By Carlo Barbieri
Many entrepreneurs complain that the economic downturn is bad for business. That’s true. But it is better to think positively, and see the struggling financial situation in the nation and the world as a cause for re-examining your business practices. From that can come new and important methods that will actually help your company’s operations.
The depth and breadth of the struggling economy will definitely change the business world and the financial marketplace. This should not be a surprise, but rather, an expectation in a growing and changing world, even if it were not impacted by economic upheaval.
Corporate governance, after all, is a working model, guided by policy values, able to plan, allocate and manage resources, actions, initiatives, principles, values and strategies, seeking to enable the achievement of the objectives proposed by a company.
Consider the insights we have been given by the late Peter Drucker, a management consultant, author and educator who did much to form the way businesses operated during the second half of the 20th century.
Drucker taught that management is “a liberal art,” and he infused his management advice with interdisciplinary lessons from history, sociology, psychology, philosophy, culture and religion. He also believed strongly that all institutions, including those in the private sector, have a responsibility to the whole of society.
“The fact is,” Drucker wrote in his 1973 “Management: Tasks, Responsibilities, Practices,” “in modern society, there is no other leadership group but managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will.”
Drucker was interested in the growing effect of people who worked with their minds rather than their hands. We can see that in the immense growth of technology. Many people in today’s workplaces spend time working on computers, coming up with ideas, rather than putting products together. People like Bill Gates and Steve Jobs earned their fame and fortune by working more with their heads and less with their hands.
Intense training of individuals and teams is of utmost importance. In addition to technical knowledge, each individual and/or team member should know, help build, accept, advocate and practice healthy structural conditions devised by the company. Vision, mission, objectives, intentions, beliefs, values and principles will be a set of harmonic signals or harmonized directives to be practiced by everyone and will evolve as the universe induces adaptations.
In his book, Drucker expressed intrigue with who knew more about certain subjects than their bosses or colleagues and yet had to cooperate with others in a large organization. Rather than simply glorify the phenomenon as the epitome of human progress, Drucker analyzed it and explained how it challenged the common thinking about how organizations should be run.
His approach worked well in the increasingly mature business world when large corporations had developed the basic manufacturing efficiencies and managerial hierarchies of mass production. Executives thought they knew how to run companies, and Drucker took it upon himself to poke holes in their beliefs. But he did so in a sympathetic way. He assumed that his readers were intelligent, rational, hardworking people. If their organizations struggled, he believed it was usually because of outdated ideas, a narrow conception of problems or internal misunderstandings.
While Drucker passed away in 2005, his ideas are still fresh, and they can be used and adapted for the “new” economy being thrust upon us. Entrepreneurs must look both within the shop and outside the box for methods of dealing with change. In other words, the internal work atmosphere must be checked and rechecked to see if it gels with the new global marketplace.
While all businesses feel the call of the new economy, the small- and middle-sized firms are more capable of making changes, and making them more quickly. While the large automotive companies have added innovations like robotic assembly line workers, the basic structure of those companies has remained unchanged.
It is probably more important for the small and medium-sized companies to change as a matter of survival. If they don’t update themselves to meet the challenges of the new financial reality – and do so more regularly than large, established firms – they could fail.
“An entrepreneur who does not learn to manage will not last long, as well as a manager who does not learn to innovate,” Peter Drucker advised.
So, in the end, what businesses will survive and thrive? Those who work with ideas; those who develop really competitive products or processes; those who develop an ongoing competitiveness; those who support job training and those who know the law and tax policies.