Tag Archives: Practice of Management

80 – The Practice of Management (Drucker, 1993)


Drucker, Peter F.
“The Practice of Management”
Harper and Brothers, New York, 1993
(Introduction, Parts 1,2, 5, Conclusion)

Topic: Comprehensive theory of the management tasks and responsibilities

Summary and citations:

• The first definition of management is therefore that it is an economic organ, indeed the specifically economic organ of an industrial society – p8
• Management is a practice, rather than a science or a profession, though containing elements of both. – p10
• Managing is not passive, adaptative behavior; it means taking action to make the desired results come to pass. – 11
• To manage a business means, therefore, to manage by objectives – p12
• Second function is therefore to make a prodctive enterprise out of humna and material resources. P 12
• It must be a genuine whole: a greater than –or at least different from- the sum of its parts with its output larger than the sum of all inputs. – p12
• The final function of management is to manage workers and work – p14
• Time dimension of management: has to live always in both present and future p 15
• The popular belief that the new technology will replace human labor by robots is utterly false – p21
• A business enterprise is created and managed by people. It is not managed by “forces”. P34
• Profitaibility is not the purpose of business enterpise and business activity, but a limiting factor on it. – p35
• There is only one valid definition of business purpose : to create a customer – p37. It is the customer who determines what a business is. P 37. Because it is its prpose to create a customer, any business enterprise has two –and only these two- basic functions: marketing and innovation. They are the entrepreneurial functions. – p37
• Innovation goes right through all phases of business – p40
• Innovation can no more be considered a separate function than marketing – p40
• Productivity means the balance between all factords of production that will give the greatest output for the smallest effort – p41
• First duty is to survive (p46), not maximizatino of profits but avoidance of loss (p47), creative rather than adaptative task (p47)
• What is business is not determined by the producer but by the consumer. – p50
• Business must be managed by setting objectives for it. – p60
• Developments may change objectives. This is one reason why all objectives have to be reexamined continually –p61
• Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity fo the business. P63
• There are eight areas in which objectives of performance and results have to be set: market standing, innovation, productivity; physical and financial resources; profitability; manager performance and development; worker performance and attitude; public responsibility. – p63
• 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. – p64
• There are three basic systems of industrial production known to us so far: unique-product production, mass production (old style and new style) and process production. – p96
• New-style mass production: It does not rest on uniform products. It rests on uniform parts which can then be mass-assembled into a large variety of different products. – p100
• Management must therefore develop new markets for any new products as well as maintinaa steady market for the old – p105
• Managers are the basic resource of the business enterprise and its scarcest … Are the most expensive resource in most business – p111
• Upward relations are properly a manager’s first concern. – p112
• Henry Ford’s misrule was a systematic, deliberate and conscious attempt to run the billion-dollar business without managers. – 114
• The first requirement in managing managers is management by objectives and self-control. ***– 119 – may legitimately be called a “philosophy” of management (p136)
• Story of the stone-cutters: p 122
• Emphasis should be on teamwork and team results. These objectives shold always derive from the goals of the business enterprise. – ‘126
• This requires each manager to develop and set the objectives of his unit himself – p129
• One of the major contributions of managemnent by objectives is that it enables us to substitute management by self-control for management by domination. – p131
• Authority…derives from knowledge rather than from rank – 138
• The span of control, we are told, cannot exceed six or eight subordinates – p139
• A team does not normally make a good superior manager – p140
• Every manager has the task of contributing what his superior’s unit needs to attain its objectives. This is indeed his first duty…. He has secondly a duty towards the enterprise…Finally, the manager has responsabilities downard, to his subordinate managers – p142
• The vision of a manager should always be upward –toward the enterprise as a whole. But his responsibility runs downward as well– p143
• It is performance, not conformance – p145 (constant improvement, neutralizae weaknesses of its members)
• The focus must be on strengh – p145 (not weaknesses)
• The danger of safe mediocrity: nobody learns except by making mistakes The better a man is the more mistakes will he make –for the more new things he will try. – p147
• Promotion decisions are what I call “life-and-death” decisions for managers.- p155
• Lack of character and integrity, …destroys people..spirit…performance – p158
• Leadership: making common men into uncommon men – p158 – but leadership cannot be created or promoted. It cannot be taught or learned.. But management cannot create leaders – p159. Leadership requires basic aptitude… but also requires basic attitudes.
• The chief-executive team alone can adequately solve the problem of succesion.- p169
• The much publicized divorce of ownership from control which makes it absurd that the business enterprise be directed by the representatives of the share-holders – p179
• The Board must also be detached from operations.- p181
• Sudden emergence of manager development as a major concern – p183
• No one can develop himself unless he works on the development of others – p189
• A manager has two specific tasks: 1) creating a true whole that is larger than the sum of its parts; 2) harmonize in every decision and action the requirements of immediate and long-range future. – p342
• 5 basic operations: 1) sets objectives; 2) organizes; 3) motivates and communicates; 4) job of measurement; 5) develops people p343-344
• 5 phases of decision making : definig the problem, analyzing the problem, developing alterante solutinos, deciding uupon the best solution, converting the decision into effective action.– p353
• It must create customers and markets by conscious and systematic work. Above all, it must focus continuously on creating mass purchasing power and mass purchasing habits. – p371
• 7 new tasks of the manager – p373
• The tasks must be simplified. … to convert into system and method what has been done before by hunch and intuitino… a logical and cohesive pattern. – p374
• … is neither education nor skill; it is integrity of character – p 378
• Private enterprises is an organ of society and serves a social function – p381
• The public responsibility of management must therefore underlie all its behavior (ethics of management) – p383
• The first responsibility to society is to operate at a profit, and only slightly less important is the necessity for growth. – p386
• The company is not and must be never claim to be home, family, religion, life or fate for the individual. It must never interfere in his private life or his citizenship. He is tied to a company through a voluntary and cancellable employment contract. – p387
• Business has the responsibility to make its best contribution to the defensive strength of its country. – 388

Personal comments, interesting issues and findings:

• One man show: Drucker writes about all aspects: strategy, functions, marketing, innovation, structure, competition (recalls Porter in p53), goals for each area, productivity, “instrument panel” (Balanced Scorecard?), production, two-way communication within the company, reports and procedures, authoritym, rank of control, constant improvement, compensation and reward, develop managers,…
• Drucker puts the manager as the one creating value for society and as the most important element in the company. Sees the manager as one person (the isolation of the CEO) in the whole the book, except when he talks of management teams. That shocked me.
• Interesting: the Ford story (p116). Strategy (on strong command) precedes structure (Centralisation) and it failed. “The greatest change perhaps –certainly the most visible- is in organization structure” p117. Confirms Chandler “structure follows strategy”
• Drucker has several first duties or tasks for the manager. Sometimes it seems as the last element is more important than the previous.
• Contrasting what MBA’s are told in BS, Drucker says that leadership can’t be taught.
• Drucker emphasizes the importance of integrity, which is the base for CSR.
• Conclusion is very pro-capitalism and pro-America.