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The Essential Drucker (3)

The Essential Drucker (3)

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SUMMARIES.COM
is a concentrated business information service. Every week, subscribers are e-mailed aconcise summary of a different business book. Each summary is about 8 pages long and contains thestripped-down essential ideas from the entire book in a time-saving format. By investing less than one hourper week in these summaries, subscribers gain a working knowledge of the top business titles. Subscriptionsare available on a monthly or yearly basis. Further information is available at http://www.summaries.com.
T
HE
E
SSENTIAL
D
RUCKER
The Best of Sixty YearsWritings on Management
PETER DRUCKER
PETER DRUCKER
is the world’s most widely read and influential business writer. He published his first bookin 1937 and continues to publish today, with his work being translated into more than twenty languages. Dr.Drucker earned a doctorate in public and international law and has worked as a newspaper reporter, aneconomist, a teacher, an editorial columnist for the
Wall Street Journal 
, a professor of management at theGraduate Business School of New York University and as professor of social science at Claremont GraduateSchool in California. Peter Drucker has published more than 17 management books, an autobiography, twonovels, several volumes of essays and is a frequent contributor to magazines and journals.
 
The Essential Drucker - Page 1
MAIN IDEA
While it is impossible to say with any degree of certainty what the future will be like, it is already possible to discern its most importantfeatures and key challenges:• Markets will be global with information free to flow anywhere without hindrance or restriction.• The center of power will rest squarely with consumers because they have access to so much information.• The importance of manufacturing to the overall economy will continue to fall.• The social complexion of the new economy will be different as knowledge workers become the most dominant group.• The key management challenges of the future will be tackled by individuals, not by governments.In all, the best way to face the future is to have an understanding of the tools which are available and the skills to manage them well.Drucker on Management ................................................Pages 2 - 5Drucker on the Individual................................................Pages 5 - 7Drucker on Society......................................................Page 8The key challenges for new business ventures.12The true role of management by objectives.119Challenging the basic assumptions about business.The social responsibilities of a business.8What the nonprofits teach about management.76The three key dimensions of management.The kind of information managers really need.105Good management serves a social function and is art.Drucker on ManagementGetting people decisions right is a management task.12All businesses should have an entrepreneurial mind-set.3Businesses have one purpose: to create customers.The four key entrepreneurial strategies.44Effective people focus intensively on their contribution.Business effectiveness can and must be learned.3The true nature of leadership in business.21The true nature of business communication.Drucker on the IndividualKnow and understand both your strengths and values.510The educated person.The key principles of effective time management.67A system for making effective decisions.8The key principles of innovation.The challenge of the second half of life.9Drucker on SocietyThe emergence of the knowledge society.12The coming of the entrepreneurial society.3The new concept of citizenship.The new world view.4
 
“Executives spend more time on managing people and making people decisions than on anything else, and they should. No other decisions are so long-lasting in their consequences or so difficult to unmake. Executives who do not make the effort to get their people decisions right do more than risk poor performance.They risk their organization’s respect.” 
 –Peter DruckerTo make more effective promotional and staffing decisions,managers should:1.
Think through the assignment 
– and realize the requirementswill evolve over time. Therefore, choose the right person forthe future, not the past.2.
Look at a large number of potential applicants 
– at a veryminimum at least three to five qualified people.3.
Look for strengths, not weaknesses 
 – since you cannot buildfuture performance on weaknesses.4.
Discuss with each candidate the people who have worked with them 
– to see whether or not they have the ability to buildfuture leaders and managers.5.
Take the time to explain the job fully and follow-up three or four months later 
 – since the things a person does to get the job will be entirely different to what they need to be doingonce they’ve been in the role for three months or longer.
“The all but universal belief that large businesses do not and cannot innovate is not even a half-truth; rather it is a misunderstanding. It is not size that is an impediment to entrepreneurship and innovation: it is the existing operation itself, and especially the existing successful operation.Entrepreneurship and innovation can be achieved by any business. But they must be constantly striven for. They can be learned, but it requires effort. Entrepreneurial businesses treat entrepreneurship as a duty. They are disciplined about it...they work at it...they practice it.” 
 –Peter DruckerBusiness managers can create an entrepreneurial climate by:1.
Allowing new businesses to be organized separately from the existing 
– providing focus and attention.2.
Assigning someone in top management to champion new businesses 
– to avoid them being ignored.3.
Keeping the financial analysis distinct 
– removing the usualreturn-on-investment analysis which will apply to existingbusiness lines.4.
Having separate management teams 
– since innovation willnever be a high priority for anyone charged with running andoptimizing an existing business operation.5.
Avoiding acquiring small entrepreneurial ventures 
– sincethe existing management will rarely stay on.6.
Looking for innovations in the same field as the existing business 
– to take advantage of the existing competencies,know-how and expertise. Smart businesses innovate infields they already understand.
“Asked what a business is, the typical businessman is likely to answer, ‘An organization to make a profit.’ The typical economist is likely to give the same answer. This answer is not only false, it is irrelevant. To know what a business is, we have to start with its purpose. Its purpose must lie outside the business itself. In fact,it must lie in society since business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. And because its purpose is to create a customer, the business enterprise has two – and only these two – basic functions: marketing and innovation.” 
 –Peter DruckerTo be successful in creating customers, a business needs to setobjectives in eight key areas:1.
Marketing 
– where the business will concentrate its effortsand its desired market share and positioning.2.
Innovation 
– essentially where the business should be interms of new products or services, marketplace innovation oracquiring new skills to bring different products to market.3.
Human resources 
– what kind of people the business wantsto attract and retain.4.
Financial resources 
– what kind of business proposal isrequired to attract, structure and retain the capital needed.5.
Physical resources 
– the anticipated needs of the business inorder for it to succeed in creating customers.6.
Productivity 
 – how land, labor and capital will be used bycomparison with other units of the same business or peers.7.
Social responsibility 
– creating the perception in society atlarge and the economy that the business is doing somethingnecessary, useful and productive.8.
Profit requirements 
– projecting a needed minimum level ofprofitability which will address the risks and effort involved inkeeping the business in operation.
“Profit planning is necessary. But it is planning for a needed minimum profitability rather than for that meaningless shibboleth ‘profit maximization’. The minimum needed may well turn out tbe a good deal higher than the profit goals of many companies,let alone their actual profit results.” 
 –Peter Drucker
The Essential Drucker - Page
1Getting people decisions right.
Management
4The four key entrepreneurial strategies.Businesses have one purpose: to create customers.3All businesses should have an entrepreneurial mind-set.21Getting people decisions right is a management task.Drucker on ManagementGood management serves a social function and is art.510The kind of information managers really need.The three key dimensions of management.67What the nonprofits teach about management.8The social responsibilities of a business.Challenging the basic assumptions about business.911The true role of management by objectives.12The key challenges for new business ventures.
Management
The entrepreneurial business mind-set.2
Management
Businesses exist to create customers.3

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