Customer Reviews

Managing in a Time of Great Change

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Similiar to Kennedy's (1993) "Preparing for the Twenty-First Century," Drucker's presentation is different. Drucker uses less jargon; does not read as research article; provides perspective on shared topics; and touches on areas not covered by Kennedy. Drucker provides a analysis of four major change issues: management, the information-based organization, the economy, and the society. Drucker could have subsituted the concept "knowledge" for "change" for his theme. His assessments, projections, and questions are crisp. He gives the reader more substance than just raw data, interweaving data within a setting to provide a more familiar, dimensional look at an issue. For those readers looking to understand the current business and social environment, Drucker's exploration will not be disappointing. For those active in business, his writing may confirm what experienced managers are already aware. Drucker's book may make a viable text for college undergraduate and graduate students considering today's economic and social factors, their relationships, and possible outcomes in tomorrow's society.

Peter Drucker's greatest hits. That's the easiest way to describe this book, which compiles essays written by the ultimate management guru from 1991 to 1994. All of theses essays are about change: changes in the economy, society, business and in organizations in general. Drucker's advice on how managers should adjust to these tectonic shifts centers around the rise of the now ubiquitous knowledge worker and the global economy. As always, Drucker's analysis is far enough ahead of the curve that his 90s-era observations and conclusions are still relevant in the 21st century. We from getAbstract recommend this seamlessly organized book as the perfect introduction to one of the most important management thinkers of his generation.

This book contains great words of wisdom from the Management Guru. Iam trying to summarize some such words of wisdom, from this Bible of management.

Drucker starts with the concept of "Knowledge Worker" which he first introduced in 1959 in his book "The Landmarks of Tomorrow". Starting in 1881, 2 years before Marx's death, the systemic study of work, tasks, and tools has raised the productivity of manual making and moving of things by 3-4% compounded each year over 100 years. Since the 1880s, the amount of information and knowledge needed for each additional unit of output have been going up steadily at a compound rate of 1% year-the rate at which businesses have added educated people to their payrolls. The new jobs require a good deal of formal education and the ability to acquire and to apply theoretical and analytical knowledge. They require a different approach to work and a different mind-set. Above all they require a habit of continuous learning. Also, Knowledge and knowledge jobs are equally accessible to both the sexes.

At the end of world war 1, the GI Bill of Rights and the enthusiastic response to it on the part of America's veterans signaled the shift to a knowledge society. Knowledge becomes the primary resource, and land, labor, and capital become the secondary resources. The knowledge employee will need a machine, whether it is a computer, an ultrasound analyzer, or a telescope. But the machine will not tell the knowledge worker what to do. And without this knowledge, the machine is unproductive. The technicians own the means of production, the "knowledge", the organization only owns the tools of production. The two needed each other.

The rise of the "knowledge worker" comes with the fall of the "blue collar worker". Since world war 2, more and more blacks have moved into blue collar, unionized, mass production industry, that is, into jobs paying middle class and upper middle class wages while requiring neither education nor skill. Fall of the industrial worker has been a traumatic shock for the black community in US. Only in the 20th century, has the "master" been replaced by a "boss", who, himself, ninety-nine times out of hundred, is an employee and has a boss himself.

Drucker next deals with the dynamics of organizations. Michael Hammer pointed out in HBR that when an organization reengineers itself around information, the majority of management layers become redundant. Rank and power in an organization are being replaced by mutual understanding and responsibility.

Every 3 years, an organization should challenge every product, every service, every policy, every distribution channel with the question, If we were not in it already, would we be going into it now ? Organizations will have to plan abandonment rather than try to prolong the life of a successful product, policy, or practice.

A company will outsource all work that does not have a career ladder up to senior management. To get productivity, you have to outsource activities that have their own senior management.

Power in economies of developed countries is rapidly shifting from manufacturers to distributors and retailers. Wal-Mart rather than P&G controls what should be produced, in what product mix, in what quantities, when it should be delivered, and to which stores. Wal-Mart's warehouse is more like a switching yard than a holding yard.

Drucker next talks about five deadly sins in any business. The most common sin is the worship of high profit margins and of "premium pricing". Xerox started adding features to the machine, priced to yield the maximum profit margin and each feature drove up the machine's price. Most of the customers wanted a simple machine, and turned to Canon instead.

Second sin is mis-pricing a new product by charging "what the market will bear", even if the product has patent protection. In the mid 1940s, Du Point priced the patented nylon on the world market for the price at which it would have to be sold five years hence to maintain itself against competition.

Third deadly sin is cost-driven pricing. The only thing that works is price driven costing. Cost driven pricing destroyed US electronics and machine tool industries.

Fourth deadly sin is slaughtering tomorrow's opportunity on the altar of yesterday. IBM destroyed itself by forebading PC people to sell to potential mainframe customers.

Last deadly sin is feeding problems and starving opportunities. Best people in a company should not work on solving problems, instead on newer opportunities.

Drucker now turns to family owned businesses. In a mafia family, the consigliere, the lawyer, who is the second most powerful person, might even be a non-sicillian. So should be the case for a family run company. At least one senior executive should be from outside. He says that the decision on succession should be entrusted to an outsider who is neither part of the family nor part of the business. Benjamin Disraeli, the great Tory prime minister, played this role for the Rothschilds in the 1880s, when he persuaded the youngest-but ablest of the next generation, the Viennese Leopold to be the head of all 3 Rothschild banks-London, Paris, Vienna.

Drucker talks about the importance of the third sector. Other than the private and Government sector, the third sector is the "nonprofit sector" which takes care of the social challenges of a modern society. The social sector institution aims at changing the human being. They create human health, i.e. an educated child or a cured patient. After gaining independence in 1965 from Malaysia, Singapore heavily promoted and financed advanced education. It has become a producer and exporter of high value added and highly engineered products-pharma, electronics, computers, telecom equipment, optics etc.

An example of the results of the third sector being the Green revolution in which new seeds and improved farming methods, financed and promoted by Rockefeller and Ford foundations, changed India in the 1960s.

Drucker talks about wastage in Government. VA hospitals have outlived their usefulness. They were established when veterans lived in rural areas which did not have access to hospitals. There is no need for a department of agriculture anymore. Entitlements were introduced by Bismarck in the 1880s and have now become a threat to the very survival of democracy. Modern welfare destroys. It does not build competence; it creates dependence.

An example of a good Government program was the Marshall plan which gave "seed money" to businesses which submitted a realistic plan with clear performance goals with the purpose of rebuilding war torn Europe immediately following world war 2. Both the support and money were withdrawn when a business diverted money from the agreed upon plan or failed to meet the performance goals.

Another role of Government, as Douglas North wrote in his Nobel Prize winning work "Institutions, Institutional Change and Economic Performance" in 1990, is that for a free market to work, it requires a reliable legal system, an infrastructure of financial institutions and an adequate educational system. The free market does not create a functioning society-it presupposes it. Without such a functioning civil society a few speculators may get very rich, but the economy will remain poor. Hong Kong, Taiwan, Singapore, Korea, Malaysia, Indonesia all inherited legal, financial, educational institutions from their former colonial rulers.

I am grateful to Harvard Business Press for publishing 25 of Peter Drucker's most important essays in a single volume in conjunction with celebrating the 100 anniversary of his birth. (He was born in 1909 and died just a few days before his 96th birthday in 2005.) Each of the essays originally appeared in the Harvard Business Review. As Drucker explains in the Preface, "All of the pieces - two interviews [of Drucker], one at the beginning and one at the end, and the twenty-five chapters in between, have one common theme, despite their apparent diversity. They all deal with [begin italics] changes that have already irreversibly happened. [end italics] They therefore deal with changes on which executives can - indeed must - take action. None of the pieces in this book attempt to predict the future. All deal with what executives can do - have to do - to make the future. It is not so very difficult to predict the future. It is only pointless...actions in the present are also the one and only way to [begin italics] make the future. [end italics] Executives are paid to execute - that is, to take effective action. That they can only do in contemplation of the present, and by exploiting the changes that have already happened...To enable today's executives to be ahead of this different tomorrow - indeed to make it their tomorrow - is the aim of the book."

Consider "The Five Deadly Business Sins" (1993) within the context of the comments just quoted. Note in particular how practical Drucker is when reviewing various "avoidable mistakes that will harm the mightiest businesses."

1. The worship of high profit margins and of "premium pricing" that always creates a market for the competitor. "And high profit margins do not equal maximum profits."

2. Mispricing a new product by charging "what the market will bear." "This, too, creates risk-free opportunity for the competition."

3. Cost-driven pricing. "The only thing that works is price-driven costing."

4. Slaughtering tomorrow's opportunity on the altar of yesterday. Drucker cites the example of IBM that committed this sin at least twice, first when forbidding sales initiatives that could threaten the sales of punch cards and years later when preventing its PC people to contact mainframe customers.

5. Feeding problems and starving opportunities. "All one can get by `problem solving' is damage containment. Only opportunities produce results and growth."

In other articles, Drucker focuses on major business challenges such as formulating a theory of business, planning for uncertainty, managing the family business, managing in the network society, creating an appropriate team, being "data literate" by knowing what to know, why measuring is more important than counting, coping with a major "power shift" within the U.S. economy, the meaning and significance of "a century of social transformation," why nonprofits must be strengthened, and balancing knowledge work with gender roles.

Drucker's Preface is dated May 1995. What amazes me is that in the two interviews and the 25 articles assembled in this volume, Drucker shares his thoughts about what he then characterized as "a time of great change" and yet many of the same tensions, pressures, crises, and challenges continue to create both perils and opportunities in the business world 14 years later. When we take into full account all that Peter Drucker contributed in more ways than can be fully acknowledged in this brief commentary, it is indeed appropriate to celebrate his life and work, to celebrate the man and his achievements.

This book was fascinating to hear some historic perspectives on how other countries have tried to handle some of the same type of issues and the results, some negative and some positive. I recommended it to my son and his wife as they begin planning for the future.

I was not quite sure what I would get from this book, since Peter F. Drucker is quoted so much by other managers (and many who are bad :) This book covered a macro & micro economic managerial view. Mr. Drucker thoroughly covers the full trend from agriculture, industrial, blue collar/white collar, all the way to the current knowledge worker trend. He states the truth about outsourcing (which in my opinion has been twisted out of context to what Mr. Drucker proposed as the approach companies should take). This book also covers the neoclassic conservatism and the US approach with this for further backing of capitalism. I was surprised to read that Mr. Drucker disagreed with some of the overly conservative view. And I get from the interview that he does value family and the values around family. I sure wish corporations would take his advice on that, rather than pick and choose what they hope will get them their next bonuse off of overworked people! I thought this book was awesome!! This is a book to read for full managerial and corporate trends! Very good book! Before you read someone like the unethical Jack Welch, pick up Peter F. Drucker and absorb real advice!

Even dated there is something to be learned from this book. Drucker is one of the few people who not only talks about the future of business but clarifies the present business climate. Even when he is wrong about what will happen, which he will be one of the first to say, he is smart enough to admit it and learn from it. Drucker gives solid practical advice and insight to all aspects of business. And more importantly what should be part of business. I give the book a B+ on the StuPage just because of it being dated.

Peter F. Drucker 1995 book is the expected counter scientific answer for Managers in a Time of great change. To manage complexity properly in all fields we always have had the need of a good theory so that we can make not only predictions but also controling our changing environment. The Drucker`s theory of Business is based on a fundamental schema he also uses in the most original theory of society we have ever heard. Transcending the traditional dualistic paradigm of dividing society into two sectors, the Public sector or Goverment and the Private sector or Business, Drucker propose a threefold schema, which can be very useful among all in, in those countries in which "the social sector" is a political mean to maintain the control of people at any price. In this sense he is completely right when he says that there are not poor countries, but countries bad administrated. The most important thing with Drucker thought is that is consistent, precise and why not scientific. Today when change is a fashion word this book is a great aid for those leaders interested to take their organization into a new stage of mankind.

Outsourcing has less to do with economizing than with quality. Information is replacing authority. Most people still have the big company mentality buried in their assumptions.

A knowledge economy's greatest pitfall is becoming a mandarin meritocracy. The key to the productivity of knowledge workers is to make them concentrate on real assignments. One should be intolerant of intellectual arrogance. A balance needs to be worked out between specialization and exposure.

Every organization has a theory of business. Sometimes reality changes but the theory of business does not change with it. The assumption that the computer industry is hardware driven paralyzed IBM.

Assumptions about environment, mission, and core competencies must fit reality. Rapid growth is a sure sign there is a crisis in the business theory. Unexpected success and unexpected failure equally show an inadequate theory of business.

Mass retailers had based their strategy on market homogeneity. Whosoever exploits structural trends is almost certain to succeed. The worship of premium pricing always creates a market for the competition.

There is a trend toward alliances as a vehicle of business growth. The modern organization has social responsibility. An organization is effective only if it concentrates on one task. Knowledge workers cannot be supervised effectively.

In team building there are three kinds of teams. The first is the baseball team with fixed positions. The second is the football team where players play as a team at the behest of a coach. The third is the tennis doubles team where players have primary rather than fixed positions.

History books record the squalor of early industry. Nevertheless, the workers were better off working in the factories than they were on the farm or in domestic service. Blue collar workers were manual laborers.

The emerging society is one based on knowledge. The central workforce will consist of highly specialized people. The knowledge society is an employee society. The Japanese term for continuous improvement is kaizen. An old Bell Telephone invention is benchmarking. For the most part downsizing has not resulted in the hoped for improvements.

The book is a collection of essays and interviews. The middle sags but the material near the beginning and the end of the volume is first rate.