The Practice of Management is a classic book on management, written by Peter Drucker in 1954. The book which offers the fundamentals of modern management practices received wide readership since its initial publication and is still widely sought until today. Drucker combined works of experience as a management consultant for small and large business in developing the key principles in his book. The author’s critical skills and remarkable ability to write is apparent in this literature, despite being written over 60 years ago, it remains to appeal to business people, educators and students who are interested to gain more knowledge on the fundamentals of management practice. The book is informative as it was excellently written, it focused on the customer as the main reason of running the business, market research, management by objectives and the corporate social responsibility of companies. Nevertheless, there are elements that the author failed to consider and this may be attributed to the fact that the book was written during the 1950s, under a different business atmosphere.
The Customer
Drucker described the importance of the customer as one of the key points or main driving force that keeps the business going. Many business people would agree with this claim; that is, while other factors such as business environment, economic settings and resources are important, the satisfaction of the customer is paramount. The role played by the customer according to Drucker can be summarized in his statement that “there is only one valid definition of business purpose: to create a customer.” (Drucker, 1954). With the goal of delivering value to the customer, the author further elaborated on the need of the business to adapt the fundamental function of marketing and innovation, which are concepts that have been adapted by many businesses until today. In fact, many business organizations were able to survive the threat of economic downturns by adopting new marketing and innovation strategies.
The two functions of business as Drucker suggested are marketing and innovation. He claimed that a business is distinct from other human organizations because of its inherent nature of marketing products or services. Further, he stated that: “Any organization in which marketing is either absent or incidental is not a business and should never be run as if it were one” (Drucker, 1954).
What the author failed to mention in this book, however, is the need to greatly consider the impact of human resources and how they are important in creating customer satisfaction. Moreover, when Drucker suggested how the customer has the final say on what determines a business, any business person today may find the statement to be true. However, the changed environment setting today requires that businesses do not wait on the customer. In order to keep the customer interested, the business must find ways to keep him so. In Drucker’s statement “it is the customer who determines what a business is”, and this presumes that there is already an existing customer base. What the statement failed to consider is that the fast changing times demands that businesses should be flexible and pro-active in securing new customers. These are some of the factors that proved to be important in the fast changing business environment.
Market Research
In line with Drucker’s definition of business purpose which is to create a customer, he presented the two functions of any business enterprise. This is relevant in almost any business setting, but in the current times, it is most applicable for companies that offer technological products because of the complex and competitive environment of these types of businesses. The complex, dynamic and fast changing environment of high-tech products implies the demand for sophisticated strategies in marketing. The inability of these businesses to comply with such demand may lead to slow growth or even failure of operation. As a result, technology firms are continually faced with diverse challenges because of the goal of ascertaining that the company’s technological innovations have cutting-edge features and are designed to cater to the needs of the customer. This boils down to the core functions of business as pointed by Drucker, that is, putting utmost importance to marketing and innovation. A remarkable thing about Drucker’s work is that many of he was able to conceptualize the idea of marketing, customer orientation and innovation long before large companies of his time started to do so. People who read his work would say that he was 50 years ahead of his time as demonstrated by his reference to innovative marketing which largely cater to high technology.
Management by Objectives
As a book that cater to the need of business managers, the Management Practice also discusses the fundamentals of managing enterprises. According to Drucker, management should be viewed beyond the concept of being a profession, rather, it must be viewed as a practice and managed by objectives. This means that there are objectives that has to be attained, and this could be done by planning and implementing amidst the existing business limitations. According to Drucker, there are eight main areas by which to set the objectives and performance of the organization: These are market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude and public responsibility (Drucker, 1954). The book chapters on The Nature of Management and The Role of Management discussed how the objectives of the organization can be attained by translating them to the employees and stimulate their participation towards the realization of those objectives. Drucker introduced the decentralization of management where he cited the concept of organizational spirit where he claimed that good organization has the ability to encourage “common men do uncommon things” (Drucker, 1954). He further suggested that good leadership is vital in raising the performance of people to a higher level.
When Drucker introduced the concept of management by objectives, he also promoted the need of the management and the employees to agree to work towards a common objective, and that each member fully understand their role to achieve it. The brilliance of Drucker’s management by objective is that the manager sets the objectives, but his role does not stop there. The manager must recognize that it is his responsibility to motivate and communicate with the employees. In the Integrated Nature of Management, he cited three jobs of management: managing a business, the managers and the workers and the work. Eventually, in the process of managing, the top manager is able to communicate and motivate the employees leading to the development of people (Drucker, 1954).
While the management by objective is most applicable in today’s business environment, there are elements that were not considered by the author. This may be attributed to the fact that business during the 1950s have not yet reached fast changing business setting such as what we have today. When Drucker mentioned the eight areas by which to set the business objectives, there is no mention of the need for flexibility and adaptability which are crucial in today’s businesses. Consequently, when the author mentioned about the great opportunity in distribution, he must have in mind the use of media such as print ads, radio and television, while in today’s setting, it is the internet and social media.
Drucker’s Corporate Social Responsibility
In this book, Drucker affirmed his belief on the corporate social responsibility of business management. While CSR was a new concept during the 1950s, Drucker made it a point that his management and marketing principles includes the identification of business social responsibilities. He wrote about the need for management to examine “the impact of every business policy and business action upon society” (Drucker, 1954). He explained that business leaders should evaluate the impact of an action, whether it helps in the promotion of public good, the advancement of fundamental beliefs or, on whether it supports the contribution of stability and strength in the community. It is to be noted that CSR became prevalent only during the turn of the 21st century. The fact that Drucker wrote about it 50 years ago revealed the insights and intuitive ability of the author.
Reference
Drucker, P. (1954) The Practice of Management. Harper and Brothers. New York
