The Essential Drucker

Effective leaders should earn trust. Otherwise, there won’t be any followers – and the only definition of a leader is someone who has followers.

Effective leaders are rarely “permissive”. But when things go wrong – and they always do – they do not blame others.

The effective leader sees leadership as a responsibility rather than as rank and privilege.

One has to make a decision when a condition is likely to degenerate if nothing is done.

Every decision is like a surgery. It is an intervention into a system and therefore carries with it the risk of shock. One does not make unnecessary decisions any more than any good surgeon does unnecessary surgery.

The shift to the knowledge society puts the person in the center.

One cannot build performance on weaknesses, let alone on something one cannot do at all. People therefore have to know their strengths so that they can know where they belong.

The focus on contribution is the key to effectiveness.

There has to be a clear-cut goal and all efforts have to be focused on it. And when those efforts begin to produce results, the innovator has to be ready to mobilize resources massively.

Every knowledge worker in a modern organization is an “executive” if, by virtue of his position or knowledge, he or she is responsible for a contribution that materially affects the capacity of the organization to obtain results.

Benchmarking assumes correctly that what one organization does, any other organization can do as well.

The most recent of tools used to obtain productivity information is benchmarking – comparing one’s performance with the best performance in the industry or, better yet, with the best anywhere in business.

What matters in the marketplace is the economic reality, the costs of the entire process, regardless of who owns what.

To compete successfully in an increasingly competitive global market, a company has to know the costs of its entire economic chain and has to work with other members of the chain to manage costs and maximize yield.

“Hierarchy,” and the unquestioning acceptance of it by everyone in the organization, is the only hope in a crisis.

In a situation of common peril, survival of all depends on clear command. If the ship goes down, the captain does not call a meeting, the captain gives an order.

One hears a great deal today about “the end of hierarchy”. This is blatant nonsense. In any institution there has to be a final authority, that is, a “boss” – someone who can make the final decisions and who can expect to be obeyed.

The purpose of the hospital is not to employ nurses and cooks. It is patient care. But to accomplish this purpose, nurses and cooks are needed. And in no time at all they form a work community with its own community tasks and community problems.

Management exists for the sake of the institution’s results. It has to start with the intended results and has to organize the resources of the institution to attain these results.

Objectives are needed in all areas on which the survival of the business depends.

Objectives must be operational. They must be capable of being converted into specific assignments, as well as becoming the basis and the motivation for work and achievement.

Objectives must be derived from “what our business is, what it will be, and what it should be.” These 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.

Defining the purpose and mission of a business is difficult, painful, and risky. But it alone enables a business to set objectives, to develop strategies, to concentrate its resources, and to go to work.

To discharge its job, to produce economic goods and services, the enterprise has to have an impact on people, on communities, and on society.

A business enterprise (or any other institution) has only one true resource: People. It succeeds by making human resources productive.

The emergence of management has converted knowledge from social ornament and luxury into the true capital of economy.

The single most important thing to remember about any enterprise is that results exist only on the outside: the result of a business is a satisfied customer.

Neither the quantity of output nor the “bottom line” is by itself an adequate measure of the performance of management and enterprise. Market standing, innovation, productivity, development of people, quality, and financial results – all are crucial to an organization’s performance and to its survival.

Every enterprise requires commitment to common goals and shared values. Without such commitment, there is no enterprise; there is only a mob.

Management is about human beings. Its task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant.