Peter Drucker Real Guru

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  • Peter F. Drucker The Father of Modern ManagementVenkat ramPrabhash JhaBikash Gupta

  • AGENDA

    Introduction about Peter DruckerContributions made Relevance in present contextQuestions

  • Peter Ferdinand Drucker (1909 2005)Management Consultant Born in Kaasberg (Vienna),AustriaDoctorate in International Law, Germany 1937 Moved to U.S Professor - N.Y.University (1950-1971)Professor Claremount Graduate University (1971 - 2005)

  • Career . . .Started as business thinker (1945) General Motors.

    created Concept of Corporation. Author of thirty books.Editorial Columnist Wall Street Journal (1975 1995)Contributor to

    - Harvard Business Review. - The Atlantic Monthly. - The Economist Consultant to businesses and non-profit organizationsAwarded Presidential Medal of Freedom by U.S President.

  • Seminal works in managementConcept of Corporation The Practice Of Management Technology Management and Society The changing World of ExecutiveThe Frontiers of Management The End of Economic Man Peter Drucker on the Profession of ManagementManagement Challenges of 21st Century

  • Ideas through Druckers WritingsA profound skepticism about macroeconomic theory. Drucker contended that economists of all schools fail to explain significant aspects of modern economies. A desire to make everything as simple as possible. According to Drucker, corporations tend to produce too many products, hire employees they don't need (when a better solution would be contracting out), and expand into economic sectors that they should stay out of. The need for "planned abandonment." Corporations as well as governments have a natural human tendency to cling to "yesterday's successes" rather than seeing when they are no longer useful. The lasting contribution of the "father of scientific management", Frederick Winslow Taylor. Although Drucker had little experience with the analysis of blue-collar work (he spent his career analyzing managerial work), he credited Taylor with originating the seminally important idea that work can be broken down, analyzed, and improved. He wrote extensively about Management by objectives A company's primary responsibility is to serve its customers. Profit is not the primary goal.

  • Contributions madeDruckers 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

  • The timelineIt was Drucker who introduced the idea of decentralization -- in the 1940s -- which became a bedrock principle for virtually every large organization in the world.

    He was the first to assert -- in the 1950s -- that workers should be treated as assets, not as liabilities to be eliminated .

    He originated the view of the corporation as a human community -- again, in the 1950s -- built on trust and respect for the worker and not just a profit-making machine, a perspective that won Drucker an almost godlike reverence among the Japanese

  • The timeline.ContdHe first made clear -- still the '50s -- that there is "no business without a customer," a simple notion that ushered in a new marketing mind-set. He argued in the 1960s -- long before others -- for the importance of substance over style, for institutionalized practices over charismatic, cult leaders. And it was Drucker again who wrote about the contribution of knowledge workers -- in the 1970s -- long before anyone knew or understood how knowledge would trump raw material as the essential capital of the New Economy.

  • Some more insights from the oracleDrucker and MBO

    A manager's primary task is to manage for results by translating corporate objectives into departmental, group and individual measures of performance.

    At least once every five years every form should be put on trial for its life.

  • Drucker and MarketingHis most famous book is The Practice of Management, published in 1954. Three questions that every company seeking to establish a brand must ask itself: What is our business? Who is our customer? What does our customer consider valuable?

    What is the point of bringing a 200 pound body downtown when all you want of it is only 8 pound brain?

  • I am more an insultant than a consultantI scold people for a fee.Marketing should have just one concern the customer. Consider this: The purpose of business is not to make a sale, but to make and keep a customer. The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself. Best of all: "Marketing is the whole business seen from the customer's point of view."

    Marketing is not about advertising or positioning, convincing targets about value propositions, brand equity or any other buzzwords.

  • Peter Drucker The Information AgeCompetitive advantage is created through information-based organizationsFour Critical Areas:Develop rewards, recognition and career opportunities that stimulate information sharingCreate a unified vision of how the organization will share informationCreate the management structure that enables cross-boundary information sharingEnsure the continuous supply and training of staff and volunteers that can use the information

    When a subject becomes totally obsolete we will make it a required course.

  • Learning org- Org DNAHBS review as one of top Business Ideas in 2005

  • Unhealthy versus Healthy

  • Drucker and the Non-ProfitsThe Drucker FoundationNon-profit groups can build communities while providing valuable services and fostering innovation."Convert donors into contributors." Non-profit groups as leaders in the knowledge-driven enterprises that would characterize all economic activity in the future.

    The Non-Profits spend far less for results than governments spend for failure

  • Relevance of Peter Drucker TheoriesTriple Bottom Line Reporting (TBLR).Market Positioning.Management by Objective (MBO).Value & Target Costing.Strategic Planning.Market Segmentation.Knowledge Workers.Corporate Governance.Dynamics of profit.

  • Relevance of Peter Drucker Theories

    Organizations are not only an economic entity but Socio Economic entity.It Works on Triple Bottom Line Reporting (TBLR).Bottom line 1 : Financial Performance - ProfitBottom Line 2 : Environmental Performance PlanetBottom line 3 : Social Performance People (CSR)

  • Relevance of Peter Drucker Theories

    Marketing Positioning Who is our competitor?? Aviation Industry ( Air Deccan & Railway), Beverages (Coco cola , Nestle, ITC, Amul)

    CostService qualityAir DeccanSpice JetPerceptual Space

  • Relevance of Peter Drucker TheoriesManagement by objective (MBO)MBO as a means of managerial self-direction & self control. Here objective means long term vision.

    Long term objectives Annual milestones StrategiesTACTICSQUARTERLY OBJECTIVES

  • Relevance of Peter Drucker TheoriesManagement by objective (MBO)

  • Tactic #1AMBOwnerTactic #2AMBOwnerTactic #3AMBOwnerTactic #4AMBOwnerTactic #5AMBOwner1st Quarter Objective2nd Quarter 3rd Quarter 4th Quarter AMBAMBAMBAMB1st Quarter 2nd Quarter 3rd Quarter 4th Quarter AMBAMBAMBAMBAnnual Objective # 1AMBOwnerStrategy # 1AMBOwnerAnnual Plan Structure (for each tactic there will be quarterly objectives)

  • Relevance of Peter Drucker Theories

    Target Costing & Value chain Re-engineering Peter defined one of the mission to be what is of value to the customers.What is of Value to theCustomers?Target PricingTarget CostingValue Process Re-engineering

  • Relevance of Peter Drucker TheoriesCorporate Governance

    Basel II, SOX, Clause 49 of Listing Agreement, Section 292 A of the companies Act, 1956, etc are all inclusive list of Corporate Governance after Enron, Zerox scandal.

  • Relevance of Peter Drucker TheoriesKnowledge Workers :Mr Peter suggested to create smarter organizations by hiring the right people, giving them training they need & providing them avenues for sharing their knowledge so it benefits the entire organization.Learning & tech toDeliver and tracktrainingHR planning,Career planning &Performance mgmtKnowledgemanagementSmarterOrganization

  • Relevance of Peter Drucker TheoriesStrategic Planning Peter Drucker categorically mentioned the survival objectives of an organization under following points :-Market StandingHuman Resources ManagementInnovationProfitabilitySocial Responsibility.

    Business strategy of organizations still include above points. It still relevant as of now.

  • Relevance of Peter Drucker TheoriesMarket Segmentation:Mr Peter explanation of Who is our customers still have a relevance in today's age. And it forms the basis of segmentation.

  • Relevance of Peter Drucker TheoriesDynamics of profit:

    Profit is not the only measure of business success. Its other unidentifiable factors such as SWOT analysis, externalities etc are equally imp.

    future cost, cost to cover today's unintended operating crisis & tomorrow uncertain innovative decisions. Amt paid towards workers are not cost but investment. Profit is a means not an end.

  • Peter Drucker QuotesThe art of Leadership is to align the systems strengths and thereby make the system's weakness irrelevant. The most valuable assets of a 21st Century institution, whether business or non business will be its knowledge workers and their productivity. MBO works ---if you know the objectives. 90% of the time you dont. The rate at w