the essential drucker

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The Essential Drucker Thirumeninathan Murugan

Post on 21-Oct-2014

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Insights from the all time great management guru Peter Drucker

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Page 1: The Essential Drucker

The Essential DruckerThirumeninathan Murugan

Page 2: The Essential Drucker

Who is Peter Drucker?• known as the- Father of Modern

Management• Important contributions – – MBO– Concept of Knowledge Worker– Marketing oriented organization

• Contributed regularly to – Harvard Business Review– The Economist– Wall Street Journal

• Fans and Followers include Jack Welsch (GE), Andy Grove (Intel)

(1909 - 2005) 25 honorary doctorates 39 books Presidential Medal of Freedom Presidential Citation, NYU\ 7 McKinsey Awards from HBR

Page 3: The Essential Drucker

Purpose of Business• Purpose of the business is to

satisfy the needs of its customers

• Some of the questions an organization need to ask frequently are – Who is our customer?– What should our business be?– Planned abandonment -“If we did

not do this already, would we go into it now?”

THE PURPOSE OF A BUSINESS IS TO CREATE A

CUSTOMER

Page 4: The Essential Drucker

THE BEST WAY TO PREDICT

THE FUTURE IS TO CREATE IT.

Role of Management• Everything that affects the

performance of the organization is a concern for the management and its responsibility.

• Traditional models perceive the role of management is internal which is a fallacy

Page 5: The Essential Drucker

On Marketing

• Market standing is important irrespective of increase in sales

• Market standing to aim for should be optimum and not maximum

• Technology and End-use are limitations. Customer value and customer decisions to dispose their disposable incomes should be the focus for management

THE AIM OF MARKETING IS TO

KNOW AND UNDERSTAND THE

CUSTOMER SO WELL THE PRODUCT OR SERVICE FITS HIM AND SELLS ITSELF.

Page 6: The Essential Drucker

5 bad habits of organizations

• Not Invented Here• Creaming a market• Quality as perceived by self• Illusion of a premium price• Maximize rather than optimize

UNTIL A BUSINESS RETURNS A PROFIT THAT IS GREATER

THAN ITS COST OF CAPITAL, IT DOES

NOT CREATE WEALTH — IT DESTROYS IT.

Page 7: The Essential Drucker

Effective Decision Making

Effective Decision Making

Nature of Problem – Generic or Exceptional

Solution should satisfy – boundary conditions

What is right as the starting point before

compromises and concessions

Build action items

Collect feedback from actual course of events

MAKING GOOD DECISIONS IS A CRUCIAL SKILL

AT EVERY LEVEL.

Page 8: The Essential Drucker

Organization as a human community

• One does not manage people. They should lead the people.

• Values are and should be the ultimate test..

• Knowledge workers are dependent on the organizations to make their work productive.

• Organizations also take over some of the aspects of a commune as knowledge workers interact, bond and flock together.

RANK DOES NOT CONFER

PRIVILEGE OR GIVE POWER.

IT IMPOSES RESPONSIBILITY.

Page 9: The Essential Drucker

Management by Objectives

SpecificMeasurableAchievableRealisticTimely• SMART goals should be derived

from corporate vision and should be set for individuals, teams and departments.

• Manage for Results

MANAGEMENT BY OBJECTIVE

WORKS - IF YOU KNOW THE

OBJECTIVES.

Corporate Vision

Mission Statement

Strategic Objectives

Page 10: The Essential Drucker

MANAGEMENT BY OBJECTIVE

WORKS - IF YOU KNOW THE

OBJECTIVES.

Jointly Plan Individually Act

Jointly control

Managers

Team Members

Management by Objectives

Page 11: The Essential Drucker

Effectiveness vs efficiency

• Processes and procedures typically help in increasing efficiency but only when the right things are done results are achieved.

EFFICIENCY IS DOING THINGS RIGHT; EFFECTIVENESS

IS DOING THE RIGHT THINGS.

Page 12: The Essential Drucker

Knowledge workers

• Knowledge workers own the tools of their trade.

• Knowledge society allows upward mobility.WHAT IS

MEASURED IMPROVES

Page 13: The Essential Drucker

Communications• Communication is perception• Communication is expectation• Communication makes demands• Communication and information

are different and mostly opposite – yet inter-dependent

• The onus of making himself/herself understood is on the specialist.

THE IMPORTANT THING IN

COMMUNICATION IS TO HEAR WHAT IS’NT BEING SAID