Peter Drucker' Rules of Management: The Best that Drucker ever said or wrote

On October 25, 2016 By thesuccessmanual Topic: Remarkable, Book summary, Quotes, Mba

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Peter Ferdinand Drucker (November 19, 1909–November 11, 2005) was an Austrian author of management-related literature.

Often called the world's most influential business guru, the ‘guru of gurus’, and whose thinking transformed corporate management in the latter half of the 20th Century, Peter Drucker is credited with introducing the concept of knowledge economy and also made famous the terms knowledge worker and management by objectives.

This chapter is a summary of Drucker’ s book, “Management” and other works of the great man.

1. They ask “what needs to be done?”
2. They ask “What’s right for the enterprise?”
3. They develop action plans.
4. They took responsibility for decisions.
5. They took responsibility for communicating.
6. They were focused on opportunities rather than problems.
7. They ran productive meetings.
8. They thought and said “we” rather than “I”.

The first two practices give you the knowledge you need.
The next four help you convert this knowledge into effective action.
The last two ensure that the whole organization feels responsible and accountable.

I am more an "insultant" than a consultant... I scold people for a fee.
- Peter Drucker

1. The better a man is, the more mistakes will he make--for the more new things he will try. I would never promote a man into a top level job who had not made mistakes, and big ones at that. Otherwise he is sure to be mediocre.

2. Keep the boss aware. Bosses, after all, are held responsible by their own bosses for the performance of their subordinates. They must be able to say: "I know what Anne [or John] is trying to do."

3. Thirty years from now the big university campuses will be relics. Universities won't survive. It's as large a change as when we first got the printed book. Do you realize that the cost of higher education has risen as fast as the cost of health care? And for the middle-class family, college education for their children is as much of a necessity as is medical care—without it the kids have no future. Such totally uncontrollable expenditures, without any visible improvement in either the content or the quality of education, means that the system is rapidly becoming untenable. Higher education is in deep crisis.”

4. Companies have three responsibilities: 1) make a profit, 2) satisfy employees, and 3) be socially responsible.

5. The Senior management should not be compensated more than twenty times the lowest paid employees.

6. Make everything as simple as possible.

7. Management by objectives works if you first think through your objectives. Ninety percent of the time you haven't.

8. Leadership is lifting a person's vision to higher sights, the raising of a person's performance to a higher standard.

9. Marketing is a fashionable term.

The sales manager becomes a marketing vice president. But a gravedigger is still a gravedigger even when it is called a mortician - only the price of the burial goes up.

Communication has to start with the recipient of the message rather than the emitter. Downward communication does not work. It is impossible for it to work. As a boss, the manager is not supposed to tell the worker what to do. His job is to enable him to perform well. To do this, the manager has to keep trying to force information and directions down the pipe. Instead, get the sub-ordinate to initiate some upward communication - about the job. Find out how the subordinate sees the job. Let him talk about the objectives.

It is necessary that the manager and the subordinate establish a basis for exchange-the objectives towards which the subordinate makes a contribution. To get some real communication started, sit down and talk face to face with the subordinate -to establish the objectives. Ask him what he wants to do.

Make a log of your time; the method you use is not important, but make a record. You must realize that your time is not your own. The manager’s time belongs to everyone else. Analyze the time log to spot the obvious time-wasters.

Every executive needs to be able to dispose of his time in reasonably big chunks. It is pointless to approach a task that should take 8-10 hours by giving it small bits of time. Here, much time is wasted on reorienting and retooling oneself.

To spend a few minutes with people is not productive. By and large, to have much an impact in an important conversation, you must give yourself an hour. The manager is, to a considerable extent, at the beck and call of others. So, he must pack all necessary ‘operating’ work - informational meetings, phone calls, routine reports - into, say, two days a week instead of having them strung through the calendar. Cram vital discretionary time together until you have at least a full day of it; and then see if you can’t sometimes work at home on that day, away from the ‘drop-in’, the trivial phone calls, and the temptations to ‘ just take care of one or two little things’ before getting down to serious work.

Just figure out what others can do and have them do it. It is that simple.

Handling of time in brief
Consolidate it. Eliminate some activities. Be conscious of wasting the time of subordinates. Look for tell-tale signs of time-eating organizational foul-ups- recurrent crises, conflicts, too many meetings.

What was supposed to happen? What was the purpose of the meeting? Did you expect a report? Decisions? Answers? Was the idea to make it clearer to everybody what each was doing?

A Meeting takes time and effort, not only the manager’s but everyone else’s. The purpose should be thought out and spelled out before the meeting is called. The manager who calls the meeting should state, at the outset, the specific purpose and contribution it is to achieve. Obviously, to state the purpose, he must know the purpose.

You can either direct a meeting and listen for the important things being said, or you can be part of the meeting and talk whenever you want. You cannot do both. To think you can is to diminish your effectiveness in either capacity. But the important thing is to focus the meeting on ‘contribution’ right from the beginning.

The most important thing to remember is that if the relationship is not productively work-focused- if it doesn’t produce results and accomplishments for all concerned - then all the warm feelings and pleasant words in the world are meaningless, they are phony.

The best leaders in the world inspired loyalty, devotion, and sometime, true affection. They don’t worry about ‘human relations’- they take them for granted.

A lot of managers feel they must establish ‘rapport’ first and then work will go on easier and better. That is the wrong end to start at. Instead, you must sit down and figure out what you can contribute to the subordinate to make him more effective on the job- and what he can contribute to you in the same way. Make this discussion job-oriented.

The manager must try to do something that will enable the subordinate to make a greater contribution.

How does he justify his salary? Answering that you run so and so department, that you have so many people working under you is the wrong answer. That is a description of the situation under which you are placed. It says nothing about what you do, or why the company should pay you money. In this case, you are focusing on your authority, and the man who focuses on authority will always be a subordinate, no matter what title he carries.

Instead, the manager must focus on commitment and contribution. The manager who has the people-focus will answer, “ I am responsible for opening new and profitable markets, or, I have to give the CEO the information he needs to make the right decisions.”

The manager must not become the prisoner of his own narrow background and narrow skills.

The idea of contribution requires that he can relate what he does, and what his particular operation does, to the entire organization and its purpose.

Every move, every plan, every policy should have its rationale within that broader framework. If your general frame of mind is attuned to the importance of contribution, you will automatically fit actions into the larger framework. For the successful manager, it becomes second nature.

Your organization, like every other organization, needs to obtain results today and to develop people for tomorrow. No mortal can contribute 100%. But you can look for the area in which your contributions can be increased.

Workers are paid to perform, not to please managers.
When faced with talent, the manager’s job is to ask, as in other cases, “ What does he contribute? not “ How does he get along with me and others?”

The manager must have performance, not a team.
‘He is not a team player’ is a pathetic excuse. The manager’s job is to get the most out of the talent.

The whole point of an organization is that you can maximize one man’s strengths and compensate for his weaknesses someplace else. The people should be different, not all the same.

If you go looking for someone to fit a job, it may take you forever, depending upon how detailed the description is.
The effective manager starts with what a person can do rather than what a job requires. In interviewing a lot of people you are giving yourself a wonderful opportunity to look for strengths. But you are wasting the opportunity by blinding yourself to the strengths of the applicants and simply running a comparison test, seeing if any of them fit into the outlines of the job. You say the job should be easier to fill because you have made it small. It is utterly wasteful of human resources to make jobs small.

Don’t think of yourself as ‘ having a job to fill’. You need some more strength in the organization. Look for strength. Concentrate on what someone can do., not what the job description says. And when you find strength, bring it in; even if you have to change job requirements.

A job should be big and demanding, not reduced to bite-sized bits.

A decision is rarely a choice between right and wrong.

At best it is a choice between ‘probably right’ and ‘probably wrong’- but usually it is simply a matter of picking among several courses of actions, none of them any better than the other.

It is not correct to say that decision-making starts with facts. You do not start with facts; you can’t. You don’t even know what facts are, not relevant facts, because you have no yardsticks for relevance.

To arrive at decisions, you start with opinions. Start by forming an opinion. Ask people, not for facts, but what they think. At least you will begin to get a sense of what they feel the decision is about. You don’t know if these opinions are worth anything. But you insist that the people you ask join you in spelling out what needs to be tested, so that a reasonable test of the opinion can be made..

Next, collect alternatives.
Alternatives come with dissent- so the manager must encourage it. A cardinal rule in decision-making is that you don’t make a decision until there is disagreement. If everyone agrees, you can’t tell what the decision is about. Maybe there is no decision to be made at all. So get disagreement. To figure out an alternative, don’t immediately ask ‘who is right’ and ‘who’s wrong’. You are likely to give yourself the better of the bargain on too many occasions. Admit that the other fellow has some intelligence. Find about the reality that he sees. It may be closer to the truth than the reality you see. After that, you choose a course of action.

But, before putting into execution, pause a moment. Ask yourself if it is necessary to make a decision at all. You always have the option of doing nothing.

Decisions are entire of themselves. They have to be executed. Only when you have thought over everything, go ahead and execute your decision.

Never forget- decision-making is all about taking risks.
You cannot eliminate risks. It is futile. The bigger your job, the greater the risks you should be taking.

The idea is not to try to eliminate risks, but to take right risks.

Drucker says we all need a conceptual understanding of information.
About computers- the manager should first ask, does this gadget enable me to spend less time controlling, and more time on the important things?

The computer should enable the people in the organization to do more of what they are getting paid for doing.

Drucker believes the manager must master the mundane. Apply the computer to the lowly clerical things. Then get started on building an information system.

Drucker says,
if you are unhappy with your present job (workload, job insecurity), get another job.

He also tells about the ‘Widow- maker job’- a job which has defeated two good men in a row. The company must restructure such jobs.

The manager must face up to the fact that Middle-age crisis indeed exists. He must act - talk things with his wife to define their marriage contract; make a formal effort to find and cultivate new friends; with a particular emphasis on developing companionship; and he should become involved in “some on-going activity of social value which has enduring purpose”.

In his business life, the executive should be exercising a different kind of leadership and dealing with different organizational problems. Ideally, he will become a resource for others in the organization. Organizations should build programs that minimize stress and get the most out of ageing human resources.
Lastly, get a new skill, a new hobby and you may stimulate your mind further by getting an additional alternative specialty - like, if you are a banker, start teaching high school students in the evening.

To Summarize Drucker
1. Consolidate time.
2. Concentrate on contributions, your own and others.
3. Focus on strengths instead of weaknesses.
4. In making decisions, start with opinions, get dissent, pick the alternatives that seems best.
5. Don’t be afraid of risks.
6. And remember, the important man is the manager of today. He must know his craft; and he must be able to function.

-nAdapted from 'Drucker : The Man Who Invented the Corporate Society' by John J. Tarrant

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