domingo, 1 de noviembre de 2009

Management Ebooks: Peter F. Drucker "The Concept of the Corporation"

The book studies and analyses General Motors as a large social institution involved in business activities. It describes what management is, how managers are selected, how they act, and how a corporation is organized into management units at different scales (e.g. divisions, sections, etc.). It also seeks to explain the role and position of large corporations in modern society.

In writing and researching the book, Drucker was given unprecedented access to General Motors resources. He was paid a full salary, he accompanied CEO Alfred Sloan to meetings, and he was given free run of the company.

Druckers' focus wasn't the "outside" of a company, but rather the inside: He focused, in contrast to his contemporaries, on what happened inside a company and how this related to the company's success or failure. Fascinated by this question, he studied management to find out what really made a business tick.

Until then, management was seen as a no-brainer: the CEO would simply give the orders and the others would follow. But Drucker was interested in the human interactions within a company, and more specifically on how power structures, political environments, information flows, decision making and managerial autonomy contributed to success. By shifting his focus, he was able to explain why General Motors was such a success.

GM was very pleased with Druckers' work, until Drucker published his book, "Concept of the Corporation." The book strongly praises General Motors for its vision in developing management techniques, programs, and infrastructure. But GM interpreted the suggestions that Drucker made - to decentralise the company in order to even become more successful - as betrayal. Their reaction was so strong against his view of the work, that it would lead to Alfred Sloan later penning "My Years at General Motors" as the organization's informal rewrite of Drucker's criticisms.

For Drucker this was completely unexpected: He found GM a great company, which he had even compared with the U.S. government. Drucker used the term "federal decentralization" to describe it, as he felt that a company should be organized in a number of autonomous businesses. Much like the way the U.S Government gave power to the states, GM should give its divisions more autonomy.

It would take GM several decades to listen. By then, Drucker had helped the Japanese, who embraced his intentions and the hybrid organization form, leap in front of many American companies.


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