on 21 July 2006
The late Peter F. Drucker is the most influential management thinker of the 20th Century. This book was first published in 1955 and consists of five parts plus a proper introduction and conclusion. Drucker, in the Preface, explains that the first aim of this book "is to narrow the gap between what can be done and what is being done, between the leaders in management and the average".
The Introduction - The Nature of Management - consists of three chapters. Within the first chapter Drucker explains that "the manager is the dynamic, life-giving element in every business" and that management "is the organ of society specifically charged with making resources productive, that is, with the responsibility for organized economic advance." In the second chapter Drucker explains that "management is the least known and the least understood of our institutions" and discusses the three functions of management: managing a business, managing managers, and to manage workers and work. The third chapter states that management faces its first test of its competence and its hardest task in the then imminent industrial revolution called `automation'. Drucker does explain that automation is not `technical', but primarily a system of concepts, a concept of the organization of work.
The first of six chapters within Part I - Managing a Business - uses the Sears, Roebuck & Company as an illustration of what business is and what managing it means. Based upon this illustration, Drucker concludes in Chapter 5 that "there is only one valid definition of business: to create a customer. ... It is the customer who determines what a business is." Chapter 6 introduces Drucker's most famous question: "What is our business - and what should it be?" This does look relatively simple, but it is not simple to answer and the author provides guidance. In the next chapter the objectives of a business are discussed: "Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business." Chapter 8 discusses the tools that management needs to take make decisions today for the result of tomorrow. But no matter how sound the business economics, how careful the analysis, how good the tools, managing a business always comes back to the human element. This is the subject of Chapter 9, which deals with the principles of production.
The first of the six chapters within Part II - Managing Managers - uses automobile company Ford to explain that the "fundamental problem or order, structure, motivation and leadership in the business enterprise have to be solved in the managing of managers." But he also warns that managers are its scarcest resource. Drucker also introduces the major requirements of managing managers, which are detailed in the next five chapters.
The first of the three chapters within Part III - The Structure of Management - discusses the issue of organization structure. The next chapter is concerned with building the structure. Chapter 18 deals with the small, the large and the growing business, which Drucker breaks down into four stages of business size (small, fair-sized, large, very large business). He discusses the problems and potential solutions for each.
The six chapters within Part IV - The Management of Worker and Work - discuss the human elements of business. Drucker uses IBM as an example to show basic problems in managing worker and work, and some of the principles for their solution. He also emphasizes that the management of worker and work is a complex subject. Within Chapter 20 he discusses the worker as a resource, the demands of the enterprise on the worker, the worker's demands on the enterprise, and the economic dimension. The next chapter explains that although personnel management is not bankrupt ("but certainly insolvent") the relationship between a man and the kind of work he does is known due to the Human-Relations school. Chapter 22 details human organization for peak performance or in Drucker's words "the engineering of the individual job for maximum efficiency." The fourth chapter in this section discusses the economic relationship between enterprise and worker. This is followed by chapters on the first-line supervisor and on the professional employee (who is neither management nor labor).
The title of the final part - What It Means to be a Manager - gives away the subject for the three chapters. Drucker believes that a manager has two specific tasks: "The manager has the task of creating a true whole that is larger than the sum of its parts, a productive entity that turns out more than the sum of the resources put into it. ...This task requires the manager to bring out and make effective whatever strength there is in his resources - and above all in the human resources - and neutralize whatever there is of weakness." This requires the manager to balance and harmonize the three major functions of the business enterprise: managing a business, managing managers, and managing worker and work. Chapter 28 deals with decision making. The five phases in decision-making are discussed. The final chapter discusses the manager of tomorrow. Based upon the new demands required, the manager of tomorrow has to acquit himself of seven new tasks.
The book is concluded with a proper conclusion on the responsibilities of management. "... the business enterprise must be so managed as to make the public good become the private good of the enterprise. ...To make certain that this assertion does not remain lip service but becomes hard fact is the most important, the ultimate responsibility of management: to itself, to the enterprise, to our heritage, to our society and to our way of life."
What can one say about a masterpiece like this? Books by Peter Drucker always deserve five stars since they are eye-openers to most of us, but this one is exceptional and possibly the best I have read by him. Highly recommended to anybody involved with management or working within business enterprise, it provides great insights for employees through to chief executive.