Title: Managing in Turbulent Times
Author: Peter F Drucker
Publication details: Harper Collins Publishers, 1980
Number of pages: 256 pages
After spending weeks looking for a relevant book Managers could use in these tough economic times I found this prophetic and seminal book ‘Managing in Turbulent Times’ by Peter F. Drucker, considered by many to be the most influential and widely read authority on management. Even after 25 years after its publication, the book is relevant because of its classic wisdom on running a business, in good times as well as bad times.
The book starts by asserting that in turbulent times the fundamentals have to be managed well. It explains what according to Drucker managing the fundamentals entails. An enterprise's figures should be adjusted to inflation, liquidity and financial strength must be put before earnings; the decline of productivities (of capital, time, knowledge, physical resources) must be reversed and the costs of staying in business tomorrow must be earned today, regardless of "record profits."
Drucker then provides actions and long term strategies that will ensure a company's capacity to survive a blow, to adapt to sudden change, and to avail itself of new opportunities. Strategies include concentrating resources on results by knowing the performing and productive resources; sloughing off (abandoning) of resource devouring and unproductive past; deciding how much to grow so that a company does not become marginal in its market; making existing companies especially large ones capable of innovation; and business strategies like being the right size or deciding when to diversify and how. Drucker recommends a scorecard for managers that assess performance in a)appropriating capital, b)people decisions, c)innovation and d)strategies versus performance.
The book then elaborates upon the realities of the new economic, social and political environment and how they can be managed. He discusses a range of topics including cheap imports, multinational corporations, technological change, employee participation, changing population demographics, and global markets. His commentary on recession throws up some interesting possibilities for managers to consider in current times of economic slowdown. For example he narrates how when American mass builders, thinking people cut back on housing during recession, in 1973-74 started making “basic home” without the frills, they did not sell at all. On the contrary spending on housing increased. Same was the case with eating out. He says this is because there is a new market segment that is linked to population dynamics rather than income. I like the way Drucker issues various challenges to managers throughout the book. He says, “The manager..will have to learn to create “issues”, to identify both the social concern and the solution to it, and to speak for producer interest in society as a whole rather than for special interest of “business”.
The book is full of tips on how to implement the strategies recommended. “Any increase in volume that leads to reduced productivities…should be eliminated..” He covers different economies - developed and developing; different companies; different periods to illustrate what is working and not working. Drucker has solutions to the challenges associated with each of his own prophecy. For instance about the workforce he predicted it becoming heterogeneous, knowledge workers seeking a second career in their sixties and seventies etc. He says as a step towards managing “labor forces” each with different needs and characteristics, acknowledge these differences in connection with work policies, training programs and benefits. So a woman whose husband’s company provides health insurance for family, may value benefits other than the health insurance benefit.
This book is not easy reading and you will need to budget couple of sittings to understand and assimilate the content. But then nothing worth having comes easy. It is relevant for managers grappling with various management issues and for management students aspiring to become managers.