Management Challenges for the 21st Century PETER F. DRUCKER Contents Introduction: Tomorrow’s “Hot” Issues 1 Management’s New Paradigms 2 Strategy—The New Certainties 3 The Change Leader 4 Information Challenges 5 Knowledge-Worker Productivity 6 Managing Oneself Acknowledgments About the Author Books By Peter F. Drucker Credits Front Cover Copyright About the Publisher iii Introduction: Tomorrow’s “Hot” Issues Where, readers may ask, is the discussion of COMPETITIVE STRATEGY, of LEADERSHIP, of CREATIVITY, of TEAM- WORK, of TECHNOLOGY in a book on MANAGEMENT CHALLENGES? Where are the “HOT” ISSUES OF TODAY? But this is the very reasonwhy they are notin this book. It deals exclusively with TOMORROW’S “Hot” Issues—the crucial, central, life-and-death issues that are certainto be the major chal- lenges of tomorrow. CERTAIN? Yes. For this is not a book of PREDICTIONS, not a book about the FUTURE. The challenges and issues discussed in it are already with us in every one of the developed countries and in most of the emerging ones (e.g., Korea or Turkey). They can already be identified, discussed, analyzed and prescribed for. Some people, someplace, are already working on them. But so far very few organizations do, and very few executives. Those who do work on these challenges today, and thus prepare themselves and their institutions for the new challenges, will be the leaders and dominate tomorrow. Those who wait until these challenges have indeed become “hot” issues are likely to fall behind, perhaps never to recover. This book is thus a Call for Action. These challenges are not arising out of today. THEY ARE DIFFERENT. In most cases they are at odds and incompatible with what is accepted and successful today. We live in a period of PROFOUND TRANSITION—and the changes are more radical perhaps than even those that ushered in the “Second Industrial v vi Introduction Revolution” of the middle of the 19th century, or the structural changes triggered by the Great Depression and the Second World War. READING this book will upset and disturb a good many people, as WRITING it disturbed me. For in many cases—for example, in the challenges inherent in the DISAPPEARING BIRTHRATE in the developed countries, or in the challenges to the individual, and to the employing organization, discussed in the final chapter on MANAGING ONESELF—the new realities and their demands require a REVERSAL of policies that have worked well for the last century and, even more, a change in the MINDSET of organizations as well as of individuals. This is a MANAGEMENT BOOK. It intentionally leaves out BUSINESS CHALLENGES—even very important ones such as the question of whether the EURO will displace the U.S. dollar as the world’s key currency, or what will SUCCEED the 19th centu- ry’s most successful economic inventions, the commercial bank and the investment bank. It intentionally does not concern itself with ECONOMICS—even though the basic MANAGEMENT changes (e.g., the emergence of knowledge as the economy’s key resource) will certainly necessitate radically new economic theory and equally radically new economic policy. The book does not con- cern itself with politics—not even with such crucial questions as whether Russia can and will recover as a political, military and economic power. It sticks with MANAGEMENT ISSUES. There are good reasons for this. The issues this book discuss- es, the new social, demographic and economic REALITIES, are not issues that GOVERNMENT can successfully deal with. They are issues that will have profound impact on politics; but they are not political issues. They are not issues the Free Market can deal with. They are also not issues of ECONOMIC THEORY or even of ECONOMIC POLICY. They are issues that only MANAGE- MENT and the INDIVIDUAL knowledge worker, professional or executive can tackle and resolve. They are surely going to be debated in the domestic politics of every developed and every emerging country. But their resolution will have to take place within the individual organization and will have to be worked out Introduction vii by the individual organization’s MANAGEMENT—and by every single individual knowledge worker (and especially by every sin- gle executive) within the organization. A great many of these organizations will, of course, be busi- nesses. And a great many of the individual knowledge workers affected by these challenges will be employees of business or working with business. Yet this is a MANAGEMENT book rather than a BUSINESS management book. The challenges it presents affect ALL organizations of today’s society. In fact, some of them will affect nonbusinesses even more, if only because a good many nonbusiness organizations—the university, for instance, or the hospital, let alone the government agency—are more rigid and less flexible than businesses are, and far more deeply rooted in the concepts, the assumptions, the policies of yesterday or even, as are universities, in the assumptions of the day before yesterday (i.e., of the 19th century). How to use the book? I suggest you read a chapter at a time— they are long chapters. And then first ask: “What do these issues, these challenges MEAN for our organization and for me as a knowledge worker, a professional, an executive?” Once you have thought this through, ask: “What ACTION should our organiza- tion and I, the individual knowledge worker and/or executive, take to make the challenges of this chapter into OPPORTUNI- TIES for our organization and me?” AND THEN GO TO WORK! Peter F Drucker Claremont, California New Year’s Day 1999 1 Management’s New Paradigms Why Assumptions Matter (cid:127) Management Is Business Management (cid:127) The One Right Organization (cid:127) The One Right Way to Manage People (cid:127) Technologies and End- Users Are Fixed and Given (cid:127) Management’s Scope Is Legally Defined (cid:127) Management’s Scope Is Politically Defined (cid:127) The Inside Is Management’s Domain