Shrink to Grow: A ‘Must-Do’ for Management

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Posted: 01/23/2017

A fruit tree grows stronger and fuller when it is pruned periodically. In a long out of print book entitled The Folklore of Management, Clarence B. Randall, a retired president of Inland Steel, expressed this thought most elegantly:

The world around, hearty men who make a living by harvesting the fruits of the soil know when and how to use the pruning knife... 

They have no more useful working tool... whether it be a French peasant who gives daily, almost hourly, care to his precious two hectares of sun-drenched hillside soil in Burgundy, or the cherry grower of Michigan, or the owner of an apple orchard in the Virginia, he preserves the quality of his product by his skill in removing deadwood...

The significant thing about his operation, however, is he works at it all the time... Never does he rush out in terror to lay about him with an ax, slashing indiscriminately right and left...

He is steady and consistent about the whole process and keeps constantly at it....

In the spring following a bumper crop, when he’s sure he has a vintage product, he does the same amount of trimming as after one of those sad years when the hail damage has all but ruined him.

The Message Is Clear

Shrink to grow. Weeding out "deadwood" is as important for every organizations of all kinds and sizes as it is for a farm.

In order to achieve healthy growth, every institution must get rid of the outgrown, outworn, obsolete, and unproductive.

The foundation of a growth strategy, management theorist Peter F. Drucker reminded us, is the freeing of resources for new opportunities. 

Said Drucker: "This requires withdrawing resources from the areas, products, services, markets, and technologies where results can no longer be obtained… or where returns on efforts are rapidly diminishing." 

To Reiterate 

Abandonment of weak-performing activities is a "must-do" management activity; abandonment requires a systematic and purposeful approach. 

Effective managers do not leave abandonment decisions to chance. Why? Because the realities of executive work and management frailties make it very hard to stop doing the unproductive.

In many instances, pressure must be applied to make needed abandonment decisions and actions happen. 

Abandonment policies and decision rules must be thoughtfully and thoroughly crafted and implemented. (Part II of this story—Are You Funding Problems or Solutions—discusses various kinds of abandonment policies).

Formal (and informal) strategic planning processes, based on Drucker-inspired teachings, force executives to "put on trial for its life" every product, every service, every distribution channel, every market, and every end-use.

We discuss how this is accomplished in future articles, practitioner interviews & videos.

A Critical Drucker Question Related to Abandonment Decisions

Drucker often raised the pragmatic question, "If we did not already produce this product line or did not already serve this market, would we now, knowing what we now know, go into it?"

If the answer is "no," then management should slough off what's not working—fast!

At the very least, responsible executives should seriously ask: "How can we get out or at least stop funding what amounts to nothing more than a problem?” After all, no nation or institution of any kind has infinite resources. Resources must be freed–especially first-rate people–to work on the opportunity/result areas.

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Posted: 01/23/2017