Sunday, July 19, 2009

Management Resources

I rediscovered an interesting management site. It has a management enclyclopedia and a business dictionary. Some of the things I read about are competitive advantage (porter), Ashridge mission modal, positioning (Trout Ries), and SWOT analysis.

Speaking of management, I recently read Innovation and Entrepreneurship: Practice and Principles by Peter F. Drucker. I thoroughly enjoyed this book. Here's an excerpt from the book taken from this review:

"Sometimes, there is a dissonance between reality and the perception of reality in an industry. This may offer innovative opportunities, according to Drucker.
For example, Drucker mentions the evolution of the ship container industry. While established shipping companies focused on cutting transit time and cost by making ocean-going ships faster and more cost effective, this really wasn't the key. Ships were already very efficient in transit.

Rather, the real problem with the shipping industry was the loading and unloading of cargo, which kept ships in port and tied up valuable harbor space. When the shipping container was developed, it could be pre-loaded on land before the ship arrived. The pre-loaded container could then quickly be loaded onto the ship when the ship arrived in port. This made ocean transit much more cost effective and efficient. Drucker notes that the big cost of ocean transit was having ships held up in port, effectively tying up a capital asset without being able to utilize its full earnings capability."

Drucker was recommended by John Drake. Here's what he had to say about Drucker:

"In a previous post, I have recommend Peter Druker's The Practice of Management. In my opinion, he is by far the best business writer to have lived. One of the things I love about Drucker is his clarity. Take for instance his definition of business purpose:

"There is only one valid definition of business purpose: to create a customer. "

Whether or not you agree with this definition, there is no question what his definition is. In the next paragraph, he goes on to say:

"Markets are not created by God, nature, or economic forces but by businessmen. The want they satisfy may have been felt by the customer before he was offered the means of satisfying it. It may indeed, like the want for food in famine, have dominated the customer's life and filled all his waking moments. But it was a theoretical want before; only when the action of businessmen makes it effective demand is there a customer, a market."

Drucker directly ties the purpose of business to reality. His objectivity makes Drucker stand head and shoulders above the rest. He writes in a style similar to Ayn Rand. He makes bold statements, but proceeds to justify his statement with analysis of reality and identifying the essentials. He explores all the major options (God, nature, economic forces, and businessmen) and proceeds to explain why it must be businessmen that create markets, hence customers. It is the actions of businessmen, of creating products where none existed previously, that creates the market."

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