PETER F. DRUCKER Management (Revised Edition)Revised and Updated by Joseph A. Maciariello
THELMA C. TORIO AND EDITHA A. TOLOP Reporters According to Peter F. Drucker,the very best leaders are first andforemost effective managers. Those who seek to lead but fail tomanage will become either irrelevant ordangerous, not only to theirorganizations, but to society.
Based on Jim Collins’ research on formativestages and inflection points of successful companies likeGeneral Electric, Johnson & Jonhnson, Procter &Gamble, Hewlett-Packard, Merck and Motorola, Druckersideas created an enormous impact in the said companies. This can be attributed in his entire approach which iscomposed of four elements:1.He looked out the window, not in the mirror.2.He started first --- and always ---- with results.3.He asked audacious questions4.He infused all his work with a concern andcompassion for the individual.
MANAGEMENT’S NEW REALITIES•In emerging countries, the environment isbecoming quite different from the environment ofthe late twentieth century.•Much of it is unprecedented.•Most of it is already here or is rapidly emerging. Peter F. Drucker
Knowledge industries, knowledge work, and theknowledge societies have been emerging steadilysince the 1950s.They are now realities in developed countries.And this has a number of implications for managers.The expansion of knowledge work corresponds tothe decline in manufacturing employment.A rapidly growing segment of knowledge workconsists of knowledge technicians, a trend thatshould continue.
The long-term trend in manufacturing employmentis following the long-term decline in employment inagriculture.Participation rates of women in the workforce havebeen steadily trending up because knowledge workis unisex, unlike most manufacturing employment,which is dominated by men.Knowledge workers tend to identify at least asmuch with their knowledge discipline as they dowith the organization in which they are employed.This creates new challenges for managers, becauseknowledge workers are highly mobile and moredifficult to integrate into the mission of theorganization.
Demographic trends are having significantpolitical and economic effects in developedcountries.Low birth rates in these countries areescalating political tensions over immigrationpolicies and favor those countries, such asthe United States, that have a culture of easilyassimilating immigrants.
Even in the United States, immigration isincreasing political tensions among variousgroups:• employers who need immigrant workers• unions who fear the impact of newimmigrants on wages and employment of theirmembers• large existing immigrant populations, suchas the Latino population, which strongly favorlenient policies toward both legal and illegalimmigrants
The aging of the population in developedcountries is straining existing socialpension systems, leading to pressure toincrease the traditional retirement age.Knowledge workers are likely to reenterlabor markets as part-time employees afterretirement in order to supplement theirpensions.
Increased life expectancies, especiallyamong knowledge workers, should makesecond and parallel careers possible anddesirable.This should continue to change thestructure of the workforce.
• As the population ages, so will thedemand for financial services among thepost-fifty-years-old segment of thepopulation.• This is also the segment that is likely toincrease its demand for continuingeducation. Continuing education, healthcare, and financial services are likely tocontinue to be among the growth markets ofthe future.
THE FUTURE OF THE CORPORATION AND THE WAY AHEDTwo assumptions on which corporation wasinvented:1. The specialized nature of knowledge, thereduction in communication costs, and thecrisscross of technology are having aprofound impact on reversing the centurytrend toward integrating the separateactivities of the corporation into a hierarchy.
2. Development and growth of a business isincreasingly taking place, not inside thecorporation itself, but through:• partnerships• joint ventures• alliances• minority participation• know-how agreements with institutionsin different industries and with differenttechnologies.
The process of integration is being reversedby the process of disintegration.• Attracting and holding these diversegroups will become the central tasks ofpeople management in the new corporation.• The people in these groups do not havepermanent relationships with the business.
• They may not have to be managed, butthey have to be made productive.• They will, therefore, have to be deployedwhere their specialized knowledge can makethe greatest contribution.• And they will have to be satisfied.
MANAGEMENT’S NEW PARADIGM Prevailing assumptions about therealities of management determine whatscholars, teachers, and executive assumeto be reality. What matter most in a social disciplinesuch as management are, therefore, thebasic assumptions. A change in the basic assumptions matters even more.
Two sets of assumptions regarding the realitiesof management have been held by mostscholars, most writers, and most practitioners. One set of assumptions underlies the DISCIPLINE of MANAGEMENT: Management is business management. There is one right organization structure. There is one right way to manage people.
Another set of assumptions underlies the PRACTICE of MANAGEMENT:Technologies, markets, and end-usersare given.Management’s scope is legally defined.Management is internally focused.The economy as defined by nationalboundaries is the “ecology” of enterpriseand management.
THE NEW PARADIGMS that supersede the three DISCIPLINARY ASSUMPTION OF MANAGEMENT: Management is the specific anddistinguishing organ of any and allorganizations.Management must look for theorganization that fits the task.One does not “manage” people. Thetask is to lead people and makeproductive the specific strengths andknowledge of each individual.
THE NEW PARADIGMS that supersede the fourPRACTICE ASSUMPTIONS OF MANAGEMENT ARE: Neither technology nor end-use of aproduct is the correct foundation formanagement policy. Management muststart with customer values and customerdecisions as the basis for its strategy.The scope of management is not legal;it is operational, covering the entireeconomic chain.
THE NEW PARADIGMS that supersede the fourPRACTICE ASSUMPTIONS OF MANAGEMENT ARE: The practice of management will haveto be defined operationally rather than bypolitical boundaries.Finally, the results of any instructionexist only on the outside.