Timeless Management Principles:
​Principles in Business

Watson Jr. and Drucker on Principles

Date Published: August 3, 2021
Date Modified: January 1, 2024

Focus on the "Principle" of How To Do Things

"These were general principles of organization and procedure - principles how to do and not to do things, rather than what to do or not to do. ... General Motors owes its strength precisely to that use of principles and concepts as guides for concrete, unplanned and unforeseen actions of which the "planner" knows nothing, is thus of general importance.

​"The most successful attempt to provide a basis for the political organization of the future, the American Constitution, used the same method. The Constitution is not a "plan" of government, laying down what ought to be done. Neither is it "pragmatic." It establishes a few, simple organs of government with enormous powers of which only the limits are given.

"The purpose of such a concept is never to serve as a rigid rule. Rather it is to be used like a compass bearing taken across rugged mountains. The actual trail will follow the natural contours of the terrain; but the bearing will give the deviation from the true course at every step and will thus ultimately lead to the objective, however great the detour and however much the objective has been lost sight of on the way."​

Peter F. Drucker
The Concept of the Corporation
"How Well Does It Work?," 1964

A Belief System Provides Bearings of Principle

"I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people. What does it do to help these people find common cause with each other? How does it keep them pointed in the right direction despite the many rivalries and difference which may exist among them? ...

"[These problems] exist in all large organizations, in political and religious institutions. Consider any great organization - one that has lasted over the years - and I think you will find that it owes its resiliency, not to its form of organization or administrative skills, but to the power of what we call beliefs and the appeal of those beliefs have for its people.

"This, then, is my thesis: I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions. Next, I believe that the most important single factor in corporate success is faithful adherence to those beliefs.

"In other words, the basic philosophy, spirit, and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation and timing"

​Thomas. J. Watson Jr.
A Business and its Beliefs
"The Ideas That Helped Build IBM," 1963

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​Watson Jr. with his basic beliefs, like the founders of the American Constitution, focused on "principles of how" a corporation should achieve success. He left the "what to do" in the hands of hundreds of thousands of decentralized and empowered individual decision makers. These decision makers were guided by the IBM Basic Beliefs - a compass bearing that ever pointed to an IBM corporate true north. They (employee and executive alike) were held accountable through Performance Reviews, Opinion Surveys, Open Doors, and Executive Interviews. Guidance to first-line managers was sent out through Management Briefings.

​Without a guiding compass, what will carry American Corporations through the next great turmoil if it isn't its own people unified around a set of basic beliefs?

​Peter E. Greulich Insight
March 17, 2013​

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