Management assignment
This essay would demonstrate the great work done by the man who is known as ‘’the father of management” and ‘’the world’s greatest management thinker”, Peter Drucker. In this piece of work his major achievements towards management theory and practise would be discussed. His views on the areas of marketing, performance management, knowledge economy, managing change and post-industrialisation will also be highlighted. According to the business week ‘’he was guru’s guru, a sage, kibitzer, doyen, and gadfly of business”. (site1). On another occasion Peter Drucker was compared by the business week to Maynard Keynes and W.Edwards Derming who hold a very important place in the world of economics and quality respectively. We would reflect and emphasize on his different ideas and theories which he introduced for the first time in the field of management. These theories and ideas are still looked upon and followed by the business world and will always remain the foundation of management practises. Organizational management is a complex discipline and therefore requires a formal ‘tool kit’ to work effectively and efficiently. This was unavailable before the early 1950s’. However in late 1950s’ Drucker introduced revolutionary ideas for the world of management.
When in 1940s Drucker started to work for the subject it was at the middle of nowhere. Professional institutions didn’t give any respect to business schools and no such management-consulting businesses existed. After the great study, books on management and new theories by Drucker the scenario completely changed.
In the era of 1940s the concept of de-centralization was initiated by Drucker which is now used by every organization in the world. In the 50s he claimed that the workers should not be treated as a burden that has to be made redundant in the end. They are the assets of the company not a profit making machine and hence should be given respect and honour. In his book ‘’the practice of management” which was published in 1954 he introduced the new organization management method ‘’management by objectives” which he later discouraged to be used as he said ‘’management by objectives works if you know the objectives, 90% of the time you don’t” (site12). It was him again in 1950s only who informed the organizations that there purpose is to create customers. Robert Poole and Drucker later came up with the term privatization. By rationalizing the concept of modern management theory, Drucker emphasized a value-based system. He firmly argued that the value of substance is more than the value of style on the business world. He also reinforced the importance of working as an institution rather than each individual working with their own charismatic characters. The notion of knowledge workers was also highlighted by the guru himself where he mentioned that knowledge would be the key to New Economy.
Peter Drucker introduced the 7 main management tasks that need to be performed by the managers in order to attain the objectives of the organization. The first one is management by objectives (MBO). According to the economist ‘’MBO is one of the rational school of management’s successful products”.(site 3). The main principle is that everyone in the organization is aware of the aims and goals to be achieved and they know their roles and duties which need to be performed in order to achieve these aims and goals. MBO system makes sure that managers and the staff implement on their plans to accomplish the targets of the organization.
The second task suggests that company should take more risks over a long period of time. This is due to the turbulent and fast changing nature of today’s environment. There is more competition in the market and hence it is more difficult to survive so the company needs to take risks in regard to offering new product range or just innovating the same product through research and development.
The third task implies that managers should make strategic decisions. These are long term plans which affect the whole organization. These improve the implementation of the plan and make it easier to achieve the final outcome. Next task proposes that managers should build an integrated team made up of people who can monitor and control their own performance.
According to Drucker proper communication is a vital element and that is what his next task is about. The information should be communicated vividly and quickly by using the correct language and body language so that no message is interpreted. The sixth task advocates seeing a business as a whole and incorporating its functions. Every organization has marketing. Finance, human resource and operations department and it should be known that all are inter-connected and linked together. In other words ‘’silos” should be avoided. Lastly the product should relate to the industry and the society as a whole keeping in mind the P.E.S.T.E.L. factors (political, economical, socio-cultural, technological, environmental and legal).
Drucker saw management as the most important source for human progress. He quoted that it is ‘’the organ that converts a mob into an organization and human effort into performance”.(site1a). He was the first to assert that for any industry to work effectively and efficiently it has to have clear objectives and correct measurements. He also argued that organizations should not be looked upon as a source for economic data rather it should be treated as human organizations. In his book ‘The Practice of Management’ which was published in 1954, he mentioned all these important issues regarding management subject covering up chapters such as ‘the role of management’, ‘what is a business?’, ‘objectives of a business’, ‘managers must manage’, ‘the manager of tomorrow’ and many others. He mentioned that management is a profession and not a science nor an art. It is about getting the best out of people. He himself said ‘’I wrote the Practice of Management because there was no book on management. I had been working for 10 years consulting and teaching, and there simply was nothing or very little. So I kind of sat down and wrote it, very conscious of the fact that I was laying the foundations of a discipline”. (site1).
In this book he says that the managers play a vital role in transforming resources into production. The survival of the business is dependent on the performance of the managers as it is the only advantage a company has over others in a competitive market. He mentioned a very important point which we do not notice in our daily lives that is the ‘responsibilities of capital’ has now been replaced by the ‘responsibilities of management’. He argues that fallacy of ‘profit maximization’ is not the main purpose of business as misunderstood by many. The business is to create customers, who decide what is important. He highlights the eight main areas in which goals need to be set to attract the target market. Those areas include marketing, innovation, productivity, physical and financial resources, profitability, manager’s performance and development, worker’s performance and attitude, and public responsibility.
The modern management thinker played a major role in the marketing area giving theories about the marketing concept, broadened role of marketing in society, contributions to marketing strategy and marketing -innovation interface. As mentioned before the purpose of the business according to Drucker is to create customers because they are the ones who pay for the product and decide what they want and to satisfy them is the most important mission of each organization. The customers define the market better than manufacturers. According to this the two main functions of the enterprise are marketing and innovation. These two functions give results the rest are considered to be costs. Innovation is obviously risky and all economic activities are referred to as ‘high risk’ but not innovating is far more risky. As Gaurav Bhalla points out that customer, market creation and innovation are inter linked and what better phrase than ‘customer driven innovation’ can describe this relationship.(site6)
Peter drucker in his book ‘Innovation and Entrepreneurship’ published in 1985, talks about the principles of innovation. He says that analysis of opportunities is necessary for effective innovation. The business has to keep in mind that innovation is both conceptual and perceptual. Thirdly for an innovation to be purposeful it has to be simple and focused and should begin small. The most important part is that is should aim at leadership. The marketing strategies which are mentioned to create customers are utility creation, pricing, adaptation to customer’s social and economic reality and delivering what represents true value to the customer.