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Check your organization’s vital signs

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in Leaders & Managers,Management Training

You might blame sluggishness, complacency, arrogance or bureaucracy when your organization sinks into deep trouble.

All those things matter, but management guru Peter Drucker showed us that none of them may be the main culprit. Instead, Drucker’s legacy is this: You’ve got to recognize when the assumptions on which your organization was built no longer match reality.

Example: General Motors’ old business assumptions worked for 70 years, and GM steadily gained market share.

Then, about 30 years ago, the market fragmented into “lifestyle” segments and manufacturing became possible on a small scale, allowing short runs of various models instead of long runs of the same design.

GM knew all that but couldn’t accept it. Everybody worked hard, investing lots of time and money in an obsolete business model. End of story.

Don’t flog a dead horse. Instead:
  • Start with diagnosis and analysis.

  • Accept a serious rethinking of the theory behind your enterprise. Test other theories.

  • Don’t dismiss unexpected failure or take credit for unexpected success. Treat them as challenges to your assumptions.

  • Accept that the degeneration of your organization’s basic assumptions is a life-threatening disease.
And remember: Disease doesn’t improve with procrastination. You need to act.

—Adapted from “The Theory of Business,” Peter F. Drucker, Harvard Business Review.

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