The Practice of Management is the first wide-scale study of modern business management as a unified concept. This book introduces several then-revolutionary concepts, among them is the now-common idea of business management being its own separate field of study, and the concept of management by objectives. Even knowing its status as a classic, I was surprised by not only the book’s continuing relevance, but surprising prescience and ability to predict future trends based solely on a working knowledge of the concepts of management.
The Practice of Management covers a wide range of topics; while they are too numerous to each be given due attention in a limited space, they can be roughly categorized according to the book’s sections.
The book begins with a clear, unified definition of what organizational management actually is. It clearly outlines what should – and should not be – expected of an organization’s management, and what their roles are. It argues against the then-widespread and still-common view of management as a vast, nebulous collection of all the people “above” the direct workers (factory workers, service personnel, et cetera) of a company.
It then goes on to discuss management’s role in managing a business. This section provides the famous, deceptively-simple question “What is our business and what should it be?” and discusses the concept of management by objectives – that is, managing a business by setting clear and appropriate objectives, by which performance is measurable. This is a key feature which is repeatedly emphasized throughout the book.
The next section discusses how to manage managers. The book discusses how management is often misunderstood as being an abdication of higher levels of power, such as a company owner using high-level management to dilute his work. In fact, management provides an altogether different and crucial role in business, which the Ford Motor Company discovered to its peril after decades of Henry Ford’s attempts to purge the company of management, which the man was irrationally suspicious of. This section also argues that a company must plan to develop its managers of tomorrow in advance.
The Structure of Management is a shorter section which discusses how an organization and its management should be organized. The book strongly favors decentralization, having only harsh criticism to leadership that attempts to control activity as far down as possible. It favors decentralization so that every aspect of a business acts like its own “company inside a company”, each responsible for their own contribution to profitability instead of hiding behind “accounting tricks.”
The Management of Worker and Work is, in fact, what most people think of when they think of management – and its placement near the end of the book in challenge to this is no accident. This section of the book discusses the mix of planning and action in any job – and argues that there is indeed any job in the age of automation that is purely action with no planning. It discusses the implications of this claim, and the strengths and shortcomings of then-contemporary studies in personnel management, human resources, and scientific management.
Finally, the book closes by discussing what a manager truly is. While it defined the roles of a manger early on, the book closes by discussing the concept of a manager, including what their work entails and how managers do (and should) make decisions, as well as discussing the ethical and moral obligations of management.
The author draws many then-revolutionary conclusions on all aspects of management. Peter Drucker was one of the first to propose many of the concepts now taken as standard practice in the field of management – up to and including the concept of the discipline of management itself! While countless works had been made discussing any given facet of management, it was not until midcentury that management begin to be studied as a unified whole; due in large part to the arguments in books such as this one.
The book discusses the nature of business management, and introduces management by objectives. Drucker spends much of the book discussing the various facets of MBO, explaining why other styles of leadership fail and the inherent fairness and other advantages of having clearly laid out objectives across an entire organizational structure. The author concludes, and is proven right by time, that MBO will become an important part of management theory, although he warns – again, rightly – against losing a systematic view by overemphasis on objectives.
In one particularly interesting passage, Drucker discusses why Sears & Roebuck became successful in its catalogue service and later retail establishments, using this to illustrate the concepts of business management. He then does something peculiar – he discusses the natural evolution of those concepts, including then-new concepts of Automation, and ends up describing with uncanny detail the business model of Amazon.com – in 1954.Also noteworthy is his prescient descriptions of the benefits of outsourcing, arguing that businesses should strictly focus on their objectives and allow other companies to take care of tertiary tasks (for whom these tasks are their objectives).
Another key topic is the difference between management and control. The author concludes that centralized power is inherently unfair and destructive to an enterprise, and that decentralization on both functional (by work task) and federal (by organizational task, i.e. per factory or division) levels. Drucker argues that managers must learn to “manage without abdicating” to the authority of government, union relationships, or even higher levels of management. And he is most critical of all in attacking upper level managers who attempt to do the jobs of their subordinates, such as a president who sees his job as tending to the jobs of all the division managers. He describes this as a fundamentally backwards violation of proper managerial structure.
Drucker explores three then-contemporary concepts related to managing work and worker – personnel management, the then-new study of human relations, and scientific management. He describes personnel management as “not bankrupt,[…] but it is certainly insolvent.” He argues that the work of personnel management and human relations are not a unified concept, but instead a “patchwork” division comprised of many small tasks that are dissimilar at a basic level. And finally, he argues that while scientific management produced brilliant things for the field, it ultimately produced “only half an insight”; ignoring the importance of planning in a worker’s work by suggesting a division between “planner” and “doer”.
Finally, he discusses the roles of the manager of “today” and ”tomorrow,” arguing that management of the future will have increased responsibilities and a more academic focus – all predictions which panned out – and that problems will arise if community ethics are forgotten by the world of business management – again a statement that seems oddly prescient in today’s economic turbulence.
I was quite impressed by the number of scarily accurate predictions Drucker made, both specific predictions and general comments on how his proposed principles would change business. The fact that Amazon’s entire business model was inadvertently predicted in the 1950s, and not by a contemporary science-fiction writer nor a network scientist, stuck out as particularly interesting to me. These predictions come inadvertently through discussions of business cycles, technological and academic trends, and then-contemporary concepts in management and their flaws. Thus, these predictions come out of a deep understanding of the world of business, rather than a deep understanding of technology or “crystal ball” predictions of the future.
Regarding management by objectives, I believe the concept’s success to speak for itself. I do believe in the importance of setting realistic goals organization-wide, and as importantly, in having those goals set in part by the people who are expected to achieve them. This is probably the only fair way to set standards and expectations on employees; to do anything less unfairly cuts them out of the process by which they are judged, and to not set clear objectives is to deny workers a target to work towards.
Finally, his other key points regarding decentralization are also wise and worth heeding. History both before and since the publication of this book is rife with examples of organizations run into the ground by a tyrannical boss who insists on overseeing everything; instead what he encourages is not a laissez-faire disconnection but instead accountability at the lowest levels reasonably possible. This seems like a sensible way – or even the only sensible way, I definitely do not have a better method to hand – of ensuring that every operation of a company is efficient and sustainable, while also providing a wealth of secondary benefits.
Ultimately, this book is a classic for good reason; and stands up well to criticism even after nearly 60 years.
Again, this book is a classic; there are few, if any, points that do not stand up even to this day. However, there are many arguments which badly date the book; some of them are then-new concepts that are now commonplace, others are comments on the era which are no longer relevant.
For example, the book started by defending management as its own academic discipline – and while insightful, the passages came off as self-serving because they argued for a position that is no longer contentious. The book also goes to great lengths to outline the weaknesses of Scientific Management principles and outlines the remedial concepts that later became the basis of newer, more modern theories of management – again what was important knowledge for its day is now something taught at a basic level.
The book talks repeatedly about the reconstruction of the European economy after the Second World War – by 1954, Europe was still struggling to its feet, especially West Germany. While then-relevant and of historical interest, I feel these anecdotes could be replaced with modern issues instead. For example, I would quite like to see a discussion of his values of ethics in management as applies to the last decade’s accounting and financial reporting scandals, or the past few years’ worth of banking crises in Europe and in the United States.
Finally, the book repeatedly (and rightfully) attacks Communistic and Marxist anti-capitalist philosophy, explaining what these theories fail to understand regarding the nature of management; this was an important topic in the 1950s as the Cold War took hold. But today, it’s no longer important to attack the failings of communism – any history class can do that. Instead, I would rather the book discuss the relative merits of modern theories, from populist anti-capitalist protests such as Occupy Wall Street, to the “welfare state” we have today. All in all, however, the book’s dated arguments do not significantly detract from its reasoning and logic – all of which is perfectly applicable today.
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