How do you know if someone is really a branding expert?
They have copies of one or more books by Peter Drucker on their bookshelves.
Drucker, who died in November at age 95, is often called the father of management for his work on leading and managing the modern corporation. That reputation is based on 38 books published over a half century and translated into 37 languages. His most famous book is “The Practice of Management,” published in 1954. That book memorably asked the three questions that every company seeking to establish a brand must ask itself: “What is our business?” “Who is our customer?” And by far the most important for branding: “What does our customer consider valuable?”
His reputation is also based on the influence, freely acknowledged, that he has had on such gurus as Tom Peters, Jim Collins and even Newt Gingrich. He has also impacted business leaders like Jack Welch, Andrew Grove and A.G. Lafley. Said Welch: “The world knows he was the greatest management thinker of the last century.”
Drucker made three significant contributions. The first was acknowledging the role of the worker in corporate success. He coined the term “knowledge worker,” and many of his works deal with the difficulty and importance of managing assets that walk out the door each night. Much of his later work dealt with churches and other non-profits, who often must motivate and organize workers in pursuit of a common goal without the usual management tools of position, perks and pay. The answer, said Drucker, was to manage a human community based on trust and respect.
Drucker also helped pioneer the concept of servant-leader, where leaders ask “what must be done?” instead of “what can I do.” A leader leads by getting finding agreement with employees on goals and direction, and then getting the hell out of the way during implementation. Even in 1984, he thought that CEO pay was out of control, and believed that CEO compensation must be limited to 20 times the pay of rank and file. What would Drucker say today about US Airways, which guaranteed departing CEO David Siegal and his family medical coverage for life while eliminating health coverage for 28,000 employees and 18,800 retirees?
Drucker understood that marketing was not about advertising or “positioning,” convincing targets about “value propositions,” “brand equity” or any other buzzword du jour. Rather, marketing should have just one concern – the customer. Consider this: “The purpose of business is not to make a sale, but to make and keep a customer.” Or: “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Best of all: "Marketing is the whole business seen from the customer's point of view."
Drucker also recognized that the organization is the brand. “Marketing is not only much broader than selling; it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer's point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise,” he wrote.
Barbara Bund, a senior lecturer at the MIT Sloan School of Management, sums up his position well. "Drucker made crystal clear in ‘The Practice of Management’ that business success and even the very definition of a business are determined by customers.” The same holds true for branding.
It is astounding how often this simple and fundamental concept is forgotten. Branding definitions fail to include the concept of a customer. Long articles on branding are written without mentioning the word “customer.” Products are developed without talking to customers. Customer calls are put on hold. Customers defect, and no one notices. Few companies even bother to calculate the value of a customer.
Despite his emphasis on employee empowerment and the need for everyone to contribute to the lives of others, he was not a touchy-feely consultant. Drucker was a strong believer in measurement and accountability; much that has been written about “management by objective” can be traced to him.
Unlike so many management gurus, he did not have all the answers. He only had smart questions. Shortly after Welch became CEO of GE in 1981, he invited Drucker for a meeting. Drucker asked two questions. “If you weren’t already in a business, would you enter it today? And if the answer is no, what are you going to do about it?” Welch answered those questions by determining that if GE could not be #1 or #2 in a particular market, it would exit that market. Over the next 25 years, GE became one of the most successful companies in the world.
Too many in branding have read pop marketing books about “immutable laws” that date from the 1970s or claim that brands are really based on how they smell or feel. Unfortunately, not enough have read and absorbed Drucker, which is one reason why so many brands fail to connect with customers.
Unlike many branding authors, Drucker is a genuine pleasure to read. He is quoted so often because so many of his sentences read like epigrams. His sentences march in logical order toward a sensible conclusion, perhaps reflecting his Austrian heritage. When you finish any of his books, you make a vow to yourself to read it again.
But Drucker is not just for would-be brand gurus. The magazine headlined its Drucker obituary by calling him “the one management thinker every educated person should read.”
That is absolutely true, and yet another reason why it is so sad he has passed away. We will miss you, Peter Drucker.
Find out why strategy+business magazine called ProfitBrand: How to Increase the Profitability, Accountability & Sustainability of Brands the "best business book of 2005." Order yours at Amazon today.
Drucker was absolutely right in saying that asking good questions was a key ingredient of good management. Unfortunately, too many managers today remain resistant or even hostile to questions that bubble up from the trenches. These old school boys will not survive in the new economy that will be dominated by services, information, transactions and people - all of which are inextricably intertwined.
Posted by: Thomas Tunstall | March 20, 2006 at 10:13 AM