How to Manage through Change, the Drucker Way: Where are the Change Leaders?

How to Manage through Change, the Drucker Way: Where are the Change Leaders?
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As Dean of the Drucker School, I spend a lot of time talking to business leaders and answering their questions. What do they ask me? One of the most common questions is, “how do we train people to embrace change?”

The answer depends, given the context of the person asking the question.

Many industries, such as financial services, education, retail, and healthcare, for example, are being disrupted by technology and so the question becomes, “how do we change if we are to remain competitive?” For other industries such as gaming, which are technology-based, the question is instead “how to we stay ahead of the curve?”

At times, the question relates to functional areas such as marketing and supply change (which are themselves being revolutionized by access to new forms of data and digital platforms); in other conversations, the questions are similar but arise due to uncertainties caused by changing political landscapes and voter preferences, or generational shifts (think Millennials, Gen X).

The point is, we are living in a world of change unlike any other in our history, and the rapidity of change and its consequences makes it difficult for individuals to embrace change and for organizations to adjust their strategies.

At the Drucker School, we often look to Peter Drucker’s writings for guidance in these circumstances. How would Drucker, the father of modern management, advise managers who want to lead through times of change?

Peter Drucker on Change

Drucker coined the term “change leaders” to refer to people and organizations who proactively lead change rather than react to it.

“Unless an organization sees that its task is to lead change,” Drucker wrote, “that organization—whether a business, a university, or a hospital—will not survive. In a period of rapid structural change the only organizations that survive are the ‘change leaders.’ ”

Drucker advised managers to recognize that there will always be fluctuations and to build this expectation into planning. While he knew that managers often did end up reacting to and adapting to change, he believed that managers were responsible for shaping the economic environment they face to push back or circumvent factors that limited the organization’s freedom to act. This was, Drucker believed, one of the three functions of management.

Drucker suggested that managers should “attempt to mold the future as far as possible toward the predicted shape of things to come.” One of Drucker’s most famous quotes is: “The best way to predict your future is to create it.”

Drucker’s Five Key Attributes of a Change Leader

At the Drucker School, we encourage our students to model these behaviors so that a graduate of our program is better-equipped to change his or her own future while helping to create an organization’s future.

One: A change leader gathers data and information.

a. Change leaders ask questions. Drucker developed an approach that is now famously referred to as the five most important questions you should ever ask about your organization:

(1) What is your mission?

(2) Who are your customers?

(3) What does your customer value?

(4) What are your results?

(5) What is your plan?

b. Change leaders are keen observers and good listeners. Drucker once explained it this way: “The most important thing in communication is to hear what isn't being said.”

c. Change leaders use data as evidence. Drucker was well known for seeing the future as it happens.

d. Change leaders look across disciplinary boundaries for additional or alternative answers to complex problems.

Two: Change leaders filter new insights through a marketing and innovation lens. In fact, Drucker once wrote, “business has only two functions—marketing and innovation.”

Change leaders know who their customers are and what their customers value. This knowledge then becomes a filter. For example: “How can I provide more value to my customers?” “How will this innovation solve customers’ problems better than current solutions?”

Change leaders recognize the need to balance continuity and change. Drucker reminded managers that there is always the need to focus on the core business, execute the current strategy well, and do the right things because efficiency is “doing the thing right. Effectiveness is doing the right thing.”

But Drucker recommended that at least 10–20% of an executive’s time and resources should be spent on the future: “Management…has to live always in both the present and future. [It] must keep the enterprise successful and profitably in the present—or else there will be no enterprise to enjoy in the future. It must simultaneously make the enterprise capable of growing and prospering, or at least surviving in the future—otherwise it has fallen down on its responsibility.”

Three: At some point, change leaders need to be bold and place bets on one of many strategic options and be willing to take a chance.

“Whenever you see a successful business,” Drucker explained, “someone once made a courageous decision.” He also pointed out that people who are risk averse “generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”

Four: Change leaders are willing to abandon the old as they keep a keen eye on creating the future.

“People in any organization are always attached to the obsolete,” Drucker said, they remain attached to “the things that should have worked but did not, the things that once were productive and no longer are.” Or, as he wrote somewhere else: “If you want something new, you have to stop doing something old.

Five: Change leaders are also effective managers. As Drucker reminds us, effective managers are both composer and conductor as they successfully manage across three domains: they manage the business, they manage other managers, and they manage workers.

What his writings remind us is that change is a constant. We move between adjusting to changes being imposed upon us and shaping change for ourselves; betweem seeing the future as it happens and shaping the future for ourselves and our own organizations.

While change can be unsettling, we suggest that there are certain qualities of change leaders. Change leaders ask questions, listen, and observe, filter what is discovered through the lens of who the customer is and what the customer values, place bets, abandon the old, and serve as excellent executors of strategy. This is how to manage change, the Drucker way.

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