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In his 1999 book, Management Challenges for the 21st Century, Peter Drucker explored the assumptions that pertain to the study of management. They are important, he wrote, because they “largely determine what the discipline assumes to be REALITY.” Now, almost 20 years after Drucker wrote these words, it is worthwhile to consider how well the assumptions he mentions still hold up today.
To begin, Drucker notes that since the study of management first began in the 1930s, two sets of assumptions held sway among most scholars, writers, and practitioners regarding the REALITIES of management. The first set concerns the DISCIPLINE of management:
1. Management is Business Management.
2. There is – or there must be – ONE right organization structure.
3. There is – or there must be – ONE right way to manage people (command & control).
The second set concerns the PRACTICE of management:
1. Technologies, markets and end-users are given.
2. Management’s scope is legally defined.
3. Management is internally focused.
4. Management’s scope is defined by political boundaries.
Drucker believed that every one of the above assumptions had been replaced by 1999 (when he was writing), as follows:
For the DISCIPLINE of management:
1. Management is the specific and distinguishing organ of any and all organizations.
2. The best structure for an organization is one that fits the task to be accomplished.
3. One does not manage people. The task is to lead people. The goal is to make productive the specific strengths and knowledge of each individual.
For the PRACTICE of management:
1. Neither technology nor end-user can be taken as given, they are limitations. The foundations are customer values and customer decisions regarding their disposable income.
2. Management scope is not legally defined, but rather operationally defined (embracing the entire process). It is focused on results and performance across the entire economic chain.
3. Results of any institution exist only on the outside. Management exists for the sake of the institution’s results. It has to start with the intended results and has to organize the resources of the institution to attain these results. It is the organ to make the institution, whether business, church, university, hospital or a batter women’s shelter, capable of producing results outside of itself.
4. National boundaries are important primarily as restraints. The practice of management – and by no means for businesses only – will increasingly have to be defined operationally rather than politically.
Now, almost 20-years on from Drucker’s writings, I would submit that the following updates (in italics) could be made to his list based on Management by Positive Organizational Effectiveness (advocated in this podcast):
For the DISCIPLINE of management:
1. Management is the distinguishing organ of any and all organizations in the business, government and nonprofit sectors (i.e., throughout the economy). It is also required when several organizations cooperate to tackle specific problems in society to support the common good.
2. The best structure for an organization is the one that is most effective in serving its chosen environment.
3. One does not manage people. The task is to lead people. The goal is to make productive the specific strengths and knowledge of each individual (and to make the specific weaknesses of each individual irrelevant).
For the PRACTICE of management:
1. Neither technology nor end-user can be taken as given, they are limitations. The foundations are customer values, customer decisions, and customer behaviors surrounding the use of their disposable income.
2. Management scope is not legally defined, but rather operationally defined (embracing the entire process). It is focused on results, performance, and effectiveness across the entire economic chain.
3. Results of any institution exist only on the outside. Management exists for the sake of the institution’s results. It has to start with a portfolio of expected external outcomes to be generated by its offerings and has to organize the resources of the institution to attain these results. It is the organ to make the institution, whether business, government, or nonprofit, capable of achieving results outside of itself.
4. National boundaries are important primarily as restraints. The practice of management – and by no means for businesses only – will increasingly have to be defined operationally rather than politically.
What we have tried to do today is to revisit some of Drucker’s wisdom from about 20 years ago to see how it fairs today. In general, it has held up well, but some new ideas have come on the scene, and further updates may be warranted.
Charles G. Chandler, Ph.D.
email: [email protected]
References:
1. Drucker P. F. 1999. Management Challenges for the 21st Century. HarperCollins: New York, NY.
2. Chandler, C.G. 2017. Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness. Author Academy Elite: Powell, OH.
