Inside The Guru Mind - Peter Drucker

Inside The Guru Mind - Peter Drucker - WISDOM IN A NUTSHELL...

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WISDOM IN A NUTSHELL PRESENTS INSIDE THE GURU MIND SERIES Peter Drucker The Great Pioneer Of Management Theory And Practice By Robert Heller Published By Dorling Kindersley Ltd., London 2001 ISBN: 0789451581; 1st edition (April 1, 2000) 112 pages Businesssummaries.com is a business book summaries service. Every week, it sends out to subscribers a 9- to 12-page summary of a best-selling business book chosen from among the hundreds of books printed out in the United States every week. For more information, please go to http://www.bizsum.com .
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Peter Drucker Page 2 www.bizsum.com 2001, 2002 Copyright BusinessSummaries.com Peter Drucker The Theory of a Business Drucker believes that the theory of a business or the assumptions on which a company has been built and is operating on depends on: Assumptions about the environment of the organization Assumptions about the specific mission of the organization Assumptions about the core competencies needed to accomplish the organization’s mission As the organization becomes bureaucratic and sluggish, it becomes extremely difficult to change systems and mindsets when the assumptions are no longer valid. This was the situation that General Motors found itself during the 1980’s. In the following pages, Drucker teaches us how to maintain a valid theory of business. Organizing for Success in Business Decentralized Structure In 1946, Drucker wrote “Concept of the Corporation,” which explores the evolution of the business corporation and its impact on society. The result of 18 months of interviews and observation, the book discusses the beliefs and management style of Alfred P. Sloan, GM’s creator. Drucker noted that GM gave its divisions great independence, which was uncommon by the standards of the day. “In over 20 years of work…Mr. Alfred P. Sloan Jr. has developed the concept of decentralization into a philosophy of industrial management and into a system of local self-government.” GM had 50 divisions, and Drucker estimated that all but 5 percent of decisions were within the control of the divisions. Decisions that did require head office approval had to do with the financial function, pricing, labor costs and capital deployment. Drucker invented the term “profit center” to describe a division, and noted that these groups were held highly accountable for results. Corporation as Human Effort Drucker believes that decentralization is key to the corporation’s success. Decentralization creates a pattern of behavior and a basis for the successful solution of majority of problems. Furthermore, it provides an environment for grooming GM executives by placing them in positions where they could take responsibility without endangering the entire company. As they mature and their skills broaden, they are given new positions where they can apply themselves.
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Peter Drucker Page 3 www.bizsum.com 2001, 2002 Copyright BusinessSummaries.com
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Inside The Guru Mind - Peter Drucker - WISDOM IN A NUTSHELL...

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