Peter Drucker has been writing about management and oru changing industrial society of the pst 40 years. Some of his books remain vital texts of management practice. This latest, slender volume (231 pages) seems to this reviewer a work of art in its comprehensive coverage of so many topics in a brief space.
All can easily agree that we are going through turbulent times. They are marked by a belated adjustment to massive wealth being transferred to the oil-exporting nations, by an inflation that threatens to rack the social structure of our nation, and, so far at least, by the seeming inability of our traditional political institutions to cope adequately with these and other problems.
Mr. Drucker does not claim that proper management alone can solve all our problems, but his approach is definitely positive. The race is not yet over, and a major part of its resolution lies in management's capacity to adjust to the new situatioins and to itself play unaccustomed roles.
The turbulences that must be faced are short term as well as long term. They are ones that deal with purely business problems and ones taht force business to be aware of societal changes.
Short term, among the problems he addresses are inflation and the tricks it can play on management. The entire accounting procedure, for instance, must be adjusted for inflation, if managers are to have correct information on the condition of their companies. The condition of a business as revealed by the balance sheet may tell more about a company's ability to survive in turbulent times than the profit and loss statement.
Speaking of profits, he critizes businessmen for talking almost out of ignorance about profits that are not really profits at all. Profits, he says, are "the deferred costs of staying in business." Capital being one of the resources of a business, "an enterprise that earns less on the total amount of money in the business than the going rate for capital is by definition operating at a deficit and stealing from the future."
It is Drucker's discussion of the near future, the next two decades, that would most intrigue the generalist. We are well on the way to a new kind of multinational economy, one that is being almost forced upon us by imbalances developing in world demographics. In the developed countries, with high educational standards, semiskilled workers will be scarce.
On the other hand, in the developing countries that have had a generation of high birthrates, political leaders must think first about how to put the young adults to work.There will be less insistence on the terms of investment by multinationals in developing countries, he thinks, and more on "production sharing." An admirer of the Japanese for their thoroughness in figuring out their own economic role, he notes how many sophisticated Japanese products are partly assembled in developing Asian countries.
The problems of the more developed among the less-developed countries can thus be solved in tandem with the problems of the industrialized, rich nations. Businessmen must steer their course by two "almost-certain factors in an otherwise turbulent scene: the emergence of the world economy as an integrated system . . . and the pivotal role of the almost-developed countries, whose success or failure to attain full economic development will largely determine the success or failure of the entire world economy in the next decades."
Domestically, Drucker deals with the fragmentation of the US labor force into manym labor forces with different goals. Tangential to this development is the question of whether any useful role remains for the labor union in the United States.
He also discusses the many new social roles forced on management, whether of business, educational, or healthcare institutions. None can any longer be judged adequate managers if they only perform their primary role well; they will be judged instead by the degree to which they pass muster among a host of new constituencies. Uncomfortable advice, but probably true.
He deals at length with the lack of satisfactory theory to give proper status to today's educated employee. The new knowledge worker, upon whom the success of our whole economic future depends, is indispensable to his organization's success but often feels alienated from organization. His loyalties are primarily to his professional skills. While not advancing the entire solution, Drucker puts this as the major challenge to theorists: "The status, function, power, and responsibility of the educated, employed middle class are going to be central social issues of the next hundred years in the developed countries."