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 (Continued from front f lap) management US$29.95

ting
Celebra of
h a r v a r d b us i n e ss p r e ss

rs
100 Yea ker
economy, and society and government—the the
book guides managers as they consider the drucker timeless advice
library
ruc on leading in
Peter D
critical questions their organizations’ futures

Peter F.
depend on:
turbulence from
● How do we keep our business from becoming
management’s most

Drucker
obsolete?
● How can we use information for competitive
revered thinker
advantage?

Time of great change

● How will new markets and industries shift Perhaps no one has impacted management
the centers of power in the global economy? theory and practice more profoundly than
Peter Drucker. For more than half a century,
● How can we reinvent government for a
his books and writings on the evolution of—
radically new age?
and the relationship between—business, the

managing in a
economy, and society have provided prudent
“Actions in the present,” writes Drucker, “are
counsel and practical guidance for business
. . . the one and only way to make the future.”
and government leaders around the world.
Filled with insights both timeless and timely,
Now, as change has rocked the global
this classic work by a management legend is

Managing
marketplace in unprecedented ways,
for anyone looking for trusted advice in this
Drucker’s powerful advice proves more
era of change.
relevant than ever. Managing in a Time of
Great Change, reissued as part of Harvard

in a Time of
Business Press’s Drucker Library Series,
peter f. drucker was a writer,
brings together more than two dozen of
teacher, and consultant. His books have been
Drucker’s most influential articles and
published in more than seventy languages.
interviews on how to manage in a rapidly
He founded the Peter F. Drucker Foundation

great change
changing environment.
for Nonprofit Management, and counseled
With his trademark sagacity and candor,
thirteen governments, public services
Drucker cuts to the heart of what leading
institutions, and major corporations.
through change is about: rather than
predict what might happen, managers
must understand how what has already
happened will impact customers, business,
and society—and act on that understanding.
This invaluable volume offers a chance to
look forward through the lens of history to
see how macroeconomic trends have shaped
today’s world, from how businesses and
ISBN 978-1-4221-4079-6
9 0000 governments are organized to how leaders
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jacket design: stephani finks Divided into four themes—management,
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the drucker library the information revolution, the world

get inspired. stay informed. join the discussion.

visit www.harvardbusiness.org/press www.harvardbusiness.org/press (Continued on back f lap)

Drucker13159_Mechanical.indd 1 8/20/09 3:23:40 PM

 Managing in a Time
of Great Change

FM.indd i 8/21/09 2:49:21 AM

FM.indd ii 8/21/09 2:49:21 AM
 Managing in
a Time of
Great Change
<

Peter F. Drucker

Harvard Business Press

Boston, Massachusetts

FM.indd iii 8/21/09 2:49:21 AM

 Copyright 2009 Harvard Business School Publishing Corporation

All rights reserved

Printed in the United States of America

13 12 11 10 09 5 4 3 2 1

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or
transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or
otherwise), without the prior permission of the publisher. Requests for permission should be
directed to [email protected], or mailed to Permissions, Harvard Business School
Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

Library of Congress Cataloging-in-Publication Data

Drucker, Peter F. (Peter Ferdinand), 1909-2005.
Managing in a time of great change/Peter F. Drucker.
p. cm.
Includes index.
eISBN 978-1-4221-5515-8
1. Management. 2. Organization. I. Title.
HD31.D77337 2009
658—dc22
2009022125

The paper used in this publication meets the requirements of the American National Standard for
Permanence of Paper for Publications and Documents in Libraries and Archives Z39.48-1992.

FM.indd iv 8/21/09 2:49:21 AM

 CONTENTS

Preface vii
Acknowledgments xi
Interview: The Post-Capitalist Executive xiii

Part I Management

one The Theory of the Business 3

two Planning for Uncertainty 19

three The Five Deadly Business Sins 25

four Managing the Family Business 31

five Six Rules for Presidents 37

six Managing in the Network Society 43

Part II The Information-Based Organization

seven The New Society of Organizations 53

eight There Are Three Kinds of Teams 71

nine The Information Revolution in Retail 77

FM.indd v 8/21/09 2:49:21 AM

 ten Be Data Literate; Know What to Know 83

eleven We Need to Measure, Not Count 89

twelve The Information Executives Need Today 93

Part III The Economy

thirteen Trade Lessons from the World Economy 113

fourteen The U.S. Economy’s Power Shift 133

fifteen Where the New Markets Are 139

sixteen The Pacific Rim and the World Economy 145

seventeen China’s Growth Markets 149

eighteen The End of Japan, Inc.? 155

nineteen A Weak Dollar Strengthens Japan 163

twenty The New Superpower: The Overseas Chinese 169

Part IV The Society

twenty-one A Century of Social Transformation 177

twenty-two It Profits Us to Strengthen Nonprofits 231

twenty-three Knowledge Work and Gender Roles 237

twenty-four Reinventing Government 241

twenty-five Can the Democracies Win the Peace? 261

Conclusion 289
Interview: Managing in a Post-Capitalist Society 291
Index 301

vi CONTENTS

FM.indd vi 8/21/09 2:49:21 AM

 PREFACE

All the pieces in this book—two interviews, one at the beginning

and one at the end, and the twenty-five chapters in between, have
one common theme, despite their apparent diversity. They all deal
with changes that have already irreversibly happened. They therefore
deal with changes on which executives can—indeed must—take
action. None of the pieces in this book attempt to predict the future.
All deal with what executives can do—have to do—to make the
future.
It is not so very difficult to predict the future. It is only pointless.
Many futurologists have high batting averages—the way they mea-
sure themselves and are commonly measured. They do a good job
of foretelling some things. But what are always far more important
are fundamental changes that happened though no one predicted
them or could possibly have predicted them. Looking back ten
years ago today, no one in 1985 predicted—or could have predicted—
that the establishment of the European Economic Community
would not release explosive economic growth in Europe but would,
on the contrary, usher in a decade of economic stagnation and petty
bickering. As a result, the unified Europe of 1995 is actually weaker
in the world economy than was the fractured Europe of 1985.
No one, ten years ago, predicted—or could have predicted—the

vii

FM.indd vii 8/21/09 2:49:21 AM

 explosive economic growth of mainland China, a growth that came
despite rather than because of its government policies. No one pre-
dicted the emergence of the 55 million overseas Chinese as the new
economic superpower. No one ten years ago could have predicted
that the biggest impact of the Information Revolution on business
would be a radical rethinking and restructuring of the oldest infor-
mation system—and one that apparently was ossified in every joint
and tissue—the accounting model of the “bean counters.”
But equally important: one cannot make decisions for the future.
Decisions are commitments to action. And actions are always in the
present, and in the present only. But actions in the present are also
the one and only way to make the future. Executives are paid to exe-
cute—that is, to take effective action. That they can only do in con-
templation of the present, and by exploiting the changes that have
already happened.
This book starts out with the executive’s job, that is, with man-
agement. What has already happened in the world of the execu-
tive that puts into question—or perhaps even makes obsolete—the
assumptions, rules, and practices that have worked these last forty
years and that therefore have automatically been taken for granted?
The book then proceeds to look at the implications of one particu-
lar fundamental change in management, economy, and society:
the emergence of information as the executive’s key resource and
as the organization’s skeleton. The premise of this part of the book
is the old adage that either you are the tool’s master or you are its
servant. What do executives have to learn to be masters of the
new tool? Then this book moves out of the executive’s job and
organization into markets and into a world economy in which
there are new power centers, new growth markets, new growth
industries. In its last section the book analyzes the changes in
society and government—the biggest changes, perhaps, in this
century of social transformation, in which government has been
both a great success and the ultimate failure.

viii P R E FA C E

FM.indd viii 8/21/09 2:49:21 AM

 Only thirty—perhaps even only twenty-five—years ago it was
often said that while there were a great many more managers and
executives than there had been in the 1920s (let alone before World
War I), most of them were doing pretty much what their predeces-
sors had done and in pretty much the same way. No one would say
that anymore for today’s managers and executives. But if there is
one thing that is certain today, it is that tomorrow’s managers and
executives will do things that are even more different from what
today’s managers and executives do. And they will do them quite
differently. To enable today’s executives to be ahead of this different
tomorrow—indeed to make it their tomorrow—is the aim of
the book.
Peter F. Drucker
Claremont, California
May 1995

P R E FA C E ix

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FM.indd x 8/21/09 2:49:21 AM
 ACKNOWLEDGMENTS

From the very beginning, in 1991, every piece in this volume was
written with this book in mind. But every single one was also pre-
published, intentionally so. It is the reaction of readers—and espe-
cially of friends all over the world, former students, present and
former clients—that ultimately determines whether a piece is wor-
thy of being included in the final book. Prepublication is, so to
speak, my market test.
For the most part, the pieces chosen appear as chapters in this
book without any change other than perhaps a new title or a resto-
ration of cuts that had to be made to fit a piece into a magazine or
newspaper. But three long pieces in this book are substantially dif-
ferent from the version in which they were published originally—
they are much longer. Chapter 21 (“A Century of Social Transfor-
mation”) was published only in an abridged version in The Atlantic
Monthly and so was chapter 25 (“Can the Democracies Win the
Peace?”). Chapter 13 (“Trade Lessons from the World Economy”)
was similarly published only in an abridged version in Foreign Affairs
magazine. The other long chapters—the two interviews that open
and close the book; chapters 1, 7, and 12 (all three first published in
the Harvard Business Review); chapter 18 (first published in Foreign
Affairs); and chapter 24 (first published in The Atlantic Monthly)—are

xi

FM.indd xi 8/21/09 2:49:21 AM

 published in this book the way they first appeared in print. Of the
short pieces—reprinted virtually unchanged except for the occa-
sional change in title—all but one first appeared in the Wall Street
Journal. Chapter 16 first appeared in the Asian Wall Street Journal
under the sponsorship of Citibank. The May 1995 epilogue to chap-
ter 24 was written especially for this book.
This is the fourth book of mine that owes its focus and structure
to my friend, editor, and publisher M. Truman Talley, of Truman
Talley Books. It was Mr. Talley who fifteen years ago first had the
idea that I might organize my articles and essays written over a
period of years around a common idea and toward a common
objective. Each piece was to be written separately and had to stand
on its own. But eventually the pieces would form a unit—as does
this book. Prepublication would test them, or rather would allow
them to be tested by executives all over the world. Pieces that
proved to contribute the most to their readers’ effectiveness would
be selected for republication in a book. The idea has proven extraor-
dinarily productive. The three earlier books that resulted from
it—published respectively in 1982 (The Changing Work of the Execu-
tive), 1986 (The Frontiers of Management), and 1992 (Managing for the
Future)—have been extremely successful, both in their original Eng-
lish editions and in a large number of translations. They have also
proven extremely effective as tools, guides, thought-starters, and
action-starters for practicing executives and managers worldwide.
To M. Truman Talley my readers and I thus owe a large debt of
gratitude. And I want to express my gratitude also to Mr. Talley’s
associates, the managing editor and the production editor, who
worked hard to turn a manuscript into a handsome book.

xii ACKNOWLEDGMENTS

FM.indd xii 8/21/09 2:49:21 AM

 INTERVIEW:

T H E P O S T- C A P I T A L I S T E X E C U T I V E

An interview with the Harvard Business Review

Conducted by T. George Harris

For half a century, Peter F. Drucker has been teacher and adviser to senior
managers in business, human service organizations, and government.
Sometimes called the godfather of modern management, he combines an
acute understanding of socioeconomic forces with practical insights into
how leaders can turn turbulence into opportunity. With a rare gift for
synthesis, Drucker nourishes his insatiable mind on a full range of intel-
lectual disciplines, from Japanese art to network theory in higher
mathematics. Yet he learns most from in-depth conversations with clients
and students: a global network of men and women who draw their ideas
from action and act on ideas.
Since 1946, when his book Concept of the Corporation redefined
employees as a resource rather than a cost, Drucker’s works have become
an ever-growing resource for leaders in every major culture, particularly
among Japan’s top decision makers in the critical stages of their rise to
world business leadership. A goodly share of productive organizations
worldwide are led by men and women who consider Drucker their intel-
lectual guide, if not their personal mentor.

xiii

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 Drucker’s most productive insights have often appeared first in the
Harvard Business Review. He has written thirty HBR articles, more
than any other contributor. In the September–October 1992 issue, he pub-
lished core concepts for his major new work, Post-Capitalist Society
(HarperCollins 1993). HBR editors sent T. George Harris, a Drucker friend
for twenty-four years, to the Drucker Management Center at the Clare-
mont Graduate School in California for two days of intensive conversation
about recent practical implications for today’s executives.
HBR: Peter, you always bring ideas down to the gut level where people
work and live. Now we need to know how managers can operate in the
post-capitalist society.
Peter F. Drucker: You have to learn to manage in situations where
you don’t have command authority, where you are neither con-
trolled nor controlling. That is the fundamental change. Manage-
ment textbooks still talk mainly about managing subordinates. But
you no longer evaluate an executive in terms of how many people
report to him or her. That standard doesn’t mean as much as the
complexity of the job, the information it uses and generates, and
the different kinds of relationships needed to do the work.
Similarly, business news still refers to managing subsidiaries. But
this is the control approach of the 1950s or 1960s. The reality is
that the multinational corporation is rapidly becoming an endan-
gered species. Businesses used to grow in one of two ways: from
grassroots up or by acquisition. In both cases, the manager had
control. Today businesses grow through alliances, all kinds of dan-
gerous liaisons and joint ventures, which, by the way, very few
people understand. This new type of growth upsets the traditional
manager, who believes he or she must own or control sources and
markets.
How will the manager operate in a work environment free of the old hier-
archies?
Would you believe that you’re going to work permanently with
people who work for you but are not your employees? Increasingly,

xiv I N T E R V I E W : T H E P O S T - C A P I TA L I S T E X E C U T I V E

FM.indd xiv 8/21/09 2:49:21 AM

 for instance, you outsource when possible. It is predictable, then,
that ten years from now a company will outsource all work that
does not have a career ladder up to senior management. To get pro-
ductivity, you have to outsource activities that have their own senior
management. Believe me, the trend toward outsourcing has very
little to do with economizing and a great deal to do with quality.
Can you give an example?
Take a hospital. Everybody there knows how important cleanliness
is, but doctors and nurses are never going to be very concerned with
how you sweep in corners. That’s not part of their value system.
They need a hospital maintenance company. One company I got to
know in southern California had a cleaning woman who came in as
an illiterate Latino immigrant. She is brilliant. She figured out how
to split a bed sheet so that the bed of a very sick patient, no matter
how heavy, could be changed. Using her method, you have to move
the patient about only six inches, and she cut the bed-making time
from twelve minutes to two. Now she’s in charge of the cleaning
operations, but she is not an employee of the hospital. The hospital
can’t give her one single order. It can only say, “We don’t like this;
we’ll work it out.”
The point is, managers still talk about the people who “report”
to them, but that word should be stricken from management
vocabulary. Information is replacing authority. A company trea-
surer with outsourced information technology, IT, may have only
two assistants and a receptionist, but his decisions in foreign
exchange can lose or make more money in a day than the rest of
the company makes all year. A scientist decides which research not
to do in a big company lab. He doesn’t even have a secretary or a
title, but his track record means that he is not apt to be overruled.
He may have more effect than the CEO. In the military, a lieuten-
ant colonel used to command a battalion, but today he may have
only a receptionist and be in charge of liaisons with a major foreign
country.

I N T E R V I E W : T H E P O S T - C A P I TA L I S T E X E C U T I V E xv

FM.indd Sec1:xv 8/21/09 2:49:22 AM

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