Timeliness of the Concepts and Theories of the Practice of Management by Drucker Peter - Essay Example

Timeliness of the concepts and theories of The Practice of Management by Drucker Peter and how they still apply to today's organizations The book The Practice of Management by Drucker Peter is one that was so timely in responding to issues of management. The book was written in 1954 and during this time, there was no toolkit for managing complex organizations that had already gone out of control. Drucker claims to have written the book because there was no book on management and as businessweek.com. (2005) explains, Drucker was the inventor and creator of modern management. This book became famous and a manifesto of the time because it laid bare and explained the topic of management. In this book, Drucker explained that management was a profession just like law and medicine, and thus it should aim at getting the best from people. The concepts outlined by Drucker became important guidelines for managers and executives of firms in the 1950s. Drucker’s theories and concepts were not only applicable in the 1950s. They are still applicable to today’s firms. According to Drucker (1954), the only sustainable advantages for an organization are the quality and performance of management. This is true of today’s firms in that their performances are a good reflection of the quality and performance of their managers. Currently, firms are more sensitive on the quality of their management than in the past. To back up this theory, Drucker lists the duties of management that are aimed at improving the performance of the firm, these duties still applying to the management of today’s firms. Another theory postulated by Drucker in the book is that managerial capabilities will be challenged by advances in technology and automation because they will produce a highly skilled and highly knowledgeable workforce. Currently, firms are employing managers with high capabilities to lead their highly skilled and highly educated employees. Another theory is that managers have important social and economic responsibilities. This theory is applicable in today’s organizations. Currently, management of organizations not only focuses on the profit making activities of their organization of profit making but also on their social responsibility to the society. They also evaluate how their policies impact the society. In the book, Drucker explains the concept of the firm and points out six important points under this. First, Drucker states that organizations and managers should be outward looking (Drucker1954). Considering today’s firms managers do not just allow themselves to be influenced by the external environment. Instead they also try to shape it though creativity. The description of organizations as social institutions still applies to today’s organizations because in addition to being created and managed be people, they also contribute to the society, economically and socially. Drucker views businesses as organizations pursuing multiple goals, both economic and non-economic. This is true of today’s firms considering that they conduct profit and nonprofit making activities like charity works. Drucker identifies innovation as an important concept of a firm and as seen today, firms are placing a great emphasis on innovation, creativity and entrepreneurship as a way of gaining a competitive advantage over similar firms. Drucker describes the firm as a focused organization. This concept is evident and applicable in today’s firms in that the managements always align the resources of their firms towards the achievement of their primary objectives. Finally, the concept of firms as being spirited is still applicable today. Managers of firms develop motivated managers out of their workforce through activities that enhance personal growth among employees. A "big looser" organization Firestone Tire and Rubber Company is one organization that can be singled out in the history of the 20th century as a big looser organization and the theories and concepts described in by the selections of part III greatly apply to it. The company was founded in 1900 to supply pneumatic tires for various types of wheeled transportation. In 1911, the Indianapolis auto race was held and the company’s tires were used on several of the cars including the winner’s. From then on, Firestone became a leader in the racing market and gained more fame. By the 1920s, it was a household name as noted by Beach (2010). The company’s road to loosing was a result of poor response to competition. A good theoretical explanation of this is clearly depicted in the book How the Mighy Fall, written by Jim Collins. In this book, Collins explains how big organizations end up becoming the big losers in their sector and he describes five stages of decline that a loosing company goes through. Collins (2009) names the first stage as Hubris Born of Success and explains that at the stage, such companies do not realize that they are falling and this is seen in firestone’s case. Towards mid 20th century, it was already among the leading tire manufacturers globally and its management could not suspect or expect anything that could lead to destruction. They acted as though they were entitled to success and thus they lacked inquisitiveness on the needs of the customers. Because of this, other companies overtook it in inventing radial tires. The second stage of organizational decline is Undisciplined Pursuit for More. This is characterized by obsession with growth, taking undisciplined steps of growth among others. Beach (2010) reveals that when Firestone saw that its competitors had produced radial tires and were becoming top sellers, the company rushed to produce its own version of the same. However, discipline was not applied in this. The company produced the tires on equipment that had been designed for other purposes and by 1978, it had been blamed for over 30 deaths and hundreds of injuries. The company had to recall 7 million tires and settle a number of lawsuits. These happenings caused customers to loose trust in the company’s brand and all its products. The third stage of decline is called Denial of Risk and Peril. At this stage, such companies do not want to believe that they are loosing despite the warning signs. With these happenings, Firestone resorted to restructuring as a business strategy to give the impression that something was being done. However, this restructuring was meant to save it from bankruptcy. Grasping for Salvation is the forth stage for a loosing company. The restructuring was a sign of desperation mentality in Firestone at that time. The fifth stage is Capitulation to Irrelevance or Death. By 1988, Firestone had recovered part of its financial health and market share but this was not very promising. Eventually, the company was bought by Bridgestone, a Japanese tire making company, for much less than the company was worth a decade and a half earlier (Beach, 2010). References Beach, E. (2010). “History of Firestone Tires”. Online http://www.ehow.com/about_5068400_history-firestone-tires.html. Viewed on 13th January, 2012. businessweek.com. (2005). “The Man Who Invented Management: Why Peter Drucker's ideas still matter.” Online: http://www.businessweek.com/magazine/content/05_48/b3961001.htm. Viewed on 13th January, 2012. Collins, J. (2009). How the Mighy Fall- and Why Some Companies Never Give in. New York. HarperCollins. Drucker, P. (1954). The Practice of Management. New York. Harper and Row Publishers. Read More