TODAY'S DECISIONS FOR TOMORROW'S RESULTS れ Ot. indicates, however, the extremes of cyclical risk involved. lt is therefore the mo 並 important forecasting t001 in the determina ・ tion Of the minimum necessary profi し The second tool—more diffcult to handle but also more produc- uve——consists Of basing a decision on events which are likely to have heavy impact upon future economic conditions but which have al ・ ready happened. lnstead of forecasting the future, this method focuses on past events——events WhiCh, however, have not yet ex ・ pressed themselves economically. lnstead 0 [ attempung to guess economic conditions, this method tries t0 find the "bedrock ” under ・ lying economic conditions. We have mentioned before the case the company which decided during World War Ⅱ to turn to the production of fuse boxes and switch boxes after the war. This decision was based on such an analysis of the bedrock underlying the economy, namely, the pattern family forma ・ tion and population structure that had emerged in the United states between 37 and ー 3 ・ By ー 3 れ had become clear that something fundamental was happen- ing tO population trends. Even ⅱ the population statisticians had turned ou 【 tO be right in their forecast that the high birthrate was a wartime phenomenon and would ( on 肥 tO an end with the conclusion of the war (one Of the most groundless, if not frivolous, forecasts ever made), it would not have altered the fact that from a 10W point in 1937 the rate of family formation had risen tO where it was significantly above the rate of the depression years. These new families would need houses, even if the rate of family formation and the birthrate were to decline again after the end of the war. ln addition, there had been almost twenty years 0 [ stagna ・ tion in residential building, so that there was a tremendous pent•up de ・ mand for houses. From this it could be concluded that there would be substantial residential building activity in the postwar period. The on け thing that could have prevented it would have been America's losing the war. Ⅱ the postwar period had brought a sizable depression, this housing activity would have been a government project. ln fact, population trends and the housing situation indicated that housing would have to be the major depression-fighting t001 of governmental policy. Ⅱ the postwar periOd were tO be a boom period, as it turned out tO be, there should be substantial private housing activity. ln Other words, housing would be at a high level in depression as well as ⅲ boom. ()n fact, building would probably have been on a higher level than the one we actually experienced

THE IBM STORY 2 would have cushioned the depression unpact on IBM even without the New Deal. The fact remains, however, that many of IBM's competitors suffered heavily during the depression despite New DeaI and favor ・ able long-term な e れ d. There is something to be said for the argu- ment used by one IBM executive: "lt is not correct tO say that we managed tO maintain employment during the depression because we grew. We grew because we had committed ourselves tO the 1 期 ai ・ tenance Of employment. This forced us tO find new users and new uses for our existing products. lt forced us tO find unsatisfied wants in the market and to develop new products t0 satisfy them. lt forced us to develop foreign markets and t0 push export sales. I am convinced that we would not today be one 0f the world's leading producers and exporters Of Ofre machinery but for our commit- ment tO maintain employment during the depression years. lndeed,' he added, "I sometimes wonder whether we wouldn't be well advised tO commit ourselves tO i れ 2 れ g employment constandy.

THE CHALLENGE TO MANAGEMENT 23 new technology will demand the utmost in decentralization, in flexibility and in management autonomy. Any society in the era Of the new 記 ( hn010 ' would perish miserably were it to attempt to get rid Of free management Of autonomus enterprise SO as tO run the economy by central planning. And so would any enterprise that attempted tO centralize responsibility and decision ・ making at the top. Ⅱ would go under as did the great reptiles of the Saurian age who attempted t0 control a huge body by a small, centralized nervous system that could not adapt itself to rapid change in the envrronment. For a11 of these reasons, no description of the nature Of manage ・ ment will be complete that fails tO take Automation intO account. I am inclined tO believe that Automation will not inundate us in a sudden flood but will seep in gradually though steadily. But there can be little doubt that it is coming. There can be little doubt that the industrial country that first understands Automation and first applies it systematically will lead in productivity and wealth during the second half of the twentieth century, Just as the United States, through understanding and applying mass production, came t0 lead the world during the 6 t half of this century. And there is even less doubtthat this leadership position will fall t0 the country whose managers understand and practice management in itS fullest sense.

T 日見 PRACTICE OF MANAGEMENT ⅲ the postwar period, had the much ・ heralded po w depressi 0 れ a ( 加け come tO p 5. ) Ⅱ was on the basis 0f this analysis 0f a development that had already happened and that could be expected t0 shape the economy regardless 0f business conditions, that the company's management decided tO move intO its new business. Management could justifiably claim that' even though れ planned long-range, no forecast regarding the future was actually in- volved. Of course, population structure is only one 0f the bedrock factors. ln the period immediately following World War Ⅱ it was probably a dominant factor in the American economy. ln Other times, hOW ・ ever, it might well be secondary, if not irrelevant. However, the basic method used is umversally applicable: t0 find events that have already occurred, events that )ie outside Of economlC conditions, but in turn shape those conditions, thus basing a decision for the future on events that have already happened. But though the best tool we have, bedrock analysis is far 伝 om perfect. ExactIy the same bedrock analysis of population trends with the same conclusion for a postwar housing b001 れ could have )een made in 1944 for France. The analysis would have been right; but the French housing boom never occurred. Of course, the reasons may be tOtally outside Of the economic system proper. Per- haps they are t0 be found in strangulation by rent ( 0n501S and by a vicious tax system. The boom may only be delayed and may still be ・ just around the corner. " And the lack of any appreciable postwar residential building in France may be a major cause Of the French political and economic 、 sickness, and therefore should not have been allowed to happen. This would have been cold comfort tO the businessman, however. ln France the decision tO go intO fuse boxes and switch boxes, though based on rational premises, would still have been the wrong decision. ln other words, one cannot say that anything will "inevitably ・ happen in the future. Even if the inevitable does happen, one d 5 not know when. Bedrock analysis should therefore never be used alone. Ⅱ should always be tested by the third and final method 0 [ limiting the risks 0f making prediction: Trend analysis—the most widely used 0f the three t001S in this country today. Where bedrock

CHIEF EXECUTIVE AND BOARD job should be. What activities must the chief executive do himself? What activities can he leave to others—and to wh01 ? Above all: what activities come first? HOW much time must be set aside for them, no matter what "cnsis" pressures there are? The intuitive manager, in other words, cannot d0 the chief executive's jOb, no matter how brilliant, how quick, how perceptive he is. The job has to be planned. And the work has to be r ・ formed according to plan. T んど″可ど 0 れど - Ma れ C 可 Ex ど硼 Even if the job is studied most systematically, organized most thoughtfully, and with the maximum of decentralization, it still is not a j0b one man could or should do. lndeed, 90 per cent 0f the trouble we are having with the chief executive's jOb is rooted in our superstition 0f the one-man chief. We still, as did Henry Ford, model the chief executive Of the modern business after the single proprietor Of yesterday's economy. There will always be t00 many activities in the job for any 0 e man's working day. Half the activities in the list I gave above should probably be taken out of the chief execuuve's hands and given [ 0 other people. The remainder would still be unmanageable for one man; there would still be some fifteen or twenty maJOr activities. Each Of them would be Of vital importance tO the enter ・ prise. Each would be diffcult. Each would be time-consuming. And each would require careful planning, thought and preparation. The job, if pared to the bone, would still exceed the span of managerial responsibility of any one man. An unlimited supply 0f universal geniuses could not save the one-man chief-executive concept 社 nle they could also bid the sun stand still in the heavens. And even JOShua could accomplish this only once, whereas the one ・ man chief executive would have tO perform the miracle seven days a week. The activities that together make up the chief ・ executive jOb are also t00 diverse t0 be performed by 0 e man. The list includes things that have primarily t0 d0 with planning, analyzing and li formulation, like the determination Of the company's business, the setting 0f objectives and so forth. lt includes things that require fast decisive action: for instance, the handling Of a CTiSiS. Some

MAKING DECISIONS 355 A fairly large kitchenware manufacturer bent all management energres for ten years toward cutting production ( os COSts actually did go down; but profitability did not improve. Critical-factor analysis showed that the 代 problem was the product mix sold. The company's sales force pushed the products that could be 501d the easiest. And it put all its emphasis on the most obvious sales appeal: lower price. AS a result the company more and more Of the less profitable lines where its competitors made the least e 圧 0 靆 s. And as fast as it reduced manufacturing costs it cut itS price ・ lt gained greater sales volume—but the gain was pure fat rather than 部 ow 山 . ln fact, the company became progressively more vulnerable t0 market fluctuations. Only by defining the problem as one 0f product mix could it be solved at all. And only when 山 0 quesuon was asked: What is the critical factor in this situation? could the right definition Of the problem be given ・ To find the critical factor by straight analysis of the problem is not always easy. Often two subsidiary approaches have t0 be used. Bo 山 are applications of a principle developed by the classical phy ・ si ロ sts Of the eighteenth centuy tO iSOlate the critical factor: the principle Of "virtual motion. '' One approach assumes that nothing whatever will change or move, and asks: What will then happen in time? The other approach projects backward and asks: What that could have been done or left undone at the time this problem 6 t appeared, would have materially affected the present situation? One example of the use Of these two approaches is the case 0f a chemical company that faced the need tO replace the executive uce-president whO had died suddenly. Everybody agreed that the dead man had made the company; but everybody agreed that he had been a bully and a tyrant and had driven out 0 { the company all independent people. Con ・ sequently the problem, as management saw it, seemed t0 be that 0f de ・ ciding between not filling the job at all or filling it with another strong man. But if the first were done who would run the company? Ⅱ the second' would there not be another tyrant? The question of what would happen if nothing were done revealed bo 山 that the problem was to give the company a top management' and that action had t0 be taken. Without action the company would be left without top management. And sooner or later—probably sooner—it would decline and disintegrate. The question of what could have been done ten years ago then brought 0 社 t that the executive vice-president, his function and his personality were not the problem at 1. The problem was that the company had a

THE PRINCIPLES OF PRODUCTION Navy, a Of automatic production Of electronic circuits. ThiS process The U. S. Bureau 0 [ Standards has recently worked out, for the U. S. 代丘 ne or a plate ・ glass plant. There are other illustrations. ing closely the continuous flOW and automatic self-control Of an Oil easily put his production Of parts on an automatic basis, approach ・ The electrical instrument maker mentioned above could fairly ture of unform parts and their assembly into diversified products. if production is properly understood and organized as the manufac ・ lies in the application 0f Automation; and this can only be achieved which produces diversified products. For there the great opportunity This is 0f particular importance in a mass-production industry, organization, standardized p brought tremendous ⅵ ngs ・ work, when, in Other words, craft organization was replaced by stage teams, each containing all the skills needed in a particular stage 0f the shop as long as it was craft-organized. When the work was organized in Similarly, standardized parts brought れ 0 savings in a locomotive repair ( 0 れ spi ( 0u3 savings in time and money 山 could immediately use uniform standardized prefabricated parts with Levitts in Long lsland organized home building by homogeneous stages, mo 代 expensive and slower than the 01 d methods. When, however, the craft organization. The use Of prefabricated parts in a craft system proved system. lnstead Of homogeneous stages, the organizing principle was other words—were superimposed on a badly disorganized unique-product The reason was that uniform, standardized parts——mass production, in World War Ⅱ , proved abortive. 仕 om prefabricated, standardized parts. Yet the attempt, when made after hou 記 . lt would seem the most obvious thing in the world tO build a house and organizing れ properly is shown by the failure of the prefabricated The result of doing this without first analyzing the production process advanced system. the organization Of parts Of production on the basis of a more OnIy when these steps have been taken can the next one be made: duction 0 Ⅱ business performance. 山 0 丘 [ and decisive steps in pushing back the limitations of pro ・ principles Of that system consistently and tO the limit. These are know what system of production is appropriate, and apply the Management must demand that those responsible for production Ⅳん砒 Ma れ ag ど m S ん 0 観 d D ど襯 2 れ d 可れ 5 p d 跖 0 れ ~ eo が

THE PRACTICE OF MANAGEMENT railroads' competitive position in the freight and passenger business. Neither industry, れ can be asserted with confidence, れど d have tumbled from the high estate れ occupied less than a generation ago had managements thought through what business they were instead Of considering the question SO obvious as tO answer itself. Ⅳん 0 お肪ど C m ? The first step toward finding out what our business iS, is tO raise the question: "WhO is the customer?" —the actual customer and the potential customer? Where is he? How does he buy? HOW can he be reached? One Of the companies that had come into existence during World War Ⅱ decided after the war to go into the production of fuse boxes and switch boxes for residential use. lmmediately it had tO decide whether its customer should be the electric contractor and builder or the homeowner making his own electric installations and repairs. TO reach the first would require a maJOr effort at building a distributive organization; the home ・ owner could be reached through the mail-order catalogues and retail stores Of such existing distributive organizations as Sears, Roebuck and Montgomery Ward. Having decided in favor 0 [ the electrical contractor as the larger as well as the stabler (though the more diffcult and much more competi- tive) market, the company had tO decide where the customer was. This innocent ・ sounding question required major analysis Of population and market trends. ln fact, tO go by past experience would have meant disaster tO the company. Ⅱ would have led them tO ok for their customer in the big cities—and the postwar housing boom was primarily suburban. That the company foresaw this and built a marketing organization centering in the suburbs unprecedented in the industry—was the first mapr reason for itS success. The question "how does the customer buy?" was fairly easy to answer in this case: the electrical contractor buys through specialty wholesalers. But the question 研 how best to reach him was hard—indeed, today, after almost ten years Of operations, the company is still undecided and is still trying out various methods such as salesmen or manufacturer's agents. lt has tried to sell direct to the contractor—by mail or out of central sales warehouses Of its own. lt has tried something never attempted before in the industry: to advertise its products directly to the public so as to build up ultimate-consumer demand. 、 hese experiments have been successful enough tO warrant the suspicion that the first supplier who finds a wav

PREFAC E XI lndeed, the Japanese consider it the föundati()n ()f their economlC success and industrial performance. Some Of my subsequent management bOOkS have taken one major theme 0 「 T んに P act に可、イ〃 ag に襯円〃 and developed it at greater length—for instance, M の zag ゾ〃 g おおれ / な ( 1964 ) , which was the first book on business strategy, and The E 〃〃 Ex “行 ( 1966 ) , which treats rnanagmg oneself as a manager and exec.utlve ln an orgamza- tion. M の田 g に襯に厩 . ・ 7 冰 , R に平の厖〃〃 , P 川 c 厳 ( 1973 ) was written as a systematic handbook for the practicing executive but alSO as a systematlC text for the student ()f management; it thus alms at being comprehensive and definitive, whereas T んに P 尾〃 c に 0 / 、イ〃〃夜〃〃 alms at being accessible and stimulating. イロ〃 ag 川ⅲ石仼われ / 石襯 ( 1980 ) further develops basic questions raised in に“厳・に可、 Management—What is our business? What could ⅱ be? 、 What should ⅱ be?—but alSO considers the quest1011 ()f h()W a business b()th lnnovates and maintains contlnuity in a time ofchange, thus turning change into opportunity. Ehese four volumes—all originally pub- lished bv Harper & Row—have now come out as Harper paperbacks in the same format as this paperback edition ()f 7 方に PI ct なに ( ゾ、 ーの田 g に〃肥れた But 月乃辺得なにイ Manag に盟に襯 has rernained the one bOOk which students Of management, Y()ung people asl)lring t() beconr lnan- agers and mature managers still consider the foundation bOOk. 、、 If you read only one b()()k on management," the chairman ()fone ()fthe world's largest banks tells his officers again and again, "read The practice 可、 A12 れ ag に襯にれた " 、 Mhat explains this success is, I believe, the t)()Ok'S balance between being comprehensive and being accessible and easy tO read. Each chapter iS short, yet each presents the funda- mentals in their entirety. is, Of course, the result ()f the bOOk'S origins; I wanted something that would give the managers I was working with in my client companies 夜リ / 〃 g they would need tO dO theirjobs and prepare themselves for top-management respon- sibilities; yet the material had to be accessil)le, had to be readable, had to fitthe limited time and attention busy people could give t0 it. lt is this balance, I believe, that has made this b()()k keep on selling and being read for thirty years despite the plethora of books on managementthat have been written and published since. This bal- ance, I believe, has made itthe preferred b()()k ofthe practitioner 0f

IS PERSONNEL MANAGEMENT BANKRUPT? 2 新 Work was taken for granted•, and it iS an axiomthat one never sees what one takes for granted. Scientific Management was thus one Of the great liberating, pioneering insights. Without it a real study of human beings at work would be impossible. Without it we could never, in managing worker and work, go beyond good in- tentions, exhortations or the "speed up. " Although its conclusions have proved dubious, its basic insight is a necessary foundation for thought and work in the field. lt iS one American concept that has penetrated the entire world. lt is practiced in lndia and in the SOViet Union, in Argentina and ⅲ Sweden. The Germans have made a pseudo ・ metaphysics out of it; they ( a11 it "rationalization. '' The critics Of America everywhere think that they are attacking the "real America" if they attack Scientific Management. When we started, after World War ll, tO give assistance tO western Europe's attempt tO improve productivity, we thought that that meant primarily the exportation Of Scientific Management techniques. We preached that "productivity is an attitude. " We stressed the importance Of mass distribution, Of capital investment, Of research. But what we actually did was tO send over industrial engmeers equipped with Scientific Management t001S and imbued with its philosophy. And where the European industrialist on the whole turned a deaf ear tO our recommendations Of mass distribu ・ tion, capital investment or research, he tOOk tO Scientific-Manage ・ ment techniques with alacrity. For, in CO ー 1 on with the rest Of the ou tside world, he had come t0 bel ieve—though wrongly—that scientific Management was the essence Of America's industrial achievement. Yet, Scientific Management, t00 , has been stagnant for a long time. lt is the Oldest Of our three approaches tO the management Of worker and work; it rose together with the new profession Of engineering in the last Of the nineteenth century• lt alSO ran dry first. From 1890 t0 1920 Scientific Management produced one brilliant new insight after the Other and one creative new thinker after the 0ther—Taylor, FaY01, Gantt, the Gilbreths. During the last thirty years, it has given us little but pedestrian and some tomes on the techniques, if not on the gadgetS' Of narrower and narrower specialties. 、 here are. Of exceptions—especially