The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done

by Peter F. Drucker

Management is what tradition used to call a liberal art—“liberal” because it deals with the fundamentals of knowledge, self-knowledge, wisdom, and leadership; “art” because it deals with practice and application. Managers draw upon all of the knowledges and insights of the humanities and social sciences—on psychology and philosophy, on economics and history, on the physical sciences and ethics. But they have to focus this knowledge on effectiveness and results—

The more an institution is organized to be a change leader, the more it will need to establish continuity internally and externally, the more it will need to balance rapid change and continuity.

Balancing change and continuity requires continuous work on information. Nothing disrupts continuity and corrupts relationships more than poor or unreliable information. It has to become routine for any enterprise to ask at any change, even the most minor one: “Who needs to be informed of this?”

Finally, the balance between change and continuity has to be built into compensation, recognition, and rewards. We will have to learn, similarly, that an organization will have to reward continuity—for instance, by considering people who deliver continuing improvement to be as valuable to the organization, and as deserving of recognition and reward, as the genuine innovator.

the organization cannot submerge itself in the community or subordinate itself to that community. Its “culture” has to transcend community.

It is the nature of the task that determines the culture of an organization, rather than the community in which that task is being performed.

If an organization’s culture clashes with the values of its community, the organization’s culture will prevail—or else the organization will not be able to make its social contribution.

The only way in which an institution—whether a government, a university, a business, a labor union, an army—can maintain continuity is by building systematic, organized innovation into its very structure.

Freedom is not fun. It is not the same as individual happiness, nor is it security or peace or progress. It is a responsible choice. Freedom is not so much a right as a duty. Real freedom is not freedom from something; that would be license. It is freedom to choose between doing or not doing something, to act one way or another, to hold one belief or the opposite. It is not “fun” but the heaviest burden laid on man: to decide his own individual conduct as well as the conduct of society and to be responsible for both decisions.

Economic purpose does not mean that the corporation should be free from social obligations. On the contrary it should be so organized as to fulfill, automatically, its social obligations in the very act of seeking its own self-interest.

At the same time, the demand for harmony does not mean that society should abandon its needs and aims and its right to limit the exercise of economic power on the part of the corporation. On the contrary, it is a vital function of rulership to set the frame within which institutions and individuals act. But, society must be organized so that there is no temptation to enact, in the name of social stability or social beliefs, measures that are inimical to the survival and stability of its representative institutions.

Unless the members of the industrial system are given the social status and function that they lack today, our society will disintegrate. The masses will not revolt; they will sink into lethargy; they will flee the responsibility of freedom, which without social meaning is nothing but a threat and a burden. We have only two alternatives: either to build a functioning industrial society or to see freedom itself disappear in anarchy and tyranny.

A business is not defined by the company’s name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when she buys a product or a service. To satisfy the customer is the mission and purpose of every business. The question “What is our business?” can, therefore, be answered only by looking at the business from the outside, from the point of view of the customer and the market. What the customer sees, thinks, believes, and wants, at any given time, must be accepted by management as an objective fact and must be taken as seriously as the reports of the salesperson, the tests of the engineer, or the figures of the accountant. And management must make a conscious effort to get answers from the customer herself rather than attempt to read her mind.

One cannot manage change. One can only be ahead of it. In a period of upheavals, such as the one we are living in, change is the norm. To be sure, it is painful and risky, and above all it requires a great deal of very hard work. But unless it is seen as the task of the organization to lead change, the organization will not survive. In a period of rapid structural change, the only ones who survive are the change leaders. A change leader sees change as an opportunity. A change leader looks for change, knows how to find the right changes, and knows how to make them effective both outside the organization and inside it. To make the future is highly risky. It is less risky, however, than not to try to make it. A goodly proportion of those attempting to will surely not succeed. But predictably, no one else will.

The test of an innovation is whether it creates value. Innovation means the creation of new value and new satisfaction for the customer. A novelty only creates amusement.

The test of an innovation, as well as the test of “quality,” is not “Do we like it?” It is “Do customers want it and will they pay for it?”

Morality, to have any meaning at all, must not be exhortation, sermon, or good intentions. It must be practices. Specifically: The focus of the organization must be on performance. The first requirement of the spirit of performance is high performance standards, for the group as well as for each individual. The focus of the organization must be on opportunities rather than on problems. The decisions that affect people—their placement, pay, promotion, demotion, and severance—must express the values and beliefs of the organization. Finally, in its people decisions, management must demonstrate that it realizes that integrity is one absolute requirement of any manager, the one quality that he has to bring with him and cannot be expected to acquire later on.

The more the individual in an organization grows as a person, the more the organization can accomplish—this is the insight underlying all our attention to manager development and advanced manager education today. The more the organization grows in seriousness and integrity, objectives and competence, the more scope there is for the individual to grow and to develop as a person.

What would I look for in picking a leader of an institution? First, I would look at what the candidates have done, what their strengths are. You can only perform with strength—and what have they done with it? Second, I would look at the institution and ask: “What is the one immediate key challenge?” I would try to match the strength with the needs. Then I would look for integrity. A leader sets an example, especially a strong leader. He or she is somebody on whom people, especially younger people, in the organization model themselves. Many years ago I learned from a very wise old man, who was the head of a very large, worldwide organization. He was in his late seventies, famous for putting the right people into the right enterprises, all over the globe. I asked him: “What do you look for?” And he said: “I always ask myself, would I want one of my sons to work under that person? If he is successful, then young people will imitate him. Would I want my son to look like this?” This, I think, is the ultimate question.

The leader who basically focuses on himself or herself is going to mislead. The three most charismatic leaders in this century inflicted more suffering on the human race than almost any other trio in history: Hitler, Stalin, and Mao. What matters is not the leader’s charisma. For leadership is not magnetic personality—that can just as well be demagoguery. It is not “making friends and influencing people”—that is flattery. Leadership is the lifting of a man’s vision to higher sights, the raising of a man’s performance to a higher standard, the building of a man’s personality beyond its normal limitations. Nothing better prepares the ground for such leadership than a spirit of management that confirms in the day-to-day practices of the organization strict principles of conduct and responsibility, high standards of performance, and respect for the individual and his work.

In human affairs, the distance between the leaders and the average is a constant.

She therefore makes sure that she puts into the leadership position, into the standard-setting, the performance-making position, the person who has the strength to do the outstanding, the pacesetting job.

The task of an executive is not to change human beings. Rather, as the Bible tells us in the parable of the talents, the task is to multiply the performance capacity of the whole by putting to use whatever strength, whatever health, whatever aspiration there is in individuals.

The most successful leader of the twentieth century was Winston Churchill. But for twelve years, from 1928 to Dunkirk in 1940, he was totally on the sidelines, almost discredited—because there was no need for a Churchill. Things were routine or, at any rate, looked routine. When the catastrophe came, thank goodness he was available. Fortunately or unfortunately, the one predictable thing in any organization is the crisis. That always comes. That’s when you do depend on the leader. The most important task of an organization’s leader is to anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until crisis hits is abdication. One has to make the organization capable of anticipating the storm, weathering it, and in fact, being ahead of it. You cannot prevent a major catastrophe, but you can build an organization that is battle-ready, that has high morale, that knows how to behave, that trusts itself, and where people trust one another. In military training, the first rule is to instill soldiers with trust in their officers, because without trust they won’t fight.

Most organizations need somebody who can lead regardless of the weather. What matters is that he or she works on the basic competencies. As the first such basic competence, I would put the willingness, ability, and self-discipline to listen. Listening is not a skill; it is a discipline. Anybody can do it. All you have to do is to keep your mouth shut. The second essential competence is the willingness to communicate, to make yourself understood. That requires infinite patience. The next important competence is not to alibi. Say: “This doesn’t work as well as it should. Let’s take it back and reengineer it.” The last basic competence is the willingness to realize how unimportant you are compared to the task. Leaders subordinate themselves to the task. When effective leaders have the capacity to maintain their personality and individuality, even though they are totally dedicated, the task will go on after them. They also have a human existence outside of the task. Otherwise they do things for personal aggrandizement, in the belief that this furthers the cause. They become self-centered and vain. And above all, they become jealous. One of the great strengths of Winston Churchill was that Churchill, to the very end, pushed and furthered young politicians.

A very great leader of men, General George C. Marshall, chief of staff of the U.S. Army during World War II, had the most remarkable record of putting people into the right place at the right time. He appointed something like six hundred people to positions as general officer, division commander, and so on, almost without a dud. And not one of these people had ever commanded troops before. A discussion would come up, and Marshall’s aides would say, “Colonel So-and-So is the best trainer of people we have, but he has never gotten along with his boss. If he has to testify before Congress, he’ll be a disaster. He is so rude.” Marshall would then ask, “What is the assignment? To train a division? If he is first-rate as a trainer, put him in. The rest is my job.” As a result, he created the largest army the world had ever seen, thirteen million people, in the shortest possible time, with very few mistakes. The lesson is to focus on strengths.

General George C. Marshall followed Five Simple Decision Steps in making people decisions. First, Marshall carefully thought through the assignment. Job descriptions may last a long time, but job assignments change all the time. Second, Marshall always looked at several qualified people. Formal qualifications, such as those listed in a résumé, are no more than a starting point. Their absence disqualifies a candidate. However, the most important thing is that the person and the assignment fit each other. To find the best fit, you must consider at least three to five candidates. Third, Marshall studied the performance records of all three to five candidates to find what each did well. He looked for the candidate’s strengths. The things a person cannot do are of little importance; instead, you must concentrate on the things they can do and determine whether they are the right

strengths for this particular assignment. Performance can only be built on strengths. Fourth, Marshall discussed the candidates with others who had worked with them. The best information often comes through informal discussions with a candidate’s former bosses and colleagues. And fifth, once the decision was made, Marshall made sure the appointee understood the assignment. Perhaps the best way to do this is to ask the new person to carefully think over what they have to do to be a success, and then, ninety days into the job, have the person commit it to writing.

The succession to the top decision is the most difficult because every such decision is a gamble. The only test of performance in the top position is performance in the top position—and there is very little preparation for it. What not to do is fairly simple. You don’t want a carbon copy of the outgoing CEO. If the outgoing CEO says, “Joe [or Mary] is just like me thirty years ago,” that’s a carbon copy—and carbon copies are always weak. Be a little leery, too, of the faithful assistant who for eighteen years has been at the boss’s side anticipating his or her every wish, but has never made a decision alone. By and large, people who are willing and able to make decisions don’t stay in the assistant role very long. Stay away, too, from the anointed prince. Nine times out of ten that’s a person who has managed to avoid ever being put in a position where performance is essential, measured, and where he or she might make a mistake. They are media events rather than performers. What are the positive ways to handle the succession decision? Look at the assignment. In this institution, what is going to be the biggest challenge over the next few years? Then look at the people and their performance. Match the need against proven performance.

A business that does not show a profit at least equal to its cost of capital is irresponsible; it wastes society’s resources. Economic profit performance is the base without which business cannot discharge any other responsibilities, cannot be a good employer, a good citizen, a good neighbor. But economic performance is not the only responsibility of a business any more than educational performance is the only responsibility of a school or health care the only responsibility of a hospital. Every organization must assume responsibility for its impact on employees, the environment, customers, and whomever and whatever it touches. That is social responsibility. But we also know that society will increasingly look to major organizations, for-profit and nonprofit alike, to tackle major social ills. And there we had better be watchful, because good intentions are not always socially responsible. It is irresponsible for an organization to accept—let alone to pursue—responsibilities that would impede its capacity to perform its main task and mission or to act where it has no competence.

authority and responsibility must be congruent and commensurate to each other. If you don’t want authority and shouldn’t have it, don’t talk about responsibility. And if you don’t want responsibility and shouldn’t have it, don’t talk about authority.”

Authority without responsibility is illegitimate; but so is responsibility without authority. Both lead to tyranny.

every boom—and I have lived and worked through four or five—puts crooks in at the top.

so it goes after every boom. The only thing new is that the last boom considerably increased the temptation to fake the books—the exclusive emphasis on quarterly figures, the overemphasis on the stock price, the well-meant but idiotic belief that executives should have major financial stakes in the company, the stock options (which I have always considered an open

The fundamental axiom on which the Western tradition of ethics has always been based is: There is only one code of ethics, that of individual behavior, for prince and pauper, for rich and poor, for the mighty and the meek alike. Ethics, in the Judeo-Christian tradition, is the affirmation that all men and women are alike creatures—whether the Creator be called God, Nature, or Society. There is only one ethics, one set of rules of morality, one code, that of individual behavior in which the same rules apply to everyone alike. And this fundamental axiom business ethics denies. Business ethics, in other words, is not ethics at all, as the term has commonly been used by Western philosophers and Western theologians. Business ethics assumes that for some reason the ordinary rules of ethics do not apply to business. What is business ethics then?

Six major factors determine knowledge-worker productivity. Knowledge-worker productivity demands that we ask the question: “What is the task?” It demands that we impose the responsibility for their productivity on the individual knowledge workers themselves. Knowledge workers have to manage themselves. They have to have autonomy. Continuing innovation has to be part of the work, the task, and the responsibility of knowledge workers. Knowledge work requires continuous learning on the part of the knowledge worker, but equally continuous teaching on the part of the knowledge worker. Productivity of the knowledge worker is not—at least not primarily—a matter of the quantity of output. Quality is at least as important. Finally, knowledge-worker productivity requires that the knowledge worker be both seen and treated as an “asset” rather than a “cost.” It requires that knowledge workers want to work for the organization in preference to all other opportunities.

Work on knowledge-worker productivity therefore begins with asking the knowledge workers themselves: What is your task? What should it be? What should you be expected to contribute? and What hampers you in doing your task and should be eliminated? The how only comes after the what has been answered.

the next and crucial step in making the knowledge worker productive is to define what results are or should be in a particular knowledge worker’s task.

it is the point where the individual worker’s task and the mission of the organization converge and have to be harmonized.

What are results?” The traditional answer—“the bottom line”—is treacherous. Under a bottom-line philosophy, we cannot relate the short run to the long term, and yet the balance between the two is a crucial test of management. The beacons of productivity and innovation must be our guideposts. If we achieve profits at the cost of downgrading productivity or not innovating, they aren’t profits. We’re destroying capital. On the other hand, if we continue to improve productivity of all key resources and improve our innovative standing, we are going to be profitable. Not only today, but tomorrow.

When a company builds its organization around modern information technology, it must ask the questions: “Who requires what information, when and where?” And then those management positions and management layers whose duty it has been to report rather than to do can be scrapped.

The information-based system can, therefore, function only if each individual and each unit accepts responsibility: for their goals and their priorities, for their relationships, and for their communications. This in turn makes possible fast decisions and quick responses. These advantages will be obtained only if there are understanding, shared values, and, above all, mutual respect. If every player needs to know the score, there has to be a common language, a common core of unity.

people continue in their new assignment to do what made them successful in the old assignment and what earned them the promotion. Then they turn incompetent, not because they have become incompetent, but because they are doing the wrong things.

When I was thirteen I had an inspiring teacher of religion who one day went right through the class of boys asking each one, “What do you want to be remembered for?” None of us, of course, could give an answer. So, he chuckled and said, “I didn’t expect you to be able to answer it. But if you still can’t answer it by the time you’re fifty, you will have wasted your life.”

It is a question that induces you to renew yourself, because it pushes you to see yourself as a different person—the person you can become.

The person with the most responsibility for an individual’s development is the person himself—not the boss. The first priority for one’s own development is to strive for excellence. Workmanship counts, not just because it makes such a difference in the quality of the job done, but because it makes such a difference in the person doing the job. Expect the job to provide stimulus only if you work on your own self-renewal, only if you create the excitement, the challenge, the transformation that makes an old job enriching over and over again. The most effective road to self-renewal is to look for the unexpected success and run with it. The critical factor for success is accountability—holding yourself accountable. Everything else flows from that. The important thing is not that you have rank, but that you have responsibility. To be accountable, you must take the job seriously enough to recognize: I’ve got to grow up to the job. By focusing on accountability, people take a bigger view of themselves.

Attracting and holding knowledge workers have become two of the central tasks of people management. We already know what does not work: bribery.

knowledge workers need to be satisfied with their pay, because dissatisfaction with income and benefits is a powerful disincentive. The incentives, however, are different. Knowledge workers know they can leave. They have both mobility and self-confidence. This means they have to be treated and managed as volunteers, in the same way as volunteers who work for not-for-profit organizations. The first thing such people want to know is what the company is trying to do and where it is going. Next, they are interested in personal achievement and personal responsibility—which means they have to be put in the right job. Knowledge workers expect continuous learning and continuous training. Above all, they want respect, not so much for themselves, but for their area of knowledge. Knowledge workers expect to make the decisions in their own area.

Work, we know, is both a burden and a need, both a curse and a blessing. Unemployment we long ago learned creates severe psychological disturbances, not because of economic deprivation, but primarily because it undermines self-respect. Work is an extension of personality. It is achievement. It is one of the ways in which a person defines himself or herself, measures his worth, and his humanity.

Those who perform love what they’re doing. I’m not saying they like everything they do. That’s something quite different. Everybody has to do a lot of the routine;