Managing for Business Effectiveness in Today's New World: The Three Essential Jobs of Every Executive
It's no time for clichés. Every organization has to ask the question: What really determines our performance and results in today's new business climate?
This, of course, requires an analysis of results, revenues and resources as well as what might be termed "a knowledge analysis," that is, do we have the right knowledges for making the future today?
Avid followers of the precepts of Peter F. Drucker will immediately recognize our enormous debt to his priceless wisdom.
Drucker wrote extensively about the three jobs every executive must master–albeit to different degrees depending on the situation.
Many firms are putting a brave face on it. But we all now know that to thrive and survive, we will have to master a new environment as the COVID-19 crisis and the response to it accelerates.
Some leaders pumped with adrenaline broadcast uplifting messages to their staff. But that's not enough.
Every organization needs leaders who understand the importance of abandoning ongoing efforts to make room for purposeful innovation… continuously seeking/exploiting new opportunities for growth… strategically allocating resources to where it will have maximum impact… and organizing efforts for disciplined, continuous and purposeful innovation.
In addition to just understanding intellectually what needs to be done, every organization needs leaders who can successfully carry-out the above mentioned tasks.
The Business of Survival
Most organizations have been through economic crises before. They know that each time the situation is different–and each time in addition to managing for liquidity or the balance sheet, the organization must adapt to new realities and do new and different things.
Every senior-level executive/manager has three distinct jobs–namely: (1) an economic job; (2) an entrepreneurial job and; (3) an administrative job.
Admittedly, some people are very good at, say, the economic job and perhaps the entrepreneurial job, and perhaps not so good at the administrative job.
But the true purpose of an organization is to make one's strength productive and their weakness irrelevant. Top-flight executives understand this and knowingly or just instinctively put this Drucker principle into practice.
The Economic Job
The economic job, according to Drucker, focuses on making all resources (e.g., monies, people and physical assets) under one's sphere of responsibility more productive.
To reiterate: Making resources productive is the specific job of management, as distinct from the other jobs of the "manager": entrepreneurship (identifying & capitalizing on new opportunities) and administration.
Resources are made more productive–or deprived of productivity–by individual managers within their own individual sphere of responsibility.
Here's just a few of the many ways to increase the productivity of assets:
- Organized spreading of best internal practices that will increase individual and organizational productivity (i.e., internal benchmarking).
- Organizational structure changes (e.g., developing responsibility based organizations better suited for a talent/knowledge-based workforce than command-and-control structures).
- Abandoning ongoing efforts that are unproductive and obsolete to make room for innovation that creates new wealth producing capacity. Determining what to abandon and how to abandon is an essential management skill (shifting resources from old and declining employments to new and productive employments is now an essential element of the business of survival).
- Process reengineering (i.e., redesign) enables professional, managerial and technical workers to work smarter rather than harder and achieve quantum leaps in productivity.
- More effective usage of today's groundbreaking technologies (e.g., AI, IA and machine learning) and much more.
We will in future articles discuss all these points in great detail.
The Entrepreneurial Job
The entrepreneurial job is to constantly identify and exploit new opportunities for profitable growth. Indeed, Drucker defined internal entrepreneurship as "endowing existing resources with new wealth producing capacity."
In many instances, the entrepreneurial job involves creating new ventures, each with an autonomous organizational structure. Why? Because the existing organization always tends to try to crush newness of any kind.
But the entrepreneurial job is best not left to amateurs, ill-trained or, perhaps, what might be termed on-the-job retirees who do not have the energy, will or skills to do what's necessary in today's new business climate.
Producing and managing successful innovation is an acquired management skill. No doubt about it. Many businesses will not survive unless they have executives willing and able to produce purposeful (and successful) innovation.
More on Purposeful Innovation
Every organization–to survive and thrive in what might be considered the most perilous time since the Great Depression–must develop systematic policies for the creation of innovation, to create meaningful change or "new value" for new and potential customers.
Simply put, we need businesses to create more products, services and experiences at irresistible prices. We need more innovations that people value, expect, want, need and are willing to pay for. (e.g., Apple creating iPhones and iPads).
Further, we need organizations of all kinds and sizes to produce and manage innovations with respect to organizational structures, processes, products, service, distribution channels, business models and the like.
Stated differently, internal entrepreneurship, led by knowledgeable executives, can save the day for many organizations. Costs can be cut only so far.
Innovation in products and services has always been the way to get the ball rolling on consumer spending. We're talking about spending and investing to meet the vast unsatisfied needs of billions of people on the planet.
We have not yet become a "no-need" society. The only way to do this is to utilize all the relevant tools, techniques and technologies to mobilize for producing a high ratio of successful innovations.
The Administrative Job
We hear it all the time: "Bill's/Mary's skills make the trains run on time." Typically, this refers to an executive whose only major contribution is supposedly administrative.
While this may be important to the success of an ongoing, stable organization, if the job does not involve developing people… continually improving productivity…continuously restructuring the organization to make it more agile given today's environment… and a whole list of other mission-critical activities, it's near-certain the executive whose chief focus is on administration will not provide the organization with a realistic exit path in today's New World.
A Simple Example
Take-for example, a respected executive, whose primary skill could be labeled administrative, returns from maternity leave that started just before the COVID-19 lockdown crisis started.
That individual is now returning to a changed world. Indeed, if the particular business was one of those hardest hit by the lockdowns, the primary emphasis of the organization would/should now be on the economic and entrepreneurial jobs of an executive.
If the returning executive does not have the required skill sets to manage in a completely changed environment, there will be serious consequences.
In today's business climate, senior-level executives have to study the situation. The central question is not "What can this or that candidate do or not do?"
It is, rather, "What are the strengths of the returning executive or candidate to preside over a completely changed situation?"
Does the returning executive have the right strengths for what can be legitimately termed a new assignment?"
Weaknesses and limitations, which may, of course, rule a candidate out for a given job must be seriously considered–and, perhaps, the possibility of reassigning returning executive to a more suitable position.
Drucker's distinction among the three jobs of an executive have never been more important.
L&D organizations must focus training programs on providing the skills and knowledges managers need to continuously and methodically improve individual and organizational productivity and spur purposeful innovation.
Senior-level executives who suddenly find themselves displaced because of a lack of productivity-boosting and entrepreneurial skills can learn new skills and acquire new knowledge.
The most important factor in self-development, apart from insight into one's own strengths, is the strength of character to assume responsibility for learning what's now required.
No organization is competent, let alone obligated, to provide senior-level executives commanding high salaries to substitute its efforts for the self development efforts now required to navigate in a new business climate.
Very senior-level executives are now forced to do very serious evaluations of the true strengths of those put in charge of the business of survival.