the essential drucker 2010 v2
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Drucker is called as the father of Modern Management, MBO.TRANSCRIPT
The Essential Druckerpresenting the
1The book 2Key Insights
Who is Peter Drucker?• known as the- Father of Modern
Management• Important contributions – – MBO– Concept of Knowledge Worker– Marketing oriented organization
• Contributed regularly to – Harvard Business Review– The Economist– Wall Street Journal
• Fans and Followers include Jack Welch (GE), Andy Grove (Intel)
(1909 - 2005) 25 honorary doctorates 39 books Presidential Medal of Freedom Presidential Citation, NYU 7 McKinsey Awards from HBR
The book
Society
Individual
Management
1The Management
What is management?
• Enabling people to perform• Set the culture• Training & development• Measure performance of self and
the organization• Result is always outside (no
perpetual motion machines )
Dimensions of management
• Economic performance and improve /maintain wealth producing capability of the organization
• Work and worker productive• Social responsibilities
Purpose of business
• Marketing and innovation• What is our business and what
should it be?• Objectives should be– Operational– Selective– Multiple– Should cover areas of survival
InvestorsInnovation
Clients
MarketingProfit
RequirementFinancial
Resources
Employees
Human Resources
Physical resources
SocietySocial
responsibiiityProductivity
• Market standing regardless of sales
• New markets• New products and services in
existing markets• Optimum market standing as
the goal• Product
Innovation• Social innovation• Managerial
innovation• Productivity and
improvement of productivity should be a key focus
Lessons from non-profits• Starts with their customers• Zeal to accomplish mission• Effectiveness of boards – CEO and
board as colleagues• Meaningful achievement• Transformation from non-profit
volunteer to non-paid professional
New Paradigms –Searching for the holy grail– One right org structure– One right way to manage people
Per Drucker -The organization that fits the taskManage for resultsFlat hierarchy
New paradigms• Practice of management –
assumptions– Technology and end use are fixed and
given• Technologies mesh and can impact any
industry• i.e. the definition “electronics company” is a
limitation rather than foundation
– Management’s scope is legally defined.• Economically linked keiretsu
Information• Yield control instead of cost control• Activity based accounting• Price lead costing• Total factor productivity– Economic value added– Benchmarking
ROI / Payback period/Cash flow / Discounted present value
Outsourcing and consulting of information
Why MBO• Un-spelt objectives causes misdirection• Management by drives• MBO– Organizational goals spelt out clearly– Departmental /bu goals are arrived from
org goals– Mgr / individual goals are arrived from
BU/Org goals– Tools like manager’s letter– Self control rather than control from above
Forms and reports
• Should Focus on performance• Should Focus on self monitoring• Control & controlling the
irrelevant should be avoided
Staffing & Promotion
• Manager to be blamed for putting a wrong person in a spot
• Soldier has a right to competent command
• People decisions impact the performance capacity of an organization
• New people in established slots
Staffing & PromotionThink through the
assignment
Evaluate potentially qualified
candidates
Identify Evaluation parameters
Get Peer feedback
Set and clarify performance expectations
• Widow maker • People decisions – as a tool of control– as a tool for organizational culture– as strategy
Staffing & Promotion
The entrepreneurial business
• Special handling for new innovative ventures– Separate new businesses from
established ones– Provide executive cover– Build the desire to innovate in the
organization rather than trying to acquire it
2The Individual
• Effectiveness • Contribution• Know thyself• Time• Effective Decisions• Functioning communications• Leadership as work• Principles of Innovation• The second half-life• The Educated person
Effectiveness
• Operations research and the efficiency of the chef’s kitchen
• Effectiveness - Doing the right thing• Effectiveness is a habit and could be
practiced
Contribution
• Results– Direct results– Building of values and reaffirmation– Building and developing people of
tomorrow• Making the result effective
Know thyself
• Personal strengths should match assignment
• More than that personal values should match with the assignment
Time
• 80-20 – where should I contribute • What could be delegated• -- the recurrent fire fighting• Overstaffing – mal-organization• Consolidating discretionary time
Characteristics of an entrepreneur– Decisive– Decisive even with insufficient data– Decisive even when mistake prone– Decisive but learns from mistakes
even when mistake prone– Tradition counts only when it makes
sense– Owns the result
Effective decisions
• Right and the wrong compromise – baby and the loaf
• Translation to work• Generic problem or exceptional
problem• Start with what is right and make
your compromises• Do not hedge
Leadership as work
Think through org’s missionDefine and establish it clearly…. and
visiblyLeadership as Responsibility and not as
rank or privilegeHold ultimate responsibility for
subordinates actionsPromote / praise / groom subordinatesEarn trust= be an effective manager
Innovation• Dos• Analyze opportunities
– Unexpected success or failures– Incongruity in customer behavior
• Positioning• Keep it simple to make it effective• Aim at leadership
• Donts• Too clever• Innovate for the present
• Innovators are opportunity focused and successful ones become one by defining and containing the risks
3The Society
Organizing principles of Production
Manual=>900 ADChina
MechanicalOccident and Byzantine
Informational
Transformation of society
Family centered trades
Professional training
Knowledge /information based society
Services
Manufactured Products
Primary Products
Manufactured Products
Primary Products
Primary Products
• Some blurred distinction between Socialism! Humanism! And Druckerism– Universal rights and responsibility– Flat structures– Ownership of the means of livelihood
and production– Need of the commune to be
productive
Challenging the statusquo• Welfare state is past --?? Scenario post
2009• Mega state vs. non-profit social sector• Mega state vs. youtube / twitter /
facebook• Learning & constant relearning ->
outliving obsolescence• Drucker hedging ?! his bets ??– Government will NOT become less
pervasive, less powerful, less expensive but will depend more on individuals / organizations to be effective
• From chimney monkeys to the era of Rugmark and beyond– Time – Affluence– Move from subsistence production
to services
So called evils of modernity – is it just widespread reporting of it? And change in our sensibilities?
Key Insights
Purpose of Business• Purpose of the business is to
satisfy the needs of its customers
• Some of the questions an organization need to ask frequently are – Who is our customer?– What should our business be?– Planned abandonment -“If we did
not do this already, would we go into it now?”
The Purpose of a business is to create a
customer
The best way to predict the future is to create it.
Role of Management• Everything that affects the
performance of the organization is a concern for the management and its responsibility.
• Traditional models perceive the role of management is internal which is a fallacy
On Marketing
• Market standing is important irrespective of increase in sales
• Market standing to aim for should be optimum and not maximum
• Technology and End-use are limitations. Customer value and customer decisions to dispose their disposable incomes should be the focus for management
The aim of marketing is to know and understand the
customer so well the product or service fits
him and sells itself.
5 bad habits of organizations
• Not Invented Here• Creaming a market• Quality as perceived by self• Illusion of a premium price• Maximize rather than optimize
Until a business returns a profit that
is greater than its cost of capital, it does not create
wealth — it destroys it.
Effective Decision Making
Effective Decision Making
Making good decisions is a crucial skill at every level.
Organization as a human community
• One does not manage people. They should lead the people.
• Values are and should be the ultimate test..
• Knowledge workers are dependent on the organizations to make their work productive.
• Organizations also take over some of the aspects of a commune as knowledge workers interact, bond and flock together.
Rank does not confer
privilege or give power.
It imposes responsibility.
Management by Objectives
SpecificMeasurableAchievableRealisticTimely• SMART goals should be derived
from corporate vision and should be set for individuals, teams and departments.
• Manage for Results
Management by objective works - if you know the
objectives.
Corporate Vision
Mission Statement
Strategic Objectives
Management by objective works - if you know the
objectives.
Jointly Plan Individually Act
Jointly control
Managers
Team Members
Management by Objectives
Effectiveness vs efficiency
• Processes and procedures typically help in increasing efficiency but only when the right things are done results are achieved.
Efficiency is doing things right; effectiveness
is doing the right things.
Knowledge workers
• Knowledge workers own the tools of their trade.
• Knowledge society allows upward mobility.What is measured
improves
Communications• Communication is perception• Communication is expectation• Communication makes demands• Communication and information
are different and mostly opposite – yet inter-dependent
• The onus of making himself/herself understood is on the specialist.
The important thing in
communication is to hear what is’nt
being said