Alex Lyons EAS 545 9/3/13 Peter Drucker was one of the pioneers of modern management.

t. His four requirements for successful entrepreneurial management were market focus, sound financial planning, the development of an effective management team, and a flexible mindset towards the entrepreneurs own role in the company. Druckers ideas have also been reflected in both the teachings of Louis Agassiz and the founding principles of Hewlett Packard. The first of these, market focus, requires an open mind. Entrepreneurs, says Drucker, can often suffer from tunnel vision in a time when their company is developing new products, exploring new partnerships, and tapping into new markets. Instead of relying on flawed market research and predetermined expectations, Drucker proposes that new ventures should instead embrace the possibility that a product could be used in a wider range of applications than those for which it was originally intended. Druckers second requirement, financial planning, centers around three Cs: Cash, Capital, and Control. Foresight is critical; fast-growing companies without a detailed plan can easily outstrip their financial means. As a general rule, Drucker suggests oneyear advance prediction of cash requirements, a practical method of upsizing its capital base (such as franchising), and finally, the establishment of financial controls for each critical area of the company as much as three years in advance. These three Cs, says Drucker, should be the focus of new ventures as growth is impossible without them. Third, a successful new venture must build a top management team. Because strong human relationships can take a long time to develop, Drucker says that founders should begin to build their management teams trust and communication skills three years before the company grows to need it. Although the team will be developed informally at first, the management must identify key tasks and carefully match them to each individuals skillset. This division of tasks, along with a set of goals and an objective system of measuring progress, forms a strong foundation for the companys leadership hierarchy. Last but not least, a growing new venture must have a flexible leader who can adapt his or her role to the companys changing needs. Instead of pursuing tasks for their own satisfaction, the founder (or founders) should instead objectively determine the

companys needs and seek to fill that role instead. As with the rest of the ventures management team, the entrepreneur must align this role his or her own skillset. Although Louis Agassizs teaching methods were unorthodox, he imparted critical lessons upon his students. In any new venture, the entrepreneurs goal is to develop something of value from a scarce pool of resources. Similarly, Agassiz left Shaler and Scudder to develop observations on their fishes without tools, assistance, or resources. In this way, Agassizs style forced each his students to take on the role of an academic entrepreneur. As a result, the students learned not only to observe every detail closely, but also to try different things and embrace each dead-end as a learning experience rather than a waste of time. Entrepreneurs are also intrinsically driven to pursue evergreater goals. In this vein, Agassiz added more fish and encouraged Scudder to continually develop his expertise as he mastered observational skills. Hewlett and Packard developed HP using several of Druckers requirements. For instance, they began establishing a management team as early as 1930. The two of them met Porter and Oliver at Stanford, where the four of them began developing mutual trust and communication. Although the men didnt know it at the time, they were forming the relationships that would carry HP to success nearly a decade later. HPs founders unofficially put together an early management team, which paved the way for strong yet flexible leadership as the company would grow and change later on. Hewlett and Packard also did a good job of adapting their personal roles in the company. When starting out, the entrepreneurs examined the companys goals as well as their individual skills to develop their roles. They found that Hewlett excelled in circuit technology while Packard was skilled in manufacturing processes, so the two men took on complementary hands-on roles at the head of HP. As the company grew in the 1950s, Hewlett and Packard transitioned into managerial positions and took on the responsibility of promoting key corporate values. Throughout HPs existence, the two of them also consulted their mentor Frederick Terman to generate ideas, network with professionals in their field, and review the direction of the company. Hewlett and Packards abilities to adapt enabled them to continue leading HP in spite of the companys fast growth. Both Louis Agassizs teaching methods and Hewlett and Packards young company utilized many of Peter Druckers guidelines for new ventures.