Job Advice: The Concept of the Corporation Chapter 2

He ends with leadership. He ends with the advice we give to new graduates. Work for a small company first. Your will learn more. You will get a better understanding of the business. You will move into leadership ranks faster.

“A senior executive of one of the big divisions after speaking at length
about the advantages of his centralized organization, concluded by saying that they were attainable only because the smaller decentralized divisions supplied the top leadership,” Drucker noted. It works “very much in the manner in which a big baseball club will get its talents from its small farms, but its revenue from the
big.timers. (127)

Annual Model Year: The Concept of the Corporation Chapter 2

In his autobiography, Sloan presents the annual model change as a way of improving the product. He is a little more or a Taylorist than Drucker.

Drucker argues that it is a way of bringing market forces to bear on units that cannot be decentralized.

We all see what we admire in the picture.

In a note that shows how thoroughly this discussion is rooted in 1946, Drucker notes that few organizations could afford an annual model change. “the annual model is something few industries could have”. (124) Many, many industries run on production cycles that are far shorter than a year. That is one of the changes that has happened in the past 50 years, a change that could not have been managed without software.

Nearing the End: The Concept of the Corporation Chapter 2

As we near the end of this chapter, we’re led through a discussion how centralized firms or units can still be managed in a way that makes them responsive to market forces. It is pretty straightforward but does not really anticipate the argument that markets are merely producers of information and that an individual need not be present at the market to get the information.

Socialist Production: The Concept of the Corporation Chapter 2

Here is the question. Are there forms of production that are capitalist and other forms that are socialist? The answer is probably yes, if you look at the national economic scale.

Does the answer to that question change if you look within a company? In particular, can certain products be only manufactured only by a process that must be considered socialist? Must automobiles be a capitalist product? How about computers? How about software?

Here is the real issue. If decentralization represents modern free enterprise, are there some products that require such a tightly managed, step by step production process that they cannot be produced by a decentralized organization? Is our commitment to free enterprise measured by the amount of parallelism in our production processes?

This probably a moot point but it does suggest one of the boundaries between engineering and political economy, between Taylor and Drucker. “The importance of the question whether decentralization is absolutely more efficient than centralization does not lie, primarily, in its application to business management,” Drucker concludes. “It is actually the question whether a socialist economy can be as efficient economically as a free-enterprise economy.” (p122)

Golden Tower of the Fisher Building: The Concept of the Corporation Chapter 2

Nearing the end of Chapter 2.

If you know Detroit, you know the Golden Tower of the Fisher Building, which is on West Grand Avenue, which is more or less the active and healthy section of downtown. The General Motors building is across the street from it. The Motown artists lived north of it.

I was going to do a bit of a note about how the Fisher Building represented the decentralization of General Motors but that idea fell apart. First, Fisher Body never occupied the Fisher Building. The family build it after they sold Fisher Body to General Motors. (For the record, I worked for Fisher Oldsmobile, which was owned by minor and distant branch of the family.)

Second, Fisher Body was not very decentralized. They had one plant for each of the major GW auto lines, which were all managed out of Detroit. Third it was highly efficient as a centralized unit.

Drucker argues that it was able to survive as a centralized unit because it made a single, simple products. That may be the case or not. There is aways a question of why it existed as a distinct unit at all and was not divided and merged into the different automobile lines.

It was originally an artifact of the early manufacturing process. People bought automobiles without the body and then bought a body later. Certain carriages apparently worked on a similar principle. It survived because it survived because it used a specialized manufacturing technique – stamped sheet metal – that was not common in other parts of the company.

Drucker’s example of Fisher Body may not tell us much about how to a company any more than the Fisher Building tells us much about GM. It is not centralized. It seems to work. It may not be a logical division of the company. It certainly is no longer. It was dissolved in 1984.