Netflix Rewinds

Posted on Oct 10, 2011 | 2 Comments

Was it only three weeks ago that Netflix announced plans to split into two businesses—one for online video streaming and another called Qwikster for DVDs by mail?

For Netflix Chief Executive Reed Hastings, who has received a ceaseless torrent of unfavorable publicity since announcing the strategy, the three weeks have probably felt more like three years. Now, to stop a customer exodus, the company has done an about-face. Although Netflix is sticking with a price increase that it also announced earlier, there will be no second business.

We wrote earlier about some of the possible reasons that Netflix went astray.…

Going Postal

Posted on Sep 8, 2011 | 2 Comments
Going Postal

Looks like you might have to deliver those wedding invitations by email instead.


Posted on Aug 19, 2011 | 14 Comments

When the world’s largest personal-computer maker decides to stop making personal computers, eyebrows get raised.

This week, Hewlett-Packard announced that it’s weighing whether to spin off its PC business, a move that HP projects would raise profit margins even as it reduces revenue by a third. Rival Michael Dell mocked the idea, and The Wall Street Journal dinged HP Chief Executive Leo Apotheker for engaging in “a strategic flip-flop.”

But flip-flops aren’t necessarily an indication of bad decisions as much as an indication of new (or newly considered) data. And HP’s decision was apparently made after an analysis of market trends indicating that PCs face an inexorable decline—what Apple’s Steve Jobs, for one, has dubbed a “post-PC era.”

As we’ve noted before, Peter Drucker repeatedly emphasized the benefits of purposeful abandonment. “The change leader puts every product, every service, every process, every market, every distribution channel, every customer and end-use on trial for its life,” Drucker wrote in Management Challenges for the 21st Century.…

The Friendly Business Divorce

Posted on Aug 4, 2011 | 2 Comments
The Friendly Business Divorce

Will it be as natural as pulling apart an Oreo cookie or as awkward as separating two slices of melting cheese?

Joe’s Journal: On Government Programs and Performance

Posted on May 16, 2011 | No Comments

“Governments have become powerless against the onslaught of special-interest groups, have, indeed, become powerless to govern — to make decisions and to enforce them. The new tasks — protection of the environment, stamping out private armies and international terrorism, making arms control effective — all will require more rather than less government. But they will require a different form of government. Government has to regain a modicum of performance capacity. It has to be turned around. To turn around any institution — whether a business, a labor union, a university, a hospital, or a government — always requires the same three steps:

  1. Abandonment of the things that do not work, the things that have never worked, the things that have outlived their usefulness and their capacity to contribute.

All the News That’s Fit to Charge For

Posted on Mar 23, 2011 | No Comments

The New York Times announced that effective next week, it would start charging for online access to its articles. The move has spurred widespread debate both inside and outside of the 159-year-old newspaper, which is trying to figure out how to create a sustainable business model while rubbing up against the popular notion that all content on the Internet should carry the same price: free.

“I believe that our journalism is very worth paying for,” said Jill Abramson, the paper’s managing editor for news. “In terms of ensuring our future success, it was important to put that to the test.”

Peter Drucker, we think, would have applauded the test—and, in particular, the way that the Times is going about it.…

Regaining Your Spark

Posted on Mar 9, 2011 | 3 Comments

As we noted last monthPeter Drucker believed that every company’s “theory of the business”—that is, the basic assumptions it makes about its mission and the market—eventually needs to be reconsidered.

In a 1994 Harvard Business Review article, Drucker explained that in order to sustain itself for the long term, a company must be prepared to move in a whole new direction. It needs to “rethink a theory that is stagnating and to take effective action in order to change policies and practices, bringing the organization’s behavior in line with the new realities of its environment,” Drucker wrote.

We were reminded of this insight once again this week when we read a fascinating piece in The Wall Street Journal about Zippo Manufacturing, producer of those iconic, rectangular, windproof cigarette lighters.…

The Way the Cookie Crumbles

Posted on Jan 27, 2011 | One Comment

Of all the news making headlines today—civil unrest in Egypt, the Dow briefly topping 12,000 on Wednesday, Toyota’s latest vehicle recall—we’re guessing that Peter Drucker would have been drawn in particular to this front-page item from The Wall Street Journal: “Cookie Cutters: Girl Scouts Trim Their Lineup for Lean Times.”

Drucker, after all, was a close adviser to former Girl Scouts CEO Frances Hesselbein and, in his seminal Harvard Business Review article “What Business Can Learn from Nonprofits,” hailed the Girl Scouts as one of “America’s management leaders.” In fact, Drucker was made a lifetime Girl Scouts member.

According to the Journal, the Girl Scouts are dealing with tough economic times by moving toward what Drucker called “planned abandonment,” with a dozen Girl Scouts councils testing a plan to shed a great many varieties of cookie offerings in order to cut costs, speed delivery and boost revenue.

Joe’s Journal: On Stinking Corpses

Posted on Jan 6, 2011 | One Comment
Joe’s Journal: On Stinking Corpses

“There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking.”

– Peter F. Drucker

When we take a look at various systems, products, and services, we can see that there are often some that have outlived their usefulness and need to be dropped. Oftentimes organizations develop people who care a lot about their products and services, so that when it comes time to abandon those things there is resistance. Peter Drucker thought this was especially true of government and as a result, government keeps going and going with projects and policies that should be abandoned.…

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