The Alternative to Tyranny
It is fashionable today to talk of a revolt against authority and to proclaim that everybody should “do his own thing.”
This, then, I have to admit, is a most unfashionable book.
It does not talk about rights.
It stresses responsibility.
Its focus is not on doing one’s own thing but on performance.
¶ ¶ ¶
Our society has become, within an incredibly short fifty years, a society of institutions.
It has become a pluralist society in which every major social task has been entrusted to large organizations—from producing economic goods and services to health care, from social security and welfare to education, from the search for new knowledge to the protection of the natural environment.
¶ ¶ ¶
It is understandable that the sudden realization of this change in the crystal structure of society has evoked an angry response, “Down with organization!”
But it is the wrong response.
The alternative to autonomous institutions that function and perform is not freedom.
It is totalitarian tyranny.
¶ ¶ ¶
Our society is neither willing nor able to do without the services that only the institutions can provide.
And the most vocal among our modern Luddites, the would-be institution wreckers, the highly educated young people, are even less able to do without the large organizations than the rest of us.
For it is only in the large organizations that there exist plentiful opportunities to make a living through knowledge, to make a contribution through knowledge, and to achieve through knowledge.
¶ ¶ ¶
If the institutions of our pluralist society of institutions do not perform in responsible autonomy, we will not have individualism and a society in which there is a chance for people to fulfilll themselves.
We will instead impose on ourselves complete regimentation in which no one will be allowed autonomy.
We will have Stalinism rather than participatory democracy, let alone the joyful spontaneity of doing one’s own thing.
Tyranny is the only alternative to strong, performing autonomous institutions.
Tyranny substitutes one absolute boss for the pluralism of competing institutions.
It substitutes terror for responsibility.
It does indeed do away with the institutions, but only by submerging all of them in the one all-embracing bureaucracy of the apparat.
It does produce goods and services, though only fitfully, wastefully, at a low level, and at an enormous cost in suffering, humiliation, and frustration.
To make our institutions perform responsibly, autonomously, and on a high level of achievement is thus the only safeguard of freedom and dignity in the pluralist society of institutions.
¶ ¶ ¶
But it is managers and management that make institutions perform.
Performing, responsible management is the alternative to tyranny and our only protection against it.
«§§§»
Management is work, and as such it has its own skills, its own tools, its own techniques.
A good many skills, tools, and techniques ate discussed in this book, a few in some detail.
But the stress is not on skills, tools, and techniques.
It is not even on the work of management.
It is on the tasks.
¶ ¶ ¶
For management is the organ, the life-giving, acting, dynamic organ of the institution it manages.
Without the institution, e. g., the business enterprise, there would be no management.
But without management there would also be only a mob rather than an institution.
The institution, in turn, is itself an organ of society and exists only to contribute a needed result to society, the economy, and the individual.
Organs, however, are never defined by what they do, let alone by how they do it.
They are defined by their contribution.
¶ ¶ ¶
Most books on management are books on the work of management.
They look at management from the inside.
This book starts with the tasks.
It looks at management first from the outside and studies the dimensions of the tasks and the requirements in respect to each of them (Part One).
Only then (in Part Two) does it turn to the work of the organization and the skills of management, and (in Part Three) to top management, its tasks, its structures, and its strategies.
¶ ¶ ¶
I myself have for many years been deeply interested in the management sciences, that is, in the manager’s logical and analytical tools.
But there are no equations in this book, no graphs, no mathematical formulas, not even a table.
The stress throughout the book is not on how to do, let alone on how to make the tools to do it.
Even when discussing skills, even when discussing the management sciences themselves, the stress is on accomplishments and results.
This book is task-focused throughout.
«§§§»
This book is also manager-focused.
The starting point was the question, What does the manager have to know, or at least to understand, to be equal to his task?
¶ ¶ ¶
The many, many books on management are skill-focused, discipline-focused, or function-focused.
They deal with one aspect of a manager’s task.
They may deal with managing a business or a hospital or with managing people, with tools, e. g., controls, or with specific problems.
They deal with the author’s particular area of concern or expertise, rather than with the tasks of the manager.
¶ ¶ ¶
This book was designed to be different.
It was designed to take as starting point and as principle that informs the entire work the manager’s needs rather than the author’s own knowledge or special areas of interest.
This explains what is included and what is left out.
¶ ¶ ¶
This is a long book—though I dislike long books.
And yet it is not a comprehensive book, but highly selective.
A good many readers, I am sure, will complain that this or that important topic is not even mentioned; many more will undoubtedly criticize the author’s decision to stress one topic while playing down another.
¶ ¶ ¶
Undoubtedly the author’s own judgment and his own preferences played a part.
But I have at least tried to decide what belongs in this book and how much importance to give to it by an objective set of criteria, developed as the result of years of working closely with managers on all levels, with managers in large and small businesses, and with managers in business and in nonbusiness service institutions.
What every manager needs to know has been included in this book.
What not every manager needs to know, however important or interesting, has been excluded, or at least given only cursory treatment.
This explains why such topics as “Managing Money in the Business” or “From Selling to Marketing”—to name two chapters I had in my first draft—are not to be found in the book, or why, to give another example, the management sciences are treated in one short chapter only.
It explains, however, why a good deal of space has been devoted to top management and to the relationships between structure and strategy—topics that are not commonly considered in a book on management.
¶ ¶ ¶
It was not my intention to include every problem any manager might conceivably have to face.
But it was my intention to include those areas of concern with which all managers can expect to deal and in which all managers have to be literate regardless of their functional background, the mission and purpose of their institution, or the size of their organization.
And this, then, meant a big book, since the manager’s job is big, and the management tasks demanding.
«§§§»
Management, the book maintains throughout, is a discipline, or at least is capable of becoming one.
It is not just common sense.
It is not just codified experience.
It is at least potentially an organized body of knowledge.
This book tries to present the little we know so far.
But it also tries to present the much larger body of our organized ignorance, that is, the areas in which we know that we need new knowledge, in which we can define what we need—but in which we do not as yet possess the knowledge.
¶ ¶ ¶
Indeed, these areas of organized ignorance are perhaps the core of this book.
For in management we have clearly outgrown the knowledge that had been painfully amassed in what one might call the Heroic Age of Management—the fifty years before World War II—by a few men and women working mostly in isolation and sustained by vision and faith rather than by public acclaim.
It was this knowledge that the management boom of the twenty-five years between World Was II and 1970 popularized, disseminated, and made effective over most of the world.
¶ ¶ ¶
Now we know that even in the areas in which we have a little knowledge, we do not know enough.
There are new tasks in these areas for which we are not yet equipped with tested, proven approaches and tools.
New areas of challenge and new management problems have arisen, where we have done little work so far and where we have so far only ignorance rather than even a modicum of knowledge.
¶ ¶ ¶
This book attempts to identify and define these areas.
But it also attempts to develop at least first approaches to these areas, to think through policies, principles and practices to accomplish the new tasks and to satisfy the new challenges.
This book tries to equip the manager with the understanding, the thinking, the knowledge, and the skills for today’s and also for tomorrow’s job
«§§§»
While management is a discipline—that is, an organized body of knowledge and as such applicable everywhere—it is also “culture.”
It is not value-free science.
Management is a social function and embedded in a culture—a society—a tradition of values, customs, and beliefs, and in governmental and political systems.
Management is—and should be— culture-conditioned; but, in turn, management and managers shape culture and society.
¶ ¶ ¶
From the beginning management was polycentric.
Management as a discipline and management as a practice were tackled from the beginning by men of many nationalities and races.
It was a temporary aberration in the years of the management boom to forget this and to believe instead—against all evidence—that management was an American specialty, if not an American invention.
Today it is obvious again that management is polycentric.
The management boom has not Americanized management.
It has left untouched fundamental national characteristics throughout the world, such important areas, for instance, as the relationship between government and business management, the fundamentals of managing people, or the structure of top management.
There surely is no “management gap” today between Western Europe or Japan, and the United States (if there ever was one).
¶ ¶ ¶
This book is based on my experience, especially as a consultant, and mainly in America, or at least with American businesses and public-service institutions.
I have consciously attempted during the last fifteen years to expand my horizon and to work with managements outside the United States (especially in Great Britain, Western Europe, Ja- pan, and Latin America).
I have tried to study management outside the United States as well as inside.
While the book still has a strong American flavor—inevitably so—I have tried to relate managerial tasks, managerial work, managerial organization, and managerial approaches to culture and society and to present, especially in the examples and illustrations, management as worldwide rather than as confined to this or that country.
I have particularly stressed the Japanese experience—not only because far too few managers in the West understand Japanese management and organization, but also because an understanding of the often very different ways in which Japan, the only non-Western developed country, tackles a common task (e. g., the determination of profitability, the organization of work and workers, or the making of decisions) may help the Western manager to understand better what he himself is trying to do.*
The basic conviction of this book throughout is that each country’s managers can and need to learn from the best others have to offer.
«§§§»
Management is tasks.
Management is a discipline.
But management is also people.
Every achievement of management is the achievement of a manager.
Every failure is the failure of a manager.
People manage, rather than “forces” or “facts.”
The vision, dedication, and integrity of managers determines whether there is management or mismanagement.
¶ ¶ ¶
There are no anecdotes in this book; every illustration or example is intended to drive home an essential point.
But in presenting cases and examples, I have also tried to make the reader aware of the men, and especially of the practicing managers, who first tackled major management jobs:
Georg Siemens of the Deutsche Bank, for instance, first working out a century ago the function and structure of top management;
Theodore N. Vail of the American Telephone Company, a little later, first thinking through “What is our business?”; or
Thomas Watson, Sr., trying—and at the same time not trying—to make his little IBM become capable of growing into a big company.
But the book always tries to integrate man and task.
It tries to deal with objective and impersonal tasks but also with the human requirements, skills, and basic attitudes needed to perform these tasks.
“Le style c’est l’homme” may apply to a writer.
But in other pursuits style tends to be manner rather than substance.
There is not much talk of style in this book.
But there is stress on character.
In the last analysis management is practice.
Its essence is not knowing but doing.
Its test is not logic but results.
Its only authority is performance.
This is therefore not a philosophical book even though it deals with fundamentals.
It grew out of practice.
And it centers on practice.
¶ ¶ ¶
“From Management Boom to Management Performance” is the title of the introductory section of this book.
It could have been the title of the book itself.
In the next decades managers will have to meet far greater performance demands than most of them can envisage, and in all areas.
A great deal more will depend on their performance than the prosperity or even the survival of their own company or institution.
For, to repeat, performing management of our institutions is the only alternative to tyranny in our pluralistic society of institutions.
¶ ¶ ¶
And the aim, the motive, and the purpose of this book are to prepare today’s and tomorrow’s managers for performance.
¶ ¶ ¶
In its aim, its scope, and its approach this book differs from my earlier management books:
Concept of the Corporation (New York, John Day, 1946;
new edition 1972;
British edition, London, Heinemann, 1946 under the title Big Business);
The Practice of Management (New York, Harper & Row, 1954; London, Heinemann, 1955, and in Mercury and Pan paperbacks);
Managing for Results (New York, Harper & Row, 1964; London, Heinemann, 1964, and in Pan paperback); and
The Effective Executive (New York, Harper & Row, 1966; London, Heinemann, 1966, and in Pan paperback).
But Management, while in every respect a new book, did, of course, evolve out of my earlier work.
And I have not hesitated to draw on my earlier work where appropriate.
¶ ¶ ¶
The heaviest debt is owed to The Practice of Management.
Direct borrowings from this earlier book are confined to a few pages in Chapters 4, 5, 6, 7, 34, and 36.
But Chapters 20, 29, 31, and 50 also develop ideas that were first presented in The Practice of Management.
At the most, however, such material accounts for one-twentieth or so of the text of this new volume—and primarily for basic concepts such as the question “What is our business?”; Business Objectives; Management by Objectives and Self-Control; and the elements in the work of the manager, which were first introduced in Practice of Management twenty years ago and have since become fundamental tenets of management and key concepts.
¶ ¶ ¶
A word might be said about the use of cases and examples in this book.
Wherever a company (or a public-service agency) is identified by name in the book, everything in the example or illustration is taken from published and universally accessible sources, whether the company’s own statements and reports or reports on it in the public press.
The interpretation in every case is, of course, mine; but the facts are in the public domain.
Wherever a company—Or an industry—is not specifically identified by name I have used—always with the company’s knowledge and consent—private information, whether obtained in the course of consulting work or, more often, through personal acquaintance, discussions in management meetings and seminars, or private correspondence.
In every such case the company (or industry) has been so carefully camouflaged that even people in the company itself will probably not recognize it.
The one thing the reader can be sure of if he reads of a “hardware manufacturer in the American Midwest” is that the company is not a hardware manufacturer and is not located in the Midwest.
The facts given in the illustration are reported faithfully and accurately; the specific company where they occurred is carefully concealed.
Peter F. Drucker Claremont, California New Year’s Day, 1985
Management
8. The Power and Purpose of Objectives: The Marks & Spencer Story and Its Lessons
Social Revolution as Business Purpose and Mission
The Concentration Decision
The Objectives: Marketing; Innovation; Key Resources; Productivity; Social Responsibilities
Profit as Result Rather Than as Goal
Converting Objectives into Work Assignments
The Lessons
Specifications for Objectives
Objectives Needed in All Survival Areas
The Eight Areas of Objectives
The Basis for Work and Assignments
Objectives and Measurements
The Use of Objectives
One company in the Western world can (as has been said earlier) be compared with Sears, Roebuck: Marks & Spencer.
It might even be slightly ahead in growth of sales and profits over a long period of years.
Like Sears, Marks & Spencer is a chain retailer.
It opened its first penny bazaar in 1884, or just about the time Richard Sears made his first mail-order offer of cheap but reliable watches to the Midwestern farmer.
By 1915 the company was building variety stores.
It has been growing fast ever since.
Its most spectacular growth period, however, was the ten years between 1963 and 1972—a period in Britain’s economic history which was characterized by “stagflation,” i. e., inflationary stagnation, rather than growth.
During this difficult period Marks & Spencer more than doubled its sales volume (from £184 million to £463 million, or in U.S. dollars, $460 million to $1,100 million).
Profits went up just as fast, from £22 million to £54 million ($55 million to $135 million).
Equally remarkable was the profit margin—almost 12 percent on sales before taxes—which is double what any other retail merchant (except Sears) would consider fully satisfactory.
Social Revolution as Business Mission
By the mid-twenties the four brothers-in-law (Simon Marks, Israel Sieff, Harry Sacher, and Norman Laski) who had built the penny bazaars of 1915 into a major chain of variety stores owned a successful business.
They might have been satisfied to rest on their laurels and to enjoy their considerable wealth.
Instead they decided—following a trip to America by Simon Marks in 1924 in the course of which he carefully studied Sears, Roebuck—to rethink the purpose and mission of their business.
The business of Marks & Spencer, they decided, was not retailing.
It was social revolution.
Marks & Spencer redefined its business as the subversion of the class structure of nineteenth-century England by making available to the working and lower middle classes upper-class goods of better than upper-class quality, and yet at prices the working and lower-middle-class customer could well afford.
Marks & Spencer was by no means alone in the England of the twenties in seeing a major opportunity in the rapid social changes of the post-World War I period (another contemporary example was Montague Burton, the “Fifty Shilling Tailor”).
What made Marks & Spencer unique and successful, however, was its conversion of the definition of “what our business is, and should be” into clear, specific, operationally effective and multiple objectives.
This required first a decision as to what to concentrate on, that is, a basic strategy objective.
Marks & Spencer had been a variety store chain like many others, offering a large assortment of products which had nothing in common except low price.
Now the company decided to concentrate on wearing apparel (to which it soon added household textiles such as towels and draperies).
This was a rational decision.
In the England of that time dress was still highly class-determined and the most visible of all class distinctions.
Yet all of Europe, after World War I, had become fashion conscious.
At the same time mass-production facilities for good-quality but inexpensive fabrics and clothes had come into being, in large part as a result of the huge demand for uniforms during World War I. New textile fibers, such as rayon and acetate, were coming on the market.
There was still, however, no mass-distribution system in England for well-designed, up-to-date, and inexpensive clothing for the masses.
Within a few years the new Marks & Spencer had become the leading clothing and textile distributor in England, a position held ever since.
By 1972 clothing sales accounted for a full three-quarters of total Marks & Spencer volume, i. e., for £327 million (roughly $800 million).
After World War II the same thinking was applied to a new major product category: food.
During World War lI the English people, formerly known for their dogged resistance to any innovation in eating, learned to accept new foods.
Marks & Spencer’s food business accounted, in 1972, for the remaining one-fourth of its sales.
From having been a successful variety chain in the early twenties, and even in the early thirties, Marks & Spencer purposefully changed itself into a highly distinct “specialty” marketer—maybe the largest in the world.
The concentration decision then enabled the company to set specific marketing objectives.
The decision enabled it to decide who its customer was and should be; what kind of store it needed and when; what pricing policy to follow; and what market penetration to aim at.
The next area which Marks & Spencer tackled was that of innovation objectives.
The clothing and textiles Marks & Spencer needed did not exist at the time.
Marks & Spencer started out with quality control, like any other large retailer.
But it rapidly built its quality-control laboratories into research, design, and development centers.
It developed new fabrics, new dyestuffs, new processes, new blends, and so on.
It developed designs and fashions.
Finally, it went out and looked for the right manufacturer, whom it often had to help get started—for the existing old-line manufacturers were for obvious reasons none too eager to throw in their lot with the brash upstart who tried to tell them how to run their business.
And when, after World War II, the company moved into prepared and processed foods, bakery goods, and dairy products, it applied the same innovative approach to a new industry.
Marks & Spencer set innovation goals in marketing.
It pioneered, for instance, in consumer research in the early thirties, when such work was still so new* that Marks & Spencer had to develop the needed techniques.
*General Motors had a consumer research activity well before 1929.
I doubt that this was known to Marks & Spencer, however; it was not generally known even within the American automobile industry.
Marks & Spencer set objectives for the supply and development of key resources.
It early copied and adapted the Sears program for recruiting, training, and developing managers.
It set objectives for the systematic development of financial resources, and measurements to control the utilization of these resources.
And it set objectives for the development of its physical facilities, that is, for retail stores.
Hand in hand with these objectives for resources went objectives for their productivity.
Marks & Spencer had originally taken its measurements and controls from America.
In the twenties and early thirties it began to set its own objectives for continuously improving the productivity of key resources.
As a result, Marks & Spencer has a singularly high productivity of capital—surely one of the keys to its success.
Unnoticed, by and large—but fully as important—is the productivity of the Marks & Spencer retail store, which exceeds, to my knowledge, anything to be found anyplace else, including even Sears, Roebuck or Kresge, the acknowledged store-management virtuosi of the American retail scene.
Up till the late twenties the expansion of Marks & Spencer had been achieved primarily by opening new stores.
Since the thirties Marks & Spencer’s expansion has been achieved primarily by making each store more productive and by raising sales per square foot of selling space.
Marks & Spencer, measured by the number of its stores, is still a small chain—there are only 250 stores.
The stores themselves are not large, even by English standards; the average selling area is only 20,000 square feet per store.
(The large American supermarket, by comparison, goes up to 100,000 square feet.)
Yet these small stores sell something like $4 million apiece a year, which is many times what even highly successful retail stores of other companies do.
The only explanation is continual upgrading of volume per store, that is, upgrading of merchandise, display, and sales per customer.
Store selling space is the controlling resource of a retail merchant; Marks & Spencer’s success in raising its utilization was central to its performance.
Marks & Spencer set objectives for its social responsibilities, and especially for areas of major impact: its own work force and its suppliers.
It introduced “staff manageresses” into its stores to look after the employees, to take care of personal problems, and to make sure employees are treated with intelligence and compassion.
Personnel management remains the job of the store manager.
The staff manageress was set up to be the “people conscience” of the company.
Similarly Marks & Spencer developed objectives for its relations with its suppliers.
The more successfully a supplier works with Marks & Spencer, the more dependent upon the company he will be.
To safeguard the supplier against exploitation by the company became a concern of the company’s management.
It set out to develop a “putting out” system which, unlike its preindustrial predecessor of early eighteenth-century England, would not impoverish the supplier and make him less secure but would, on the contrary, enrich the supplier and give him security.
But what about a profit objective?
The answer is that there has never been one.
Profit goals have been anathema at Marks & Spencer.
Obviously the company is highly profitable and highly profit conscious.
But it sees profit not as an objective but as a requirement of the business, that is, not as a goal but as a need.
Profit, in the Marks & Spencer view, is the result of doing things right rather than the purpose of business activity.
It is, above all, determined by what is necessary to attain company objectives.
Profitability is a measurement of how well the business discharges its functions in serving market and customer.
Above all, it is a restraint; unless profit is adequate to cover the risks, a company will not be able to attain its objectives.
I do not know how conscious Marks & Spencer’s top management was in the early years, the late twenties and early thirties, of the full import of the decisions they then made.
There was probably no master plan.
But the young key executives who were brought into the firm in those years to take on new jobs such as innovation or the development of productivity objectives and standards were fully aware that their company had committed itself to a definition of what its business was—and they knew what the definition entailed.
They were highly conscious of the company’s social and business objectives.
They knew what these objectives meant to each of them individually in terms of performance goals, performance standards, and demands for their own contribution.
Marks & Spencer from the start converted objectives into work assignments.
It thought through what results and contributions were needed in each objectives area.
It assigned responsibility for these results to someone and held him accountable.
And it measured performance and contribution against the objectives.
The Lessons
The Marks & Spencer story reaffirms the central importance of thinking through “what our business is and what it should be.”
But it also shows that this, by itself, is not enough.
The basic definition of the business and of its purpose and mission have to be translated into objectives.
Otherwise, they remain insight, good intentions, and brilliant epigrams which never become achievement.
The Marks & Spencer story brings out the specifications for objectives.
Each of them will be discussed in some detail in the next chapter.
But here is the list:
1. Objectives must be derived from “what our business is, what it will be, and what it should be.”
They are not abstractions.
They are the action commitments through which the mission of a business is to be carried out, and the standards against which performance is to be measured.
Objectives, in other words, are the fundamental strategy of a business.
2. Objectives must be operational.
They must be capable of being converted into specific targets and specific assignments.
They must be capable of becoming the basis, as well as the motivation, for work and achievement.
3. Objectives must make possible concentration of resources and efforts.
They must winnow out the fundamentals among the goals of a business so that the key resources of men, money, and physical facilities can be concentrated.
They must, therefore, be selective rather than encompass everything.
4. There must be multiple objectives rather than a single objective.
Much of today’s lively discussion of management by objectives is concerned with the search for the “one right objective.”
This search is not only likely to be as unproductive as the quest for the philosopher’s stone; it does harm and misdirects.
To manage a business is to balance a variety of needs and goals.
And this requires multiple objectives.
5. Objectives are needed in all areas on which the survival of the business depends.
The specific targets, the goals in any objective area, depend on the strategy of the individual business.
But the areas in which objectives are needed are the same for all businesses, for all businesses depend on the same factors for their survival.
A business must first be able to create a customer.
There is, therefore, need for a marketing objective.
Businesses must be able to innovate or else their competitors will obsolesce them.
There is need for an innovation objective.
All businesses depend on the three factors of production of the economist, that is, on the human resource, the capital resource, and physical resources.
There must be objectives for their supply, their employment, and their development.
The resources must be employed productively and their productivity has to grow if the business is to survive.
There is need, therefore, for productivity objectives.
Business exists in society and community and, therefore, has to discharge social responsibilities, at least to the point where it takes responsibility for its impact upon the environment.
Therefore objectives in respect to the social dimensions of business are needed.
Finally, there is need for profit—otherwise none of the objectives can be attained.
They all require effort, that is, cost.
And they can be financed only out of the profits of a business.
They all entail risks; they all, therefore, require a profit to cover the risk of potential losses.
Profit is not an objective but it is a requirement that has to be objectively determined in respect to the individual business, its strategy, its needs, and its risks.
Objectives, therefore, have to be set in these eight key areas:
- Marketing
- Innovation
- Human Organization
- Financial Resources
- Physical Resources
- Productivity
- Social Responsibility
- Profit Requirements
Objectives in these key areas enable us to do five things:
- to organize and explain the whole range of business phenomena in a small number of general statements;
- to test these statements in actual experience; to predict behavior;
- to appraise the soundness of decisions while they are still being made; and
- to let managers on all levels analyze their own experience and, as a result, improve their performance.
The Basis for Work and Assignments
Objectives are the basis for work and assignments.
They determine the structure of the business, the key activities which must be discharged, and, above all, the allocation of people to tasks.
Objectives are the foundation for designing both the structure of the business and the work of individual units and individual managers.
Objectives are always needed in all eight key areas.
The area without specific objectives will be neglected.
Unless we determine what shall be measured and what the yardstick of measurement in an area will be, the area itself will not be seen.
(On this see Chapter 39 — Control, Controls and Management.)
The measurements available for the key areas of a business enterprise are still haphazard by and large.
We do not even have adequate concepts, let alone measurements, except for market standing.
For something as central as profitability we have only a rubber yardstick; and we have no real tools at all to determine how much profitability is necessary.
In respect to innovation and, even more, to productivity, we hardly know more than that something ought to be done.
In the other areas—including physical and financial resources—we are reduced to statements of intentions; we do not possess goals and measurements for their attainment.
However, enough is known about each area to give a progress report at least.
Enough is known for each business to go to work on objectives.
How to Use Objectives
We know one more thing about objectives: how to use them.
If objectives are only good intentions they are worthless.
They must degenerate into work.
And work is always specific, always has—or should have—clear, unambiguous, measurable results, a deadline and a specific assignment of accountability.
But objectives that become a straitjacket do harm.
Objectives are always based on expectations.
And expectations are, at best, informed guesses.
Objectives express an appraisal of factors that are largely outside the business and not under its control.
The world does not stand still.
The proper way to use objectives is the way an airline uses schedules and flight plans.
The schedule provides for the 9 A.M. flight from Los Angeles to get to Boston by 5 P.M.
But if there is a blizzard in Boston that day, the plane will land in Pittsburgh instead and wait out the storm.
The flight plan provides for flying at 30,000 feet and for flying over Denver and Chicago.
But if the pilot encounters turbulence or strong headwinds he will ask flight control for permission to go up another 5,000 feet and to take the Minneapolis-Montreal route.
Yet no flight is ever operated without schedule and flight plan.
Any change is immediately fed back to produce a new schedule and flight plan.
Unless 97 percent or so of its flights proceed on the original schedule and flight plan—or within a very limited range of deviation from either—a well-run airline gets another operations manager who knows his job.
Objectives are not fate; they are direction.
They are not commands; they are commitments.
They do not determine the future; they are means to mobilize the resources and energies of the business for the making of the future.
