Drucker claimed that “everything that concerns the achievements and results of
an institution is the subject of management and lies within the responsibility of
management. (...) It is thus one of the special tasks of management to administer
the organization’s resources with the resulting external relationships in mind. (...)
The results as manifested in external relationships must be a central focus of
management teams” (Drucker 1999a, p. 63).
Yet neither productivity nor financial performance alone can measure the
achievements of an enterprise. A balanced scorecard is achieved by combining
market positioning, the ability to innovate, productivity, quality, and workforce
development. As Drucker succinctly stated, “the result of the activity of an enter-
prise is a satisfied customer.”
Drucker further differentiated between eight key areas essential to obtaining
quality results: marketing, innovation, human resources, financial resources, mate-
rial resources (e.g. production plants), productivity, social responsibility, and a
winning attitude. In addition Drucker believed that goals are not an unalterable
fate, but point us in the right direction. They are not orders, but are more like a
religious confession. They do not dictate how the future will unfold, but serve to
guide the usage of an enterprise’s means, and free the energy of the enterprise
to design its own future (Drucker 2004, p. 51). If the management lacks the ability
to assimilate lessons learned through the achievement of or failure to achieve goals,
and if it does not value the employees, the company will not survive.
In order to obtain good results, all activities of a company must focus on its
goals. Thus, we are concerned with the topic of management “by objectives,” an
innovative philosophy put forth by Drucker. This point is best illustrated by the
story of three stonemasons (Drucker 2004), who were asked what they do. The first
mason answered, “I earn my living expenses.” The second explained, “My masonry
work is the best in the country.” And the third answered with brightly shining eyes,
“I am building a cathedral.”
What exactly are the crucial goals for managers? Each manager needs clearly
defined objectives that coincide with those of the enterprise. This is true whether
managers are leading production processes, or marketing, or heading the executive
finance committee. However, this is often considered banal and is as such neglected,
decades after Drucker first recommended the practice of aligning managers’ goals
with those of the enterprise.
Frequently the practice of “management by campaigns,” makes it impossible to
achieve objectives in a steady and balanced manner. Additionally, as pointed out
by Drucker, “All parties involved seem to know and accept that 3 weeks after the
campaign, all will return to the status quo” (Drucker 2004, p. 145). Nevertheless,
new managers continue to utilize this approach. For Drucker, “management by
campaigns is nothing but a safe haven for confusion and an admission of incompe-
tence,” i.e., it reveals that the management is incapable of planning.
In summary, the principle of “management by objectives” offers room for
individual strengths, needs, and responsibility while directing efforts in a collective
and common direction.
20 2 Occupation or Calling: What Makes for Good Leadership?