The Essential Drucker

There are three tasks, equally important but essentially different, that management has to perform to enable the institution in its charge to function and to make its contribution. Establishing the specific purpose and mission of the institution, whether business enterprise, hospital, or university Making work productive and the worker effective Ma

There are essentially three kinds of innovation in every business: innovation in product or service; innovation in the marketplace and consumer behavior and values; and innovation in the various skills and activities needed to make the products and services and to bring them to market. They might be called respectively product innovation, social in

Because its purpose is to create a customer, the business enterprise has two—and only these two—basic functions: marketing and innovation.

Management’s first job is to think through, set, and exemplify those objectives, values, and goals. Management must also enable the enterprise and each of its members to grow and develop as needs and opportunities change. Every enterprise is a learning and teaching institution.

To satisfy the customer is the mission and purpose of every business. The question, What is our business? can, therefore, be answered only by looking at the business from the outside, from the point of view of customer and market. All the customer is interested in are his or her own values, wants, and reality. For this reason alone, any serious att

Until a business returns a profit that is greater than its cost of capital, it operates at a loss. Never mind that it pays taxes as if it had a genuine profit. The enterprise still returns less to the economy than it devours in resources. It does not cover its full costs unless the reported profit exceeds the cost of capital. Until then, it does no

General Motors had come to own the manufacturers of 70 percent of everything that went into its automobiles—and had become by far the world’s most integrated large business. It was this prototype keiretsu that gave General Motors the decisive advantage, both in cost and in speed, which made it within a few short years both the world’s largest and t

In every case, beginning with General Motors, the keiretsu—that is, the integration into one management system of enterprises that are linked economically rather than controlled legally—has given a cost advantage of at least 25 percent and more often 30 percent. In every case, it has given dominance in the industry and in the marketplace.

The want a business satisfies may have been felt by the customer before he or she was offered the means of satisfying it.