The advent of the Internet has created a whole new corporate ballgame. Based on your knowledge of Drucker’s insights and management ideas (Drucker’s brain), how would he approach the management of a virtual company staffed by telecommuters such as yourself? Without management by sight, how would Drucker handle such aspects as human resources, personal relationships, etc? (By this, I mean a company without any central, brick-and-mortar location, with all communication and work performed via the Internet.)

What a great question! Drucker believed a great deal in responsibility and accountability. He once said, “All development is self development,” meaning that it is the responsibility of each and every person to make sure they got whatever training was necessary to excel in their jobs. If Drucker was the head of this virtual organization, he would take a great deal of time in each and every hire to make sure that he was hiring people with the strengths required for each position. He would also put in metrics to make sure that there was a way to measure the performance of each individual.

Lastly, he would hire a manager who had what it took to manage people from a distance (he told me he was “the world’s worst manager,” so he would hire someone else to manage the unit). This would be someone who had the maturity to care more about what was right than who was right, an individual who could make what he called the life and death decisions (know who to hire, fire, and who to promote).

Considering the trying times businesses are facing—tight and tightening margins, shrinking international markets, credit markets slowly coming out of the deep freeze, stock market wealth vanishing without a trace—what Druckerisms specifically apply to this market? What can companies do to survive while staring down the barrel of 1929? And how can they position themselves to take the offensive, not only now but as the recovery progresses?

What a timely question. Drucker felt that management was a “foul weathered job.” He felt that the leader’s most important job was to guide his or her organization through any kind of disaster: “The most important task of an organization’s leader is to anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until the crisis hits is already abdication,” asserted Drucker.

To get by in these difficult times would involve certain strategic moves. First would be a review of all product lines to make sure they still make sense for the business: Too many organizations have a hard time figuring out what to grow and what to abandon, as Drucker explained in 1982: “…a growth policy needs to be able to distinguish between healthy growth, fat, and cancer ― all three are ‘growth,’ but surely all three are not equally desirable.”

Drucker was telling managers to exercise careful judgment by abandoning the marginal: “Yesterday’s breadwinner should almost always be abandoned on a fairly fast schedule,” explains Drucker. It still may produce net revenue. But it soon becomes a bar to the introduction and success of tomorrow’s breadwinner.”

Which corporate heads strongly influenced Drucker in the development of his theories? And were any of those mentors later torn down to make way for newer theories?

As for practitioners, Drucker’s greatest influence was Alfred Sloan, the head of General Motors for a good part of the first half of the 20th century. Drucker spent most of two years studying GM in the early to mid-1940s, which led to Drucker’s first business book, Concept of the Corporation (1946). Drucker called Alfred Sloan the first “professional manager,” and credits Sloan’s segmentation strategy with unseating Henry Ford and his Model Ts. Sloan was a leader with character, maturity, and commitment, and made General Motors ─ which had been a bunch of smaller businesses strung together ─ one of the world’s greatest companies. Only in recent years has GM really faltered by continuing to make large gas guzzling SUV’s while Toyota ate their lunch with hybrids like the Prius. As a result of the recent financial meltdown, GM is in deep trouble and in stunning fashion, their stock has recently hit a 50-year low!

Laying aside your editorial and publishing background, what specific personal qualifications made you the best person to write this book?

As an author I have always recognized the need to write books that boil down large bodies of work into smaller, bite sizes of information that are easy to understand. This was particularly important with Drucker since he wrote so many books (38), with so many of them being difficult to navigate (he sometimes is repetitive and his writing style is not the simplest to follow). If someone wanted to learn about Drucker’s greatest ideas, where would they start? That’s where I come in. I was able to provide that starting point and pull out the fifteen or so seminal ideas from all of his works so that readers get a real sense of Drucker’s classical concepts, ideas, and strategies. Lastly, because I spent a full day with him and corresponded with him briefly, I was able to humanize him in a way no writer had done before.

You can learn more about Inside Drucker’s Brain and Drucker himself at www.insidedruckersbrain.com or www.jeffreykrames.com. The book is now available for purchase at Amazon.com.

Now It’s Your Turn to Ask the Questions and Win a Chance to Get a Free Copy of Inside Drucker’s Brain.

Have a question that we didn’t ask? Here’s your chance to pick Jeffrey Krames’ brain. Also, by submitting a question in the comments area below, you’ll be automatically entered into a drawing for one of three free copies of Inside Drucker’s Brain. Please see our Book Giveaways page for complete rules and qualifications.

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In a capitalist healthcare system focused on profits, what is the most effective reimbursement structure to reward providers for care while also managing costs?

We need a regulated system – a private/public partnership [that…involves payment to the government for healthcare and government-monitored, private health insurance companies administering payment to privately employed doctors and privately run hospitals]. Over the last 20 years, we have been depending on the free enterprise system to bring costs down. Over that time, healthcare costs have risen faster than the rate of inflation. That is because we don’t really have a free enterprise system. The free market is skewed by politics. The large healthcare companies have huge amounts of money to pass along to Congress via lobbyists, who influence Congress to pass laws that benefit big business healthcare.

What we are not cognizant of is the tremendous amount of profit realized by these companies, healthcare insurance, managed care, and pharmaceutical companies. These companies drive up our healthcare costs. We have the most expensive healthcare in the world, spending 17% of our GDP. France, Italy, Germany, Japan, and Taiwan spend roughly 8-9% of their GDP on healthcare, cover everyone, and have extremely happy patients.

We are told that the only alternative to the system that we have is the Canadian style system. That is a false story put out by the beneficiaries of our current system, primarily the insurance companies.

One obvious consequence of bringing down big pharma and device companies is that they will no longer spend the huge R&D on blockbuster drugs if there is no capital reward via reimbursement. Thus one clear consequence of making healthcare more affordable is a slowing of discovery and advancement. How can we incentivize advancement in medicine while controlling costs?

Big pharma spends 10-15% of its profit on research and development and 30-40% on marketing. Professor Karl Lauterbach of Germany said in a PBS interview on Frontline, titled Sick Around the World, “I don’t know of a single economist who would buy into that argument. I think this is a lobbyist argument. A market works best if there are no inefficiencies, and higher-than-necessary prices are inefficiencies. And the drug companies now spend more for marketing the drugs than for innovating the drugs. This clearly is an artifact which comes across with this system of subsidized and too-high prices.”

Do you think that class-action lawsuits by providers against insurance companies are a good solution to balance the inequity of power insurance companies wield in the current healthcare climate? Or does this merely clog the judicial system and become a distraction from what providers should be doing: helping patients?

Class actions and lawsuits in general are very wasteful of resources because the outcome is extremely uncertain and the suits are very costly in time and money. They would take time away from healthcare and possibly put health care workers in an unfavorable light vis-à-vis the public. As I said, the outcome of lawsuits is uncertain, and I think they should be used as a last resort. The better approach in this case is to influence the public and Congress for the development of a new healthcare system: a public/private partnership which eliminates the excessive profits of health insurance companies, big pharma, and managed care.

In your August newsletter, you describe the many and varied problems the U.S. has had with contaminated or improperly supervised drugs coming from China. Would it not solve a lot of the U.S.’s problems as well as poor patient outcomes if we simply stopped accepting drugs from China and instead paid a bit more for drugs that are properly supervised in countries that care to ensure it? What do you think it would take to reduce consumerism from China, especially given that drugs are not the only problems we have had, but also melanin contaminated products and lead contaminated toys?

I don’t think it likely that world trade is going to be turned back, and it may not even be a good idea. We already pay two to three times more for pharmaceuticals than other developed countries, for example Canada. We have been told that we must pay more in order to safeguard our drug supply and promote the development of new drugs.

U.S. drug companies are making record profits but still want to make more. They are having their drugs made in China to increase profits. Because we pay a premium for pharmaceuticals, I believe that we are a target for counterfeit pharmaceuticals, not more protected. Counterfeiters have no compunction about who they kill and want to make the most money. In my book, The Price of Death, I discuss the point of view of the Chinese on counterfeiting. Because this administration has actually reduced funding for the FDA despite the fact that world trade has increased, we are at great risk. At its current rate, the FDA will be able to inspect the 700 plants now open in China in the next 40-50 years. What we should do is require importers to pay a government fee to have their imports inspected. There is no reason that they should be making record profits and putting the consumer at risk as they are.

There was a problem with Baxter International heparin earlier this year, which, according to the FDA, probably came from China. The FDA says that the manufacturer used oversulfated chondroitin sulfate (OCS) instead of chondroitin sulfate (CS). The relative cost of the bogus chemical was only $9 per unit vs. $900 for the correct ingredient. There had also been a reduction in the availability of other materials to make heparin because it comes from pigs, and there was a pig epidemic in China. While it is difficult to prove, one can speculate why the plants would have substituted the new ingredient when stocks of other ingredients fell short and became more expensive. I say that it is difficult to prove partly because the Chinese government had not admitted that the OCS was the cause of the problem even though the FDA has indicated so on its website. The bogus chemical fooled the standard tests [about the protein content of the product], impeding immediate discovery of the problem.

Now Here’s Your Chance to Ask the Questions (and Win One of Three Copies of The Price of Death, Too!)

Do you have a question that we didn’t ask? Here’s your chance to pick S.J. Robinson’s brain. Submit your questions for her in the comments section, and she’ll be available for a week to answer them. Also, by submitting your question, you will be automatically entered into a drawing next week in which three winners will receive a free copy of her book. (Sorry, you must be a U.S. or Canada resident to participate in the drawing.) Please see our Book Giveaways information page for complete details and ask away!