“The analyses sketched out in the preceding chapters should provide the executive with an understanding of the business adequate to the demands of his economic task…a business should be able to understand itself; to diagnose itself; and to direct itself.”
The four areas of business analysis are the result areas of a business, its cost centers, markets, and knowledge areas. These are necessary for understanding how a business is doing and what it should be doing. Ducker believed that the last two analysis areas–market and knowledge–once accomplished, should be used to reconsider the state of the business in regard to its results and costs.
The chapter provides several case studies that illustrate how major conclusions were adjusted. One company realized that its market was not dying after all but that it had moved overseas. This insight came as a result of asking a question it had not quite asked. Instead of asking “Where is our market?” the company asked, “Where is the market?”
Another company realized that they needed to sell life insurance to housewives in the morning, not to husbands at the end of the work day.
Lastly, Drucker explains the value of reconsidering past conclusions, such as knowledge that needs to be developed or added to, to maintain and increase one’s leadership position.
(Managing for Results, chapter 8)