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The truly important problems managers face do not come from technology or politics; they do not originate outside of management and enterprise. They are problems caused by the very success of management itself.
Management explains why, for the first time in human history, we can employ large numbers of knowledgeable, skilled people in productive work.
The emergence of management has converted knowledge from social ornament and luxury into the true capital of any economy.
To the very end, the Germans were by far the better strategists. Having much shorter interior lines, they needed fewer support troops and could match their opponents in combat strength. Yet the Allies won—their victory achieved by management.
One important advance in the discipline and practice of management is that both now embrace entrepreneurship and innovation.
Any existing organization, whether a business, a church, a labor union, or a hospital, goes down fast if it does not innovate. Conversely, any new organization, whether a business, a church, a labor union, or a hospital, collapses if it does not manage.
social innovation—as this chapter tries to make clear—may be of greater importance and have much greater impact than any scientific or technical invention.
managers. They have not yet faced up to the fact that they represent power—and power has to be accountable, has to be legitimate. They have not yet faced up to the fact that they matter.
Nonprofit institutions too need measurements in a number of areas specific to their mission.
the single most important thing to remember about any enterprise is that results exist only on the outside.
A business enterprise (or any other institution) has only one true resource: people. It succeeds by making human resources productive.
Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity.
There is only one valid definition of business purpose: to create a customer.
It is not necessary for a business to grow bigger; but it is necessary that it constantly grow better.
The most important time to ask seriously, What is our business? is when a company has been successful.
Success always makes obsolete the very behavior that achieved it.
Businesses must be able to innovate or else their competitors will render them obsolete.
The first sign of decline of an industry is loss of appeal to qualified, able, and ambitious people.
The continual improvement of productivity is one of management’s most important jobs.
The Girl Scouts, the Red Cross, the pastoral churches—our nonprofit organizations—are becoming America’s management leaders. In two areas, strategy and the effectiveness of the board, they are practicing what most American businesses only preach.
nonprofits need management even more than business does, precisely because they lack the discipline of the bottom line.
good intentions are no substitute for organization and leadership, for accountability, performance, and results.
The best nonprofits devote a great deal of thought to defining their organization’s mission.
Social responsibilities—whether of a business, a hospital, or a university—may arise in two areas. They may emerge out of the social impacts of the institution. Or they arise as problems of the society itself.
The modern organization exists to provide a specific service to society. It therefore has to be in society. It has to be in a community, has to be a neighbor, has to do its work within a social setting.
The question is not, Is what we do right? It is, Is what we do what society and the customer pay us for?
It is the job of business to convert change into innovation, that is, into new business. And it is a poor businessman who thinks that innovation refers to technology alone.
And it is foolish to hope that these problems will disappear if only one looks the other way. Problems go away because someone does something about them.
To expect every manager to be a leader is futile. There are, in a developed society, thousands, if not millions, of managers—and leadership is always the rare exception and confined to a very few individuals.
Basic assumptions about reality are the paradigms of a social science,
The discipline’s basic assumptions about reality determine what it focuses on.
The social universe has no “natural laws” of this kind. It is thus subject to continual change.
Not to be called “management” was, in other words, “political correctness” in the Depression years.
management is not business management—any more than, say, medicine is obstetrics.
One hears a great deal today about “the end of hierarchy.” This is blatant nonsense. In any institution there has to be a final authority, that is, a “boss”—
If the ship goes down, the captain does not call a meeting, the captain gives an order.
There is wisdom to the old proverb of the Roman law that a slave who has three masters is a free man.
we now practice—and not only in American industry—the most extreme “personality cult” of CEO supermen.
Even if employed full-time by the organization, fewer and fewer people are “subordinates”—even in fairly low-level jobs. Increasingly they are “knowledge workers.” And knowledge workers are not subordinates; they are “associates.”
that they know more about their job than anybody else in the organization is part of the definition of knowledge workers.
a knowledge organization can easily sabotage even the ablest, let alone the most autocratic, superior.
What motivates—and especially what motivates knowledge workers—is what motivates volunteers.
It is also the definition of a partnership that partners cannot be ordered. They have to be persuaded.
Increasingly, therefore, the management of people is a “marketing job.”
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.
Management therefore now has to start out with the assumption that there is no one technology that pertains to any industry and that, on the contrary, all technologies are capable—and indeed likely—to be of major importance to any industry and to have impact on any industry.
The starting point has to be what customers consider value.
All the traditional assumptions led to one conclusion: The inside of the organization is the domain of management. This assumption explains the otherwise totally incomprehensible distinction between management and entrepreneurship.
The inward focus of management has been greatly aggravated in the last decades by the rise of information technology. Information technology so far may actually have done more damage to management than it has helped.
The greatest contribution of our data-processing capacity so far has not even been to management. It has been to operations—
