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The Daily Drucker ++++: Learn or learning search
This page contains parts of a chapter on education from Managing the Non-Profit Organization — How to make the schools accountable — an interview with Albert Shanker (American Federation of Teachers) below
Also see
The World — a Brief Introduction by Richard Haass
Important Peter Drucker interview
Try a page search for education related topics on this page Topics from The Daily Drucker which contain the word “learn” or “learning”
↑ To know something … sixteen different angles ↓
↑ #msd ← SEEN Most mistakes in thinking … Seeing only part of the situation … continue
How to make the schools accountable — an interview with Albert Shanker
PETER DRUCKER: Albert, you have been leading a crusade to improve performance in the classroom, to make teachers and schools accountable for performance, and to build the school around the classroom teacher.
... snip, snip ...
PETER DRUCKER: Basically, the implication of this experience for non-profit institutions is to keep an eye on the fundamental, long-term goal. Make sure you move toward it, and you'll gain credibility. And be sure you define performance and hold yourself accountable for it. ALBERT SHANKER: That's right. I think the public may have given up on many of our public institutions because of a feeling that these people have their jobs, their security, their tenure, their Civil Service regulations; but they've really stopped trying. They're just doing what they did last week and last year and five years ago, whether it works or not. PETER DRUCKER: And in many cases, alas, they are right. ALBERT SHANKER: That's correct. They are right. But even an old institution like the school can be turned around. … snip, snip … Foreword by Jim Collins In December of 1994, I pulled up to Peter Drucker's house in my rental car. I rechecked the address because the house just didn't seem big enough. It was a nice house in a neighborhood near the Claremont Colleges, bordered tightly by similar suburban houses, with two small Toyotas parked in the drive. It would have been a perfect, modestly proportioned home for a professor from the local college. But I wasn't looking for a professor from the local college; I was looking for Peter Drucker — the leading founder of the field of management, the most influential management thinker in the second haIf of the twentieth century, the founding father of the Peter F. Drucker Graduate School of Management. But the address matched, so I ambled up to the front door and rang the bell. I waited. Nothing happened. So, I rang again. "Okay, okay, I'm coming," I heard a voice from inside the house. "I'm not so fast anymore." The voice sounded cranky, and I expected a curmudgeon to open the door, but instead found myself greeted with a gracious smile that made me feel that my host was really happy to see me, even though we'd never met. "Mr. Collins. So very pleased to meet you," said Drucker, with a handshake that warmly invited me across the threshold. "Please come inside." We settled in the living room, with Drucker asking questions from his favorite wicker chair, probing, pushing, challenging. He gave freely of his wisdom, asking nothing in return. He simply wanted to contribute to my development at what was then a pivotal stage of my career; I was only thirty-six years of age with no significant reputation. His generosity of spirit explains much of Drucker's immense influence. I reflected back on his work, The Effective Executive, and his admonition to replace the quest for success with the quest for contribution. The critical question is not, "How can I achieve?" but "What can I contribute?" Drucker's primary contribution is not a single idea, but rather an entire body of work that has one gigantic advantage: nearly all of it is essentially right. Drucker has an uncanny ability to develop insights about the workings of the social world, and to later be proved right by history. His first book, The End of Economic Man, published in 1939, sought to explain the origins of totalitarianism; after the fall of France in 1940, Winston Churchill made it a required part of the book kit issued to every graduate of the British Officer's Candidate School. His 1946 book The Concept of the Corporation analyzed the technocratic corporation, based upon an in-depth look at General Motors. It so rattled senior management in its accurate foreshadowing of future challenges to the corporate state that it was essentially banned at GM during the Sloan era. Drucker's 1964 book was so far ahead of its time in laying out the principles of corporate strategy that his publisher convinced him to abandon the title Business Strategies in favor of Managing for Results, because the term "strategy" was utterly foreign to the language of business. There are two ways to change the world: with the pen (the use of ideas) and with the sword (the use of power). Drucker chooses the pen, and has rewired the brains of thousands who carry the sword. When in 1956 David Packard sat down to type out the objectives for the Hewlett-Packard Company, he'd been shaped by Drucker's writings, and very likely used The Practice of Management — which still stands as perhaps the most important management book ever written — as his guide. In our research for the book Built to Last, Jerry Porras and I came across a number of great companies whose leaders had been shaped by Drucker's writings, including Merck, Procter & Gamble, Ford, General Electric, and Motorola. Multiply this impact across thousands of organizations of all types — from police departments to symphony orchestras to government agencies and business corporations — and it is hard to escape the conclusion that Drucker is one of the most influential individuals of the twentieth century. At one point during my day with Drucker, I asked, "Which of your twenty-six books are you most proud of?" "The next one," snapped Drucker. He was eighty-five years young at the time, cranking at a pace of nearly a book a year, plus significant articles. Over the next nine years, he added another eight books to the count and continues at age ninety-four to produce work highly relevant to the challenges of the twenty-first century. For Drucker, writing is a compulsion — a form of productive neurosis, which explains his grand output. "I started in journalism," he explained in response to the question of how he manages to write so much, so fast. "I had to write fast to make deadline. I was trained to be prolific." I do not know precisely how many pages Drucker has written so far in his career, but his books alone almost certainly exceed 10,000 pages. Drucker occupies a rare quadrant of genius, being both highly prolific and remarkably insightful. Drucker's genius shines best in the short paragraph or single sentence that cuts through the clutter and messiness of a complex world and exposes a truth. Like a Zen poet, Drucker packs universal truth into just a few words; we can return to his teachings repeatedly, each time with a deeper level of understanding. This wonderful collection presents these pearls of insight in one place, where you can reflect upon them one at a time, without having to read all 10,000 pages. Professor Maciariello has masterfully culled the very best of Drucker and deserves our appreciation for this significant service. Drucker likes to tell the story of a Greek sculptor from 500 BCE who was commissioned by the city of Athens to construct a set of statues to ring the top of a building. (Entitled "Pursuing Perfection," you may find this story on October 1.) The sculptor toiled for months longer than expected, making the backs of the statues as beautiful as the fronts. The city commissioners, angered by his extra work, asked: "Why did you make the backs of the statues as beautiful as the front? No one will ever see the backs!" "Ah, but the Gods can see them," replied the sculptor. This book is like getting all the fronts of the statues assembled in one place for us to enjoy. But what makes the fronts so beautiful is all the thinking and work that went into the entire statue-work you and I can never see, but without which the work would lack integrity. We know we can trust these wonderful gems because Drucker's entire body of work, the hundreds of thousands of hours of thinking and reflection by one of the piercing intellects of the modern age, stands behind this carefully selected set of words. At the end of my day with Drucker in 1994, we pulled up to his home after a meal at his favorite local restaurant. "How can I thank you, how can I repay you?" I asked, knowing that the value of a day with Drucker was incalculable. "You have already repaid me," said Drucker. "I have learned much from our conversation today." That's when I realized that what ultimately sets Peter Drucker apart is that he does not see himself as a guru; he remains a student. Most management gurus are driven to say something; Drucker is driven to learn something. Drucker's work is interesting — he is interesting — because, to borrow a phrase from the late John Gardner, he remains relentlessly interested. "Just go out and make yourself useful," he finished. Then, without another word, he got out of the car and walked into his modest home, presumably back to his typewriter, to continue carving the fronts and backs of beautiful statues of great ideas. JIM COLLINS Boulder, Colorado August 3, 2004 11 JAN — Management and Theology Management always deals with the nature of Man, and with Good and Evil. Management always lives, works, and practices in and for an institution, which is a human community held together by a bond: the work bond. And precisely because the object of management is a human community held together by the work bond for a common purpose, management always deals with the nature of Man and (as all of us with any practical experience have learned) with Good and Evil, as well. I have learned more theology as a practicing management consultant than when I taught religion. ACTION POINT: Do you have any colleagues who are truly evil? Is there anything you can do about it? "Teaching the Work of Management," New Management
12 JAN — Practice Comes First Decision makers need to factor into their present decisions the "future that has already happened." Decision makers — in government, in the universities, in business, in the labor unions, in churches — need to factor into their present decisions the future that has already happened. For this they need to know what events have already occurred that do not fit into their present-day assumptions, and thereby create new realities. Intellectuals and scholars tend to believe that ideas come first, which then lead to new political, social, economic, psychological realities. This does happen, but it is the exception. As a rule, theory does not precede practice. Its role is to structure and codify already proven practice. Its role is to convert the isolated and "atypical" from exception to "rule" and "system," and therefore into something that can be learned and taught and, above all, into something that can be generally applied. ACTION POINT: Are the premises that you base your decisions on obsolete? Do you need a new intellectual framework to win in the market, as it exists today? The New Realities
16 JAN — The Function of Management Is to Produce Results Above all management is responsible for producing results. Management has to give direction to the institution it manages. It has to think through the institution's mission, has to set its objectives, and has to organize resources for the results the institution has to contribute. Management is, indeed, J. B. Say's "entrepreneur" and responsible for directing vision and resources toward greatest results and contributions. In performing these essential functions, management everywhere faces the same problems. It has to organize work for productivity; it has to lead the worker toward productivity and achievement. It is responsible for the social impact of its enterprise. Above all, it is responsible for producing the results — whether economic performance, student learning, or patient care — for the sake of which each institution exists. ACTION POINT: Is your organization delivering the results it should? If not, articulate your mission. Management: Tasks, Responsibilities, Practices
17 JAN — Management: The Central Social Function Noneconomic institutions need a yardstick that does for them what profitability does for business. Nonbusiness institutions flock in increasing numbers to business management to learn from it how to manage themselves. The hospital, the armed service, the Catholic diocese, the civil service — all want to go to school for business management. This does not mean that business management can be transferred to other, nonbusiness institutions. On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of objectives and that, therefore, noneconomic institutions, such as a university or a hospital, will also need very different management from that of a business. But these institutions are right in seeing business management as the prototype. Business, far from being exceptional, is simply the first of the species and the one we have studied the most intensively. Noneconomic institutions need a yardstick that does for them what profitability does for the business. "Profitability," in other words, rather than being the "exception" and distinct from "human" or "social" needs, emerges, in the pluralist society of organizations, as the prototype of the measurement needed by every institution in order to be managed and manageable. ACTION POINT: What is the most important nonbusiness institution with which you are associated? Does it use a specific yardstick to assess performance? How successful is the organization? The Ecological Vision
24 JAN — Feedback: Key to Continuous Learning To know one's strengths, to know how to improve them, and to know what one cannot do — are the keys to continuous learning. Whenever a Jesuit priest or a Calvinist pastor does anything of significance (for instance, making a key decision), he is expected to write down what results he anticipates. Nine months later, he then feeds back from the actual results to these anticipations. This very soon shows him what he did well and what his strengths are. It also shows him what he has to learn and what habits he has to change. Finally it shows him what he is not gifted for and cannot do well. I have followed this method myself, now for fifty years. It brings out what one's strengths are — and this is the most important thing an individual can know about himself or herself. It brings out where improvement is needed and what kind of improvement is needed. Finally, it brings out what an individual cannot do and therefore should not even try to do. To know one's strengths, to know how to improve them, and to know what one cannot do — they are the keys to continuous learning. ACTION POINT: List your strengths and the steps you are taking to improve them. Who knows you well enough to help identify your strengths? Drucker on Asia 25 JAN — Reinvent Yourself Knowledge people must take responsibility for their own development and placement. In today's society and organizations, people work increasingly with knowledge, rather than with skill. Knowledge and skill differ in a fundamental characteristic — skills change very, very slowly. Knowledge, however, changes itself. It makes itself obsolete, and very rapidly. A knowledge worker becomes obsolescent if he or she does not go back to school every three or four years. This not only means that the equipment of learning, of knowledge, of skill, of experience that one acquires early is not sufficient for our present life time and working time. People change over such a long time span. They become different persons with different needs, different abilities, different perspectives, and, therefore, with a need to "reinvent themselves." I quite intentionally use a stronger word than "revitalize." If you talk of fifty years of working life — and this, I think, is going to be increasingly the norm — you have to reinvent yourself. You have to make something different out of yourself, rather than just find anew supply of energy. ACTION POINT: Ask those ahead of you in age how they went about "re-potting themselves." What steps should you take now? Drucker on Asia
27 JAN — The Discipline of Management If you can't replicate something because you don't understand it, then it really hasn't been invented; it's only been done. When I published The Practice of Management, fifty years ago, that book made it possible for people to learn how to manage, something that up until then only a few geniuses seemed to be able to do, and nobody could replicate it. When I came into management, a lot of it had come out of the field of engineering. And a lot of it had come out of accounting. And some of it came out of psychology. And some more came out of labor relations. Each of those fields was considered separate, and each of them, by itself, was ineffectual. You can't do carpentry, you know, if you have only a saw, or only a hammer, or if you have never heard of a pair of pliers. It's when you put all of those tools into one kit that you invent. That's what I did in large part in The Practice of Management. I made a discipline of it. ACTION POINT: Are your management practices ad hoc or systematic? The Frontiers of Management
4 FEB — Knowledge and Technology The new technology embraces and feeds off the entire array of human knowledges. The search for knowledge, as well as the teaching thereof, has traditionally been dissociated from application. Both have been organized by subject, that is, according to what appeared to be the logic of knowledge itself. The faculties and departments of the university, its degrees, its specializations, indeed the entire organization of higher learning, have been subject-focused. They have been, to use the language of the experts on organization, based upon "product," rather than on "market" or "end use." Now we are increasingly organizing knowledge and the search for it around areas of application rather than around the subject areas of disciplines. Interdisciplinary work has grown everywhere. This is a symptom of the shift in the meaning of knowledge from an end in itself to a resource, that is, a means to some result. Knowledge as the central energy of a modern society exists altogether in application and when it is put to work. Work, however, cannot be defined in terms of the disciplines. End results are interdisciplinary of necessity. ACTION POINT: List results for which you are responsible. What specialists are you dependent on to get these results? How can you improve coordination among these specialists? The Age of Discontinuity
7 FEB — The Educated Person The educated person needs to bring knowledge to bear on the present, not to mention molding the future. In his 1943 novel, published in English as Magister Ludi (1949), Hermann Hesse anticipated the sort of world the humanists want — and its failure. The book depicts a brotherhood of intellectuals, artists, and humanists who live a life of splendid isolation, dedicated to the Great Tradition, its wisdom and its beauty. But the hero, the most accomplished Master of the Brotherhood, decides in the end to return to the polluted, vulgar, turbulent, strife-torn, money grubbing reality — for his values are only fool's gold unless they have relevance to the world. Post-capitalist society needs the educated person even more than any earlier society did, and access to the great heritage of the past will have to be an essential element. But liberal education must enable the person to understand reality and master it. ACTION POINT: Read a book on politics, history, or anything that interests you. What did you learn? How can you put that knowledge to work? Post-Capitalist Society
8 FEB — Balance Continuity and Change Precisely because change is a constant, the foundations have to be extra strong. The more an institution is organized to be a change leader, the more it will need to establish continuity internally and externally, the more it will need to balance rapid change and continuity. One way is to make partnership in change the basis of continuing relationships. Balancing change and continuity requires continuous work on information. Nothing disrupts continuity and corrupts relationships more than poor or unreliable information. It has to become routine for any enterprise to ask at any change, even the most minor one: "Who needs to be informed of this?" And this will become more and more important as more enterprises come to rely on people working together without actually working together — that is, on people using the new technologies of information. Above all, there is need for continuity in respect to the fundamentals of the enterprise: its mission, its values, its definition of performance and results. ¶¶¶ Finally, the balance between change and continuity has to be built into compensation, recognition, and rewards. We will have to learn, similarly, that an organization will have to reward continuity — for instance, by considering people who deliver continuing improvement to be as valuable to the organization, and as deserving of recognition and reward, as the genuine innovator. ACTION POINT: When you make a decision or a change, ask yourself, "Who needs to be informed of this?" Management Challenges for the 21st Century
9 FEB — Organizations Destabilize Communities In its culture, the organization always transcends the community. Modern organizations have to operate in a community. Their results are in the community. Yet the organization cannot submerge itself in the community or subordinate itself to that community. Its "culture" has to transcend community. Companies on which local communities depend for employment close their factories or replace grizzled model-makers who have spent years learning their craft with twenty-five-year-old "whiz kids" who know computer simulation. Every one of such changes upsets the community. Every one is perceived as "unfair." Every one destabilizes. It is the nature of the task that determines the culture of an organization, rather than the community in which that task is being performed. Each organization's value system is determined by its task. Every hospital, every school, every business, has to believe that what it is doing is an essential contribution on which all the others in the community depend in the last analysis. To perform its task successfully, it has to be organized and managed the same way. If an organization's culture clashes with the values of its community, the organization's culture will prevail — or else the organization will not be able to make its social contribution. ACTION POINT: If Wal-Mart wishes to move into your neighborhood against the wishes of the neighborhood, what actions should Wal-Mart take? Under what conditions would it be wise for it to withdraw its move? Post-Capitalist Society
4 MAR — In Innovation, Emphasize the Big Idea Innovative ideas are like frogs' eggs: of a thousand hatched, only one or two survive to maturity. The innovative organization understands that innovation starts with an idea. Ideas are somewhat like babies — they are born small, immature, and shapeless. They are promise rather than fulfillment. In the innovative organization executives do not say, "This is a damn-fool idea." Instead they ask, "What would be needed to make this embryonic, half-baked, foolish idea into something that makes sense, that is feasible, that is an opportunity for us?" ¶¶¶ But an innovative organization also knows that the great majority of ideas will turn out not to make sense. Executives in innovative organizations therefore demand that people with ideas think through the work needed to turn an idea into a product, a process, a business, or a technology. They ask, "What work should we have to do and what would we have to find out and learn before we can commit the company to this idea of yours?" These executives know that it is as difficult and risky to convert a small idea into successful reality as it is to make a major innovation. They do not aim at "improvements" or "modifications" in products or technology. They aim at innovating a new business. ACTION POINT: Make a list of your three best ideas. Then make a list of the key pieces of information you need to know and the major work that needs to be done before these ideas can blossom into a new business. Now pursue the best idea, or if none is practical, start again. The Frontiers of Management
8 MAR — Turbulence: Threat or Opportunity? When it rains manna from heaven, some people put up an umbrella. Others reach for a big spoon. The manager will have to look at her task and ask, "What must I do to be prepared for danger, for opportunities, and above all for change?" ¶¶¶ First, this is a time to make sure that your organization is lean and can move fast. So this is a time when one systematically abandons and sloughs off unjustifiable products and activities — and sees to it that the really important tasks are adequately supported. Second, she will have to work on the most expensive of resources — time — particularly in areas where it is people's only resource, as it is for highly paid, important groups such as research workers, technical service staffs, and all managers. And one must set goals for productivity improvement. ¶¶¶ Third, managers must learn to manage growth and to distinguish among kinds of growth. If productivity of your combined resources goes up with growth, it is healthy growth. Fourth, the development of people will be far more crucial in the years ahead. ACTION POINT: Get rid of unjustifiable products and activities, set goals to improve productivity, manage growth, and develop your people. The "How to" Drucker Managing in Turbulent Times
22 MAR — Internet Technology and Education The medium not only controls how things are communicated, but what things are communicated. In health care, information technology has already made a fabulous impact. In education, its impact will be greater. However, attempts to put ordinary college courses on the Internet are a mistake. Marshall McLuhan was correct. The medium controls not only how things are communicated, but what things are communicated. On the Web, you must do it differently. ¶¶¶ You must redesign everything. ¶¶¶ Firstly, you must hold students' attention. Any good teacher has a radar system to get the class's reaction, but you don't have that online. Secondly, you must enable students to do what they can do in a college course, which is to go back and forth. So, online you must combine a book's qualities with a course's continuity and flow. Above all, you must put it in a context. In a college course, the college provides the context. In that online course you turn on at home, the course must provide the background, the context, the references. ACTION POINT: Think about your organization's online services, from Web-based learning to health benefits to compliance. Ask a few employees who use these services whether they are satisfied with them. Hint: Bring earplugs! Managing in the Next Society
1 APR — Management as a Human Endeavor Management is about human beings. The modern enterprise is a human and social organization. Management as a discipline and as a practice deals with human and social values. To be sure, the organization exists for an end beyond itself.
To achieve these ends, the peculiar modern invention we call management organizes human beings for joint performance and creates social organization. But only when management succeeds in making the human resources of the organization productive is it able to attain the desired outside objectives and results. Management is no more a science than is medicine: both are practices. A practice feeds from a large body of true sciences. Just as medicine feeds off biology, chemistry, physics, and a host of other natural sciences, so management feeds off economics, psychology, mathematics, political theory, history, and philosophy. But like medicine, management is also a discipline in its own right, with its own assumptions, its own aims, its own tools, and its own performance goals and measurements. ACTION POINT: Are you by background an engineer, economist, psychologist, mathematician, political scientist, historian, or philosopher? List three ways your background influences your approach to management. The Frontiers of Management 4 APR — Organizations and Individuals The more the organization grows, the more the individual can grow. The more the individual in an organization grows as a person, the more the organization can accomplish — this is the insight underlying all our attention to manager development and advanced manager education today. The more the organization grows in seriousness and integrity, objectives and competence, the more scope there is for the individual to grow and to develop as a person. ACTION POINT: Keep learning. Take full advantage of your company's educational benefits. Landmarks of Tomorrow 5 APR — Picking a Leader I always ask myself, would I want one of my sons to work under that person? What would I look for in picking a leader of an institution? First, I would look at what the candidates have done, what their strengths are. You can only perform with strength — and what have they done with it? Second, I would look at the institution and ask: "What is the one immediate key challenge?" I would try to match the strength with the needs. Then I would look for integrity. A leader sets an example, especially a strong leader. He or she is somebody on whom people, especially younger people, in the organization model themselves. Many years ago I learned from a very wise old man, who was the head of a very large, worldwide organization. He was in his late seventies, famous for putting the right people into the right enterprises, all over the globe. I asked him: "What do you look for?" And he said: "I always ask myself, would I want one of my sons to work under that person? If he is successful, then young people will imitate him. Would I want my son to look like this?" This, I think, is the ultimate question. ACTION POINT: Next time you hire someone, ask yourself whether you would want your son or daughter to work for him or her. Managing the Non-Profit Organization 15 APR — People Decisions No organization can do better than the people it has. People decisions are the ultimate — perhaps the only — control of an organization. People determine the performance capacity of an organization. No organization can do better than the people it has. The yield from the human resource really determines the organization's performance. And that's decided by the basic people decisions: whom we hire and whom we fire, where we place people, and whom we promote. The quality of these human decisions largely determines whether the organization is being run seriously, whether its mission, its values, and its objectives are real and meaningful to people, rather than just public relations and rhetoric. ¶¶¶ Any executive who starts out believing that he or she is a good judge of people is going to end up making the worst decisions. To be a judge of people is not a power given to mere mortals. Those who have a batting average of almost a thousand in such decisions start out with a very simple premise: that they are not judges of people. They start out with a commitment to a diagnostic process. Medical educators say their greatest problem is the brilliant young physician who has a good eye. He has to learn not to depend on that alone but to go through the patient process of making a diagnosis; otherwise he kills people. An executive, too, has to learn not to depend on insight and knowledge of people but on a mundane, boring, and conscientious step-by-step process. ACTION POINT: Don't hire people based on your instincts. Have a process in place to research and test applicants thoroughly. Managing the Non-Profit Organization
2 MAY — The Network Society The developed countries are moving fast toward a Network Society. For well over a hundred years, all developed countries were moving steadily toward an employee society of organizations. Now the developed countries, with the United States in the lead, are moving fast toward a Network Society in respect to the relationship between organizations and individuals who work for them, and in respect to the relationships between different organizations. Most adults in the US labor force do work for an organization. But increasingly they are not employees of that organization. They are contractors, part-timers, temporaries. And relations between organizations are changing just as fast as the relations between organizations and the people who work for them. The most visible example is "outsourcing," in which a company, a hospital, or a government agency turns over an entire activity to an independent firm that specializes in that kind of work. Even more important may be the trend toward alliances. Individual professionals and executives will have to learn that they must take responsibility for placing themselves. This means above all they must know their strengths and look upon themselves as "products" that have to be marketed. [Search for "marketing" then "managing knowledge workers" in this project] ACTION POINT: Make a list of the top ten reasons you are attractive as a partner in an alliance. Managing in a Time of Great Change
5 MAY — The New Pluralism Each of the new institutions perceives its own purpose as central, as ultimate value, and as the one thing that really matters. The new pluralist organization of society has no interest in government or governance. Unlike the earlier pluralist institutions, it is not a "whole." As such, its results are entirely on the outside. The product of a business is a satisfied customer. The product of a hospital is a cured patient. The "product" of the school is a student who ten years later puts to work what he or she has learned. In some ways the new pluralism is thus far more flexible, far less divisive than the old pluralism. The new institutions do not encroach on political power as did the old pluralist institutions, whether the medieval church, feudal baron, or free city. The new institutions, however, unlike the old ones, do not share identical concerns or see the same world. Each of the new institutions perceives its own purpose as central, as ultimate value, and as the one thing that really mailers. Every institution speaks its own language, has its own knowledge, its own career ladder, and above all, its own values. No one of them sees itself as responsible for the community as a whole. That is somebody else's business. But whose? ACTION POINT: Reflect on the political disease of single-interest pluralism of our society. The New Realities
6 MAY — Knowledge Does Not Eliminate Skill Knowledge without skill is unproductive. At present, the term "knowledge worker" is widely used to describe people with considerable theoretical knowledge and learning: doctors, lawyers, teachers, accountants, chemical engineers. But, the most striking growth will be in "knowledge technologists": computer technicians, software designers, analysts in clinical labs, manufacturing technologists, paralegals. These people are as much manual workers as they are knowledge workers; in fact, they usually spend far more time working with their hands than with their brains. So, knowledge does not eliminate skill. On the contrary, knowledge is fast becoming the foundation for skill. We are using knowledge more and more to enable people to acquire skills of a very advanced kind fast and successfully. Only when knowledge is used as a foundation for skill does it become productive. For example, surgeons preparing for an operation to correct a brain aneurysm before it produces a lethal brain hemorrhage spend hours in diagnosis before they cut — and that requires specialized knowledge of the highest order. The surgery itself, however, is manual work — and manual work consisting of repetitive manual operations in which the emphasis is on speed, accuracy, uniformity. And these operations are studied, organized, learned, and practiced exactly like any other manual work. ACTION POINT: Outline the skills required in your work. Analyze and refine these skills for optimum quality and productivity. The Age of Discontinuity Management Challenges for the 21st Century Managing in the Next Society
9 MAY — The Center of the Knowledge Society Education will become the center of the knowledge society, and schooling its key institution. Throughout history, the craftsman who had learned a trade after five or seven years of apprenticeship had learned, by age eighteen or nineteen, everything he would ever need to use during his lifetime.
What mix of knowledges is required for everybody? What is "quality" in learning and teaching? All these will, of necessity, become central concerns of the knowledge society, and central political issues. In fact, it may not be too fanciful to anticipate that the acquisition and distribution of formal knowledge will come to occupy the place in the politics of the knowledge society that the acquisition of property and income have occupied in the two or three centuries that we have come to call the Age of Capitalism. ACTION POINT: Make learning a lifelong habit. Managing in a Time of Great Change
11 MAY — Managing Foreign Currency Exposure Foreign exchange risks make speculators out of the most conservative managements. Old and amply tested wisdom holds that unless a company's business is primarily the trading of currencies or commodities, the firm inevitably will lose, and heavily, if it speculates in either. Yet foreign exchange risks make speculators out of the most conservative managements. Executives will have to learn to protect their enterprises against several kinds of foreign exchange risks: losses on sales or purchases in foreign currencies, and loss of sales and market standing in both foreign and domestic markets. These risks cannot be eliminated. But they can be minimized or at least contained. Above all, they can be converted into a known, predictable, and controlled cost of doing business not too different from any other insurance premium by the use of hedging and options. "Internationalizing" the company's finances is also the best — perhaps the only — way in which a purely domestic firm can protect itself to some degree against foreign competition based on currency rates. ACTION POINT: Protect your business against foreign-exchange risk by hedging your exposure. The Frontiers of Management The New Realities
21 MAY — Productivity of Service Work Raising the productivity of service work is the first social responsibility of management. The need to raise the productivity of service work is a social priority in developed countries. Unless it is met, the developed world faces increasing social tensions, increasing polarization, increasing radicalization. It may increasingly face a new class war. Unless the productivity of service work is rapidly improved, both the social and economic position of a large class — as large a group as people making and moving things ever were at their peak — must steadily go down. Real incomes cannot for any length of time be higher than productivity. The service workers may use their numerical strength to get higher wages than their economic contribution justifies. But this only impoverishes all of society with everybody's real income going down and unemployment going up. Or the incomes of the unskilled workers are allowed to go down in relation to the steadily rising wages of the affluent knowledge workers, with an increasing guIf between the two groups, an increasing polarization into classes. In either case the service workers must become alienated, increasingly bitter, increasingly see themselves as a class apart. We know how to raise service work productivity. This is production work and what we have learned during the past hundred years about increasing productivity applies to such work with minimum adaptation. The task is known and doable, but the urgency is great. It is, in fact, the first social responsibility of management in the knowledge society. ACTION POINT: Set annual targets for raising the productivity of your service staff. Reward those who are successful in meeting these new targets. The Ecological Vision 23 MAY — Knowledge-Worker Productivity Knowledge-worker productivity requires that the knowledge worker be both seen and treated as an asset rather than a cost. Work on the productivity of the knowledge worker has barely begun. But we already know a good many of the answers. We also know the challenges to which we do not yet know the answers. Six major factors determine knowledge-worker productivity.
ACTION POINT: Apply steps one through five to your knowledge work. Management Challenges for the 21st Century 26 MAY — Defining Quality in Knowledge Work Measuring quality in knowledge work sounds formidable. In practice, it defines itself In some knowledge work — and especially in some work requiring a high degree of knowledge — we already measure quality. Surgeons, for instance, are routinely measured, by their success rates in difficult and dangerous procedures, for example, by the survival rates of their open-heart surgical patients. But by and large we have, so far, mainly judgments rather than measures regarding the quality of a great deal of knowledge work. The main trouble is, however, not the difficulty of measuring quality. It is the difficulty in defining what the task is and what it should be. ¶¶¶ The best example is the American school. Public schools in the American inner city have become disaster areas. But next to them — in the same location and serving the same kinds of children — are private schools in which the kids behave well and learn well. There is endless speculation to explain these enormous quality differences. But a major reason is surely that the two kinds of schools define their tasks differently. The typical public school defines its task as "helping the underprivileged"; the typical private school (and especially the parochial schools of the Catholic church) define their task as "enabling those who want to learn, to learn." One therefore is governed by its scholastic failures, the other one by its scholastic successes. ACTION POINT: Define quality for your job. Management Challenges for the 21st Century 28 MAY — Continuous Learning in Knowledge Work A knowledge organization has to be both a learning organization and a teaching organization. Knowledge workers must have continuous learning built into their tasks. And a knowledge organization has to be both a learning organization and a teaching organization. Knowledge today, in all areas, changes so fast that knowledge workers become obsolete pretty soon unless they build continuous learning into their work. And that is not just true of high knowledge such as that of the engineer, the chemist, the biologist, or the accountant. It's increasingly just as true of the cardiac nurse, the person who handles payroll records, and the computer repair person. But also, a knowledge organization depends on knowledge specialists understanding what their colleagues are doing or trying to do. And each of them has a different specialty. Knowledge workers need, therefore, to hold themselves responsible for educating their colleagues, especially when the knowledge base of their own specialty changes. This means that knowledge workers are well advised to sit down and answer two questions:
ACTION POINT: Answer the two questions at the end of this reading. Management Challenges for the 21st Century Knowledge Worker Productivity (Corpedia Online Program) 29 MAY — Raise the Yield of Existing Knowledge "Only connect." In learning and teaching, we do have to focus on the tool. In usage, we have to focus on the end result, on the task, on the work. "Only connect" was the constant admonition of a great English novelist, E. M. Forster. It has always been the hallmark of the artist, but equally of the great scientist. At their level, the capacity to connect may be inborn and part of that mystery we call "genius." But to a large extent, the ability to connect and thus to raise the yield of existing knowledge is learnable. Eventually, it should become teachable. It requires a methodology for problem definition — even more urgently perhaps than it requires the methodology for "problem solving." It requires systematic analysis of the kind of knowledge and information a given problem requires, and a methodology for organizing the stages in which a given problem can be tackled — the methodology that underlies what we now call "systems research." It requires what might be called "Organizing Ignorance" — and there is always so much more ignorance around than there is knowledge. Specialization into knowledges has given us enormous performance potential in each area. But because knowledges are so specialized, we need also a methodology, a discipline, a process to turn this potential into performance. Otherwise, most of the available knowledge will not become productive; it will remain mere information. To make knowledge productive, we will have to learn to connect. ACTION POINT: Spend sufficient time on the definition of a problem prior to making a decision. Post-Capitalist Society 1 JUN — Managing Oneself Knowledge workers must take responsibility for managing themselves. Knowledge workers are likely to outlive their employing organization. Their average working life is likely to be fifty years. But the average life expectancy of a successful business is only thirty years. Increasingly, therefore, knowledge workers will outlive any one employer, and will have to be prepared for more than one job. And this means most knowledge workers will have to MANAGE THEMSELVES. They have to place themselves where they can make the greatest contribution; they will have to learn to develop themselves. They will have to learn how and when to change what they do, how they do it, and when they do it. ¶¶¶ The key to managing oneseIf is to know:
ACTION POINT: Manage yourself by knowing your strengths, values, and where you do best. Then use feedback analysis by, first, recording what you expect the results of key actions or decisions to be, and then nine months or a year later, comparing the actual results to those expectations. Management Challenges for the 21st Century Managing OneseIf (Corpedia Online Program)
13 JUN — Attracting Knowledge Workers In attracting and holding knowledge workers, we already know what does not work: bribery. Attracting and holding knowledge workers have become two of the central tasks of people management. We already know what does not work: bribery. In the past ten or fifteen years many businesses in America have used bonuses or stock options to attract and keep knowledge workers. It always fails when falling profits eliminate the bonus or falling stock prices make the option worthless. Then both the employee and the spouse feel bitter and betrayed. Of course knowledge workers need to be satisfied with their pay, because dissatisfaction with income and benefits is a powerful disincentive. The incentives, however, are different. Knowledge workers know they can leave. They have both mobility and self-confidence. This means they have to be treated and managed as volunteers, in the same way as volunteers who work for not-for-profit organizations.
ACTION POINT: Manage professionals as volunteers by defining for them what the company is trying to do and where it is going. Put them in the right job and offer them educational benefits. Respect them and their areas of expertise. Allow them to make decisions in their own areas. Managing in the Next Society
21 JUN — Work "The devil finds work for idle hands." Work, we know, is both a burden and a need, both a curse and a blessing. Unemployment we long ago learned creates severe psychological disturbances, not because of economic deprivation, but primarily because it undermines self-respect. Work is an extension of personality. It is achievement. It is one of the ways in which a person defines himself or herself, measures his worth, and his humanity. ACTION POINT: Don't let your self-respect be undermined by being unemployed. Remind yourself that there are other ways to define yourself besides work. Management: Tasks, Responsibilities, Practices
26 JUN — Enjoying Work Those who perform love what they're doing. Those who perform love what they're doing. I'm not saying they like everything they do. That's something quite different. Everybody has to do a lot of the routine; there's an enormous amount of the routine. Every great pianist has to do three hours of playing scales each day. And nobody will tell you they love it. You have to do it. It's not fun, but you enjoy it because even after forty years you still feel the fingers improving. Pianists have a wonderful expression I heard many years ago: "I practice until I have my life in my fingers." And, sure, it's a dull routine, but you enjoy it. The same is true of people I've seen in business who enjoy the work. Their routine is: It's got to be done, and I enjoy it because I enjoy the work. And that is the difference, I believe, not between mediocrity and performing, but between what you call a "learning organization" — one where the whole organization grows and then the process changes — and an organization that maybe does very well but nobody misses it after five o'clock. ACTION POINT: Practice until you have your life in your fingers. "Meeting of the Minds," Across the Board: The Conference Board Magazine
30 JUN — Effective Management of Nonprofits Nonprofits need management even more than business does. In the early 1990s, people sentenced to their first prison term in Florida, mostly very poor black or Hispanic youths, were paroled into the Salvation Army's custody — about 25,000 per year, Statistics showed that if these young men and women had gone to jail, the majority would have become habitual criminals. But the Salvation Army was able to rehabilitate 80 percent of them through a strict work program that was run largely by volunteers. And the program cost a fraction of what it would have to keep the offenders behind bars. Underlying this program and many other effective nonprofit endeavors is a commitment to management. Forty years ago, management was a dirty word for those involved in nonprofit organizations. It meant business, and nonprofits prided themselves on being free of the taint of commercialism and above such sordid considerations as the bottom line. Now most of them have learned that nonprofits need management even more than business does, precisely because they lack the discipline of the bottom line. The nonprofits are, of course, still dedicated to "doing good." But they also realize that good intentions are no substitute for organization and leadership, for accountability, performance, and results. Those require management and that, in turn, begins with the organization's mission. ACTION POINT: Commit your nonprofit organization to effective management. Adopt high standards of organization, leadership, accountability, performance, and results. Managing for the Future
13 JUL — Unexpected Success It takes an effort to perceive unexpected success as one's own best opportunity. It is precisely because the unexpected jolts us out of our preconceived notions, our assumptions, our certainties, that it is such a fertile source of innovation. In no other area are innovative opportunities less risky and their pursuit less arduous. Yet the unexpected success is almost totally neglected; worse, managements tend actively to reject it. One reason why it is difficult for management to accept unexpected success is that all of us tend to believe that anything that has lasted a fair amount of time must be "normal" and go on "forever." ¶¶¶ This explains why one of the major US steel companies, around 1970, rejected the "mini-mill." Management knew that its steelworks were rapidly becoming obsolete and would need billions of dollars of investment to be modernized. A new, smaller "mini-mill" was the solution. Almost by accident, such a "mini-mill" was acquired. It soon began to grow rapidly and to generate cash and profits. Some of the younger people within the steel company proposed that available investment funds be used to acquire additional "mini-mills" and to build new ones. Top management indignantly vetoed the proposal. "The integrated steelmaking process is the only right one," top management argued. "Everything else is cheating — a fad, unhealthy, and unlikely to endure." Needless to say, thirty years later the only parts of the steel industry in America that were still healthy, growing, and reasonably prosperous were "mini-mills." ACTION POINT: Don't neglect or reject unexpected success. Identify it, absorb it, and learn from it. Innovation and Entrepreneurship
28 JUL — Cost Control in a Stable Business In cost control an ounce of prevention is worth a pound of cure. All of us have learned that it is much harder to get rid of five extra pounds than it is not to put them on in the first place. In no other area is it as true as it is in cost control that an ounce of prevention is worth a pound of cure. An absolute necessity is to watch like a hawk to make sure that costs do not go up as fast as revenues; and, conversely, that they fall at least as fast as revenues if there is a recession and revenues go down. ¶¶¶ One example of a follower of this rule is one of the world's largest pharmaceutical companies, a company that grew almost eightfold, adjusted for inflation, between 1965 and 1995. During those thirty years, it held cost increases to a fixed percentage of its increase in revenues; a maximum 6 percent rise in costs for every 10 percent rise in revenues. After five or six years of trying, it also learned how to make sure that costs go down in the same proportion as revenues go down in a down period. It took quite a few years to make this work; now it's almost second nature in that company. ACTION POINT: Hold increases in operating costs to a fixed percentage of increases in operating revenues. Make sure operating costs go down by the percentage decrease in operating revenues. Permanent Cost Control (Corpedia Online Program) Managing for Results
12 AUG — Managing Cash in the New Venture There is an old banker's rule of thumb according to which one assumes that bills will have to be paid sixty days earlier than expected and receivables will come in sixty days later. Entrepreneurs starting new ventures are rarely unmindful of money; on the contrary, they tend to be greedy. They therefore focus on profits. But this is the wrong focus for a new venture, or rather, it comes last rather than first. Cash flow, capital, and controls come much earlier. Without them, the profit figures are fiction — good for twelve to eighteen months, perhaps, after which they evaporate. Growth has to be fed. In financial terms this means that growth in a new venture demands adding financial resources rather than taking them out. The healthier a new venture and the faster it grows, the more financial feeding it requires. The new venture needs cash-flow analysis, cash-flow forecasts, and cash management. The fact that America's new ventures of the last few years (with the significant exception of high-tech companies) have been doing so much better than new ventures used to do is largely because the new entrepreneurs in the United States have learned that entrepreneurship demands financial management. Cash management is fairly easy if there are reliable cash-flow forecasts, with "reliable" meaning "worst case" assumptions rather than hopes. If the forecast is overly conservative, the worst that can happen is a temporary cash surplus. ACTION POINT: Develop "worst case" estimates of cash flow and cash forecasts for new ventures. Monitor receivables and inventory levels closely. Innovation and Entrepreneurship
2 SEP — Record Time and Eliminate Time Wasters All one has to do is to learn to say "no" if an activity contributes nothing. The first step toward executive effectiveness is to record actual time-use. There are executives who keep such a time log themselves. Others have their secretaries do it for them. The important thing is that it gets done, and that the record is made in "real" time. A good many effective executives keep such a log continuously and look at it regularly every month. After each such sample, they rethink and rework their schedule. First one tries to identify and eliminate the things that need not be done at all, the things that are purely a waste of time without any results whatever. To find these time wasters, one asks of all activities in the time records: "What would happen if this were not done at all?" And if the answer is, "Nothing would happen," then obviously the conclusion is to stop doing it. ACTION POINT: Create a time log of your activities. Eliminate those activities that are time wasters. The Effective Executive 6 SEP — Performance Appraisals Appraisals — and the philosophy behind them — are far too much concerned with "potential." Effective executives usually work out their own unique form of performance appraisal. It starts out with a statement of the major contributions expected from a person in his past and present positions and a record of his performance against these goals. Then it asks four questions:
This appraisal actually takes a much more critical look at a person than the usual procedure does. But it focuses on strengths. Weaknesses are seen as limitations to the full use of strengths and to one's own achievement, effectiveness, and accomplishment. The last question (b.) is the only one that is not primarily concerned with strengths. Subordinates, especially bright, young, and ambitious ones, tend to mold themselves after a forceful boss. There is, therefore, nothing more corrupting and more destructive in an organization than a forceful but basically corrupt executive. Here, therefore, is the one area where weakness is a disqualification by itself rather than a limitation on performance capacity and strength. ACTION POINT: Adhere to the four questions in this reading when conducting performance appraisals. The Effective Executive 7 SEP — How to Develop People Any organization develops people; it either forms them or deforms them. Any organization develops people; it has no choice. It either helps them grow or it stunts them. What do we know about developing people? Quite a bit. We certainly know what not to do, and those don'ts are easier to spell out than the dos. First, one does not try to build upon people's weakness. One can expect adults to develop manners and behavior and to learn skills and knowledge. But one has to use people's personalities the way they are, not the way we would like them to be. A second don't is to take a narrow and shortsighted view of the development of people. One has to learn specific skills for a specific job. But development is more than that: it has to be for a career and for a life. The specific job must fit into this longer-term goal. Another thing we know is not to establish crown princes. Look always at performance, not at promise. With the focus on performance and not potential, the executive can make high demands. One can always relax standards, but one can never raise them. Next, the executive must learn to place people's strengths. In developing people the lesson is to focus on strengths. Then make really stringent demands, and take the time and trouble (it's hard work) to review performance. Sit down with people and say: "This is what you and I committed ourselves to a year ago. How have you done? What have you done well?" ACTION POINT: Develop your people. Focus first on their strengths. Then make high demands based on a person's strengths. Finally, periodically review their performance. Managing the Non-Profit Organization 12 SEP — Managing Oneself: Identify Strengths It takes far less energy to move from first-rate performance to excellence than it does to move from incompetence to mediocrity. You can learn to identify your strengths by using feedback analysis. This is a simple process in which you write down every one of your key decisions and key actions along with the results that you expect them to achieve. Nine to twelve months later, check the actual results against expectations. After two to three years of use, you will know your strengths by tracking those decisions and actions where actual results fell in line with or exceeded expectations. Once you have identified your strengths through feedback analysis, you can use this knowledge to improve performance and results. You can make this happen in five ways.
ACTION POINT: Use feedback analysis to identify your strengths. Then go to work on improving your strengths. Identify and eliminate bad habits that hinder the full development of your strengths. Figure out what you should do and do it. Finally, decide what you should not do. Management Challenges for the 21st Century Managing OneseIf (Corpedia Online Program) 13 SEP — Managing Oneself: How Do I Perform? Performance that violates your values corrupts, and it will ultimately sap and destroy your strengths. Just as different people have different strengths and weaknesses, they also work and perform in different ways. For example, some people learn by reading, others by listening. And few readers can become successful listeners or vice versa. Learning style is just one of several factors that go into making up a person's work style. There are other questions that must be answered. Do you work best when cooperating with others, or do you achieve results when working alone? If you work best with others, is it usually as a subordinate, peer, or supervisor? Do you need a predictable, structured work environment? Do you thrive under pressure? You also have to consider your personal values: are they comparable to or at least compatible with your strengths? If there is any conflict between your values and strengths, always choose values. Performance that violates your values corrupts, and it will ultimately sap and destroy your strengths. These are just some of the questions that must be answered. What is important is to figure out your unique work style. ACTION POINT: Think through your work style by answering the questions in this reading. Think through your values. Do not apply your strengths to a position that will destroy your values. Find a position that is compatible with your values. Management Challenges for the 21st Century Managing OneseIf (Corpedia Online Program) 15 SEP — Managing Oneself: Work Relationships Organizations are built on trust, and trust is built on communication and mutual understanding. Just as it is important for you to know your own strengths, work styles, and values, it is also important that you learn the strengths, work styles, and values of the people around you. Each person is an individual, and there are likely to be great differences between yourself and others. But such differences do not matter. What does matter is whether everyone performs. Consistent group performance can be achieved only if each person within the group is able to perform as an individual. And to help make this happen, you must build on other people's strengths, other people's work styles, and other people's values. Once you have identified your strengths, work style, and values, as well as what your contribution should be, you must then consider who else needs to know about it. Everyone who depends on you and on whom you depend needs to know this information about how you work. Since communication is a two-way process, you should feel comfortable asking your coworkers to think through and define their own strengths, work styles, and values. ACTION POINT: List the people who depend upon your contributions and the specific contribution each person requires. List those people on whom you depend and the contributions you require from each person. Inform both groups and be sure each person is served properly, including you. Management Challenges for the 21st Century Managing OneseIf (Corpedia Online Program) 12 OCT — Getting Others to Buy The Decision If you wait until you have made the decision and then start to "sell" it, it's unlikely to ever become effective. Unless the organization has "bought" the decision, it will remain ineffectual; it will remain a good intention. And for a decision to be effective, being bought has to be built into it from the start of the decision-making process. This is one lesson to learn from Japanese management. As soon as it starts the decision-making process, and long before the final decision is made, Japanese management sells the decision. Everyone who is likely to be affected by a decision — say, to go into a joint venture with a Western company or to acquire a minority stake in a potential US distributor — is asked to write down how such a decision would affect his work, job, and unit. He is expressly forbidden to have an opinion and to recommend or to object to the possible move. But he is expected to think it through. And top management, in turn, then knows where each of these people stands. Then top management makes the decision from the top down. There isn't much "participatory management" in Japanese organizations. But everyone who will be affected by the decision knows what it is all about — whether he likes it or not — and is prepared for it. There is no need to sell it — it's been sold. ACTION POINT: Involve everyone who will have to carry out a decision in the process of making the decision. Then, based upon their contributions, decide who is most likely to carry out the decision effectively. Management: Tasks, Responsibilities, Practices The Elements of Decision Making (Corpedia Online Program)
13 OCT — Testing the Decision Against Results "Poor Ike . Now … he'll give an order and not a damn thing is going to happen." Feedback has to be built into the decision to provide a continuous testing, against actual events, of the expectations that underlie the decision. Decisions are made by people. People are fallible; at their best, their works do not last long. Even the best decision has a high probability of being wrong. Even the most effective one eventually becomes obsolete. When General Dwight D. Eisenhower was elected president, his predecessor, Harry S. Truman, said: "Poor Ike; when he was a general, he gave an order and it was carried out. Now he is going to sit in that big office and he'll give an order and not a damn thing is going to happen." The reason why "not a damn thing is going to happen" is, however, not that generals have more authority than presidents. It is that military organizations learned long ago that futility is the lot of most orders and organized the feedback to check on the execution of the order. They learned long ago that to go oneseIf and look is the only reliable feedback. Reports — all a president is normally able to mobilize — are not much help. ACTION POINT: Make sure you go out and "kick the tires" and get on-site feedback. Find out if decisions have accomplished their intended results. The Effective Executive
14 OCT — Continuous Learning in Decision Making Feedback from the results of a decision compared against the expectations when it was being made makes even moderately endowed executives into competent decision makers. In no area is it more important than in decision making to build continuous learning into the executive's work. And the way to do this is to feed back from results of the decision to the expectations when it was being made. Whenever executives make an important decision, they put down in writing what results are expected and when. And then the executive, nine months or a year later, begins to feed back from the actual results to the expected ones and keeps on doing this as long as the decision is in force. So in an acquisition, for example, an executive compares the actual results to the expected ones for the two to five years it takes fully to integrate an acquisition. It's amazing how much we learn by doing this and how fast. And physicians have been taught since Hippocrates in Greece 2,400 years ago to write down what course they expect a patient's condition to take as a result of the treatment the physician prescribes, that is, as a result of the physician's decision. And that, as every experienced physician will tell you, is what makes even moderately endowed doctors into competent practitioners within a few years. ACTION POINT: When you make an important decision, make sure to write down the expected "prognosis." Then at a time appropriate for the particular decision, go out and look at what results have transpired. Compare results to your prognosis. Use what you learn in subsequent decision situations. The Effective Executive The Elements of Decision Making (Corpedia Online Program)
22 OCT — Purpose of Government Every government is a "government of forms." Government is a poor manager. It is, of necessity, concerned with procedure, and it is also, of necessity, large and cumbersome. Government is also properly conscious of the fact that it administers public funds and must account for every penny. It has no choice but to be "bureaucratic." Whether government is a "government of laws" or a "government of men" is debatable. But every government is, by definition, a "government of forms." This means inevitably high costs. ¶¶¶ But, the purpose of government is to make fundamental decisions, and to make them effectively. The purpose of government is to focus the political energies of society. It is to dramatize issues. It is to present fundamental choices. The purpose of government, in other words, is to govern. This, as we have learned, in other institutions, is incompatible with "doing." Any attempt to combine governing with "doing" on a large scale, paralyzes the decision-making capacity. Business has had to face, on a much smaller scale, the problem that modern government now faces: the incompatibility between "governing" and "doing." Business management learned that the two have to be separated, and that the top organ, the decision maker, has to be detached from "doing." Otherwise he does not make decisions, and the "doing" does not get done either. In business this goes by the name of "decentralization." ACTION POINT: What are some clear examples of nonprofit organizations that are doing a better job addressing a social problem than a government agency? The Age of Discontinuity
7 NOV — The Failed Strategy Most of the people who persist in the wilderness leave nothing behind but bleached bones. When a strategy or an action doesn't seem to be working, the rule is, "If at first you don't succeed, try once more. Then do something else." The first time around, a new strategy very often doesn't work. Then one must sit down and ask what has been learned. Maybe the service isn't quite right. Try to improve it, to change it, and make another major effort. Maybe, though I am reluctant to encourage this, you might make a third effort. After that, go to work where the results are. There is only so much time and so many resources, and there is so much work to be done. There are exceptions. You can see some great achievements where people labored in the wilderness for twenty-five years. But these examples are very rare. Most of the people who persist in the wilderness leave nothing behind but bleached bones. There are also true believers who are dedicated to a cause where success, failure, and results are irrelevant, and we need such people. They are our conscience. But very few of them achieve. Maybe their rewards are in Heaven. But that's not sure either. "There is no joy in Heaven over empty churches," Saint Augustine wrote sixteen hundred years ago to one of his monks who busily built churches all over the desert. So, if you have no results, try a second time. Then look at it carefully and move on to something else. ACTION POINT: If at first you don't succeed, sit down and ask what you have learned. Improve your approach and try once more. Maybe make a third effort. Then do something else. Managing the Non-Profit Organization
16 NOV — The Right Organization The only things that evolve by themselves in an organization are disorder, friction, malperformance. The pioneers of management a century ago were right: organizational structure is needed. The modern enterprise needs organization. But the pioneers were wrong in their assumption that there is — or should be one right organization. Instead of searching for the right organization, management needs to learn to look for, to develop, to test, the organization that fits the task. There are some "principles" of organization. One is that organization has to be transparent. People have to know and have to understand the organization structure they are supposed to work in. Someone in the organization must have the authority to make the final decision in a given area. It also is a sound principle that authority be commensurate with responsibility. It is a sound principle that any one person in an organization should have only one "master." These principles are not too different from the ones that inform an architect's work. They do not tell him what kind of building to build. They tell him what the restraints are. And this is pretty much what the various principles of organization structure do. ACTION POINT: Reflect on whether your organization is transparent, if decision-making authority is clear, whether authority is commensurate with responsibility, and whether each person has only one master. Management Challenges for the 21st Century Management: Tasks, Responsibilities, Practices
24 NOV — Simulated Decentralization The main rule is to look upon simulated decentralization as a last resort only. Whenever a unit can be set up as a business, no design principle can match federal decentralization. We have learned, however, that a great many large companies cannot be divided into genuine businesses. Yet they have clearly outgrown the limits of size and complexity of the functional or of the team structure. These are the companies that are increasingly turning to "simulated decentralization" as the answer to their organization problem. Simulated decentralization forms structural units that are not businesses but which are still set up as if they were businesses, with maximum possible autonomy, with their own management, and with at least a "simulation" of profit-and-loss responsibility. They buy from and sell to each other using "transfer prices" determined internally rather than by an outside market. Or their "profits" are arrived at by internal allocation of costs to which then, often, a "standard fee," such as 20 percent of costs, is added. ACTION POINT: Produce internal competition by using "micro" profit centers when feasible. Attribute revenue to each unit and match revenue with its cost. Management: Tasks, Responsibilities, Practices
25 NOV — Building Blocks of Organization Contribution determines ranking and placement. "What activities belong together and what activities belong apart?" A searching analysis is needed that groups activities by the kind of contribution they make. There are four major groups of activities, if distinguished by their contribution.
Among the result-producing activities, there are some that directly bring in revenues (or in service institutions, directly produce "patient care" or "learning"). Here belong innovating activities, selling and all the work needed to do a systematic and organized selling job. Here also belongs the treasury function, that is, the supply and management of money in the business. Key activities should never be subordinated to nonkey activities. Revenue-producing activities should never be subordinated to nonrevenue-producing activities. And support activities should never be mixed with revenue-producing and result-contributory activities. ACTION POINT: Give result-producing activities high visibility in your organization. Make sure support activities are subordinated to result producing activities. Consider delegating employee welfare activities to employee teams. Management: Tasks, Responsibilities, Practices
8 DEC — EVA as a Productivity Measure Until a business returns a profit that is greater than its cost of capital, it does not create wealth, it destroys it. Measuring total-factor productivity is one of the major challenges confronting the executive in the age of knowledge work. For manual work, measuring quantity is usually sufficient. In knowledge work, we have to manage both quantity and quality, and we do not know yet how to do that. We must try to assess total-factor productivity using the common denominator of revenues and expenses. By measuring the value added over all costs, including the cost of capital, EVA (economic value added analysis) measures, in effect, the productivity of all factors of production [or the true economic costs produced by all resources used]. Never mind that a business pays taxes as if it had earned a profit. It does not cover its full costs until reported profits exceed its cost of capital. Until a business returns a profit that is greater than its cost of capital, it operates at a loss. And this is why EVA is growing in popularity. It does not, by itself, tell us why a certain product or a certain service does not add value or what to do about it. It does show which products, services, operations, or activities have unusually high productivity and add unusually high value. Then we should ask ourselves, "What can we learn from these successes?" ACTION POINT: Calculate the "economic value added" for your organization or for a product or service that you provide. Management Challenges for the 21st Century From Data to Information Literacy (Corpedia Online Program)
23 DEC — Spiritual Values Only compassion can save — the wordless knowledge of my own responsibility for whatever is being done to the least of God's children. This is knowledge of the spirit. Society needs a return to spiritual values — not to offset the material but to make it fully productive. However remote its realization for the great mass of mankind, there is today the promise of material abundance or at least of material sufficiency. Mankind needs the return to spiritual values, for it needs compassion. It needs the deep experience that the Thou and the I are one, which all higher religions share. In an age of terror, of persecution, and of mass murder, such as ours, the hard shell of moral callousness may be necessary to survival. Without it we might yield to paralyzing despair. But moral numbness is also a terrible disease of mind and soul, and a terrible danger. It abets, even if it does not condone, cruelty and persecution. We have learned that the ethical humanitarianism of the nineteenth century cannot prevent man from becoming beast. The individual needs the return to spiritual values, for he can survive in the present human situation only by reaffirming that man is not just a biological and physiological being but also a spiritual being, that is, creature, and existing for the purposes of his Creator and subject to Him. Only thus can the individual know that the threat of instant physical annihilation of the species does not invalidate his own existence, its meaning, and its responsibility. ACTION POINT: In the presence of the threat of instant annihilation, how can we maintain meaning and responsibility without spiritual values? Landmarks of Tomorrow
31 DEC — From Data to Information Literacy The executive and the knowledge worker have only one tool — information. Information is what holds an organization together and information is what makes individual knowledge workers effective. Enterprises and individuals will have to learn what information they need and how to get it. They will have to learn how to organize information as their key resource. In moving from data literacy to information literacy, you need to answer two principal questions:
To answer these questions you have to rethink:
You will need three different types of information, each with its own concepts. The three primary types of information are:
Your success and the success of your organization depend upon getting these answers right. ACTION POINT: Answer these questions: "What is my job? What should be my contribution?" and "What are the fundamentals of the organization?" Then answer: "What information does my organization need?" and "What information do I need?" Management Challenges for the 21st Century From Data to Information Literacy (Corpedia Online Program)
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“The greatest danger in times of turbulence is not turbulence;
The shift from manual workers
“Managing Oneself (PDF) is a REVOLUTION in human affairs.” …
“More than anything else,
“Making a living is no longer enough
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What’s the next effective action on the road ahead
It’s up to you to figure out what to harvest and calendarize It may be a step forward to actively reject something (rather than just passively ignoring) and then working out a plan for coping with what you’ve rejected.
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