The Practice of Management

Reviewed by: 
Peter Drucker
Alistair Schofield, Managing Director, Extensor Limited

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Most of the books I review for the Extensor Newsletter are relatively recent publication.  This one is different.  It was first published in 1955 and I wanted to review t for two reasons.  First, because it was in its day a seminal work by the legendary Peter Drucker, a man who came to be regarded as a guru by everyone from Winston Churchill to Bill Gates and, second, because I wanted to see if its advice, written before the invention of the Internet, was still relevant in today’s fast-moving business environment.

I am sure that the age of this book, written more than 50 years ago, will put many readers off - it shouldn’t.  The book is packed full of good advice that rings as true today as I am sure it did then.  But I think its greatest value is in challenging the reader to think about how things have changed from then to now and considering whether the differences justify different actions or not.

For example, the book places great emphasis on the importance of market research.  This is because, as Drucker observes, “it is the customer who determines what a business is.”  While this is a truism, requirements change so fast that businesses often have to second-guess consumer requirements.  If they didn’t, they would be at risk of missing opportunities.  Furthermore, asking customers what they want is only of any assistance in driving incremental changes to existing products and services.  If you want to secure new customers, then a) you don’t know who they are as they are not yet customers and b) it is possible that you don’t yet have a product for them as otherwise it is likely that they would already be customers.

It is interesting also that the pace of change scarcely gets a mention.  In describing the objectives of a business, the need for flexibility, agility or scalability is not mentioned.  Whereas in today’s businesses, these are key factors.
In other areas the book makes quite profound predictions.  For example, in considering the opportunities for productivity improvement Drucker suggests that “the greatest opportunities … lie in distribution”.  In other words, in the way in which the press, radio and television can be used as a substitute for individual selling effort.  This certainly came to pass and was taken a stage further with the invention of the World Wide Webb.

One of the other points the book makes that I particularly thought was highly observant was that; “A business is set apart from all other human organisations in that it markets a product or service.  Any organisation in which marketing is either absent or incidental is not a business and should never be run as if it were one.”  

The interesting thing is that for the last 20-30 years successive governments on both sides of the Atlantic have tried to run everything including the police, the NHS, schools and even natural monopolies as though they are businesses with at best disappointing results.  Once again, the great Peter Drucker was way ahead of them.

In conclusion, this is an excellent book which would unquestionably have been an outstanding book in 1955 when it was first published.  Reading it today is fascinating in demonstrating the quality if Drucker’s thinking and vision and revealing in highlighting the small number of areas in which organisation life has changed, and the larger number of areas where it has not.

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