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The Essential Drucker 2010 V2


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Drucker is called as the father of Modern Management, MBO.

Drucker is called as the father of Modern Management, MBO.

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  • Approach should be “what does the customer want to buy?” rather than “what do we sell?”Three essential questions –What is our business?What will be our business?What should be our business?These questions when well thought through will form a solid foundation for any business.The corporation’s strategic mission must be translated to :objectives in the following key areas:Marketing ObjectivesInnovation ObjectivesHuman Resources ObjectivesFinancial Resources ObjectivesPhysical Resources ObjectivesProductivity ObjectivesSocial Responsibility ObjectivesProfit Requirements
  • Factors which affect the performance of the organization whether they are within the control of the organization or outside the control of the organization – they are the responsibility of the management.In the traditional manufacturing mindset, the focus will be on optimizing productivity, optimizing the value chain, increase operational efficiencies. Although this is needed, most of the time, management teams around the world focus highly on this aspect, to the exclusion of all the other important areas.
  • Sales increase alone will not be a good indicator for the sustainability of an organization. Higher sales with shrinking market share means that the market is expanding fast and there are competitors who are expanding faster than us.Dominance in a market or monopoly in a market will lead to complacence.It will also bring in inertia, which will resist changes and innovation inside the organization.Technology and End-use are limitations. Customer value and customer decisions to dispose their disposable incomes should be the focus for management
  • The following are the cardinal rules for creating a customer:Creating customer utilityPricingAdapting to customer’s social and economic realityDelivering a service that is of true value to the customerThe 5 bad habits listed above are against these cardinal rules.
  • PerDrucker, first the nature of the problem needs to be identified. In Six Sigma terms it is known Common Cause (Generic) and exceptional cause (exceptional).Handling exceptions are easy.Generic problems should be handled with policies and procedures so that they are handled as a routine.Identify the boundary conditions under which the problem can be considered as resolved.Identify what is right before starting off making compromises or concessions, otherwise we will never be sure whether we made the right compromises.Once a decision is made, action items should be generated with someone responsible for each action item and a schedule.The results should be analyzed so that the feedback loop is closed, without which future decisions would also be made without the benefits of those “lessons learnt”.
  • Flatter organization structuresMobilitythe fact that the knowledge workers carry the tools of their trade with them wherever they goAre some of the major reasons why employees should be treated as volunteers.Superior / subordinate mentality is a legacy model which would not work in a knowledge society.In this milieu, values of an individual and the values of an organization increasingly pays an important role . They have an inordinate amount of influence in the career of an individual and the growth of an organization.So an individual or an organization find themselves in scenarios where the values do not match, they should go their own ways.As knowledge workers become highly specialized, they are highly dependent on organizations to make their output productive.Unlike before, where businesses and trades are family owned and families and villages served the social needs of a knowledge worker
  • Setting of individual objectives, team objectives, departmental objectives and measuring performance against those objectives (i.e. MBO) is one of the key contributions of Peter Drucker.These goals have to be specific, measurable, achievable, realistic and timely.Improve sales should be replaced with Improve sales by 5% YoY as accruals every quarter starting from q2fy10 to q4fy10 is how a good goal statement should be stated.Although efforts count, effort which does not translate into results should be pruned out.
  • The objectives should be planned jointly by the manager and the employee. The employee is completely responsible for delivering the results and both should get together on a regular basis to control and track the efficacy of the goals, actions taken, and results.
  • Focus should be on both efficiency and effectiveness. Focus on or the other alone can lead to a dysfunctional
  • Unlike feudal age, when the landlord provided the place to work or the tools of the trade (like plough horse / oxen owned by the whole village as a community property) or the industrial age, the where the capital provider or the owner provided the tools and the workplace, the knowledge worker owns the tools of his trade and can carry it with him where he goes.In the feudal age, everyone is born into their station in life and there is no upward / downward mobility. Knowledge society enables upward mobility.
  • As mentioned above for communication to be successful, it has to be understood by the receiver but the onus is always on the expert/specialist to make themselves understood.
  • Transcript

    • 1. presenting the
      The Essential Drucker
    • 2. 1
      The book
      Key Insights
    • 3. Who is Peter Drucker?
      known as the- Father of Modern Management
      Important contributions –
      Concept of Knowledge Worker
      Marketing oriented organization
      Contributed regularly to
      Harvard Business Review
      The Economist
      Wall Street Journal
      Fans and Followers include Jack Welch (GE), Andy Grove (Intel)
      (1909 - 2005)
      • 25 honorary doctorates
      • 4. 39 books
      • 5. Presidential Medal of Freedom
      • 6. Presidential Citation, NYU
      • 7. 7 McKinsey Awards from HBR
    • The book
    • 8. 1
      The Management
    • 9. What is management?
      Enabling people to perform
      Set the culture
      Training & development
      Measure performance of self and the organization
      Result is always outside (no perpetual motion machines )
    • 10. Dimensions of management
      Economic performance and improve /maintain wealth producing capability of the organization
      Work and worker productive
      Social responsibilities
    • 11. Purpose of business
      Marketing and innovation
      What is our business and what should it be?
      Objectives should be
      Should cover areas of survival
    • 12. Market standing regardless of sales
      New markets
      New products and services in existing markets
      Optimum market standing as the goal
      Product Innovation
      Social innovation
      Managerial innovation
      Productivity and improvement of productivity should be a key focus
    • 13. Lessons from non-profits
      Starts with their customers
      Zeal to accomplish mission
      Effectiveness of boards – CEO and board as colleagues
      Meaningful achievement
      Transformation from non-profit volunteer to non-paid professional
    • 14. New Paradigms –Searching for the holy grail
      One right org structure
      One right way to manage people
      Per Drucker -
      The organization that fits the task
      Manage for results
      Flat hierarchy
    • 15. New paradigms
      Practice of management – assumptions
      Technology and end use are fixed and given
      Technologies mesh and can impact any industry
      i.e. the definition “electronics company” is a limitation rather than foundation
      Management’s scope is legally defined.
      Economically linked keiretsu
    • 16. Information
      Yield control instead of cost control
      Activity based accounting
      Price lead costing
      Total factor productivity
      Economic value added
      ROI / Payback period/Cash flow / Discounted present value
      Outsourcing and consulting of information
    • 17. Why MBO
      Un-spelt objectives causes misdirection
      Management by drives
      Organizational goals spelt out clearly
      Departmental /bu goals are arrived from org goals
      Mgr / individual goals are arrived from BU/Org goals
      Tools like manager’s letter
      Self control rather than control from above
    • 18. Forms and reports
      Should Focus on performance
      Should Focus on self monitoring
      Control & controlling the irrelevant should be avoided
    • 19. Staffing & Promotion
      Manager to be blamed for putting a wrong person in a spot
      Soldier has a right to competent command
      People decisions impact the performance capacity of an organization
      New people in established slots
    • 20. Staffing & Promotion
    • 21. Staffing & Promotion
      Widow maker
      People decisions
      as a tool of control
      as a tool for organizational culture
      as strategy
    • 22. The entrepreneurial business
      Special handling for new innovative ventures
      Separate new businesses from established ones
      Provide executive cover
      Build the desire to innovate in the organization rather than trying to acquire it
    • 23. 2
      The Individual
    • 24. Effectiveness
      Know thyself
      Effective Decisions
      Functioning communications
      Leadership as work
      Principles of Innovation
      The second half-life
      The Educated person
    • 25. Effectiveness
      Operations research and the efficiency of the chef’s kitchen
      Effectiveness - Doing the right thing
      Effectiveness is a habit and could be practiced
    • 26. Contribution
      Direct results
      Building of values and reaffirmation
      Building and developing people of tomorrow
      Making the result effective
    • 27. Know thyself
      Personal strengths should match assignment
      More than that personal values should match with the assignment
    • 28. Time
      80-20 – where should I contribute
      What could be delegated
      -- the recurrent fire fighting
      Overstaffing – mal-organization
      Consolidating discretionary time
    • 29. Characteristics of an entrepreneur
      Decisive even with insufficient data
      Decisive even when mistake prone
      Decisive but learns from mistakes even when mistake prone
      Tradition counts only when it makes sense
      Owns the result
    • 30. Effective decisions
      Right and the wrong compromise – baby and the loaf
      Translation to work
      Generic problem or exceptional problem
      Start with what is right and make your compromises
      Do not hedge
    • 31. Leadership as work
      • Think through org’s mission
      • 32. Define and establish it clearly…. and visibly
      • 33. Leadership as Responsibility and not as rank or privilege
      • 34. Hold ultimate responsibility for subordinates actions
      • 35. Promote / praise / groom subordinates
      • 36. Earn trust
      = be an effective manager
    • 37. Innovation
      Analyze opportunities
      Unexpected success or failures
      Incongruity in customer behavior
      Keep it simple to make it effective
      Aim at leadership
      Too clever
      Innovate for the present
      Innovators are opportunity focused and successful ones become one by defining and containing the risks
    • 38. 3
      The Society
    • 39. Organizing principles of Production
    • 40. Transformation of society
    • 41. Some blurred distinction between Socialism! Humanism! And Druckerism
      Universal rights and responsibility
      Flat structures
      Ownership of the means of livelihood and production
      Need of the commune to be productive
    • 42. Challenging the statusquo
      Welfare state is past --?? Scenario post 2009
      Mega state vs. non-profit social sector
      Mega state vs. youtube / twitter / facebook
      Learning & constant relearning -> outliving obsolescence
      Drucker hedging ?! his bets ??
      Government will NOT become less pervasive, less powerful, less expensive but will depend more on individuals / organizations to be effective
    • 43. From chimney monkeys to the era of Rugmark and beyond
      Move from subsistence production to services
      So called evils of modernity – is it just widespread reporting of it? And change in our sensibilities?
    • 44. Key Insights
    • 45. Purpose of Business
      Purpose of the business is to satisfy the needs of its customers
      Some of the questions an organization need to ask frequently are
      Who is our customer?
      What should our business be?
      Planned abandonment -“If we did not do this already, would we go into it now?”
      The Purpose of a business is to create a customer
    • 46. Role of Management
      Everything that affects the performance of the organization is a concern for the management and its responsibility.
      Traditional models perceive the role of management is internal which is a fallacy
      The best way to predict the future is to create it.
    • 47. On Marketing
      Market standing is important irrespective of increase in sales
      Market standing to aim for should be optimum and not maximum
      Technology and End-use are limitations. Customer value and customer decisions to dispose their disposable incomes should be the focus for management
      The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.
    • 48. 5 bad habits of organizations
      Not Invented Here
      Creaming a market
      Quality as perceived by self
      Illusion of a premium price
      Maximize rather than optimize
      Until a business returns a profit that is greater than its cost of capital, it does not create wealth — it destroys it.
    • 49. Effective Decision Making
      Making good decisions is a crucial skill at every level.
    • 50. Organization as a human community
      One does not manage people. They should lead the people.
      Values are and should be the ultimate test..
      Knowledge workers are dependent on the organizations to make their work productive.
      Organizations also take over some of the aspects of a commune as knowledge workers interact, bond and flock together.
      Rank does not confer
      privilege or give power.
      It imposes responsibility.
    • 51. Management by Objectives
      SMART goals should be derived from corporate vision and should be set for individuals, teams and departments.
      Manage for Results
      Management by objective works - if you know the objectives.
    • 52. Management by Objectives
      Jointly Plan
      Individually Act
      Management by objective works - if you know the objectives.
      Jointly control
      Team Members
    • 53. Effectiveness vs efficiency
      Processes and procedures typically help in increasing efficiency but only when the right things are done results are achieved.
      Efficiency is doing
      things right;
      is doing the right
    • 54. Knowledge workers
      Knowledge workers own the tools of their trade.
      Knowledge society allows upward mobility.
      What is measured improves
    • 55. Communications
      Communication is perception
      Communication is expectation
      Communication makes demands
      Communication and information are different and mostly opposite – yet inter-dependent
      The onus of making himself/herself understood is on the specialist.
      The important thing in communication is to hear what is’nt being said