Peter Drucker, The Practice of Management (1954)
Drucker (a German- born American) is the father of modern management (pictured right).
He has written many outstanding books, but this book and Management:
Tasks, Responsibilities, Practices are his most influential.
More than any other books they brought to people’s attention the importance of management.
He once said that his life’s work centred on balancing continuity and change in organizations
He died in 2005.
Peter Drucker in the Management Gurus section.
What is management?
Management is a “practice” that must be evaluated on how well it improves business
How management can
improve business performance
1. Maximize the effectiveness of
They must be used to create as many customers as possible.
2. Treat employees as human
So managers must deliver what they want:
- satisfaction of their needs.
- participation in decision making.
- planning and setting objectives (including high performance standards and balancing
the short and long-term).
- motivating and encouraging people to accept change (for example,
through communicating and profit sharing).
3. Be led by a customer driven business purpose
The purpose of a business is “to create a customer”.
If it is does this well, it will make a profit. So profit is the result of business
success, not its cause.
Because “the customer is the foundation of a business and keeps it in existence”, a
business has only two basic functions:
Focusing every organizational activity on creating customers and selling what they want.
Providing new and better ways to improve customer satisfaction in every organizational activity - for
- better production and design.
- improving customer benefits (like greater convenience and lower prices).
Marketing and innovation are creative, so:
“managing a business must always be entrepreneurial in character”.
4. Define your business
Any organization must decide what business it is in.
This is determined by customers and what they want.
Key questions are:
- what does the customer want and consider to be value for money?
- what will our business be in the future?
- what should our business be?
5. Be socially responsible
- consider the organization’s impact on society.
- try to make corporate strategy socially beneficial as well as profitable.
But a business’s first responsibility is to ensure its survival by making a
It must make enough profit to:
- contribute to society (through paying taxes).
- reinvest money back into the business for future expansion.
6. Management by objectives
The best way to run an organization is “management by objectives”.
This means managers must be asked to achieve short and long term objectives in eight key areas:
a) market standing
Customer satisfaction (and loyalty) through new or
New products and improvements in
organizational activities and processes.
(utilizing resources to satisfy customers).
d) physical and financial resources
- ensuring adequate supplies of goods and services.
Profits made from customer satisfaction and innovation.
f) manager performance and development
(through coaching, training and education).
g) worker performance and attitude
h) public (i.e. social) responsibility
The organization's contribution to society - see point 5
These objectives and activities must be effectively balanced and
co-ordinated (via the organization structure), to create as many
customers as possible.
Therefore, vital are:
- inspired teams and individuals working together to achieve customer satisfaction.
- customer centred vision and values.
The best managers are driven by a vision of what customers will want .
They are like the stone cutter who says
- “I am building a cathedral”, not..
- “I am making a living”, or...
- “I am doing the best job of stone cutting in the entire country”.
7. Avoid “safe mediocrity”
Every organization faces the danger of “safe mediocrity”.
This is poor performance resulting from:
- unchallenging objectives.
- the penalization of creative innovation.
To avoid safe mediocrity, managers must be given:
- dismissal or demotion for under-performance.
- rewards (e.g. more money) for learning and better performance - so they mustn’t be
penalized for mistakes and nobody blamed (or fired) for them.
- regular appraisal - feedback on performance from superiors.
Key quotes on
The customer is the foundation of a business and keeps it in existence.
It is the customer who determines what a business is.
Key quotes on objectives and vision
There is only one valid definition of business purpose: to create a customer.
Profit is not a cause. It is the result - the result of performance of the business in marketing,
innovation and productivity.
Key quote on marketing
Marketing... is the whole business seen... from the customer’s point of view.
Key quote on management
The ultimate test of management is business performance.
Key quote on business ethics
It is vision and moral responsibility that, in the final analysis, define the manager.
Key quote on business success
Managing a business always comes back to the human element – no matter how sound the business economics, how
careful the analysis, how good the tools.
Key quote on corporate culture
The enterprise is a community of human beings. Its performance is the performance of human beings. And a human
community must be founded on common beliefs, must symbolize its cohesion in common principles.
Key quotes on motivation
What we need is to replace the externally imposed spur of fear with an internal self-motivation for
Self-control means stronger motivation.