Book Review: The Practice of Management by Peter F. Drucker

The Practice of Management by Peter F. Drucker. Harper & Row, 1954

This book is divided into 6 main parts: Managing A Business; Managing Managers; The Structure Of Management; Management Of Workers And The Worker; What It Means To Be A Manager; and a conclusion.

In Managing a Business, Drucker stresses the importance of the customer , not economic or market forces, in defining a business. He suggests that it is the customer, not forces, that converts economic resources into wealth, and things into goods. He states that "there is only one valid definition of business purpose: to create a customer." (p.37) Drucker goes on to say that any business enterprise has two basic functions - marketing and innovation. I would argue that there should be other functions to add to this - what about technology or human resources?

Drucker also discusses how a business should be managed - by objectives.

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Objectives should be set in 8 areas - market standing; innovation; productivity; physical and financial resources; profitability; management performance and development; worker performance and attitudes; and public responsibility. These eight areas would appear to be all encompassing however the last three areas are somewhat intangible and therefore would be difficult to measure performance by.

In Managing Managers, Drucker gives the example of Henry Ford as a way of not managing an enterprise. Ford tried to run his company without the aid of managers and quashed any attempts by his subordinates to think freely and make business decisions. Supervisors were demoted if they tried to make decisions and a culture of mistrust and misrule was embraced. The result of this was that when he died, the company had no managers who could make decisions and plan for the company's future. Profitability was non-existent. Ford's successor brought in management from...