Author: Peter F. Drucker
Genre: Business, Non-Fiction
How I came about the book
A friend of mine mentioned it on Facebook and I decided to look it up online. Luckily, I found a free PDF version and I downloaded it.
I’m honestly not a fan of business books. I just assume most of them would be boring and too technical with details for my liking, so I didn’t really know what to expect.
So it’s pretty much a book for serious minded individuals who want to do well in the business world.
The lessons here are mostly about, but not limited to, business principles. There are one or more lessons that can be applied to personal development as well.
Entrepreneurship is neither a science or an art, it is a practice.
– Not everyone who starts a new venture is an entrepreneur. An entrepreneur doesn’t even have to be a business owner.
– An Entrepreneur has to have special characteristics over being new or small.
– People who need certainty are unlikely to make good entrepreneurs.
– Entrepreneurship is more of behavior rather than personality trait.
– Entrepreneurship is about doing something different rather than doing what has been done better.
– Entrepreneurs see change as healthy and the norm. They search for it, respond to it and exploit it as an opportunity.
– Entrepreneurship is comparatively low risk than standard businesses. It is risky in theory because only few of the so-called entrepreneurs actually know what they are doing.
– Entrepreneurs who start with the idea that they’ll make it big and in a hurry, can be guaranteed failure.
– Successful entrepreneurs, whatever their individual motivation, try to create value and make a contribution.
– The right personality for entrepreneurship needs willingness, to learn, to work hard, to exercise self discipline, and to adapt and apply the right policies and practices.
– Innovation is the specific tool of the entrepreneur.
– Innovation can be defined as changing the yield of resources i.e. the value and satisfaction of resources, obtained by the consumer.
-There’s no such thing as a resource until man finds a use for something and endows it with economic value.
– Innovation is both conceptual and perceptual.
– Successful innovations begin with a careful analysis of opportunities.
– For an innovation to be successful, it has to be simple but focused. A successful innovation does not try to do too many things at once.
– Everything new runs into trouble and if it’s complicated, it can’t be repaired.
– Unless there’s an immediate application to an innovation, it only remains a brilliant idea. Don’t try to innovate for the future, innovate for the present.
– Innovation depends not only on talent, ingenuity and knowledge, it also requires diligence, persistence and commitment.
– Convergence of knowledge is a tool for innovation. It is only by pulling different kinds of knowledge together that innovation is possible.
– Successful innovators are not risk-focused, they are opportunity-focused.
– Successful innovations exploit change. Change is what always provides opportunity for the new and different.
– A good innovator need not always try to understand why things do not work as they should. He should rather ask, what would convert this incongruity into an opportunity?
On Unexpected Success
– Learn to take unexpected success seriously. If a new aspect of your business begins to work more than the mainstream, do your best to capitalize on it rather than suppress it.
– Unexpected success is often a limitation on the management’s vision, knowledge and understanding. In reality a product line can have uses that were not originally envisaged.
– Unexpected success is not just an opportunity for innovation, it demands innovation.
– The unexpected success is an opportunity but it makes demands that must be taken seriously. It demands seriousness and support that is equal to the size of the opportunity.
On Unexpected Failure
– Failures, unlike success, cannot be rejected and rarely go unnoticed. But they are seldom seen as symptoms of opportunity.
– One rule of failure is that the assumptions on which a product or service were based may no longer fit reality.
– The unexpected failure doesn’t demand more study or analysis, but it demands that you go out more, look around more, and listen more.
– Failure should always be considered as a symptom of innovative opportunity, and taken seriously as such.
On Market Research
– A research is often needed to convert a process from potential into reality.
– Need is a source of innovation just as necessity is the mother of invention.
– It is not enough for a need to be felt, it also must be understood. Without understanding a problem, we may never be able to find a lasting solution.
– It is possible to understand the need but have no knowledge to make a difference.
– Any innovative solution has to fit the values of the intended consumers.
– Often old businesses cling to serving the old market the old way, while paying little attention to the new challenge.
– People running a new venture need to spend time outside, in the market place, looking and listening.
On Diligence in Business
– The extraordinary innovator will be effective only if grounded in the master and discipline of the innovation.
– Innovative opportunities come and go as the breeze.
– Being alert to opportunity sets successful innovators apart.
– Bright ideas are the riskiest and least successful source of innovative opportunities. Bright ideas are vague and elusive.
– Innovations which are as the result of a flash of genius rather than hard, organised and purposeful work, cannot be replicated.
– Innovators improve with practice, but only if they practice the right method.
On Business Forecast
– Nothing so powerfully concentrates a manager’s mind on innovation as the knowledge that his present product or service will become obsolete in the foreseeable future.
– All existing products and services have limited life expectancy.
On Business Expectations and Problem-solving
– Problems have to be paid attention to and tackled, but if they are the only things being discussed, opportunities will die of neglect.
– To be successful one must learn to ask those who have succeeded, what they did to succeed.
– What works best in a going, established business, would kill an infant business. A new business shouldn’t be burdened by a compensation load it cannot yet carry.
– It is to be expected that for a long time the new endeavor will show neither profit nor growth, it only absorbs resources.
– A failure to achieve an objective after repeated tries should be viewed as an indication that the objective is wrong or at least defined wrongly.
It is irrational to consider failure a good reason to keep trying again and again
– According to Mathematicians, the probability of success diminishes with each successive try.
On Starting Up
– An innovation is expected to start small but end big.
– Unless a new venture develops into a new business, it will not survive no matter how brilliant its entrepreneurial idea is.
– When a new venture succeeds, more often than not, it’s in a market other than the one it was originally meant to serve.
– Anything genuinely new creates markets that nobody before even imagined.
– A new venture should be willing to experiment.
– A new business must start with the assumption that its product/service may find customers in markets no one thought of.
On Business Financing
– The more successful a new venture is becoming, the more dangerous its lack of financial foresight.
– Profit is a wrong focus for the new venture, and should come rather last, than first.
– Growth in a new venture demands adding financial resources rather than taking out of it.
– If the growing venture shows an unusual “profit” it is a fiction, a bookkeeping attempt to balance the accounts.
– The healthier a new venture and the faster it grows, the more financial feeding it requires.
– A growing venture should know 12 months ahead of time how much cash it will need, when and for what purposes.
– Raising cash in a hurry and in a crisis is never easy and always prohibitively expensive.
– The new venture is almost always under cash pressure, when the opportunities are greatest.
– As a venture grows, private sources of funds (savings, family) become inadequate. Hence capital planning is a survival necessity.
– Financial foresight does not require a great deal of time, but does require a great deal of thought.
On Management Strategies
– It is important to build a top management team before the venture reaches the point where it must have one.
– Management of finance and Management of people (customers, employees) are by far the two most important areas a venture’s management team should be concerned with.
– It is the management’s responsibility to set goals and objectives for specific areas and assign to each member taking primary responsibility for it.
– A growing venture has need for independent, objective outside advice. Sometimes someone who is not a part of the problem can offer better insights to its solution.
– Only when people with performance capacity and the right tools have been assigned to a project, do we have a plan. Until then al we have are good intentions.
– A new venture must prepare itself for the demands and responsibility its own success will make of it.
– An innovator has to run even harder once it has attained a leadership position or else it only creates a market for its contributors.
Building a managerial team is like preventive medicine.
On Creative Imitation
– Creative imitation describes a strategy that waits until someone else has established something new, then goes on to make it better.
– Creative imitation does not exploit the failure of the pioneers, but on the contrary, their success.
– The creative imitator does not invent a product or service, he perfects it by supplying something that is lacking.
– The creative imitator looks at products or services from the viewpoint of the customer.
– It focuses on the market rather than the product. It satisfies a demand that already exists rather than creating one.
On Avoidable Business Pitfalls
– Beware of man’s typical pride of doing things the hard way.
– Quality is not defined by how hard/how much it costs to make a product.
– Quality in a product is not what the supplier puts in, but what the customer gets out and is willing to pay for it.
– It’s not only criminals who are set in their habits, most businesses are.
– Don’t just explain away failure. Learn to find out why something didn’t work and what you can/should do about it.
– Beware of the arrogance that something new cannot be good unless they themselves thought of it first.
– Beware of Creaming, an attempt to get paid for past contributions.
On Customer Satisfaction and Making Profit
– Businesses are not paid to reform customers, they are paid to satisfy customers.
– A product or service is defined by the customer, not by the producer.
– The best way to get higher profit margins is through lower costs.
– In trying to satisfy everybody you eventually satisfy nobody.
– It is not good enough to offer the same product or the same service at a lower cost. There has to be something that distinguishes it from what already exists.
– It’s better to price what the customer buys than what the manufacturer sells.
– Whatever customers buy has to fit their realities or it’s of no use to them
There are no irrational customers, there are only lazy manufacturers.
On Knowledge Acquisition
– An entrepreneur needs to take responsibility for his/her own continuous learning and relearning.
– An entrepreneur challenges habits and assumptions of schooling.
– The fact is that what individuals learn becomes obsolete a few years after and needs to be replaced or at least refurbished- by new learning, skills and knowledge.
It was a very long read. It took every ounce of determination to complete the book.
Who should read this book?
Every “Wannabe” Entrepreneur that needs an advantage in the business world.
For Start ups, Young business owners and those in managerial positions.
I hope you enjoyed this review.
What other business book(s) have you read? Which do you recommend?