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Management Challenges for the 21st Century

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MANAGEMENT CHALLEGES FOR THE 21ST CENTURY is a breakthrough work, even for Peter Drucker. Through 6 impressive essays, Professor Drucker sets the agenda for the next several decades, for every organization and individual. He begins by pointing out that the way most people think about management is all wrong, and immediately needs to be changed. He outlines the needed changes. He then picks the key strategy issues that will strongly affect all organizations for the next 50 years. Next, he points out that we live in turbulent times and that one must lead the changes that one's organization must make so they occur faster than for the competition. There is no choice for any organization, except to fail to survive. From there, he points out that we have information TECHNOLOGY, but very little information worth looking at on the devices the technology brings us. He goes on to define what must be done to create the right information. In a remarkable section, he then tells how to create knowledge worker productivity (something he has said in the past that no one knows how to do). Finally, he provides a remarkable essay on how to get the most out of yourself, for yourself. These essays were previewed in leading publications, and substantially improved from the originals. There is no repetition of his work and thinking from earlier books. This is like finding a whole new Peter Drucker. I especially loved the new examples that he included, as well as his historical references that only Peter Drucker can make. YOU ARE MAKING A BIG MISTAKE IF YOU FAIL TO BUY, READ, AND APPLY THE IMPORTANT LESSONS OF THIS BOOK. If you read only one book by Peter Drucker, read this one! I was especially pleased to see that he addressed the stalls that delay organizational progress such as the old habits reinforced by tradition, unwillingness to address the new through disbelief, poor communications at all levels (he states the rules that you must follow to be a better communicator and be more effective), needless interactions fostering mindless bureaucracy, the temptation to procrastinate (standing still in front of a truck about to run you over is a mistake you will not repeat), avoiding the unattractive key issues of your organiztion (he recommends doing the dirty jobs yourself for several weeks a year in order to understand how to improve), and failing to set high standards. As always, the book is filled with powerful questions that you can answer for yourself in order to accomplish much, much more and feel great while you do so. Read and apply the lessons of this book and you will have many more 2,000 percent solutions (achieving 20 times the usual results with the same resources or getting the same results 20 times faster).

Peter F. Drucker writes in the Introduction, "...this is not a book of 'predictions,' not a book about the 'future.' The challenges and issues discussed in it are already with us in every one of the developed countries and in most of the emerging ones (e.g., Korea or Turkey). They can already be identified, discussed, analyzed and prescribed for. Some people, someplace, are already working on them. But so far very few organizations do, and very few executives. Those who do work on these challenges today, and thus prepare themselves and their institutions for the new challenges, will be the leaders and dominate tomorrow. Those who wait until these challenges have indeed become 'hot' issues are likely to fall behind, perhaps never to recover. This book is thus a Call for Action."

In this context, in Chapter 5 of this invaluable book, Drucker focuses on knowledge worker. He says that "the most important, and indeed the truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the 'manual worker' in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of 'knowledge work' and the 'knowledge worker.' The most valuable assets of a 20th-century company were its production equipment. The most valuable asset of a 21st-century institution, whether business or nonbusiness, will be its knowledge workers and their productivity."

Thus, he defines six major factors determine knowledge worker productivity as follows:

1. Knowledge worker productivity demands that we ask the question: "What is the task?"

2. It demands that we impose the responsibility for their productivity on the individual knowledge workers themselves. Knowledge workers have to manage themselves. They have to have authonomy.

3. Continuing innovation has to be part of the work, the task and the responsibility of knowledge workers.

4. Knowledge work requires continuous learning on the part of the knowledge worker, but equally continuous teaching on the part of the knowledge worker.

5. Productivity of the knowledge worker is not-at least not primarily-a matter of the quantity of output. Quality is at least as important.

6. Finally, knowledge worker productivity requires that the knowledge worker is both seen and treated as an "asset" rather than a "cost." It requires that knowledge workers want to work for the organization in preference to all other opportunities.

He argues that each of these requirements-except perhaps the last one-is almost the exact opposite of what is needed to increase the productivity of the manual worker.

Highly recommended.

I've recently purchased some management books at Amazon, and this one is one of the best. Mr. Drucker has precise and plain spoken knowledge he imparts to us about the challenges that management face (motivation, competition, e.g.). His years of experience are easily shared in this book.

Other superb books I recommend that I have recently read are Ponder's "The Leader's Guide: 15 Essential Skills," and any Ken Blanchard or Warren Bennis book.

First published in Forbes magazine, California Management Review and Harvard Business Review, the six chapters in this book contain nothing that is an excerpt from Peter Drucker's earlier management books. Indeed, this book supplements Drucker's many earlier management books by looking ahead to the future of management thinking and practice.

At 90, Peter Drucker is, by all accounts, the most enduring management thinker of our time. Born in Vienna, educated in Austria and England, he has worked since 1937 in the United States, first as an economist for a group of British banks and insurance companies, and later as a management consultant to several leading companies. Drucker has since had a distinguished career as a teacher, including more than twenty years as Professor of Management at the Graduate Business School of New York University. With a long-term business perspective second to none, Drucker's books span sixty years of modern history beginning with The End of Economic Man (1939) and Managing in a Time of Great Change; Management: Tasks, Responsibilities, Practices; Innovation and Entrepreneurship; The Effective Executive; Managing for Results and The Practice of Management.

This book looks afresh at the future of management thinking and practice and defines new ways of delivering success. It deals exclusively with tomorrow's hot management issues-the crucial, central, life-and-death issues that are certain to be the major challenges of tomorrow. The biggest challenge will be knowledge worker productivity-what is it; how can it work; how do we manage knowledge workers and ourselves? Two fundamental issues addressed are changes in the world economy and the subsequent changes in management practice which will bring about new realities requiring new corporate policies as well as presenting new opportunities for the individual knowledge worker.

Many of the individual knowledge workers affected by these challenges will be employees of business or working with business. Yet this is a management book rather than a business management book. The challenges it presents affect all organisations of today's society, particularly the more rigid and less flexible, i.e. the ones more rooted in the concepts, assumptions and policies of the 19th century. The challenges and issues discussed in this book are not new and are already with us in every one of the developed countries and in most of the emerging ones. They can already be identified, discussed, analyzed and prescribed for. Some people, someplace, are already working on them. But so far very few executives and even less organisations are. Those who do work on these challenges today, and thus prepare themselves and their organisations for the new challenges, will be the leaders and will dominate tomorrow.

Peter Drucker has a beautiful mind, forever fresh and overflowing with innovative thoughts. This book, published just as the master of management began his tenth decade of life, shows him at his perpetual best. The text carries with it the sweeping knowledge, deep experience, and astute analysis that a reader might expect from Drucker at this point in his life. But you will find no timid conservatism, no holding on to safe ground here. Drucker has made a lifelong habit of leading the way in business thought and this book confirms that he just can't help himself.

In contrast to the typical business book which is 200 pages too long, every chapter and every page of Management Challenges for the 21st Century relentlessly tweaks the noses of bad assumptions while focusing our attention on the future. Drucker pulls together diverse trends and forces to map out the truly new management challenges. His first chapter, "Management's New Paradigms" argues that organizations (or what ManyWorlds calls "business architecture") will have to become part of the executive's toolbox, yet we continue to operate on outdated assumptions about the role and domain of management.

Fortunately much recent management thinking explicitly challenges one assumption pulled apart by Drucker: The idea that the inside of the organization is the domain of management. This assumption, says Drucker, "explains the otherwise totally incomprehensible distinction between management and entrepreneurship". These are two aspects of the same task. Management without entrepreneurship (and vice versa) cannot survive in a world where every organization must be "designed for change as the norm and to create change rather than react to it."

Although Drucker is intent on uprooting old certainties and focusing organizations on constant change, he does not leave the reader without a compass. In the second chapter, "Strategy-The New Certainties", Drucker says that strategy allows an organization to be "purposefully opportunistic" and explains five certainties around we can shape our strategy. While other writers have addressed a couple of these, too little attention has been paid to some of the inevitabilities analyzed here, including the collapsing birthrate, shifts in the distribution of disposable income, and the growing incongruence between economic globalization and political splintering.

The book's third chapter, "The Change Leader", gives Drucker's unique perspective on the need for 21st organizations to be change leaders. "One cannot *manage* change. One can only be ahead of it." Change leaders have four qualities. They create policies to make the future which means not only continual improvement but *organized abandonment* - a practice still almost unknown in practice. Contrary to typical company reactions, change leaders will starve problems and feed opportunities. For Drucker this means, in part, having a policy of systematic innovation and - in tune with recent calls for new budgetary practices - having two separate budgets to ensure that the future-creating budget is not stopped off in difficult times.

Strong as the first chapters are, I found the other chapters of this book even more incisive. The reader may come away with the sense that many of Drucker's points are obvious, but will realize that they only *became* obvious after hearing them. In his chapter on "Information Challenges", Drucker gives his own, historically-rich, controversial, and provocative take on our current information revolution - the fourth such revolution, he says).

The man who coined the term "knowledge worker" has no shortage of fresh thoughts in the chapter on "Knowledge-Worker Productivity", and has profoundly important things to say in the final chapter on "Managing Oneself". Management Challenges for the 21st Century is, of course, essential reading for aspiring manager-entrepreneurs in these confusing times. As for aspiring business writers, I can only say: Read it and weep!

This is a straightforward, no-holes-barred book on leadership that gets to the bottom line quickly: what is happening now (not in the future) in organizations that's good and not-so-good. It reads well and gives quite a bit of insight into the challenges. Very well organized and provoking.

Also recommend Drucker's brilliant other works and also a thought-provoking book: "The Leader's Guide: 15 Essential Skills."

One of the most powerful ways that we all learn is by analogy to our own lives, and Peter Drucker has done his best job ever at providing those analogies. For example, he refers to the leadership model of a volunteer organization as the preferred way to lead knowledge workers, as well. Almost all of us have been or seen someone who effectively led volunteers. The other great way to learn is to answer questions, and this book is full of them. In fact, it is almost like getting two books: a book and a workbook. Like many of his recent books, this book is organized into essays, except these are much longer than most and provide more detail. One thing I liked about this book was the way that he pointed out what was going to be different in the next century from the current one. Although all of these changes are well underway, their pervasiveness will grow greatly so that they will replace many existing issues in importance. My experience with his past books has been that they are excellent at pointing our thinking in the right direction for decades, and I believe he has done it again. Although some of these themes will be familiar from othe reading or other Drucker books, what will be new is much more detail about what to do differently. Some may feel that they already "get the message" but I doubt if anyone has already "gotten all the messages" he presents here. You owe it to yourself to check your thinking by testing with this book.

Drucker's covers a spectrum of topics which is not easily organized, but his wealth of experience (first business book written in 1939, this one written 60 years later) makes it worth reading regardless.

"One cannot manage change. Once can just be ahead of it." (pg 73)

An outline might look like this:

1) For starters, people must understand that a) Management does not only pertain to business. 90% of organizations are the same. b) There is no such thing as a RIGHT ORGANIZATION. The organization fits the task. c) In the knowledge economy, you cannot manage people. Only lead them. d) Management focus is external, not internal. "Management exists for the sake of its institution's results." (pg 39)

2) For knowledge workers, money is not enough. They require a challenge for motivation and must believe in the company mission to really perform. It is the quality of their work, not the quantity that matters.

3) Management needs to clearly define WHAT SHOULD BE DONE, rather than HOW IT SHOULD BE DONE. For manual labor, HOW matters because there are minimum quality requirements. For knowledge work, quality is a given.

4) Increasingly a company's comparative advantage will be its ability to attract and retain the most talented people. Likewise, knowledge workers should be treated as a capital asset, not as a cost.

5) Successful companies have a culture of organized abandonment. People are encouraged to abandon what does not work. It is innovation in motion. Opportunities are fed and problems starved.

6) The new Information Revolution is about concepts, not data. Going forward, IT will focus less on the T (Technology) and more on the I (Information). Once again, it is a question of quality ~ not quantity. Likewise, the ultimate test of any information system is that there are no surprises.

7) Since knowledge workers have a long working life (evidence, the author), they must actively manage their careers. To achieve this, Drucker gives straightforward advice: Know yourself. What are my strengths? How do I perform? What are my values?

8) Everyone should develop secondary interests (volunteer work, different job, hobbies) to challenge, and motivate themselves. Do not get stuck mid-career without any alternatives.

In reading material purporting to help me run my company better today and tomorrow, I have grown tired of hearing the mantra, "change is inevitable so prepare for change." Well, I know that already, so my eyes and mind glaze over when it is encountered. My interest is in learning what the changes might be and ways in which I can better cope with them. While Drucker does use some of the routine statements about change, he correctly identifies some of the changes that are taking place, the affects they will have and how to respond to them in an effective manner.
Drucker identifies what is the most powerful social force working today and some of the consequences, namely the aging of the population in the developed countries. This, coupled with the lowering of the birthrate to the point where the native populations are now declining will change everything in our societal structures. One phenomena that I had not thought of is a consequence of families only having one child. It appears that the parents lavish so much more on the only child that they end up spending more on toys than they would for multiple children. Other, more obvious trends are how to keep the older workers interested, trained and dedicated so that they do not "retire on the job." It is clear that the only way the economies will continue to run without the steady influx of young people is by getting more productivity out of the older ones.
The other main point is the rise to dominance of the knowledge worker and how developing countries are making concerted efforts to create them. In a throwback to Marxist dogma, it means that for the first time the workers own the means of production, namely the knowledge that they carry around. The consequences of this for business management are very profound. In manufacturing, it was possible to monitor progress by simply counting how many widgets were constructed per time frame. If a worker decided to take some time off while on the job, that number dropped. However, for the knowledge worker, similar metrics are difficult if not impossible. While some progress has been made in the area of measuring programmer productivity, it is still much a matter of guesswork. When ten lines of brilliant, bug-free code can be better than one hundred lines of adequate code, such traditional measures such as lines of code cannot be applied. Old style incentives such as bonuses for the production of more widgets also do not apply well to knowledge workers. Incentives such as payments for lines of code or bugs found have almost always ended up with improvements in numbers without an equivalent improvement in quality. Furthermore, incentives to increase the speed just get you a poorer quality product faster. Drucker's treatment of these issues lend his powerful voice to the chorus who describe modern management as the position of an overseer with a tickle stick rather than a whip.
While there are many more challenges facing us in the 21st century than can be described in a book with less than 200 pages, Drucker hits many of the most significant. While there may be times when you will not quite agree with his proposals, they are sensible and you need overwhelming evidence to conclude that they do not apply to you.

Surveying the authors in today's "Business & Finance" section can give you an acute case of guru overload. Leadership gurus. Management gurus. Self-actualization gurus. Egotists. Hagiographers. Monomaniacs. Sheepish academics in vulpine inspirational-speaker clothing. Thinkers who can't write. Writers with nothing to say. It's enough to make a grown critic weep.

But soft! what light from yonder bookshelf breaks? It is Peter Drucker, and his writing is the sun. For over sixty years, Drucker has built his reputation on his penetrating insight, deadpan style, intelligent marshalling of facts, and sturdy common sense. Drucker's books and articles don't tout crackpot theories, or substitute emphasis for evidence. He recognizes how the world truly works, and decries baseless shoulds and untested presumptions as "simply nonsense". Above all Drucker offers perspective: intelligent observations, practical advice, and a historically informed long view that distinguishes genuine challenges from faux revolutions.

_Management Challenges for the 21st Century_, the latest in Drucker's string of successes, is a welcome antidote to the widespread contagion of alarmist, brave-new-world, everything-you-believed-is-wrong assertions. Drucker enjoys testing assumptions, and he begins by debunking some of the most jealously guarded, including "management is business management" and "management is internally focused". He knows what's new, what's old, and where the true distinctions lie, decrying the "totally incomprehensible distinction between management and entrepreneurship" and remarking wryly that today's Information Revolution is merely the fourth of its kind in world history (and not even the fastest or most sweeping). Strategy has its place in the sun, and Drucker's recommendations and "organized abandonment" approach are as revealing as anything ever produced by Michael Porter - and much more readable. The final chapter of _Management Challenges_ is the most immediately useful, for here the author takes a refreshingly balanced look at managing oneself. Styles, values, even manners have their place, and Drucker's invitation to capitalize on strengths and take responsibility for relationships will win the hearts of all the square pegs trying to pound themselves into round corporate holes.

No book is perfect, unfortunately. Putting aside Drucker's comic-strip APPROACH to EMPHASIS, there is at times a suggestion of old wine in new bottles, although the wine is of a particularly excellent vintage. But no connoisseur or novice need carp at the pleasures offered by _Management Challenges for the 21st Century_. If you read only one Business & Finance book this June, read this one. Summertime is too fleeting for guru overload.