A Class with Drucker - Headway | Work on yourself

204 ■ A CLASS WITH DRUCKER
equally by a line either vertical or horizontal. So the matrix outlined by the
two axes had one horizontal and one vertical line which divided it into
four quadrants or cells. From then on, the strategist simply followed standard
actions according to their place in the matrix. Those businesses in the
dog quadrant you sold or closed down. You used those falling in the cash
cow quadrant to fund your stars. You paid particular attention to the question
marks, also called problem children, taking actions to turn them into
stars, doing some watchful waiting, or <strong>with</strong>drawing resources and considering
them dogs to be dumped.
This system of strategy development by formula became extremely
popular in the 1960’s. Many companies found a quick way to dramatically
change SBUs from problem children to stars, or even dogs into cash cows,
<strong>with</strong>out having to increase sales in individual businesses. All you had to
do was to acquire a company in the same group as represented by the troubled
SBU. The secret was acquisition, and the logical outcome was for a
corporation to grow larger and larger.
Peter would have none of this formulaic nonsense, and, of course, he
was proven right. <strong>Drucker</strong> was all for a logical approach to arriving at a
strategy. His famous technique of asking questions which led respondents
towards powerful strategic approaches was based on a system of
applied logic. However, he avoided precise quantifying inputs to arrive
at precise quantified outputs which were intended to direct the manager
in exactly what to do and how it was to be done. Such was the fourcelled
matrix approach. According to the matrix, bigness was supposed
to lead to profitability through economies of size. In fact, there were
plenty of smaller companies making fortunes, while some giant corporations
stumbled and choked on too much acquisition, their size and
their loss of efficiency, and their inability to best satisfy the customer.
Some failed in the marketplace before they could recover.
Peter was not against acquiring as much information as you could
prior to making a strategic decision. He was certainly not against analyzing
this information in whatever way brought clarity. He just didn’t
think that you could develop a successful business strategy by formula
after doing this analysis, regardless of what method of categorization
was used.
This was a theme that continued throughout Peter’s teaching. The
manager was supposed to think each different situation through, not to
allow a formula or a system to make decisions for him.