Tag: Peter Drucker

Drucker on Knowledge Worker Productivity, Part 2

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

The concepts of knowledge work and manual work and their differences are intuitive. Drucker also discussed another important concept called “The Technologists.” He defined the technologists as workers who do both knowledge work and manual work.

This group includes people who perform knowledge work as their primary task and apply knowledge of the highest order. The technologists make up the majority portion of the knowledge workers. This group is also the fastest-growing group which includes occupations such as laboratory technicians, surgeons and dentists, computer programmers, and so on.

When it comes to truly advanced knowledge, Drucker believed no single country has the monopoly anymore. Only in educating technologists can the developed country still have a meaningful competitive advantage. Besides being a big part of the modern labor pool, increasing the productivity of the technologists deserves a high priority within any organization.

But what are the elements for making the technologists more effective? Drucker outlined three considerations.

First, we must ourselves the key productivity question “What is the task?” For many technologists’ work, the answer is not always obvious. If we focus solely on making the manual work portion of the technologists a little faster, better, or cheaper, we might miss the essential objective. Instead, technologists should be asking the critical question of “Who are we trying to serve and why are we doing it?”

Second, after we are clear about our task and our audience, the technologists must take the full responsibility of delivering projects to fulfill the answers. The technologists will apply their knowledge to deliver the quality and the quantity required by the projects. And only then could the technologists can be effective in organizing the manual part of the work.

Finally, organizations must treat the technologists as knowledge workers, no matter how time-consuming the manual part of their work. The organization’s focus must be on making the technologists knowledgeable, responsible, and productive.

Drucker on Knowledge Worker Productivity, Part 1

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

In this chapter, Drucker discussed worker productivity for both manual work and knowledge work. In the 20th century, businesses focused on manual workers’ productivity and reaped a tremendous amount of benefits.

In the 21st century, Drucker believed the most valuable asset of any institution, whether for or non-profit, will be its knowledge workers and their productivity.

According to Drucker, six factors can influence the knowledge worker’s productivity.

1. Knowledge workers’ productivity demands that we ask the question: “What is the task?”

While manual work productivity asks the question of “How can we do something faster and more cheaply,” the question for knowledge work should be “Who is this for and why do we want to do it?”

2. Knowledge workers must own responsibility for their productivity. Another word, knowledge workers must manage themselves with autonomy.

For manual work, the bosses and managers own the primary responsibility of keeping their worker productivity. It is the opposite of knowledge work.

3. Continuing innovation must be part of the knowledge work.

For manual productivity, doing things faster and producing things cheaper per unit are the goal. For knowledge workers, our work must be innovative by being purposeful and aiming at a leadership posture.

4. Knowledge work requires continuous learning, and equally continuous teaching on the knowledge worker’s part.

Manual worker’s productivity relies on obedience and compliance.

5. Quantity of output is not the primary productivity concern for knowledge workers.

For manual productivity, it is mostly about the quantity of output. The quality aspect of the manual work is to meet a minimum standard. Exceeding such minimum standard is welcome but not essential for manual work.

On the other hand, the productivity of knowledge work must aim first at obtaining the optimum, if not maximum, quality. Only after achieving the quality goal, we can ask ourselves the question of quantity or volume. This quality-first posture also means that the knowledge workers must think through the definition of quality for our work.

6. Finally, Drucker asserted that the productivity of knowledge workers requires that we treat the people as an “asset” rather than a “cost.”

Drucker on Information Challenges, Part 4

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

Drucker discussed the challenges of managing information in an enterprise. To run an organization that focuses on wealth creation, Drucker advocated that we must collect information about both the internal organization and the external environment. Information, as Drucker asserted, must be organized or they are still just data.

However, there is not only one right way to organize information. Every executive must decide what is the right way to organize information for their needs. Even though there is no one perfect way, Drucker did suggest three elements to look for when designing an information organizing methodology.

Key Event: The executive should decide what key events should be tracked by the information system. Drucker defined the key event as something the executive’s performance depends on and want to monitor closely.

Probability Theory: The executive should work with her team to determine what constitutes normal operational fluctuation and what are exceptional events. Applying the total quality management principles, we can leverage the probability theory to determine that is normal and what is outside the norm.

Threshold Phenomenon: The third element of information organizing methodology can help the executives connect the dots for their businesses. The threshold concept is especially helpful to the executives when a sequence of events becomes a “trend,” thus warranting the executive’s attention and potential actions.

To measure the effectiveness of an information organizing effort, Drucker suggested the ultimate test is the goal of “No Surprises.”

No information design will be perfect for all occasions, but it should serve the executives by minimizing the surprise element of the business. Before events become significant, the information system should have allowed the executive to analyze them, understand them, and take appropriate actions or make the adjustments.

In the end, Drucker advised the executives to learn two very important lessons. We need to “eliminate” data that do not pertain to the information we need, and we need to focus on the usage of information for “action.” The purpose of having information is not so much about the knowledge we can gain. It is all about being able to take the right action using the information.

Drucker on Information Challenges, Part 3

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

[www.amazon.com/MANAGEMENT-CHALLENGES-Century-Peter-Drucker-ebook/dp/B000FC12PK/]

Drucker discussed the challenges of managing information in an enterprise. To run an organization that focuses on wealth creation, Drucker outlined four sets of diagnostic information the executive will need: Foundation Information, Productivity Information, Competence Information, and Resource Allocation Information.

But, these four kinds of information, as Drucker asserted, are internally focused and can only inform or direct tactics. For strategy and, ultimately, results, we need organized information about the environment in which we operate.

We must design strategy based on information about markets, customers and prospects, technology within the industry or outside, and worldwide finance and economy. All these kinds of information are about the outside world and may not be easily collected. Without the critical information about the environment, it can lead to something Drucker described as:

“A serious cause of business failure is the common assumption that conditions must be what we think they are or at least what we think they should be.”

Another word, executives need a system which includes information that makes executives question the above assumption. The system must lead us to ask the right questions and not just feed the information we expect.

For the knowledge workers, and especially for executives, information is our key resource. We use the information to create connections with other knowledge workers, with other organizations, and expanding our “networks.” Essentially, knowledge workers use information to enable themselves to do the work.

So how can knowledge workers decide what information they would need? Drucker suggested we ask ourselves two important questions.

#1 “What information do I owe to the person with whom I work and on whom I depend? In that form? And in what time frame?”

#2 “What information do I need myself? From whom? In what form? And in what time frame?”

The question of “what I owe” must come first because the answer will establish communications. Until we can establish that communication between us and our connections, there will be no information flow back to us.

The only person who can help us answer the question of “what I owe” is our network and the connections within the network. By asking this question, we must collaborate with our network in arriving at the answer. At the same time, we must think through question #2 and be ready to answer when the other person in our network ask question #1 from their perspective.

By purposely asking and honestly answering both questions, we can create a virtuous cycle where the answers from one question can feed into and even strengthen the other question. Furthermore, working through these two questions are not a one-time event. We must be asking and answering them iteratively as necessary because the world around us is always changing.

The changes around us mean we must always be challenging our assumptions about our information needs and cultivating our network through sharing of information.

Drucker on Information Challenges, Part 2

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

Drucker discussed the challenges of managing information in an enterprise. He believed that enterprises exist to create customers and wealth, not to control costs. To run an organization that focuses on wealth creation, Drucker outlined four sets of diagnostic information the executive will need.

1. Foundation Information

The foundation information encompasses the oldest and most widely used tools such as profit-and-loss, cash-flow, and financial ratios. They are like the measurements from routine physical for human health. If those readings are normal, they do not tell us much. If they are abnormal, we need to do something to fix the situation.

2. Productivity Information

We used to measure only the productivity of workers, but those measurements are not enough anymore. Enterprises need data on total-factor productivity. Until business return a profit that is greater than its cost of capital, it operates at a loss. The combination of Economic Value-Added Analysis and benchmarking provide the diagnostic tools to measure total-factor productivity and to manage it.

3. Competence Information

According to Drucker, leadership rests on core competencies that the organization can do but others find it difficult to do them well. Core competencies often meld market or customer value with a special ability from the producer or supplier.

Every organization needs a set of core competencies, and they all might be different. They, however, all need one common core competency: innovation. Every organization needs a way to record and appraise its innovative performance.

4. Resource Allocation Information

The last area of diagnostic information is the allocation of scarce resources: capital and performing people. In the effort to create wealth, all managers need to allocate human resources and capital as purposely and as thoughtful as they can. The outcomes of those allocations must be recorded and studied carefully.

These four sets of diagnostic information inform the executives about their organizations from an internal perspective. They are tactical by nature. To achieve the required results, executives will also need information about the outside world. Those sources of information are more strategic by nature.

A serious cause of business failure if the common, and frequently incorrect assumptions made by the organizations about taxes, social legislation, market preferences, distribution channels, intellectual property and many other. The organization’s information system must be able to capture, measure and report on that information required by the executives, whether from internal or external sources.

At the end of the day, Drucker asserted that “Inside an organization there are only cost centers. The only profit center is a customer whose check has not bounced.”