ambition. And the full conference hasn’t even started yet.

A recent New York Times blog and a business book published last year cover the same territory: the many ways you can kill off your business. The former is written from the perspective of the entrepreneur; the latter takes a corporate manager’s viewpoint.

Entrepreneur Jay Goltz’s blog post – “Eleven easy ways to destroy your company” – includes warnings against such things as not carrying enough insurance or hiring the wrong accountant.

The book, The Ten Commandments for Business Failure, is by Donald Keough, former president of Coca-Cola. It identifies errors such as ceasing to take risks, isolating yourself. being inflexible and loving bureaucracy.

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The three most dangerous words in management? “Not invented here.” Only complacent leaders believe that their way of doing things cannot be improved upon. But that attitude can lead apparently successful businesses astray.

As Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley, has pointed out, senior management teams can fail to spot important innovations because the new business models they rely on do not easily fit in with the way things are being done now.

Researching the performance of Xerox, the copier and printer company, between the late 1990s and early 2000s, Prof Chesbrough found that, out of 35 projects that had been rejected as part of a review process, 10 had gone on to become highly successful businesses. Indeed, the combined market capitalisation of these 10 new ventures, even after the “new economy” crash of 2001, was twice that of the former parent itself. He calls these unfortunate rejections a “false negative”: the innovations had looked bad, but that was because senior managers were unable to recognise their virtues.

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My children like Kraft’s Philadelphia soft cheese - the light version (got to think of their health, you know). But I have a question for the company. For many, many years - too many - the product was presented in the most flimsy, feeble packaging imaginable. If you dropped it the lid broke or the packaging shattered.

Finally, this year (in the UK at least), a sturdier version has gone on sale. I and my children welcome this. (Well, I do anyway). But my question is: what sort of company takes so long to recognise the inadequacies of its packaging? Is this new packaging a sign that Kraft’s management has woken up and would therefore make a worthy acquirer of Cadbury? Or is it still a lumbering giant that would never move fast enough in the ultra competitive and fast-moving confectionery market?

I hope the analysts and investors are giving this some thought.

The bear market in management bullshit is over. Last week, I came across two signs that managers’ brief flirtation with being sensible – which started the day that they watched staff of Lehman Brothers leaving the bank with their stuff in boxes – is now finished. It is time to be sillier than ever before.

A friend who works at a large, multinational company tells me that he arrived in the office the other day to find a bottle of water had been placed on his desk – and on every other desk in the 11-storey building – alongside a little card displaying a series of yellow blobs from the palest lemon to the deepest ochre. This represented the colour of urine depending on how much water had been consumed and was meant to tell employees whether they ought to be drinking more. Dehydrated workers were less productive, the card warned.

This is the most extreme example I have yet seen of a HR department infantilising the workforce and meddling in matters that should not concern it. In my experience, even the youngest child has a perfectly good way of working out whether it is dehydrated – which does not involve going to an office loo with a yellow colour card. If it feels thirsty, it demands a drink.

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A bit of chatter out there about how Starbucks, which has had a rough few years, has quietly launched a new shop on London’s Conduit Street. You can see some pics of the new cafe on Tiki Chris’s Flickr page. They did this first in New York a few months ago, with a cafe that you would have barely realised was a Starbucks cafe.

Judging by the pics, it is a subtle-ish revamp - more communal spaces, like shared tables, more trendy lighting and furniture, a darker and warmer feel to the place, more books and so on.

Will it work? I have no idea but I do think there are a couple of interesting points here. First, Starbucks is applauded for at least being bold enough to rethink what they are doing. When the chain first started expanding outside of its Seattle base, it traded more on being a cool place to go rather than simply being ubiquitous. When Howard Schulz, its founding chief executive, came back to run the company this was one of his key messages; the chain, he lamented, had loss the “romance and theatre” on which the company was founded.

Continue reading "The soft launch rebrand of Starbucks hits London"

I recently participated in a debate entitled “The good society: virtues for a post-recession world”. A couple of my fellow panellists emphasised the importance of promoting happiness rather than material wealth as a true measure of human progress. They believe that advances in gross domestic product are an inferior way to achieve greater wellbeing, and that a concept such as “gross national happiness” might be a better tool.

As I listened to their definitions of happiness, I realised that not many coincided with my view of what made entrepreneurs tick. I have spent decades partnering entrepreneurs, trying to understand their psychology and motivation. I find them hugely exciting to work with, because it is only thanks to their ambition and ingenuity that enterprises are started and fresh wants satisfied.

There is no stereotypical personality, but one can identify characteristics that most entrepreneurs share. At heart they are highly competitive. They do not seek security as their main goal – rather, they actively seek risk, and enjoy overcoming stressful challenges. They are not sheer gamblers, but they embrace dynamism and are willing to invest in spite of the possibility of failure – to have the chance to win.

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