Peter Drucker in 3 minutes… all you need to know…

Posted on February 3, 2007
Filed Under Economics/Business education |

Drucker is the author of thirty-nine books, which have been translated into more than twenty languages. Two of his books are novels, one an autobiography. No time to read his books? No problem… we have summarized his main ideas…

On Management

“… the fundamental task of management [is] to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change…”

“… [management’s] task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant. That is what organization is all about, and it is the reason that management is the critical, determining factor…”

On People

“… organizing work according to its own logic is only the first step. The second and far more difficult one is making work suitable for human beings — and their logic is radically different from the logic of work. Making the worker achieve implies consideration of the human being as an organism having peculiar physiological and psychological properties, abilities, and limitations, and a distinct mode of action.”

“The first sign of decline of an industry is loss of appeal to qualified, able, and ambitious people.”

On Results

“… the single most important thing to remember about any enterprise is that results exist only on the outside… inside an enterprise there are only costs.”

“Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity… the root of the confusion is the mistaken belief that the motive of a person — the so-called profit motive of the businessman — is an explanation of his behavior or his guide to right action. Whether there is such a thing as a profit motive at all is highly doubtful. The idea was invented by the classical economists to explain the economic reality that their theory of static equilibrium could not explain”

On Markets

“… the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

“The market standing to aim at is not the maximum but the optimum… the dominant supplier in a rapidly expanding, especially a new, market is likely to do less well than if it shared that market with one or two other major and competing suppliers… a new market, especially a new major market, tends to expand much more rapidly when there are several suppliers rather than only one… A new market that has only one supplier is likely to become static at 100. It will be limited by the imagination of one supplier who always knows what his product or service cannot or should not be used for. If there are several suppliers, they are likely to uncover and promote markets and end uses the single supplier never dreams of. And the market might grow rapidly to 250. Du Pont seems to have grasped this. In its most successful innovations, Du Pont retains a sole-supplier position only until the product has paid for the original investment. Then Du Pont licenses the innovation and launches competitors deliberately.”

On Risk

“Successful innovators are conservative. They have to be. They are not ‘risk-focused’; they are ‘opportunity-focused’… And defending yesterday – that is, not innovating – is far more risky than making tomorrow.”

On Wealth

“Enterprises are paid to create wealth, not to control costs.”

On Change

“Business — and every other organization today — has to be designed for change as the norm and to create change rather than react to it.”

On Customers

“[One large Catholic hospital chain’s] motto was if it’s in the patient’s interest, we have to promote it; it’s then our job to make it pay.”

On Results

“Knowledge work is not defined by quantity. Neither is knowledge work defined by its costs. Knowledge work is defined by its results.”

On People

“[People decisions] reveal how competent management is, what its values are, and whether it takes its job seriously.”

“Of all the decisions an executive makes, none is as important as the decisions about people because they determine the performance capacity of the organization.”

“Altogether, an increasing number of people who are full-time employees have to be managed as if they were volunteers. They are paid, to be sure. But knowledge workers have mobility. They can leave. They own their ‘means of product,’ which is their knowledge.”

“[The relationship between knowledge workers and their superiors] is far more like that between the conducter of an orchestra and the instrumentalist than it is like the traditional superior/subordinate relationship. The superior in an organization employing knowledge workers cannot, as a rule, do the work of the supposed subordinate any more than the conductor of an orchestra can play the tuba. In turn, the knowledge work is dependent on the superior to give direction and, above all, to define what the “score” is for the entire organization, that is, what are its standards and values, performance and results. And just as an orchestra can sabotage even the ablest conductor — and certainly even the most autocratic one — a knowledge organization can easily sabotage even the ablest, let alone the most autocratic superior.”

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Comments

One Response to “Peter Drucker in 3 minutes… all you need to know…”

  1. jerry on February 3rd, 2007 1:25 pm

    Your post was really useful… keep posting about economics… good luck!

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