Managing in a knowledge society.(Book Review)

Peter Drucker On the Profession of Management

Published by Harvard Business School Press (800) 988-0886 www.hbsp.com 2003; 224 pages; $16.95

Over the last few years, we at GFOA have heard repeated calls from our members for more guidance on general management issues. It seems that while finance officers are becoming ever more proficient in the disciplines of public finance, an increasing share of their time is now devoted to non-financial concerns for which many have little formal training. Finance officers looking for insights into how to navigate the challenges of the modern organization could do much worse than the writings of Peter Drucker, one of this century's foremost experts on management.

Harvard Business School Press recently did us all a favor by publishing 11 of the 32 articles Drucker has written over the years for Harvard Business Review. Edited by former HBR editor Nan Stone, Peter Drucker On the Profession of Management is a thought-provoking collection of forward-looking ideas that are as relevant today as they were when they were first written. While the articles focus specifically on the for-profit sector, most of the lessons are equally applicable to public management.

The book is divided into two sections: "The Manager's Responsibilities" and "The Executive's World." Although the latter section is, on the balance, more interesting and useful than the former, the article on making personnel decisions deserves careful study. "Executives who do not make the effort to get their people decisions right do more than risk poor performance," Drucker says. "They risk losing their organization's respect." In this essay, Drucker offers four basic principles for making good people decisions. Public managers would do well to learn and live by these principles.

Drucker anticipated long before most observers the shift from an industrial economy to today's information or knowledge economy. The second section specifically addresses the unique managerial challenges of the knowledge economy, where the primary factor of production is information as opposed to land, labor, and capital. Speaking of this new order, Drucker writes, "For managers, the dynamics of knowledge impose one clear imperative: every organization has to build the management of change into its very structure." This, he says, requires three systematic practices: continuous improvement, the exploitation of knowledge, and innovation.

According to Drucker, the single greatest challenge for managers in this new economy is raising the ...