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One of our leading thinkers on the practice and study of management, Drucker has sought out, identified, and examined the most important issues confronting managers, from corporate strategy to management style to social change. Through his unique lens, this volume gives us the rare opportunity to trace the evolution of the great shifts in our workplaces, and to understand more clearly the role of managers in the ongoing effort to balance change with continuity.
Now, these important articles and essays are strategically presented here to address two unifying themes: the first examines "The Manager's Responsibilities" while the second investigates "The Executive's World". Accompanied by an interview with Peter Drucker on "The Post-Capitalist Executive", as well as a thought-provoking preface by Peter Drucker himself, a complete picture of management theory and practice emerges, both as it was and as it will be.
Infused with a perspective that holds new relevance today, these essays represent Drucker at his best: direct, wise and challenging. Peter Drucker on the Profession of Management, sure to be studied, debated, and enjoyed by everyone concerned with management, everyone concerned with management, is a timely offering from one of the most respected and prolific authors to appear in the Harvard Business Review.
At 90, Peter Drucker is, by all accounts, the most enduring management thinker of our time. Born in Vienna, educated in Austria and England, he has worked since 1937 in the United States, first as an economist for a group of British banks and insurance companies, and later as a management consultant to several leading companies. Drucker has since had a distinguished career as a teacher, including more than twenty years as Professor of Management at the Graduate Business School of New York University. Since 1971 he has been Marie Rankin Clarke Professor of Social Science and Management at the Peter F. Drucker Graduate School of Management, Claremont Graduate University in California, where he still teaches in the fields of management and business policy. He is the founder of The Peter F. Drucker Foundation for Nonprofit Management, and has counseled numerous governments, public service institutions, and major corporations.
Drucker is a writer, teacher, and consultant with a long-term business perspective second to none. His twenty-nine previous books have been published in more than twenty languages and span sixty years of modern history beginning with The End of Economic Man (1939) and Managing in a Time of Great Change; Management: Tasks, Responsibilities, Practices; Innovation and Entrepreneurship; The Effective Executive; Managing for Results and The Practice of Management. Nan Stone is the editor of the Harvard Business Review.
Reviewed by Azlan Adnan, Managing Partner of Azlan & Koh Knowledge and Professional Management Group, an education and management consulting practice based in Kota Kinabalu. Azlan has a MA in International Business and Management from the University of Westminster.
The theory of business is what Drucker, defines as "what a company gets paid for." Drucker states when big companies get in trouble they blame "complacency, arrogance, mammoth bureacracies", as a plausible explanations. However, the problem's root causes are rarely identified and the prevously stated explanations are rarely right. Most companies fail, to perform well, at what they get paid for.
Drucker defines the parts of the business environment, as: environment (society and its structure and the market), mission (customer ), (core competencies) and technology. Why is this important? The assumptions about environment, mission, and core competencies must fit together. Drucker drives home the point by contrasting the sucess of non-profit organizations with profit organizations, stating we can learn from the success of non-profit organizations, namely: well define mission, lack of deep management hierarchy, individual responsiblity, a deep understand of individual roles and purposes, and cohension between expectations and results. Secondly, the theory of business must be known and understood through out the business. Drucker stresses the importance of learning from the non-customer. And Lastly, the theory of business must be tested constantly.
The Effective Decision process involves the follow sequence of steps: 1. Classify the problem 2. Define the problem 3. Specify the answer to the problem 4. Decide what is right rather than what is acceptable 5. Build into the decision the action to carry it out 6. and test the validity and effectiviness of the decision against the actual course of events. This is an high level sketch outlining a model for effective decision.
Drucker provides two methods, to help make, people decisions. The two creative approaches are: determine if the right people has right qualifications, perceptions, and talents; and make sure the individual understands the job. The first approaches advocates careful selection of the individual, by determining, how well the candidate fits the job assignment. The second approach measures the new manager's understanding of the job. The process requests, the new manager to write on paper, what they think will make them sucessful, in their job. Senior management reads the paper to determine, if the manager has grasped an understanding, of the job, and revalidates their decison about the individual being the right person, for the job.
The discipline of innovation encourages managers to separate the reasons for successful management, into two groups: systematic and non-systematic innovation. Both systematic and Non-systematic opportunies exist within an company or industry because of unexpected occurences, incongruties, process needs, and industry and market changes. Systematic innovation begins by analyizing the sources of opportunity. Innovation is perceptual and conceptual by definition and innovators must go out look, ask, and listen. Effective innovations start small. Small Innovations can lead to large implementations. Without innovation the company will go out of business. Innovation keeps a company competitive in the market and capable of meeting customer needs.
Technology has created a great diversity of information. In order for a manager, to be effective, managers need to identify the information they need to effective perform their jobs.
The world is moving to a society of organizations. Companies are moving to global economies of scale. People interact with various organizations to achieve results. Because of this new organization theory, outsourcing is preferred when no direct management hierarchy exists to a Vice President. Outsourcing provides high skill specialist, management, and senior management. Companies are achieving better results organizationally by outsourcing business process where possible.
Management is responsible for creating the knowledge worker. Historically, significant increasing in productivity were the result of a management core build established. Management is responsible for building the skilled worker. Organizations are made up of individuals, who have a high degree of technical skill and knowledge. Information must be convert into knowledge and manager's communication ability dictates the level of effectiviness in using the skilled worker's knowledge. Organizations represent a network of specialists, rather than a strong command and control heirarchy. However, technology of itself does not increase productivity.
How do managers increase productivity? Managers increase productive by helping the knowledge worker to work smarter - not harder. Management creates the knowledge worker by empower them with specialized skills and knowledge. Productivity gaps are closed through training. Management must decide who gets trained. Training the right people increase the worker's capability, compensation, and productivity. Performance can only be achieved by the worker working smarter not harder. Only ten percent of the work is effectively and producing ninety percent of the productivity and profit. Thus, over ninety percent of the work is ineffective. It is management's responsibility to reduce this inefficiency. Drucker will later introduce his activity oriented decision model to help managers reduce the amount of inefficiency.
Managers are responsible for creating and maintaining their carreer path. Receiving a higher education degree and employment, in a large company does not guarentee retirement, with the company. Managers are responsible for designing and maintaining their career. Fragmentation of purpose and thought must be overcome to reduce confusion and losses. Knowledge workers must learn how to produce. This requires the knowledge work to remain current, with changes, in the business environment. Their contribution in large part depends on the knowledge workers ability to adapt and learn smarter ways to produce.
Activity Oriented Decision model prevents loses and failures. Activity Oriented decisions combine value analysis, risk analysis, quality analysis, and process analysis, into one. Decisions resulting from managers who follow the activity oriented decision model don't risk losing capital. The combination of the various information sources, associated with the activity oriented decision helps the manager understand the potential value of the venture, the potential value, the risks of failure, and the cost of modifying or implement new processes, and the long term affects on quality in the organization.
The activity oriented decision model is a conceptually definition and the practical discipline proposed exciting possiblities. Activies are analyzed, defined, and sequenced. Resources are allocated to the activity. The activity outcomes are measured to determine, if they are meeting requirements. Managers weight the risks by asking "what are the benefits of the activity?","What are the fallout impacts for failure to implement the activity?", and "what are the impacts to the organization long term by implementing the activity?"
Analysis of the process, results in time and budget allocation estimates. Schedules provide time lines and sequences linked to a resources. Managers must coordination various organizations to gain access to a resource. A resource represents a individual in a specialize field of knowledge. Communication and coordination are necessary to effectively manage various resources, so each individual understands, what is expected and what to produce. Budgets and time provide the boundary of the activity problem. Its possible to have a budget or schedule which exceeds the boundary of the problem, making the activity unfeasible. To avoid this problem, the manager must provide clear objectives to be developed and maintained. The objectives scope must stay within a predefined problem boundary.
In the preface Drucker shows why he has become so famous. He shows his strength of recognising trends and how these trends will affect business, people, and society. This preface is followed by a short introduction from the editor.
The book consists of two Parts, The Manager's Responsibilities and The Executive's World, with each consisting of 6 Harvard Business Review-articles (out of 32 articles and growing). The book also includes an interesting preface, an introduction by Harvard Business Review-editor Nan Stone, and an interview with Peter Drucker.
In Part I - The Manager's Responsibilities, the articles discuss the managerial responsibilities of the manager, although Drucker prefers the term "executive". The articles discuss general management such as the decision-making process, effective management, strategic management, and innovation.
Part II - The Executive's World, Drucker discusses the history of management, the transformation from the traditional command-and-control model to knowledge-based organizations, information technology, and non-profit management.
The book concludes with an interview with Peter Drucker, which is based on his 1995-book 'Post-Capitalist Society'.
The book deserves the five-star rating since each article is fantastic. Perhaps some of them overlap, but it is amazing that some of the articles written in the 1960s are still very valid today. Drucker's writing style is simple US-English.