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

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Book Reviews of Management Challenges for the 21st Century

Book Review: DISCUSSES UNCERTAINITIES OF 21ST CENTURY
Summary: 5 Stars

Drucker highlights the new certainties for the 21st century and they are profound in their implications for all management. This is the best chapter within the text; Drucker is focused and presents a lucid discussion while avoiding unnecessary distractions. The new certainties are: 1) The Collapsing Birthrate in the Developed World. 2) Shifts in the Distribution of Disposable Income. 3) Defining Performance. 4) Global Competitiveness. 5) The Growing Incongruence Between Economic Globalization and Political Splintering."

Another Important point he brings up is Disposable Income. The share of disposable income a customer devotes to purchasing goods is fundamental knowledge any business must know for that factor is the foundation of all economic information. Drucker attributes growth in the 20th century to four categories: Government, Health Care, Education, and Leisure. Yet, the lone category providing growth in the 21st century is financial services. This, according to Drucker, has occurred because financial services learned how to market to the average customer. He also states it equally important to know who is not a customer, since this is always a larger population base than known customers.

Drucker offers multiple lessons for tomorrows leaders such as: starve problems and feed opportunities by being willing to abandon old ways of doing things and focusing more on the I of IT, that is, information needed rather than the technology. He points out that we have excellent technology to design a building but that does not inform us about the strategic question of whether or not it should be built. Further, rather than fearing resistance to change we must learn to look for and anticipate changefor this we need change leaders who see opportunities, not threats, in new developments.

Drucker summarizes the previous three information revolutions and claims we are experiencing the fourth. This one, driven by changes in accounting procedures and publishing advances will cause all business to learn to organize information. The key to remaining competitive in the 21st century will be to organize based on activity-based costing. Its basic premise is that business is an integrated process that starts when the supplies, material and parts arrive at the plants loading dock and continues even after the finished product reaches the end-user. Service is still a cost of the product, and so is installation, even if the customer pays. Drucker predicts the new accounting will have its greatest impact on service industries. This paradigm shift should cause the forward thinking manager to evaluate the scarcity of resources.

Likewise an organization to be competitive in the 21st century needs to stop thinking regionally or nationally, instead "make global competitiveness a strategic goal."

Drucker starts out by providing the reader with his key assumptions underlying management. One set concerns the discipline and the other set the practice of management. These assumptions and their applicability are critical entry points into the following chapters. Drucker shatters the illusion that management is something that only certain people can do in isolation sitting in airconditiojed offices without regard for the task at hand, the product produced, the customer served or the participation of employees.

Summary of Management Challenges for the 21st Century

In his first major new book since "Post-Capitalist Society" Peter F. Drucker discusses the new paradigms of management -- how they have changed and will continue to change our basic assumptions about the practices and principles of management. Drucker analyzes the new realities of strategy, shows how to be a leader in periods of change, and explains "the New Information Revolution," discussing the information an executive needs and the information an executive owes. He also examines knowledge worker productivity, and shows that changes in the basic attitude of individuals and organizations as well as structural changes in work itself are needed for increased productivity. Finally, Drucker addresses the ultimate challenge of managing yourself while still meeting the demands on the individual during a longer working life and in an ever-changing workplace.

Incisive, challenging, and mind-stretching, Drucker's new book is forward-looking and forward thinking. It combines the broad knowledge, wide practical experience, profound insight, sharp analysis, and enlightened common sense that are the essence of Drucker's writings, which are continuing international bestsellers and "landmarks of the managerial profession" ("Harvard Business Review").

"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 orTurkey). 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."-- From the Introduction

Drucker sees the period we're living in as one of "PROFOUND TRANSITION--and the changes are more radical perhaps than even those that ushered in the 'Second Industrial Revolution' of the middle of the 19th century, or the structural changes triggered by the Great Depression and the Second World War." In the midst of all this change, he contends, there are five social and political certainties that will shape business strategy in the not-too-distant future: the collapsing birthrate in the developed world; shifts in distribution of disposable income; a redefinition of corporate performance; global competitiveness; and the growing incongruence between economic and political reality. Drucker then looks at requirements for leadership ("One cannot manage change. One can only be ahead of it"), the characteristics of the "new information revolution" (one should focus on the meaning of information, not the technology that collects it), productivity of the knowledge worker (unlike manual workers, knowledge workers must be seen as capital assets, not costs), and finally the responsibilities that knowledge workers must assume in managing themselves and their careers.

Drucker's writing career spans eight decades and the years have only served to sharpen his insight and perspective in a way that makes most other management texts seem derivative. While Management Challenges for the 21st Century is no quick airplane read, it is a wise and thought-provoking book that will both challenge and inspire the diligent reader. This book is for people who care about their businesses and careers in the information age--CEOs, managers, and knowledge workers. Highly recommended. --Harry C. Edwards

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