Management Challenges for the 21st Century by Peter F. Drucker

In the book, Management Challenges for the 21st Century, by Peter F. Drucker, discusses the challenges and evolution of business management based on past, current and future impacts of culture, society, people and style of work.   Drucker communicates his ideas in six functional areas, Management’s New Paradigm’s, Strategy-The New Certainties, The Change Leader, Information Challenges, Knowledge-Worker Productivity and Managing Oneself.   Drucker’s view is business is in a transitional period and the best practices that have been developed from the mid-19th Century to about 1980, will not necessarily support future corporate management practices or structures.  Drucker adds that the realities of today’s business requires a “reversal” of traditional practices and mentality to support today’s individuals and organizations.   Businesses need to adopt a new direction to address challenges arising from global business integration, workplace diversity, socioeconomic impacts and the transition from manual to knowledge based workforce heading into the 21st Century and beyond.

Prior to 1980, the philosophy of business management was, “there is-or there must be- one right way to manage people”, “there is-or there must be-only one right organizational structure”, and “management is business management”.  Drucker goes to state that these philosophies have outlived their usefulness and need to be replaced with new paradigms due to the integration and evolution of our global society.  Drucker suggests new management paradigms are emerging and that management of business does not just apply to business but to other organizations such as university, civil service, or medical.  Each business must evaluate, develop, and determine the best structure that fits the task of that organization. Also, today’s management needs to understand the environment in and around the organization, driven by domestic/international business units, staff demographics, culture, politics, and needs of external customers to develop and lead people instead of managing people to achieve corporate results.  This leads to businesses needing to develop new strategies based on changing needs of the 21st century.

Drucker communicates that there are five “phenomena” that will impact future business performance and they are the declining birth rate, change in disposable income, new definition on how to define performance, global competitiveness, and the incompatibility between economic and political reality.     These phenomena pose risk to global businesses and governments alike and each entity needs to evaluate its situation and make the appropriate adjustments to be successful in the future.   The declining birth rate among industrialized countries such as, Japan, Germany and the United States poses risk without precedent to businesses and an assessment of aging and reduced future workforce will need to be evaluated to determine corporate structure in support of continued economic growth and stability.  Another impact is the global competitiveness.  Drucker says, In today’s global economy, if any business expects to survive or thrive, “it must measure itself against the standards set by leaders in its field anywhere in the world”.   Finally, global business needs to manage itself on a global platform perspective.  This requires organizations to understand the impacts to key business metrics based on currency fluctuation, the results of trade policies like North American Free Trade Agreement or the potential Trans Pacific Partnership, and ability to build alliances or partnerships to minimize investment and maximize efficiency and profit.  For example, the Nissan Renault Alliance was meant to drive maximum efficiency through the strengths of both organizations by utilizing common platform and components to reduce investment and provide quick and effective decision making process, resulting in a more efficient business model.  This leads to the next topic of the challenge to lead.

Today’s businesses face many challenges at the global and regional level and a major challenge is the ability to manage change.  Drucker says, “One cannot manage change.  He states that today; change is the norm and that only change leaders survive the rapid structural changes.   Becoming a change leader requires a willingness to make future corporate policy, identify systematic ways to anticipate change, techniques to introduce change internal and external to an organization, and ability to balance change and continuity.  Today’s change leaders will need to manage the unexpected success and failures, industry and markets trends, trends in customer and internal demographics, technological advancements, political impacts, and other.   I think that Ford Motor Company and more specifically William Clay Ford Jr, showed change leadership.    At the brink of the company’s demise, Ford hired Alan Mullaly, and auto industry outsider to lead a company turn around with a value based approach including “best self”, “best team”, “best partner”, “best investment” and “best citizen”.   Through these core values, Mullaly was able to reinvent Ford and improve its internal leadership, engineering capability, relationships with supply base, company image and product quality, which translated into new product design, increased vehicle sales, corporate profitability, and future sustainability.

Now introduce the challenges with availability of more information.  Per Drucker, “a new business revolution is underway with the advent of business enterprise”.   From when the computer was first invented to about the year 2000, Drucker states, “information technology has been centered on data-their collection, storage, transmission and presentation. Today’s mindset has shifted from data collecting to real-time data management that can be accessed by anyone, anywhere, anytime.  The evolution of technology allows independent information systems and software to become integrated to a singular source via an enterprise resource program (ERP)management software where all business information will be stored and is real-time data that can be accessed by any user.   The ERP software will provide business managers the ability to assess daily business deliverables by providing the capability to eliminate non-relevant information, review internal/external data sources, cost management, people management and others to support key business decisions.  Organizations that can be nimble and exploit the information available will make them successful today and going forward.   Look at Amazon, they are an organization feeding on infinite amount of information available through their customer base and other outlets.  They have exploited the information by evaluating and identifying unmet needs, then introduced changes and products to their business with items like the Kindle, Amazon Prime and soon to be Drone deliveries.