INTRODUCTION: A SOCIETY
OF ORGANIZATIONS

SOCIETY in this century has become a society of organizations. Social tasks which only a century ago were done by the family, in the home, in the shop, or on the farm—from providing goods and services to education and care of the sick and the elderly—are increasingly performed in and through large organizations. These organizations—whether business enterprises, hospitals, schools, or universities—are designed for continuity and run by professional managers. Executives have thus become the leadership groups in our society. The leadership groups of old—whether nobles, priests, landed aristocracy, or business tycoons—have disappeared or become peripheral.

The first job of the executive is to make his organization perform. Results are always on the outside. There are only costs on the inside. Even the most efficient manufacturing plant is still a cost center until a distant customer has paid for its products. The executive thus lives in a constant struggle to keep performance from being overtaken by the concerns of the inside, that is, by bureaucracy. Business at least stands under the control of the market, which forces even the most powerful corporation to subordinate its inside concerns to outside results and to performance. But in the public service institution, where the market test is absent—and in many cases cannot even be simulated—bureaucracy constantly threatens to swallow up performance.

For the business enterprise in a market system we are gradually developing a discipline of entrepreneurship, that is, of performance. But even the President of the United States fights a losing battle to preserve his capacity to give political leadership and to make political decisions in the face of the need to manage an unmanageably large, unmanageably complex, and self-centered bureaucratic machine.

The art and discipline of entrepreneurship to make organizations perform and to produce results will therefore be a continuing concern. This concern will involve the public service institution as well as the business enterprise.

The executive as a person—as a key individual in society and as a member of his organization—becomes a matter of increasing importance. Middle managers and other professionals working as individual contributors—as engineers, as chemists, as accountants, as computer programers, as medical technologists, and so on—have constituted the fastest-growing group in American society, and indeed in the society of all developed countries. Careers in organizations—that is, careers as managers and other professionals—are the principal career opportunities for educated people. Nine out of ten youngsters who receive a college degree can expect to spend all their working lives as managerial or other professional employees of institutions.

Social theorists and political scientists still, by and large, divide the world into “bosses” and “working stiffs.” But this was the reality of the nineteenth century. The reality of today consists of people who are “bosses” but who also have bosses of their own; who are not “capitalists” but who collectively—through their pension funds and their savings—own the economy; people who consider themselves “professionals” but who are also “employees” as “professionals” traditionally were not supposed to be.

Who are they? What do they represent? Where do they stand? What are their problems, their opportunities, their concerns? How can they best use their organizations to achieve their own ends in life and work? And what, in turn, do they owe the organizations that enable them to live comfortable, well-paid, middle-class lives by furnishing the capital they themselves lack and by taking the risks that they could not afford or dare to take themselves?

There are, of course, many other concerns of management and manager: the impact of new technology, labor relations, government regulation, and growing worldwide economic integration; taxation and compensation; rapidly changing internal organization; and the development of managers.

There is the curious ambivalence in our society that shows an apparently hostile face to business and to large organizations but that also favors business schools to the extent that they have become the fastest-growing institutions of higher education. Indeed, the Master of Business Administration degree has become increasingly important for advancement in public service organizations as well as in businesses.

There is the changing age structure of society, which for the young adult is creating a climate of extreme competition. And increasingly, too, there is the desire for a second career for the middle-aged manager and professional—a problem for the individual and a challenge to the organization that employs him.

Despite all the outpouring of management writing these last twenty-five years, the world of management is still little-explored. It is a world of issues, but also a world of people. And it is undergoing rapid change right now.

These essays explore a wide variety of topics. They deal with changes in the work force, its jobs, its expectations, with the power relationships of a “society of employees,” and with changes in technology and in the world economy. They discuss the problems and challenges facing major institutions, including business enterprises, schools, hospitals, and government agencies. They look anew at the tasks and work of executives, at their performance and its measurement, and at executive compensation.

However diverse the topics, all the pieces reflect upon the same reality: In all developed countries the workaday world has become a “society of organizations” and thus dependent on executives, that is, on people—whether called managers or administrators—who are paid to direct organizations and to make them perform. These chapters have one common theme: the changing world of the executive—changing rapidly within the organization; changing rapidly in respect to the visions, aspirations, and even characteristics of employees, customers, and constituents; changing outside the organization as well—economically, technologically, socially, politically.

Of the more than three dozen chapters in this volume, thirty-nine appeared first on the editorial page of The Wall Street Journal, one—chapter 23, “The Professor as Featherbedder”—first appeared in the Chronicle of Higher Education, and the final chapter, “The Matter of ‘Business Ethics’” was originally written for The Public Interest and published there.

This book has two aims. One is to give insight into—and an understanding of—this world of the executive. The second is to provide a useful “executive agenda.” Modern organization, as we now know it, is barely one hundred years old. It did not become conceptually visible and an object of study until World War II—less than half a century ago. This new continent has been named and its outlines can be delineated. But otherwise we are still in a fairly early stage of its exploration. My second aim for this book, as an executive agenda, is to stimulate both thought and action and to be read with this overriding question in mind: “How can I, and we in my organization, use this idea or these insights to perform more effectively—to do a better job and, above all, to welcome and accommodate the new and the different?”

Peter F. Drucker

Claremont, California

Thanksgiving Day, 1981