Friday, December 23, 2005

Peter Drucker �s Legacy

It is highly probable that everyone in the job of running these days a business corporation ,had read something about Peter Drucker , sometime in his or her professional career. Even myself had to spent hours of reading his books in the seventies, while I was studing in the University.
It was so influential, specially for his ability to transform complex thing into the simplest and well connected one. For instance ,the battle for protectionism for manufacturing sector ;as a confusion of the symptom with the desease: The decline of manufacturing. On the other hand, his ability to foresees the future of management, has made possible that much of the discussion of today� s management challenges, are based on his ideas, which has allow him to be considered the Father of management.
The importance of human resources in organizations , knowledge as an asset for workers, flexibility throughout all organizational process, information as a source of power, new negotiations boundaries within the firm down the hierarquy scale, and the creation of a customer as a key job for executives, competition among industries are on the main stream of management .-
On the declining of manufacturing he said:
The decline of manufacturing as a producer of wealth and jobs changes the world's economic, social and political landscape. It makes ?economic miracles? increasingly difficult for developing countries to achieve. The economic miracles of the second half of the 20th century?Japan, South Korea, Taiwan, Hong Kong, Singapore?were based on exports to the world's rich countries of manufactured goods that were produced with developed-country technology and productivity but with emerging-country labour costs. This will no longer work. One way to generate economic development may be to integrate the economy of an emerging country into a developed region. This statement is applied to the Free Trade agreements within different countries, such as Nafta between the United States , Canada and Mexico ,or the Free Trade agreement between European Union and Chilean economic. Each one benefit form the other.-
His view that business have two dimensions :The economic and the social one, made the foundations of what today is called the Socially responsibility commitment Firms.
Finally, it is obviously not enough to resume his whole legacy in a short paragraph like this one , but it is essential for understanding the meaning of such a great man anyway. We usually believe that knowledge is on the history books written years before. Well Peter Drucker had the extraordinary intuition to allow us to foresee that knowledge it is what lies ahead of us.-

Pd : Merry Cristmas to everyone !

1 comment:

  1. Great Weblog Erico.
    Here some words about Wolfgang Mewes (EKS), the most venerable german management theorist. Many of Germany's mittelstand companies have gained world standing using the systems approach.

    What is Special about the EKS Strategy?
    There are substantial differences between the Concentrated
    Systems Strategy (EKS) and conventional modes of behavior:
    - Concentration of forces
    - The higher priority of innovation over productivity
    - Qualitative instead of quantitative growth
    - Social networking with the target group
    - Needs-marketing related rather than aiming at gaps in the market
    - Working with an Early Warning System

    These are just some of the major challenges of the EKS. But most
    of all, the EKS strategy has a fundamentally different goalsetting
    A single-minded orientation towards increasing profits is generally regarded as the major task of management. In order to increase profit, managers jeopardize their health, family life, the social consensus, and even their conscience and the environment. They have no other alternative, because if profits decline through the pursuit of other objectives, the company will be ousted by more ruthless competitors and the manager/s in question will lose their
    This one-sided orientation towards increasing profits is becoming
    regarded as increasingly unsatisfactory not only by practicing managers, but also by management theorists. For instance, one of the most widely-read German management texts, discusses the questionable nature of this objective in some detail, and also why, despite widespread doubts, profits alone remain the central focus of so many business decision-making processes.

    Profit is not the goal, but the result:
    The issue of basic goal setting is of critical importance. If this is
    wrong, all other decisions are wrong too, because all efforts will be channeled in the wrong direction.
    For over thirty years, the EKS has demonstrated how people and
    businesses can pursue a quite different goal to profit maximization and achieve remarkable success, precisely for that reason. The appropriate focus of decision-making considerations is on developing a "power of attraction " for their target group. Profit is not the objective, but rather the result of these efforts - a substantial
    In essence, this is self-evident. Every businessman knows he needs
    to ensure that his firm is more attractive than the competition, in
    order to ensure that customers remain loyal. The greater the utility or value perceived by consumers, the greater their interest in the company and the higher the level of demand. This in turn raises turnover, output, capacity utilization, economies of scale and finally profits.

    What is remarkable, however, is that although the above principle is so obvious to practitioners, it is so frequently overridden by
    theoretically-based, short-term notions of profit maximization. For
    instance, in automobile factories, entire teams of managers pore
    over cost and price statistics, instead of concentrating on raising the consumer utility of their cars, and this the attraction for their target
    One could object that: "the EKS is still basically about raising
    profit. After all, the aim of raising environmental utility is to achieve higher turnover and profitability through this means".
    And thank goodness for that! Anything else would fail, just like Karl Marx's efforts to develop a new kind of person. It is a timeless law of
    nature that people strive for their own individual gain. The decisive difference is whether these interests are compatible with the broader environment (not just the ecology) in which the activities occur.

    Thus, the greater the value to the target group and environment, the
    greater one's own success. Both sides gain - the development of
    target group and environment are promoted more effectively than
    before, and simultaneously, earnings are greater, easier and more secure.
    Earlier on, natural scientists in particular, claimed that such mutual gain is impossible - only one or the other side benefits. However, precisely these scientists have now explained precisely how it ispossible through synergy, a seamless linking of both parties.

    Offering benefits (utility) alone is also not enough. If the utility is not
    sufficiently specific, demand from the target group does not grow,
    such that additional (marginal) costs are not balanced with adequate
    additional profits. Thus, offering utility is not good enough of itself.
    The EKS shows how a targeted use of goods or services can
    overcome the prevailing problem, the "bottleneck". This entails
    developing specific characteristics that motivate demand most
    intensively. The work of Justus von Liebig (1803-1873) on "The
    Discovery of the Minimum Factor", is relevant in this context.

    In "The Atom Bomb and the Future of Mankind", the philosopher
    New Modes of Behavior in Dynamic Systems Karl Jaspers warned as early as 1958, that, if they are unable to develop new modes of social behavior, people will become
    increasingly confused, overwhelmed and finally destroyed by the
    dynamics of technological development. This new form of behavior must fulfil three conditions:
    A. Anyone must be able to learn it.
    B. It must be so advantageous for all, that they will be self-motivated to learn it and need not be obliged to do so.
    C. Thinking and behavior must be oriented more strongly towards the
    common good.
    The EKS fulfils all three conditions. It offers a specific and effective means of applying forces and energies appropriately from a strategic perspective, thus ensuring sucess over the longer term.
    "An economy in which each individual increases his utility for the good of the environment, so that he himself maximizes his own success, will develop an entirely different economy and society to the one presently prevailing".