Book Summary of Peter Drucker’s “The Practice of Management”

Peter Drucker (1909–2005) was the 20th century’s leading thinker on business and management. He was amazingly prolific—he produced 39 volumes on management and leadership and worked right until his death a week before his 96th birthday.

'The Practice of Management' by Peter Drucker (ISBN 0060878975) Drucker’s The Practice of Management (1954) played a pivotal role in the recognition of management as a professional discipline. Even six decades after publication, The Practice of Management remains relevant for its original, profound, and timeless ideas. Drucker’s conception for the organization as an integral part of society, his elucidation of the nature of managerial tasks, his emphasis on good governance, and his prescription for effective leadership have served managers well over the decades.

Here are some prominent insights from The Practice of Management:

  • Drucker accentuated the need for clarity about the meaning of a business. He argued, “‘what is our business’ is the most important question successful management groups have to address.” In corporate strategy, this inquiry has become the underpinning for business analysis and the formulation of mission statements.
  • A business exists to “create a customer.” Therefore, managers need to query who their customers are and what the business must try to do for its customers.
  • The Practice of Management contributed to a rich analysis of the role of business in society. Drucker proposed that a business exists at three constructs that influence each other and thus establish the organization’s performance, mission, and business definition:
    1. as an economic establishment that produces value for its stakeholders and for the society,
    2. as a community that employs people, pays them, develops them, and coordinates their efforts to increase productivity,
    3. as a “social institution that is deeply embedded in society and values and as such is affected by public interest discussion, debate, and values.”
  • “The manager is the dynamic, life-giving element in every business” who defines the organization’s mission, develops and retains productive teams, coordinates various activities, sets goals, and gets things done.
  • Leadership gives the organization meaning and purpose—leadership defines and nurtures the organization’s central values, creates a sense of mission, allocates resources, and builds systems and processes in pursuit of the organization’s goals.
  • Management entails farsighted thinking about the future state of things and taking appropriate risks to capitalize on opportunities. Additionally, “managing a business must be a creative rather than adaptive task. The more a management creates economic conditions or changes them rather than passively adapts to them, the more it manages the business.”
  • The Practice of Management by Peter Drucker Managers inculcate the dominant cultural norm in the organization through their actions. These values become evident in the decisions they make concerning whom they recruit, whom they retain and promote, the goals they pursue, and the ethical parameters with which they frame their decisions.
  • The Practice of Management popularized the concept of management by objectives (MBO) for the successful execution of an organization’s strategic plan. The MBO process ensures delineation of key objectives, prudent allocation of resources, dedication of effort on key goals, use of real-time feedback, and effective communication. MBO helps managers organize and motivate their employees, promote effective communication, develop employees, measure performance, and increase their sense of empowerment.

The Practice of Management is one of those books that his admirers tend to appreciate more with every successive reading. Drucker’s remarkable virtues as the “father of modern management”—viz., clarity, usefulness, and common-sense pragmatism—are all on display in this book.

Recommendation: Read—it’s the best book you’ll find on the responsibilities, tasks, and challenges that managers undertake. The Practice of Management will have a profound effect on your thinking.

How to Handle Upset Customers

Servicing Angry Customers

From an angry customer’s perspective, the impressions left by customer-service providers are long-lasting and can heighten the impact of a service experience, for better or worse.

A failure to recognize and quickly respond to the needs of angry customers can make them feel ignored, frustrated, and powerless. Here are nine guidelines that can result in a constructive interaction with an angry customer and restore his perception of satisfaction and loyalty.

  1. Don’t adopt an angry tone. Stay calm and professional. When an upset customer starts shouting or being foul-mouthed, you’ll gain nothing by reacting in a like manner. Actually, responding to anger with anger can easily escalate the hostilities and thwart meaningful communication. Exercise self-control and regulate your feelings. Without remaining calm, you cannot break through emotional barricades or preempt the customer’s frustrations going from bad to worse.
  2. If the customer is yelling, ask him to speak slower. A louder voice often goes with a faster speech. When the customer slows down his speech, the level of his voice will also drop. Repeat this request as many times as necessary to calm him down.
  3. Declare that you intend to understand the customer’s situation and help. Say, “Could you please speak more slowly. When I understand your situation, I can help you better.”
  4. Let your angry customer vent. When a customer is upset, what you tell him matters less than what you enable him to tell you. The first thing an upset customer wants is to vent. Commonly, just the modest act of listening patiently can defuse the customer’s anger. Only after you facilitate getting the customer’s emotions off his chest can you have a constructive discussion.
  5. Recognize that the customer’s problem does exist. Restate the customer’s analysis of what the problem is. “If I understand you appropriately, you have a problem with X and you don’t like Y. This has caused Z.”
  6. How to Handle Upset CustomersDemonstrate sincere empathy for the customer’s feelings. Say, “I can understand why this situation would upset you. I’m sorry you feel that way.” Your best response to the customer’s anger is empathy.
  7. Ask what the customer would like to do to have the problem solved. Ask, “What can we do to make this right for you?” By shifting the customer’s focus from annoyance to problem solving, you can determine ways to negotiate a satisfactory solution. If the customer’s request cannot be met, provide alternative solutions that may alleviate the situation or placate the customer.
  8. Let common sense prevail over standard operating procedure. Much of current customer service initiatives (especially with outsourced call centers) has devolved into standard operating procedures, carefully formulated decision-trees, and scripted answers that customer service agents dispense mechanically. To an upset customer, these automated responses often seem hollow and inacceptable. Deviate from the canned responses and use good judgment. Exercise the autonomy you’re granted over how you can respond to help solve customer complaints. If necessary, involve your manager.
  9. Don’t need to give a “yes” or a “no” answer on the spot. If the customer asks for more than you’re able to accommodate, defer your answer by saying, “Give me a minute to consider all the options I have for you” or “let me talk to my boss and see how I can help you.” After weighing the pros and cons, give your answer and offer a reason if necessary. This way, even if the customer doesn’t get a “yes” from you, he will still appreciate knowing that you’ve seriously considered his appeals.

Idea for Impact: Body language, phrasing, and tone can have a big impact on angry customers who are on the lookout for evidence of compassion and want to be reassured that they have chosen a good provider for their product or service.

Find out What Your Customers Want and Give It to Them

“Nobody asked the dogs what they wanted”

Dog Food Product Once upon a time, a pet-foods company struggled to sell a new dog food product they’d recently introduced to the market.

The company’s CEO called the department heads together to discuss why the new product wouldn’t sell.

The head of production said he’d done everything right; it wasn’t his department’s fault.

The heads of the sales, advertising, finance, packaging, shipping, and distribution departments had done everything right. None of them were to blame.

The CEO demanded, “Darn! What happened? Why won’t our new product sell?”

A junior staffer shouted from the back of the room, “Sir, it’s just that the dogs simply won’t eat our doggone food. You see, nobody asked the dogs what they wanted.”

Idea for Impact: Customer Focus Drives Company Success

Your research and development efforts will be successful only if they’re driven by a thorough understanding of what your customers want. Engage your customers. Pay close attention to their needs in every phase of product/service design including idea generation, product design, prototyping, production, distribution, and service. Remember Peter Drucker’s dictum that “the purpose of a business is to create and keep a customer.”