Tip of the Week #42                     Tip Index

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"Management's New Paradigms"

by Peter F. Drucker, Forbes, October 5, 1998, p. 152-177.

Peter Drucker is the dean of modern management.  Perhaps he invented both strategic management and management by objectives.  At 89, he's still learning, synthesizing concepts, and contributing his wisdom as "observations of a bystander."

"There are several underlying assumptions about organizations that are out of date."  Two (of seven selected for this brief Tip) are:


Large corporations emerged late in the 19th century.  Early management scientists, such as Henri Fayol (1841-1925) believed there was a single best way to organize companies.  Centralization and vertical integration (buying suppliers) was the theme.

World War I showed that centralized structure couldn't work on a massive scale.   Decision making had to be pushed down the organization.  In the last few years teams have become recognized to be the one right organization for most everything.  But sometimes teams are not the best organization, in a crisis for example.

However, teams are right for many situations.  And there are many ways to go about a team organization.  The well-equipped future manager will have an inventory of team alternatives in her toolkit.  The best approach will very by situation and, even, member personalities.  The  manager will need to "think in terms of mixed structures rather than only pure structures."

Different people require different ways of being managed -- or led.   Increasingly, people are "knowledge workers" and need to be treated as associates rather than subordinates.  Knowledge workers must know more about their jobs than their boss does.  The relationship is more like that between a conductor and an orchestra.  Employees need to be managed much as if they are volunteers:

"Volunteers, we know, have to get more satisfaction from their work than paid employees precisely because they do not get a paycheck.  They need, above all, challenge.  They need to know the organization's mission and to believe in it.   They need continuous training.  They need to see results."

Drucker says that we are only beginning to explore the possibilities of team management paradigms.  There may be dozens of ways to manage using teams.

My interpretation (and some extension) of Mr. Drucker's observations, applied to decision-making, include:

Further reading: "Peter Drucker Takes the Long View," Drucker interviewed by Brent Schlender, Fortune, Sept. 28, 1998, pp. 162-172.  Ideas about Japan, executive salaries, managing for performance, and retirement.

—John Schuyler, September 1998.   Revised October 1998

Copyright 1998 by John R. Schuyler. All rights reserved. Permission to copy with reproduction of this notice.