Friday, July 01, 2005

Theory of Business

Theory of Business

 

"A clear, simple, penetrating theory of the business, rather than intuition, characterizes the truly successful entrepreneur, the person who builds an organization that can endure and grow long after he or she is gone." 

Peter Drucker, from The Daily Drucker, p 201

 

Peter Drucker, in his usual way, succinctly captures a big subject, one that has been bugging me for several weeks now.  This quote is from the July 1 entry in this compilation of his writings. 

 

Do we have a "clear, simple, penetrating theory" of why we do what we do in business?  Or do we simply work hard and use our intuition? 

 

In recent discussions, I have asked the question of a number of people "Do you have a way to understand how your/our business can improve?"  Without exception, the essence of the response is, "Well, we work hard and try." 

 

Yet, apart from some theory that makes sense of the myriad of stimuli we encounter, how do we know what to work hard at?  Would I want to go to a doctor that did not have a clear understanding of the theory of diagnostic technique?  Would I go to a counselor that did not have a clear theory of human behavior? 

 

Mostly, folks use intuition.  What "feels right to me."  And this can shift over time and does not build enduring value in the company. 

 

I do not know if Lean is a fully comprehensive theory of business.  It clearly is an adequate theory of operations.  When coupled with Theory of Constraints and some ability to apply principles to higher order thinking, it starts to get close. 

 

Thanks for listening.  I hope it jogs your thinking as well.

 

 

 

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