Drucker’s 5 Questions

Innovation is a business undertaking, and every innovation effort should advance business objectives. Starting with these questions is a solid place to start all the conversations you’ll lead and participate in.

  1. What Is Our Mission?
  2. Who Is Our Customer?
  3. What Does the Customer Value?
  4. What Are Our Results?
  5. What Is Our Plan?

These questions are straight from Peter Drucker’s The Five Most Important Questions You Will Ever Ask About Your Nonprofit Organization. He published that book in 1993, and The Leader to Leader Institute republished the book in 2008. The 2008 edition includes commentary by noted scholar-practitioners writing. Both editions are practical, fast reads. Here are the citations:

  • The Five Most Important Questions You Will Ever Ask About Your Nonprofit Organization (San Francisco: Jossey-Bass, 1993).
  • Drucker, Peter F. (2011-01-11). The Five Most Important Questions You Will Ever Ask About Your Organization (J-B Leader to Leader Institute/PF Drucker Foundation). Wiley. Kindle Edition.

Below I provide additional information, from the 2008 edition of the book, to guide your effort

1.  What Is Our Mission?

Drucker posed sub-questions about challenges and opportunities that get at the heart of innovation. He also asked if the mission needed to be revisited. While government managers can’t of us can change the department or agency mission, asking if a subordinate mission needs updated might be timely. Even if wording doesn’t change, asking the question could open up new ways of thinking about and delivering on the mission. Voila! Innovation.

In his accompanying chapter, Jim Collins comments that the question of mission “goes right to the heart of the…the dynamic interplay between continuity and change.” He talks about preserving the core while stimulating progress. Being “guided by a set of core values and fundamental purpose that changes little or not at all over time,” “while operating practices, cultural norms, strategies, tactics, processes, structures, and methods continually change in response to changing realities.” About knowing the difference between “what we stand for” and “how we do things.” That means-ends relationship is central to innovation – doing something different to get a better value for the customer.

2.  Who Is Our Customer

Here Drucker distinguishes between primary and supporting customers. Organizations exist to serve primary customers. Supporting customers have the power to “say no, people who have the choice to accept or reject what you offer.” Government officials have lots of supporting customers, and the benefits of innovation to them must be carefully considered.

Drucker also asks, “How will our customers change?” He talks about continuously learning about your customers because they’re not static. Meeting customers where they’re at, and moving to, is all about innovation. Don’t panic. This doesn’t mean major innovation. It just means finding ways to create a positive experience for the customer.

In his accompanying chapter, Philip Kotler touches on this. He notes that “the best companies don’t create customers. They create fans.” And, “our business is not to casually please everyone, but to deeply please our target customers.” Again, great perspectives to consider at the first stages of thinking about innovating to add value to customers.

3.  What Does the Customer Value?

Here Drucker poses three sub-questions: What do we believe our primary and supporting customers value? What knowledge do we need to gain from our customers? How will I participate in gaining this knowledge? Drucker argues that, “almost without exception, customers behave rationally in terms of their own realities and their own situation.” But what customers value – “what satisfies their needs, wants, and aspirations – is so complicated that it can only be answered by customers themselves.” That leads to Drucker’s third question about how you’ll participate in gaining this knowledge. Pondering that question before innovating will pay big dividends while innovating.

Jim Kouzes builds on this in his accompanying chapter this way: “So, what does the customer value? Clearly customers value an organization that seeks their feedback and that is capable of solving their problems and meeting their needs. But I would also venture to guess that customers value a leader and a team who have the ability to listen and the courage to challenge the “business-as-usual” environment, all in service of the yearnings of the customer.” Again, right in the center the innovation bulls-eye.

4.  What Are Our Results?

Drucker poses four questions here: How do we define results? Are we successful? How should we define results? What must we strengthen or abandon? As with nonprofit organizations (the subject of the book), government measures success in changed lives and changed conditions in which citizens live. He talks briefly about quantitative and qualitative measures before making the point that “one of the most important questions for nonprofit leadership is, ‘Do we produce results that are sufficiently outstanding for us to justify putting our resources in this area?’” Again, this might not be something that you can change for your organization, but asking the question might open new perspectives and ideas. As Drucker notes, “Leadership is accountable to determine what must be appraised and judged, to protect the organization from squandering resources, and to ensure meaningful results.”

In her accompanying chapter, Judith Rodin argues that “Drucker’s insights in this matter are now sufficiently well understood that he would want us today to go further” by asking how we’ll use our results to inform Drucker’s fifth question, “What is our plan?” She argues that if results are our goal, they must also be our test. “The goal is to achieve real impact; thus, measuring results is a tool for learning, for self-correcting, in order to reach intended, specified outcomes.” No advice on how, but that’s down the road. The point at this point is to ponder it a bit because it relates directly to “get a better result” part of the definition of innovation – doing something different to get a better result, adding value for the customer.

5.  What Is Our Plan?

Drucker asks two questions here: Should the mission be changed? And what are our goals?

The self-assessment process Drucker advocates in 5 Questions “leads to a plan that is a concise summation of the organization’s purpose and future direction. The plan encompasses mission, vision, goals, objectives, action steps, a budget, and appraisal. Now comes the point to affirm or change the mission and set long-range goals. Remember, every mission statement has to reflect three things: opportunities, competence, and commitment. It answers the questions, What is our purpose? Why do we do what we do? What, in the end, do we want to be remembered for?” These are great questions for refreshing your organizational unit’s mission and focusing innovation on the right thing.

Drucker argues that “goals are overarching and should be few in number. If you have more than five goals, you have none. You’re simply spreading yourself too thin. Goals make it absolutely clear where you will concentrate resources for results—the mark of an organization serious about success. Goals flow from mission, aim the organization where it must go, build on strength, address opportunity, and taken together, outline your desired future….Building around mission and long-term goals is the only way to integrate shorter-term interests. Then management can always ask, “Is an objective leading us toward our basic long-range goal, or is it going to sidetrack us, divert us, make us lose sight of our aims?” Drucker defines objectives as “the specific and measurable levels of achievement that move the organization toward its goals.”

Note the “address opportunity” part of that quote. Pondering your plan, goals, and objectives will help you target innovation at the right opportunities so that innovation supports the plan you have for your organization to accomplish its mission.

 

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