By Chet Yarbrough
By Peter Drucker
Narrated by Mark Blum
Peter F. Drucker is a storied business management consultant (most famously as a consultant for General Motors) that taught business administration and sociology at Claremont Graduate University in California. He died at the age of 95 in 2005.
Drucker’s management insight reverses the power structure of profit and non-profit enterprises; i.e. management down changes to management up with organization leaders determining direction but employees (knowledge workers) controlling productivity and effectiveness.
“Management Challenges for the 21st Century”, written in 1999, capsulizes Drucker’s view of the world and his management beliefs. He notes that for the first time in recorded history post-industrial nations are demographically becoming older rather than younger. American, Chinese, Russian, Japanese, Indian, and most European countries’ birth rates are lower than their death rates; there are more people nearing retirement than entering the work force (excepting countries with higher immigration rates that offset low birth rates). This demographic change profoundly affects the future of modern economies.
Some of Drucker’s presumed affects from this historic demographic change are as follows: (1)Retirement age will increase from age 65 to 75. (2)Revenue from discretionary spending rather than revenue from gross sales are a more accurate measure of growth industries. Businesses will change their accounting to monitor increases in discretionary expenditures to know how they are doing. (3)Organizations will treat employees like non-profits treat volunteers by respecting employee abilities and placing them where they can be most productive.
The rise of the knowledge worker and the fall of manual labor changes the way managers manage. Successful organizations will increasingly value employees as investments (assets) as they recognize the real cost of employee turnover. Good managers will continue to be leaders but employee jobs will be based on organization objectives (rather than job descriptions) that can be met by employee placement in jobs that require their specific skills and/or strengths. Successful organizations will invest in employees by putting them in positions that capitalize on what they are good at or can be trained to be good at. With job placement that utilizes employee’ strengths, successful managers will enable rather than direct employee performance. The manager’s role is one of defining organizational objectives, measuring productivity, and changing organization structure based on empowered employee roles.
Education is a critical component of Drucker’s philosophy of management but his approach contradicts the present direction of educational reform that focuses on teacher accountability for educating students in the fundamentals of reading, writing, and arithmetic. Drucker promotes a Montessori like approach to education. Drucker believes in structuring education based on student interest rather than set curriculums. He lauds the growth of community colleges that focus on what students want to learn rather than what others think they should learn.
Peter Drucker has been an insightful sociologist and guru of American free enterprise. Managers that choose to follow his recommendations increase their odds for success in life as well as organization management.