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drucker book report

The Essential Drucker – Management
The Essential Drucker was a slow read. First, some of his ideas seemed foreign. Then, Drucker
takes you step by step through the concept. Ending with an understanding that what Drucker
writes about, ‘The only profit center is a customer whose check has not bounced’ is basically
common sense. Drucker is a master at peeling back the layers on jargon popularized by other
management writers and adding the substance necessary to be of value to an organization.
Then he said something problematic on page 60, ‘No one in America has done very well in
training hard core unemployable black teenagers.’ One dubious statement did not prevent me
from completing the reading assignment.
Management cannot be based on what the company supplies or some new technology. Let us
say a group of engineers start a venture to sell their new widget to air travelers by supplying
them to retailers in all major airports. But the widgets sold only once at a retailer in an airport
near a professional football stadium. But the buyers were not air travelers. So, management
lowers the price instead of asking the one-time customers why they bought the widget. The
engineers wrote off the venture into widgets as a failure. Their arrogance would not allow
them to see beyond their original vision for the widget. Drucker states, ‘The starting point has
to be what customers consider value’ not the product.
Some entrepreneurs dislike unplanned uses for their product which breaks Drucker’s first
requirement for a new venture, focus on the market. ‘Organizing to take advantage of the
unexpected and unseen markets; if it is not totally market-focused, if not market-driven, then it
will succeed only in creating an opportunity for a competitor.’ Organizations must focus
outward to remain profitable. Many technologies are useful, more profitable, in industries
outside the industry where it was designed. Yet, management fails to look beyond what was
planned. Our widget engineers were so invested in the planned success of their great idea that
they ignored the minor sales blip near a sports stadium. The company that acquired the
widget business was paying attention to the market. Sports fans were buying the widgets for
use in stadium seating.
I worked on a team that developed and implemented a system of controls for operations. Our
team would conduct operational assessments of these self-audits. According to Drucker’s
management by self-control, our approach to reporting audit findings is demoralizing to
management. Audit results should go to the audited area manager not leadership. A manager
who is free to decide what to do is more motivated. ‘Impose control on managers from above.
. . . will inflict incalculable harm by demoralizing management, and by seriously lowering the
effectiveness of managers.’ Management should be driven to action by objective not
leadership directive.
In Section 5 Limits of Social Responsibility, Drucker refers to hard-core unemployable black
youths. I questioned whether the youths skin color was relevant. Is all other skin color hardcore teens employable? Maybe it is better to exclude such a statement, unless you have the
time and objectivity to deconstruct it.
Drucker references political questions, ‘Yet they underlie the most serious assault on
management in its history.’ My last employer had a team whose sole responsibility was
community relations. The company’s intranet promoted links for voter registration. The CEO
declined to meet with politicians whose platforms were not consistent with the company’s
stated policies. Some employees did not approve of the company’s involvement in politics.
Drucker mentioned the emergence of pension funds as majority shareholders in the section on
the Accountability of Management. I summarized a WSJ article that suggested a firm’s
attention to its leadership issues had more to do with losing pension fund assets under
management than addressing employee concerns.
According to Drucker, management must focus inside and outside. The customer, other
industries, noncustomers, and other markets are some of the outside concerns. Most
innovation comes from the unexpected or outside the industry. Management by self-control
rather than control from above motivates managers to strive to meet objectives. Management
success brings social and political accountability. But management cannot solve all social ills.
Drucker provides real life situations to demonstrate these concepts, failed and successful
managers. Ultimately, Drucker’s message is that there can never be too much forethought by