Abandon to succeed

Real opportunities lie not in product extension but in declaring successful products obsolete, says a new book Drucker on Marketing

Henry Fords Model T was named the worlds most influential car of the twentieth century. The actual title of the award was The Car of the Century, and this was an international award resulting from an election process overseen by the Global Automotive Election Foundation in 1999. No doubt the award was well deserved since no less than 15 million Model Ts were built between 1908 and 1927. Although there were minor changes over this 19-year period, the Model T was primarily characterized by a stubborn lack of change and maintenance of design. This was exemplified by Fords well-known instructions to his staff that Fords customers could have any color they wanted as long as it was black. Challenged by rival GM which had begun to provide a variety of designs and options, Henry Ford replied that the Model T design was already correct and therefore would not be altered. Barely profitable at the end of its career, the Model T could no longer compete with more modern offerings. Fords failure to abandon this successful product much earlier cost his companys leadership to General Motors for 40 years, early confirmation of Druckers claim that abandonment of a successful product at the right time is a necessity whether the product was already correct or not.

The systematic process of abandonment
Druckers concept of abandonment comes from the dynamics of knowledge advancement and requires a single imperative for every organization: management of change has to be instilled at the cellular level, that is, in the organizations very structure. He saw that logically this meant that an organization must be prepared to abandon everything it does at the same time that it must devote itself to creating the new, so abandonment must simultaneously be executed along with continuous improvement, exploitation of past successes, and innovation. In fact, he recommended that a proposal for a major new effort must always spell out what old effort must be abandoned. This is something I found out from necessity early in my career as director of research and development, when one boss I had insisted on initiating products for development without simultaneously increasing my overall budget.

Drucker saw that all these processes must be systematic, but he emphasized that abandonment especially was not to be done in a haphazard fashion and must be subjected to a systematic process. The process begins with rethinking. It progresses to deciding on the criterion of abandonment. Then it requires an abandonment plan and implementation of that plan.

Rethinking the preamble to abandonment
In an essay on his thoughts on re-thinking reinventing government, Drucker considered rethinking as a preamble to abandonment. The notion of rethinking is easily applied to reinventing anything, including a companys products or ways of marketing. Drucker said that rethinking should result in a long list of activities, programs, or products to examine and to be ranked by their success. Those at the top of the list should be strengthened; that is, they should be given even more resources to exploit their success. They would roughly correspond to GEs businesses which were both profitable and the leaders in their markets. Those at the bottom of the rethinking list should be dumped. Those in between should be refocused. That is, some thinking should occur as to what to do. Drucker noted that conventional policy making ranked programs and activities according to good intentions. This was probably true for GEs businesses when Welch became CEO at GE and Drucker asked his now famous questions. The same can be said for retention of the already correct Model T when technology had changed significantly over time. But rather than good intentions, correct rethinking ranks all on the list according to performance.

How often to rethink
Drucker was specific regarding how often to rethink things and wrote: Every three years, an organization should challenge every product, every service, every policy, every distribution channel with the question, if we were not in it already, would we be doing it now?

The question assumes that conditions have changed and that perhaps even more importantly the organization has learned something new since the original action was initiated or in the interim. Drucker emphasized that if the answer to the above question was no, the reaction must never be for additional study, but always what are we to do now? That is, there must be action taken.

Why abandonment is not only a necessity, but an opportunity
During rethinking, the marketer conducts categorization which will identify opportunity. Like the sorting hat in the Harry Potter books which automatically categorizes new wizard students and sends them to different academic houses of magic in the fictitious Hogwarts School of Witchcraft and Wizardry, the rethink list categorizes products (or businesses, or anything else) into three categories:

1. A high-priority ongoing group in which there is a significant opportunity to achieve extraordinary results. 2. A high-priority group in which the opportunity is in abandonment. 3. A large group of mediocre items in which efforts to exploit or abandon are likely to lead to significant results

You already know that resources are always limited and that no one ever has all the resources that theyd like to have to run a marketing campaign or develop a new product. So if something is abandoned, this frees up resources: money, personnel, facilities, equipment, and time for necessary resources for new opportunities or to take advantage of older ones with higher potential. Drucker called this sorting into areas of higher priority push priorities. He said that they were easy to identify. Push priorities are opportunities where the results, if successful, earn back what they cost many times over.

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DRUCKER ON MARKETING

 

AUTHOR: William A Cohen

PUBLISHER: Tata McGraw-Hill

PRICE: Rs 625

ISBN: 9781259064517
 

Reprinted with permission of Tata McGraw Hill Education Private Limited. Excerpted from 9781259064517: Cohen: Drucker on Marketing. Copyright 2013 by William A. Cohen. All rights reserved.