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Management Challenges for the 21st Century.

The reviewer, Stuart Rosenberg, is an adjunct professor of business at Dowling College, Oakdale, New York.

Peter Drucker is arguably the most important writer on management of our time. He is the Marie Rankin Clarke Professor of Social Science and Management at Claremont Graduate University, which in 1987 renamed its graduate management center the Peter F. Drucker Graduate School of Management. Drucker, who turns 90 in November, has written more than two dozen books on management, economics, politics, and society.

Drucker refers to his latest book, Management Challenges for the 21st Century, as a "call for action." He indicates that the major management issues of the closing century - competitive strategy, leadership, creativity, teamwork, and technology - are not the issues that will present the greatest challenges for managers in the next 100 years. In a series of essays, the book identifies "tomorrow's hot issues," which Drucker maintains are already evident in all types of enterprises, including government and nonprofit institutions. Organizations that are working on these issues now will likely be tomorrow's leaders.

Management Challenges for the 21st Century does not pretend to provide clear-cut answers for managers. It does, however, enable them to assess their respective organizations to determine if they are best positioned for success.

The first challenge introduced by Drucker is for companies to recognize that they are facing a new set of paradigms. The traditional assumptions underlying the discipline and practices of management - that there is one right corporate structure, one right way to manage people, and so on - have become obsolete. Management can no longer be thought of as business management. Instead, it needs to be the "distinguishing organ of any and all organizations." Companies should not necessarily emphasize the concept of team, or be set up functionally, or be decentralized. According to Drucker, management needs to develop the organization that "fits the task." The ultimate task is not to manage people, but to lead them, with the goal of making each person's specific strengths and knowledge productive.

Drucker claims that the scope of management is different in today's transitional society, existing solely for the organization's results. Management must know what the intended results are and organize resources to attain them. The managed institution represents the true center of modern society. Management is responsible for everything that affects the performance and results of the institution, "whether inside or outside, whether under the institution's control or totally beyond it."

The next challenge Drucker discusses is strategy. He maintains that every organization has a distinct set of assumptions to define its business, its objectives, its intended results, and its customers and what they value. Strategy converts these assumptions into performance.

Drucker identifies five certainties for strategy in the 21st century: (1) the collapsing birthrate in the developed world, (2) the shifting distribution of disposable income, (3) the way performance is defined, (4) global competitiveness, and (5) the growing incongruence between economic reality and political reality. However, these certainties are primarily social phenomena that strategies typically do not consider.

Countries, political parties, and businesses need to address the significant demographic changes in the world today. Appropriate strategies need to be developed for industries depending on whether the demand for their goods or services is growing, mature, or declining in relation to national income and/or population. With the advent of "knowledge workers" replacing manual workers, organizations will have new measures of performance, which consequently will require new strategies.

Directing his attention to leadership, Drucker states that organizations cannot manage change, but they can stay ahead of it. Those that do during this period of transition will be the organizations that survive. Such firms, which Drucker calls "change leaders," will adopt change-oriented policies that will free resources from being committed to maintaining what no longer contributes to performance and results. Although a change leader requires continuity in its base business, it is designed for change. It exploits its own successes and builds on them, regularly reviewing changes in market structure, demographics, and knowledge, and seeking opportunities to create change. This is the necessary foundation for innovation.

The challenges generated by "the New Information Revolution" have led to a redefinition of the information companies need. The transition from cost accounting (typically associated with manufacturing) to activity-based costing has highlighted the importance of results control. Businesses now have to know the costs of their entire economic chain and work with other members of the chain to manage their costs and maximize the volume and mix of services customers use.

Drucker believes economic chain costing will cause a shift from cost-led pricing to price-led costing, in which the price customers are willing to pay determines allowable costs. Therefore, the ability to organize meaningful information about the customer is key. Moreover, Drucker reminds us that because it is more important for enterprises to create wealth than to control costs, the information managers require will be used to develop wealth-creating strategies.

The emergence of the knowledge worker brings fundamental changes to the economic system. While Drucker maintains that the most important contribution of the twentieth century was the increased productivity of the manual worker, he feels that the most important challenge of the coming century will be to increase the productivity of the knowledge worker.

The primary asset of the manual worker has been production equipment. Developed economies have used such tools as task management and industrial engineering to make the manual worker more productive. Underdeveloped economies have yet to accomplish this.

Developed economies, meanwhile, are already experiencing a tremendous shift in their work forces toward knowledge workers. However, Drucker points out that efforts to increase knowledge worker productivity have been scarce. To change this, the nature of work itself will need to be restructured and made part of the economic system.

Manual workers are always given a task. Knowledge workers define their own. Whereas one manual worker is indistinguishable from the next, each knowledge worker possesses individual strengths. Knowledge workers need to have total accountability for their task. They need to be able to manage themselves. Drucker stresses that manual workers are viewed as a cost (to be controlled and reduced), but knowledge workers should be viewed as a capital asset.

Because knowledge workers need to manage themselves, Drucker advises that they ask certain questions to facilitate their progress. The most basic question is perhaps the most important: "What are my strengths?" The author also advises that such employees concentrate less on improving areas of low competence and more on moving from high competence to excellence. This sort of thinking will certainly help guide the successful individual as well as the successful organization.

Management Challenges for the 21st Century is timely and thought-provoking. Peter Drucker's reputation is based in large part on his advancing management as a unique discipline. In this book, his insightful vision of the future will challenge managers to address the new realities and lead their organizations through these rapidly changing times.

Management Challenges for the 21st Century, by Peter F. Drucker. New York: HarperBusiness, 1999. 207 PP.
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Title Annotation:Review
Author:Rosenberg, Stuart
Publication:Business Horizons
Article Type:Book Review
Geographic Code:1USA
Date:Sep 1, 1999
Words:1167
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