CHAPTER 5

Taking Action What It Takes to Implement Your Plan

Peter Drucker was a man of action. He wrote that the best plan is only a plan, mere good intentions unless it generates work.¹ His preference for action and the application of knowledge over the theoretical and the academic cost him favor with some academics. However, this same focus is what led practitioners to acclaim his ideas, and even his academic detractors acknowledged him as the “Father of Modern Management.”

Without action, nothing is achieved and nothing is accomplished. Without action, your strategic planning is worthless because you won’t be able to implement this very basic responsibility of the leader.

How many very talented leaders have you known who excelled in almost every department except one—the ability to “follow through.” This doesn’t necessarily mean that they failed to initiate the action their plans required. It means that this is all they did. They turned the switch on and stopped with that. There was no updating or oversight; they did not attempt to make sure the actions they had initiated were carried out. They did not attempt to discover whether everything was working out as intended or the organization’s future was being shaped as they had envisioned or anything should be changed or fine tuned. In failing the critical task of follow through, they wasted the time, effort, and resources of everyone involved.

In this chapter, I discuss how you can organize and implement Drucker’s advice in executing your plans to build your organization, whatever its mission, into what it should be. Your objective is not a beautifully leather bound, well organized and worded document that rests quietly on your office bookshelf, taken down only to be shown off to visitors. Your objective—and the only one worth talking about—is to make your organization what it should be.

Implementing and Controlling Your Plan

Implementing your plan means initiating and putting your plans into action. As with any project, your strategic plan needs leadership and management. This requires that tasks be broken down, assigned, and scheduled. Resources must be allocated, and performance expectations defined, and metrics established, and a system for periodic and ad hoc reviews and feedback implemented. In short, as leader you are responsible for and must implement the plan.

To do this, a leader needs controls, which according to Drucker have three major characteristics.² They

• Can be neither objective nor neutral.

• Need to focus on results.

• Must consider measurable and nonmeasurable events.

Controls Can Be Neither Objective Nor Neutral

No matter how scientific you are, when you control something you induce error in measurement. Since it is essential to measure the effect of strategy, this is important because the very act of establishing the control creates focus and can influence results.³

The most famous (or infamous) example of errors that controls can induce was a study done at the Hawthorne Works in Cicero, Illinois, beginning about 1924. An experiment was set up to measure productivity improvement that resulted from improved illumination of the work area. Not surprisingly, researchers found that when they increased the light bulb’s wattage, worker productivity increased. However, productivity continued to improve even though the wattage was increased only slightly. Suspicious, the investigators decreased the wattage. Surprise, surprise, productivity still increased! The fact that attention was being paid to the workers during the experiments caused a short-term increase in productivity.

This became known as the Hawthorne Effect, and it has been observed many times in different settings and environments, although it is still controversial, as it has not always been replicated. ⁴ Still, there is enough evidence to support Drucker’s assertion as a cautionary note. The basic question then is what exactly is it that should be measured and controlled?⁵

Controls Must Focus on Results

Drucker noted that the major difference between a manager and a leader is that the manager focuses on doing things right, while the leader focuses on doing the right things. This is not a simple play on words. Of course you would like a leader who is both efficient (doing things right) and effective (doing the right things), but if it is a choice between the two, and this determines focus, then the leader must focus on getting the right job done, at the expense of efficiency.

This was the great weakness of the Total Quality Management (TQM) movement, which had many good attributes including ownership, continuous improvement, empowerment, and, of course, its goal of quality. However, TQM specifically focused on process rather than results. The theory was that if you had the most efficient process in place then the best result would naturally follow. Unfortunately, this was not necessarily true. The Florida Power and Light Company (winner of Japan’s Deming Prize for quality management) abandoned TQM within a year due to worker complaints, while the Wallace Company, a Houston oil supplier, won the prestigious Malcolm Baldrige National Quality Award and promptly went bankrupt.⁶ The point is that the control system you implement must focus on your goals, and not on gaining efficiencies along the way.

Both Measurable and Nonmeasurable Events Need Controls

According to Drucker, it is possible and important to control both measurable and nonmeasurable events. His concern was that obviously measurable events would gradually overshadow nonmeasurable results, which were frequently more important. In the context of a strategic plan, most if not all events are measurable or can be made so. Drucker’s example of a critical nonmeasurable event was an organization’s need to attract and hold able employees.⁷ While the need to attract and hold able employees may not be measurable, measurements can be designed to calculate how an organization is doing in meeting this need. These might measure employee satisfaction, turnover rates, time to acquire new hires, and so forth.

Drucker’s Metrics for Control

Both choosing the correct metrics and making the correct decisions about them are incredibly important to achieving any goal whether strategic or everyday. Choice of the wrong metrics or application of incorrect data collection or analysis can lead to a multitude of problems for the organization—in addition to failing in the basic control function.

A large Air Force command established a management control system and developed performance measurements to control important aspects of the organization’s primary mission and support functions. One of the support functions at most U.S. military installations consists of social club like organizations, which can be very simple, or for the larger permanent bases, quite elaborate. In this command, as is often the case, all were for the benefit of all ranks, their families and guests, and were supported by the membership, not the government. Membership was voluntary, although there was some pressure to participate; therefore, almost all joined and paid a modest monthly membership fee. Since club membership fees were kept very low, a disproportionate amount of income came from the bars, which tended to make the entire club profitable, although they were not set up to be profit centers.

The higher organizational level decided that the basic metric for all clubs would be profits, but not just overall profit, profit in each part of the club. The new management control system created immediate problems. The swimming pools now had to charge a fee. Use declined. The restaurants lowered the quality of food or service, making themselves uncompetitive with many nearby restaurants not on the Air Force base. Out of desperation and in an attempt to become profitable, some clubs turned to highly questionable cost-cutting practices. One club stopped purchasing catsup and mustard bottles. Instead, the unused government issue tubes were salvaged from flight lunch boxes. Members deserted the club restaurants and soon membership declined. Only when metrics based on service as well as profits were introduced did the clubs return to their previous state.

Drucker’s Seven Specifications

Because of the importance of metrics in establishing controls, Drucker created seven specifications for effective control.⁸

First, a control must be economical to both managers and the leader. When Frank Carlucci was secretary of defense, I heard him speak about his early experiences in this cabinet position. He oversaw several million employees in and out of uniform and billions of dollars in defense expenditures. To control such a vast empire, he required a great deal of information from the many defense organizations under his supervision. His staff put together a list of the information they thought that he would need from each. Carlucci asked each organization to collect, analyze, and present the results to him during a personal visit, which he intended to make every six months. Six months later, on his first visit, he received an immense document. Pleased, he said that this was exactly what he wanted. Later, he learned that in order to obtain all the information required by him every six months, the organization would have to spend most of its time and a huge amount of resources on this one task and not on performing its mission. After his staff reviewed the requirements with this in mind, he found that a tiny percentage of the information originally requested was all he needed for effective control and oversight.

Second, Drucker found that many organizations measured things that were unimportant to the leader’s intended outcome, and were therefore meaningless. If a control is not meaningful, you are not only wasting time and effort in gathering data and analyzing it, you will be sending the wrong signals to subordinates as your organization proceeds with the plan. Those you lead will waste time, energy, and resources working on the wrong objectives. The control must be meaningful to your ultimate objective for your strategic plan.

Third—the most important specification—the control must be appropriate to what is being measured. He found that many controls supplied numbers without a description that defined what the numbers meant. For example, sales performance is frequently reported in total dollars, which by itself is inappropriate because an identical volume of sales could mean substantial profit, zero profit, or a substantial loss, depending on the product mix.

Fourth, measurements must be compatible with the events being measured. He warned of the tyranny of numbers and cautioned that frequently an exact number, although it seemed precise, could be so inaccurate as to be meaningless—even dangerous—because its implied certainty misled leaders about the real nature of the event. Terms such as “larger,” “smaller,” “earlier,” and “later” were often more accurate than numbers. For example, deliveries described as being on average only 1.2 days late might in fact have been half late by a week and half early by almost the same amount.

Fifth, measurements should be taken at appropriate intervals. The tendency, Drucker reported, is to assume frequent measurement and feedback are essential. However, frequency is not always required, nor is early reporting. As Secretary Carlucci discovered, measurements and control have a cost; frequency increases that cost and, if unnecessary, can be counterproductive. The key is to make the control timely. Not too frequent or too infrequent, and not too early or too late, but timed to the thing being measured and the need for immediacy.

Sixth, make controls as simple as possible. Complicated controls and rules confuse—and it’s true, as Murphy’s Law says, that “everything that can go wrong, will go wrong.” Complex controls make measurement more difficult and costly, and they induce a greater chance of error.

Seventh, make all controls“operational.” By this, Drucker meant that the results sought should lead to action, not merely be of interest or “academic.”

The Importance of Periodic Reviews

Based on the feedback from the controls, the leader may adjust strategy, goals, and objectives, or even reinvent everything as the organization is guided continually toward what it should become. If the environment changes suddenly, even the purpose of the organization may need to be adjusted rapidly, perhaps immediately, for the sake of survival.

Drucker recognized that reorganization was “major surgery.” Still, that’s what slide rule, vinyl record, and railroad companies should have done. To maintain control, strategic planning review should be done periodically, probably annually, and ad hoc reviews should occur whenever a major opportunity or threat occurs or a “certainty” in the equation is no longer certain. These reviews may involve anything from fine tuning to reinventing the organization from the top down and bottom up.

The Ultimate Control

Drucker recognized that the ultimate control was the fact that people act according to the metrics because they know rewards and punishments will be dispensed based on them.⁹ So even the carrot and stick approach, which Drucker did not usually recommend, had a place. In the example of the military clubs, one of the dysfunctions was that the profit metrics established focused subordinate leaders on profits rather than service, which was the original intent. A system of control that does not conform to the organization’s progress from what it is to what it should be will create conflict and push the organization out of control.

Drucker’s Concepts on Taking Action

• No matter how good the plan, there is no progress toward a desired future without action.

• Action requires control.

• Control is possible only through metrics.

• All metrics must meet Drucker’s seven specifications.

• Both periodical and ad hoc reviews are required.

• The ultimate control is that the metrics will correctly be seen as the measure for reward and punishment.