Management Challenges for the 21st Centuryby Peter F. Drucker – A Review

© Walter J. Geldart

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Some Insight from this article :

Management’s New Paradigm
The Seven Old Assumptions of Management

There is a critical difference between a natural science and a social discipline, according to Drucker. The physical universe displays natural laws that describe objective reality. Natural laws are constrained by what can be observed, and these laws tend to be stable or change only slowly and incrementally over time. “A natural science deals with the behavior of OBJECTS. But a social discipline such as management deals with the behavior of PEOPLE and HUMAN INSTITUTIONS. The social universe has no ‘natural laws’ of this kind. It is thus subject to continuous change; and this means that assumptions that were valid yesterday can become invalid and, indeed, totally misleading in no time at all.” ² Drucker identifies the following old assumptions for the social discipline of management. ³

Three Old Assumptions for the Discipline of Management

1. Management is Business Management
2. There is – or there must be – ONE right organization structure.
3. There is – or there must be – ONE right way to manage people.

Four Old Assumptions for the Practice of Management

4. Technologies, markets and end-users are given.
5. Management’s scope is legally defined.
6. Management is internally focused.
7. The economy as defined by national boundaries is the “ecology” of enterprise and management.

According to Drucker, six out of seven assumptions (2, 3, 4, 5, 6, and 7) were close enough to reality to be useful until the early 1980s. However, all are now hopelessly outdated – “they are now so far removed from actual reality that they are becoming obstacles to the Theory and even more serious obstacles to the Practice of Management. Indeed, reality is fast becoming the very opposite of what these assumptions claim it to be.” ⁴

 The Eight New Management Assumptions

Drucker identifies the following new assumptions for the social discipline of management. ⁸

1. Management is NOT only for profit-making businesses. Management is the specific and distinguishing organ of any and all organizations.

2. There is NOT only one right organization. The right organization is the organization that fits the task.

3. There is NOT one right way to manage people. One does not “manage” people. The task is to lead people. And the goal is to make productive the specific strengths and knowledge of each individual.

4. Technologies and End-Users are NOT fixed and given. Increasingly, neither technology nor end-use is a foundation of management policy. They are limitations. The foundations have to be customer values and customer decisions on the distribution of their disposable income. It is with those that management policy and management strategy increasingly will have to start.

5. Management’s scope is NOT only legally defined. The new assumption on which management, both as a discipline and as a practice, will increasingly have to base itself is that the scope of management is not legal. It has to be operational. It has to embrace the entire process. It has to be focused on results and performance across the entire economic chain.

6. Management’s scope is NOT only politically defined. National boundaries are important primarily as restraints. The practice of management – and by no means for business only – will increasingly have to be defined operationally rather than politically.

7. The Inside is NOT the only Management domain. The results of any institution exist ONLY on the outside. Management exits for the sake of the institution’s results. It has to start with the intended results and organize the resources of the institution to attain these results. It is the organ that renders the institution, whether business, church, university, hospital or a battered woman’s shelter, capable of producing results outside of itself.

8. Management’s concern and management’s responsibility are everything that affects the performance of the institution and its results – whether inside or outside, whether under the institution’s control or totally beyond it.

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