Review of Drucker’s “Management Challenges for the 21st Century”

According to Drucker, the discipline and practice of management must undergo some challenges including faulty assumptions, looming catastrophes, change, information, and knowledge worker productivity.  First, he provides new assumptions that will provide an enhanced foundation in the face of developing crises.  The first new assumption is that management is not business management.  It is the specific and distinguishing organ of any and all organizations.  It not only applies to business, but to non-profit organizations and churches as well.  The second assumption is that there is an organization that fits each task.  There is not one way to manage all organizations, for all organizations differ in needs, goals, and responsibilities.  The third assumption is that the function of management is to lead people, not manage them.  The goal is to make the strengths and knowledge of each individual productive.  The fourth assumption is that the foundation of management policy must be customer values and customer decisions on the distribution of their disposable incomes.  Technology and end use are limitations when given foundational importance in management policy.  The fifth assumption is that the scope of management is not legal in that it has to be operational while embracing the entire process.  It must be focused on results and performance across the entire economic chain.  The sixth assumption is that national boundaries are important principally as restraints.  The practice of management will increasingly be defined operationally as opposed to politically.  The seventh assumption is that management exists for the purpose of providing results.  It’s the practice of making the institution capable of producing results outside of it self.  According to Drucker, management is at the center of modern society, in that it is responsible for the results produced by institutions.

With the old management assumptions replaced by those aforementioned, the following five looming social and political catastrophes may be given a better approach.  The first is the collapsing birthrate in the developed world.  Management will have to take action on political issues of demographics and immigration, the government being incessantly unstable, retirement being a less formal variety of employment, and the need for productivity to increase rapidly.  The second is shifts in the distribution of disposable income.  Organizations must compile quantitative and qualitative information in order to interact with and understand their customers shifting distribution of disposable income.  The third is to define performance.  There must be a balance between the focus on short and long term goals.  The fourth is global competitiveness.  An organization’s strategy must factor in global competitors’ accomplishments.  The fifth is the growing incongruence between economic globalization and political splintering.  An increasing number of factors brought about by this situation requires that organizations reference their strategies in order to determine whether or not the chosen options are purposefully opportunistic.

Another challenge facing management is change.  In order to lead change, an organization must be ahead of it.  Management must make policies conducive to change, form systematic methods to look for and anticipate change, introduce change within and without the organization the right way, and make policies that balance change and continuity.  In order to bring about change, organizations must abandon its old ways while organizing improvement and exploiting successes.  Management must also institute a systematic policy of innovation.

Information poses another challenge for management.  In “IT”, the focus has remained on technology.  Drucker proposes that the information revolution requires a shift in focus towards information.  For top management, IT has produced masses of data, but not much information.  Things such as new accounting methods need to be developed in order to provide top management with meaningful information that pertains to productivity, competence, and resource allocation.  The key is to eliminate data not relating to needed information and focus the remaining information on action.

The knowledge worker is of paramount importance in the 21^st century.  Management must make productive the skills and abilities of knowledge workers.  In order to do this, management must give them autonomy, include innovation in their roles, foster continuing education and teaching, consider quality and quantity of output as equally important, and treat them as assets.  Management must treat knowledge workers with this respect because they own their means of production.  Because of this, management must utilize their knowledge and treat them as assets.