Camille Cristina Reyes and Theresa Soriano
Peter F. Drucker: The Godfather of Modern Management
There’s nothing permanent in this world. Everything changes fast. Time can change things drastically. In Peter Drucker’s book, “Managing in Time of Great Change”, he emphasized on the changing environment that we live in. The book talked about the management, information-based organization, economy, and society. The book encapsulates the emergence of information as executive’s key resource and as the organization’s skeleton.
Drucker ‘s Theory of Business refers to the assumptions that shape any organization’s behaviour, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. They are about market—customers, competitors, their values and behaviours together with a company’s strengths and weaknesses. These assumptions are what a company gets paid for. Also, a valid theory of business has an environment, mission and core competencies that fit reality and fitted to one another. The theory of business must be known and understood throughout the organization and it has to be tested constantly.
According to Drucker, uncertainty can become an opportunity. With strength analysis and matching of company’s strengths to the changes that have been made, unexpected things in a business will turn to an advantage. Don’t be afraid to respond to every opportunity encountered.
One of the highlights of this book is 5 deadly sins of business. These must be avoided in order to protect a business.
1. The worship of high profit margins and “premium pricing”
-This opens the doors for competitors.
2. Mispricing a new product by charging “what the market will bear”
3. Cost-driven pricing
-The only thing that works is price driving.
4. Slaughtering tomorrow’s opportunity on the altar of yesterday.
5. Feeding problems and starving the opportunities.
–Only opportunities produce results and growth.
There’s no excuse for managers to indulge in the five deadly sins. They are temptations that must be resisted. One solution is to start with what the market is willing to pay.
“Family serves the business, not business is run to serve the family”. Business cannot be mixed with family. As a solution to problems like when there is an incompetent family member in the organization/ company, is to entrust the succession decision to an outsider who is neither part of the family nor the business. Hire a competent non-family member employee rather than saving cost for a lazy family member employee. This is true and we suppose is one of the values that gave the Chinese people a success in their economic status today.
Drucker also mentioned about the six rules of presidents. A president is committed to the people and the law so he must not stubbornly do what he wants to do. He must have a mindset on the needs of the people. A leader like a president should not micromanage thus making sure that operations are done appropriately. He also shouldn’t have a friend in the organization that may tend to abuse their position and power. Power as a president should be used responsibly.
In his book, he also talked about the economy’s power shift. He reiterated that what underlies the shift is information. Analyzing information from a simple action done by the customer to a data that will help the company improve their service. Through the real-time information handled by a company or an organization, decision-making power of the people will also be tested. Another implication of the power shift is that companies today tend to organize themselves internally around the flow of information; we now call it today as ‘re-engineering’. Companies today found that they did not need many good management levels. The biggest implication is that, according to Drucker, the economy is changing structure. This change is from being an organized company around the flow of things and the flow of money; it is becoming organized around the flow of information.
Since, changing time is the main focus of the book, it also described how new markets are. Economic growth and expansion today is not focused on the consumer demands anymore, rather they seek for accessible new markets such as communication and information, environmental market, need of repair, replenish and upgrade physical infrastructure and investment to finance survival into old age. Marketing relationships should be taken care of, customer rather than own product.
In time when there is a need to change, the author believes every manager has to build the management of change into its very structure. Every organization has to prepare for the abandonment of everything it does. Every organization should plan abandonment rather than trying to prolong the life of a successful product. There should be self improvement. Another thing is that, they should learn how to exploit their knowledge to develop the next generation, and they should learn how to innovate. The author mentioned that “Knowledge is the primary source of individuals and for the economy overall”. A specialized knowledge can only become productive if it will be integrated to a task. Only a focused and common mission will hold the organization together and enable it to produce. Without a mission, credibility will be lost. The organization’s most essential resource are the qualified knowledge people and the greatest asset are people.
Each organization has a value system that is determined by task. He explains that for the organization to perform to a high standard, its members must believe that what it is doing is in the contribution to community and society on which all others depend. Therefore, members must believe on what they are doing in order to have a high standard performance.
Work for the organization, not for the boss. Business growth will be attained if there is ownership meaning a company must know their strengths so that they can market themselves, and partnership, which entails working with people.
“Goods, no matter how greedily desired, change consumption; information changes imagination. Goods change how we live; information how we dream. Goods change how we see the world; information changes how we see ourselves”. Change should be seen as a good choice in making a difference.
1. If you will be a manager, how will you handle your team? What characteristics of a leader that you will see to it that you possess?
2. As a leader, how will you deal with our changing environment?
3. Considering that you are a nurse, supposed that you will be inheriting a big family business, will you accept it? How will you run it?