Forces and Balance: The Concept of the Corporation Chapt 2

Drucker’s policy discussion ends quickly here. He barely introduces the topic before he shifts to something else. It suggests the standard critique of Drucker: He asked the right questions but didn’t always provide the right answers.

In reading this chapter, I began to realize that he is anticipating the world of Alfred Chandler, or perhaps more likely Chandler drew from him. Managerial policy favors stability, argued Chandler. When a company develops a professional managerial class, it makes decisions that tend to preserve the positions of those managers. We have seen that problem in many companies. DEC in the 1980s. IBM about the same time. We may be seeing it in Microsoft.

There is “always a latent conflict between the administrators who define efficiency in terms of the perpetuation of the administrative machine and the “doers” who define efficiency in terms of the aims and purposes for which the institution exists,” is Drucker’s response. “ These conflicts are not only inevitable, they are necessary; and no institution could function unless all four trends were equally represented.” I suppose that this is Schumpeterist capitalism. We have the fight so that inefficient organizations die and are replaced by more efficient ones.