Final Project
Arch 8841
Joey Plumley
December 10, 2002
“Druckerisms”
“There are three different dimensions to the economic task: (1) The present business must
be made effective; (2) its potential must be identified and realized; (3) it must be made
into a different business for a different future.” (p.4)
This Druckerism identifies a few key features of a successful business. I
would like to concentrate on (3). Any successful business is an ever-evolving,
ever-morphing creature in constant change. A successful business cannot afford
to be stagnant in its development, due to the market never being stagnant. The
market revolves around customers, and their needs are constantly changing. How
often do fast-food restaurants add a new item to their menu? Why is the fashion
industry in constant change? This all revolves around the needs and wants of the
customer. Supply and demand theory tells us that when a company finds a
profitable niche in the market, other companies will soon follow suit in an effort
to tap into the profit. The customer becomes familiar with the products and
competition kicks in. The first company must now change something in its
product or service in order to stay ahead of the rest of the companies, and the
cycle starts all over again.
“People inside a business can rarely be expected to recognize their own distinct
knowledge; they take it for granted…. What looms large on their horizon are the things
they find hard – that is, the things they are not particularly good at.” (P.92)
Here, I believe Drucker is trying to tell us how it is hard to analyze a
business from within. I believe this to be entirely true also. In my firm, described
later, there is a specific person whose job is to constantly analyze the company’s
goals and how we are responding to the needs of the market. This is crucial for
any successful business. How easy it is for a successful business to become
stagnant because they are happy with their earnings? Do they not foresee what
lies ahead due to stagnation? This also ties into the Druckerism above. This all
must be analyzed from someone outside of the business itself, who has no
dealings with the day-to-day operations.
“It is the manufacturer’s or supplier’s job to find out why the customer behaves in what
seems to be an irrational manner. It is his job either to adapt himself to the customer’s
rationality or to try to change it. But he must first understand and respect it.” (P.97)
The successful business must not forget that its sole reason for existence
depends on its ability to satisfy the needs of the customer. Therefore, a firm
should place the wants and needs of the customer as number one priority, and
should tailor its products and services to that of the customer’s desire. As
Drucker stated, perhaps sometimes the customer or market may seem
unreasonable or irrational, but without adaptation to these demands, a company
cannot flourish. Every successful firm strongly believes that the customer is
always right.
“Knowledge is a perishable commodity. It has to be reaffirmed, relearned, repracticed all
the time.” (P.117)
With technology advancing at the pace it has been since the industrial
revolution, no business can afford to employ people with an outdated knowledge
base. The whole business would eventually fall to other businesses that have
chosen to offer new technologies and techniques to the market. In my dream
firm, each individual would be required to attend forty hours of outside training
per year. While this may seem like too many hours, this education reinforcement
would only set our company up for success in the future. Plus, with $27 million, I
can afford to have people take time off work to better themselves through
education.
“Perhaps the best way to go about designing the ideal business is to start with a broad
sketch and to correct and refine as one goes along…. For the largest part of the
improvement in performance and results should come as soon as the business has begun
to move with determination toward its vision.” (P.143)
I believe Drucker is telling us here that time is of the essence and that it is
better to get a business started now, and find a niche in the market later. By the
time someone can get a plan together for a successful business, perhaps the
market has changed, the economy’s changed, etc. and his plan is nullified.
Drucker here tells us that goals can be more accurately set once the business
becomes part of the marketplace and has a chance to discover how to cater to its
customers. This is just as I am doing in my firm – I start with a broad knowledge
base to cater to a variety of firms, without any specialization in any one particular
area. As the firm grows and gains recognition, we would pick an area that not
only interests our employees, but one that is also profitable, perhaps one with not
much competition.
“First-class people must always be allocated to major opportunities, to the areas of
greatest possible return for each unit of effort. And first-class opportunities must always
be staffed with people of superior ability and performance.” (P.149)
How important it is to have a top quality staff! Without top quality
people, a business cannot expect above-average results in a competitive market.
In the business world, one is gaining market share or losing it. A business cannot
hope to survive if it does not stay ahead of the average firm in a given market.
This is why in my firm I have chose to include two to three other professionals as
principals in my firm, who were the best in their field. Mediocre people produce
mediocre results, which in time will cause a business to fail.
“Next, one always asks: Is anything happening in the structure of an industry that
indicates a major change?” (P.180)
Drucker here is hinting that one must always keep careful observation of
the industry in order to offer services that cater to its needs. A successful business
should keep watch in order to stay ahead of its competition. It should be able to
predict what the market will require in the future so that it can begin to fulfill
those needs now. Again, successful business means constant change from within
to meet the external needs of the market it is providing services or products to. In
my firm there is a full-time “watchdog” type of person whose sole job is to keep
tabs on the market at hand and where that market is heading in the future.
“Every business needs a core – an area where it leads. Every business must therefore
specialize. But every business must also try to obtain the most from its specialization. It
must diversify. The balance between these two determines the scope of a business.”
(P.208-209)
It is sound business practice to offer a variety of services and products in
order to please a larger audience. However, diversity alone will not allow a
business to survive. Something must set the business apart from its competitors
otherwise it will be wiped out by its competition. A good example is the fast-food
restaurant Hardee’s. This chain offers a large variety of food, yet they are not
popular. While they offer many different foods to satisfy a diverse crowd, they do
not have a single item on their menu that sets them apart from their competition
(except the new “Six-Dollar Burger” which I believe was introduced to remedy
this situation being discussed). Although this specialization does not have to be
implemented immediately when a firm is in its early stages of the business
lifecycle, as reinforced by other Druckerisms, it must inevitably become part of a
firm’s total business plan.
“But no company, no matter how large or how small, can afford to be marginal in all of
them. Above all it cannot afford to be anything but a leader in the areas which are the
mainstay of its business…A marginal product generates inadequate returns. It is always
in danger of being squeezed out altogether.” (P.41)
This Druckerism ties in with the last one, but goes on to emphasize how a
company would be “squeezed out altogether” by a lack of specialization.
“Successful planning is always based on maximizing opportunities.” (P.137)
A business’ chance of survival depends largely on the opportunities it
seizes in the marketplace. This ties a few Druckerisms together, such as the ones
that talk about an ever-morphing business strategy to meet the needs of an ever-
evolving marketplace. Also, there must be someone or a group of people
committed to analyzing the market and constantly looking for opportunities for
growth and new market share. This should, of course be every employee’s job to
be a rainmaker, but in reality many employees get caught up in the business
atmosphere and their work. Therefore, I feel a separate group or person is needed
to specifically market the company in addition to what the rest of the employees
do.
“Summary”
Beau and I decided to organize our thoughts on this project together, therefore our
individual companies may sound similar, but each of us have a few different ideas. The
core concept of our firm is as follows. After working for at least two different firms, we
would break the last firm to start our own. We would select two to three other, perhaps
more experienced, individuals as fellow principals in our new company. These two or
three other principals would bring with them their unique field of specialty, thereby
creating a diversified firm. The company would be a general engineering consulting
firm, dealing with architecture firms as a knowledge base to help them design and plan
buildings. Eventually we would evolve into a company with expertise in an emerging
field.
“Model Firm”
The firm that most closely resembles my firm would have to be the Zenner
Group. They started small, diverse, and non-specialized, just as I would be doing. He
felt that they put together the best people in their field, both seasoned professionals and
those who were fresh from college. Over time, they found a niche in the market (car
dealerships) just as I plan to do with my firm. They own their building and pay
themselves rent. They market themselves by quarterly mailings and much of their
business comes from repeat customers and word of mouth. They do not have a formal
advertising campaign, but feel they do not need one.
“Core Competencies”
As stated earlier, the background of our company’s principals would be diverse.
Our Core Competencies model would be as follows. Our firm would serve the
architectural design industry with a broad knowledge base by having five principals each
from unique backgrounds. Beau and I are mechanical engineers, so one of us would
specialize in HVAC and the other would specialize in structural engineering. One of the
other principals would be an electrical engineer. One would be a fire protection engineer
(this is very important for commercial and industrial buildings). The last principal would
be a civil engineer. Each principal would be considered by us to be one of the best in his
field, and have a wealth of experience in the market our firm would be catering to. This
broad range of expertise would allow us to tackle just about any problem the architectural
world could throw at us. We would also hire approximately ten other engineers to assist
the principals, with two to three of those specializing in plumbing. Plumbing is another
area that would need attention in engineering consulting, but none of the principals would
have a background in it. Of course, this would go another way, with us not having a civil
engineer as a principal. We would then make up for it by hiring two or more civil
engineers, perhaps fresh graduates (they’re cheap), and maybe someone with a bit more
experience. Regardless, whatever area the principals were lacking in we would hire
engineers to fill the hole. Also, perhaps five or so other “support personnel” would be
hired, two of these as administrative assistants.
“Marketing Mix”
The market segments we would serve would vary from job to job. I would think
this would be the norm for most consulting firms, as they are exposed to a variety of
demands from various customers. However, to gain an edge above our competition and
to establish a niche in the engineering consulting market, our firm would start to
specialize in a developing market. This market would have to be determined from
research to determine what areas would require specialization. Perhaps the health care
industry will expand greatly in the coming years, and this would be a good opportunity
for us to specialize in a growing market.
Our external image would be defined by our previous work. Word of mouth
advertising and recommendations from past clients would be the fuel of our business.
We would also try to attract past clientele from our previous work at our former jobs.
Quarterly mailings would keep past clientele as well as prospective customers in
touch with us and up to date on what we are doing. These would be kept simple, like a
postcard, and would include current projects that we feel bring a positive image to the
company. Also, holiday greeting cards would be sent to past clients as well as tailored
correspondence, such as a congratulation if their company reached a milestone. The idea
here would be to keep our company’s image in the heads of our former customers in
hopes of repeat business and/or word of mouth advertising.
During a project and immediately following a completion we would issue written
surveys to the client. These would always be returned because we would make them a
part of the contract when the project is initialized. These surveys would be kept on file.
In the event that a potential customer is looking for some reassurance, we would give out
the contact information for a few of our past clients that were pleased with our work who
had a similar need as the prospective client. Of course we would only give out a
company’s information upon their approval. Our quality control person would also call
clients at various stages of projects to make sure we are meeting all the client’s needs.
This quality control person would also be in charge of the surveys.
The quality control person would also be a major part of the company in that
he/she would serve as a market analyst. This person’s job would be to research our
competition and evaluate our performance vs. theirs. Another duty would be to ensure
that the company as a whole is moving toward our goals at a reasonable pace. The
quality control person would meet formally with the principals quarterly, or on an as-
needed basis to discuss his/her observations of the company and the direction the market
is taking.
“Everyone markets” would be one of our key values at the firm. Everyone must
realize that more than anything else the quality of our work will be a deciding factor for
future customers. I believe this is true because even if a company does a project for a
small amount of money, if the job needs to be redone after completion or was not done
properly and needs another company to come fix it, this will ultimately cost the client
more money than if they had hired a quality firm in the first place. A firm marked as one
that does a not so good job is doomed to not have much future business and therefore will
not survive in the market.
As for the staff, we would hire a range of professionals from different fields. We
would incorporate both younger, freshly graduated engineers (low cost) as well as
seasoned, more experienced engineers who could act as mentors for the younger
employees. To make the staff give their best contribution possible to the firm, we would
demand forty hours of outside education in a work related field or fields, but one of their
choice, also. This could mean learning the newest CAD software, learning about new
materials used for construction that companies would be using in the coming years, etc.
This extra training would allow us to be one step ahead of the competition in almost
every aspect, due to our diverse knowledge base and our knowledge of future techniques
and practices before they even hit the market. As for the rest of the staff, we would
require two or three administrative assistants, and an accountant.
The physical building would be based in a suburb of Atlanta, where we could
serve the whole area. We would own our office building and the land it would be sitting
on. We would also build the building new from the ground up, and have an engineering
theme throughout. Our building’s design would resemble the MRDC, MARC, or Love
buildings here on campus, though on a smaller scale. This would add to our company’s
assets, in case we ever needed to borrow money. Also, this would save costs by us
paying rent to ourselves, therefore we would write that off in our taxes.
“Feedback”
Mr. Rogers, I feel that this course was very important to be in that it gave me a
hands-on view of entrepreneurship. These classes are not offered in the M.E. curriculum,
and I feel that this will be my only exposure to this sort of education here at Tech. I feel
that the speakers were especially important because they are the businesses that us M.E.’s
will potentially be dealing with.