am 28. November 2015
If you use the amazon “look inside” function you will find the contents of the book. Each chapter headline is already meaningful in itself; in my mind each chapter carries important lessons for the attentive reader. I recommend studying the whole book, excerpting important parts, discussing it, providing teaching lessons, re-reading it “on demand” and drawing conclusions.
In the following chapters I found very important content for business management lectures and seminars: Preface, Chapters 2-4, 6-7, 10, 18-21, 23, 29, 31-38, 40, 50-51, 55-56, 60-61. As examples I provide some selected topics with original quotes of Peter Drucker and my comments (MC).
Chapter 7 Business Purpose and Business Mission …
”What is our business?” – Never Obvious; … The Need for Dissent … Method Rather than Opinion … Who is the customer? … What is value to the customer? … When to ask “What is our business”? … “What will our business be?” … The unsatisfied Wants of the Customer … “What should our business be?” … The Need for planned abandonment …
MC: in this chapter Drucker raises the most important questions which should be asked and answered at regular intervals - see also the booklet “The Five Most Important Questions you will ever ask about your Organization” by Peter Drucker with Jim Collins, Philip Kotler et.al. published in 2008.
Chapter 18 Making Work Productive: Controls and Tools …
The first thing to know is that controlling the work process means control of the work, and not control of the worker. Control is a tool of the worker and must never be his master. It must also never become an impediment to working.
MC: here Peter Drucker addresses the basic functions of management by objectives and anticipates what has been designed and conceptualized by Kaplan and Norton in their so called “Balanced Scorecard” published in 1996.
Chapter 19 Worker and Working: Theories and Reality …
The most widely read and most often quoted of these books is probably Douglas McGregor’s The Human Side of Enterprise, McGraw-Hill, 1960, with its Theory X and Theory Y. McGregor conducted no original research. He acknowledged freely in his book that he had developed no new ideas but had formulated the ideas of others (and especially those I had put forth in three earlier books – Concept of the Corporation, The New Society, and The Practice of Management). But his book fully deserves the wide attention it has received. McGregor powerfully presented fundamental choices for managing worker and working. …
Equally convincing are the extensive studies of Frederick Herzberg on knowledge workers (already mentioned in Chapter 16). Herzberg produced example after example that knowledge workers want achievement and will indeed work only if there is achievement in their job. Otherwise they will at best go through the motions. … An ardent enthusiast for Theory Y, the late Abraham H. Maslow, pointed out that the demands are actually much higher than even I had seen. … He sharply criticized me and McGregor for “inhumanity” to the weak, the vulnerable, the damaged, who are unable to take on the responsibility and self-discipline which Theory Y demands. Even the strong and healthy, Maslow concluded, need the security of order and direction; and the weak need protection against the burden of responsibility. The world is not, Maslow concluded, peopled by adults. It has its full share of the permanently immature.
MC: Peter Drucker refers to Maslow’s book “Eupsychian Management” published in 1965. The late Professor Warren Bennis wrote in his Foreword to the New Edition of this book now with the title “Maslow on Management” published in 1997: “37 Years Later It’s amazing, isn’t it, that a book out of print for almost 37 years, a book that just barely sold its first printing and then virtually vanished from view – into oblivion really, without even a whimper – has suddenly burst on the scene, piquing just about everybody’s interest. … The original publishers, though, went ballistic but Abe stubbornly held out for, yes, Eupsychian Management.” Peter Drucker gave “Maslow on Management” his special recognition on the frontispiece: “This is Maslow’s most important and most enduring book. It had a lasting impact on me.” After careful research I have included this book in my lecture about the “100 Best Business Books of Today”.
Chapter 21: The Responsible Worker …
There will be – and there has to be – the reality of management power and authority, of command and on decision making, of higher and lower incomes, of superior and subordinate. But there also is the task of building and leading organizations in which every man sees himself as a “manager” and accepts for himself the full burden of what is basically managerial responsibility: responsibility for his own job and work group, for his contribution to the performance and results of the entire organization, and for the social tasks of the work community.
MC: I am convinced that intelligent leadership initiatives should be three-dimensional - Leadership-System, Leadership Competencies and Self-Management; I call it 3 D-Leadership. With “Self-Management” as an integral part of 3 D-Leadership initiatives we can integrate the whole workforce instead of excluding the majority of employees without subordinates which creates automatically a leadership gap: “leadership is good for them and not for us.” We must not forget that knowledge worker without subordinates have leadership responsibilities in customer relations, teams, programs, projects etc.
Chapter 23 “People Are Our Greatest Asset” …
A responsible work force does indeed make very high demands on managers. It demands that they be truly competent – and competent as managers rather than as psychologists or psychotherapists. It demands that they take their own work seriously. It demands that they themselves take responsibility for their jobs and their performances.
Responsibility is a harsh taskmaster. To demand it of others without demanding it of oneself is futile and irresponsible. The worker cannot assume the burden of responsibility for his own job, work group, and work-community affairs unless he can be confident of the seriousness, responsibility, and competence of his company. He must be able to have confidence that the boss knows his own job and work. He must take it for granted that the boss provides the tools the worker himself needs to be able to do productive work and the information the worker needs to direct and control himself.
MC: a mission statement with “People are our greatest asset” requires mutual loyalty between the company and its workforce; otherwise it is an empty phrase.
Chapter 32 Design and Content of Managerial Jobs …
Managing is work. But it is not, by itself, full-time work. The way to design a managerial job is to combine “managing” with “working,” that is, responsibility for a specific function or job of one’s own. As a rule, the manager should be both a manager and an individual career professional.
MC: both parts are work. The difference between the two parts correctly identified by Peter Drucker can be seen in the fact that a manager who is only “managing” without contributing with his “specific professional competencies” is going to lose the respect of his subordinates, his peers and finally of his superiors. He/She will be considered a “desk manager” without an “added value” and without adding value to his/her subordinates.
Chapter 33 Developing Management and Managers …
Just as no one learns as much about a subject as the man who is forced to teach it, no one develops as much as the man who is trying to help others to develop themselves. Indeed, no one can develop himself unless he works on the development of others.
MC: Peter Drucker was one of the very few who were correctly considered as a “management guru” – he despised this accolade. He was outstanding in consulting, management development and self-management - see his excellent book “Manage Oneself” published in 1999 when he was 90 years old!
Chapter 37 The Effective Decision
MC: in this chapter Peter Drucker explains “How the Japanese Make Decisions” first published in the Harvard Business Review, March/April 1971 and then in his book “Men, Ideas & Politics” published in the same year.
The he continues with “Facts or Opinions?”
A decision is a judgment. It is a choice between alternatives. It is rarely a choice between right and wrong. It is at best a choice between “almost right” and “probably wrong” – but much more often a choice between two courses of actions neither of which is provably more nearly right than the other.
Most books on decision-making tell the reader: “First find the facts.” But manager who make effective decisions know that one does not start with facts. One starts with opinions. These are, of course, nothing but untested hypotheses and, as such, worthless unless tested against reality. To determine what is a fact requires first a decision on the criteria of relevance, especially on the appropriate measurement. This is the hinge of the effective decision, and usually its most controversial aspect.
But also, the effective decision does not, as so many tests on decision-making proclaim, flow from a “consensus of the facts.” The understanding that underlies the right decision grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives.
To get the facts first is impossible. There are no facts unless one has a criterion of relevance. Events by themselves are not facts.
Only by starting out with opinions can the decision-maker find out what the decision is all about. People do, of course, differ in the answers they give. But most differences of opinion reflect an underlying – and usually hidden – difference as to what the decision is actually about. They reflect a difference regarding the question that has to be answered. Thus to identify the alternative questions is the first step in making effective decisions.
Conversely, there are few things as futile – and as damaging – as the right answer to the wrong question.
The effective decision-maker also knows that he starts out with opinions anyhow. The only choice he has is between using opinions as a productive factor in the decision-making process and deceiving himself into false objectivity. People do not start out with the search for facts. They start out with an opinion. There is nothing wrong with this. People experienced in an area should be expected to have an opinion. Not to have an opinion after having been exposed to an area for a good long time would argue an unobservant eye and a sluggish mind.
People inevitably start out with an opinion; to ask them to search for the fact first is even undesirable. They will simply do what everyone is far too prone to do anyhow: look for the facts that fit the conclusion they have already reached. And no one has ever failed to find the facts he is looking for. The good statistician knows this and distrusts all figures – he either knows the fellow who found them or he does not know him; in either case he is suspicious.
The only rigorous method, the only one that enables us to test an opinion against reality, is based on the clear recognition that opinions come first – and that is the way it should be. Then no one can fail to see that we start out with untested hypotheses – in decision-making, as in science, the only starting point. We know what to do with hypotheses. One does not argue them; one tests them. One finds out which hypotheses are tenable, and therefore worthy of serious consideration, and which are eliminated by the first test against observable experience.
The effective decision-maker therefore encourages opinions. But he insists that the people who voice them also think through what it is that the “experiment” – that is, the testing of the opinion against reality – would have to show. The effective executive, therefore, asks, “What do we have to know to test the validity of this hypothesis?” “What would the facts have to be to make this opinion tenable?” And he makes it a habit – in himself and in the people with whom he works – to think through and spell out what needs to be looked at, studied, and tested. He insists that people who voice an opinion also take responsibility for defining what factual findings can be expected and should be looked for.
Perhaps the crucial question here is “What is the measurement appropriate to the mater under discussion and to the decision to be reached?”
Whenever one analyzes the way a truly effective, a truly right, decision has been reached, one finds that a great deal of work and thought went into finding the appropriate measurement.
The Need for Dissent and Alternatives
Unless one has considered alternatives, one has a closed mind. This, above all, explain why the Japanese deliberately disregard the second major command of the textbooks on decision-making and create discussion and dissent as a means to consensus. …
Sloan was anything but an “intuitive” decision-maker. …
Washington, we know, hated conflicts and quarrels and wanted a united Cabinet. Yet he made quite sure of the necessary differences of opinion on important matters by asking both Hamilton and Jefferson for their opinions.
There are three reasons why dissent is needed. It first safeguards the decision-maker against becoming the prisoner of the organization. …
Second, disagreement alone can provide alternatives to a decision. …
Above all, disagreement is needed to stimulate the imagination. … And this means that one needs imagination – a new and different way of perceiving and understanding. …
The effective decision-maker, therefore, organizes dissent. …
A feedback has to be built into the decision to provide continuous testing, against actual events, of the expectations that underlie the decision. Few decisions work out the way they are intended to. Even the best decision usually runs into snags, unexpected obstacles, and all kinds of surprises. Even the most effective decision eventually becomes obsolete. Unless there is feedback from the results of a decision, it is unlikely to produce the desired results.
This requires first that the expectations be spelled out clearly – and in writing. Second, it requires an organized effort to follow up. And this feedback is part of the decision and has to be worked out in the decision process. …
One needs organized information for the feedback. One needs reports and figures. But unless one builds one’s feedback around direct exposure to reality – unless one disciplines oneself to go out and look – one condemns oneself to sterile dogmatism and with it to ineffectiveness.
In sum: decision-making is not a mechanical job. It is risk-taking and a challenge to judgement.
The “right” answer” (which usually cannot be found anyway) is not central. Central is understanding of the problem. Decision-making, further, is not an intellectual exercise. It mobilizes the vision, the energies, and resources of the organization for effective action.
Chapter 61 The Innovative Organization …
No modern government governs effectively anymore. The crisis of the world is, above all, an institutional crisis demanding institutional innovation. …
An established company which in an age demanding innovation is not capable of innovation is doomed to decline and extinction. And a management which in such a period does not know how to manage innovation is incompetent and unequal to its task. Managing innovation will increasingly become a challenge to management, and especially to top management, and a touchstone of its competence. …
Innovative organizations are not confined to business. Both the Manhattan Project in the United States, which developed the atomic bomb during World War II, and CERN (Conseil European pour la Recherche Nucleaire) in Geneva under its first Director-General, Victor Weisskopf, furnish examples of innovative organizations. This is all the more remarkable, as these two institutions were heavily staffed with university professors who, in their natural habitat, are remarkably resistant to change and notoriously slow to innovate.
These various innovative organizations are very different indeed in their structures, their businesses, their characteristics, and even their organization and management philosophies. But they do have certain characteristics in common.
1. Innovating organizations know what “innovation” means.
2. Innovative organizations understand the dynamics of innovation.
3. They have an innovative strategy.
4. They know that innovation requires objectives, goals, and measurements that are different from the objectives, goals, and measurements of a managerial organization, and appropriate to the dynamics of innovation.
5. Management, especially top management, plays a different role and has a different attitude in an innovative organization.
6. The innovative organization is structured differently and set up differently from the managerial organization. …
The governing device of a strategy for the ongoing business might therefore be said to be: “Better and More.” For the innovative strategy the device has to be: “New and Different.”
MC: today, 40 years later, innovation and speed are “very critical success factors.”
Summary: The following three books written by Peter F. Drucker should be the platform for teaching “Management” and should be studied by managers and management candidates:
“The Practice of Management” published in 1954,
“Management: Tasks, Responsibilities, Practices” published in 1973 and
“Management revised and updated by Joseph A. Maciariello” published in 2008, three years after Peter Drucker passed away,