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The Emergence of Management
During the last fifty years, society in every developed country has become a society of institutions. Every major social task, whether economic performance or health care, education or the protection of the environment, the pursuit of new knowledge or defense, is today being entrusted to big organizations, designed for perpetuity and managed by their own managements. On the performance of these institutions, the performance of modern societyif not the survival of each individualincreasingly depends.
Only seventy-five years ago such a society would have been inconceivable. In the society of 1900 the family still served in every single country as the agent of, and organ for, most social tasks. Institutions were few and small. The society of 1900, even in the most highly institutionalized country (e.g., Imperial Germany), still resembled the Kansas prairie. There was one eminence, the central government. It loomed very large on the horizonnot because it was large but because there was nothing else around it. The rest of society was diffused in countless molecules: small workshops, small schools, the individual professional-whether doctor or lawyer-practicing by himself, the farmer, the craftsman, the neighborhood retail store, and so on. There were the beginnings of big businessbut only the beginnings. And what was then considered a giant business would strike us today as very small indeed.
The octopus which so frightened the grandparents of today's Americans, Rockefeller's giant Standard Oil Trust, was split into fourteen parts by the U.S. Supreme Court in 1911. Thirtyyears later, on the eve of America's entry into World War II, every single one of these fourteen Standard Oil daughters had become at least four times as large as the octopus when the Supreme Court divided itin employment, in capital, in sales, and in every other aspect. Yet, among these fourteen there were only three major oil companiesJersey Standard, Mobil, and Standard of California. The other eleven were small to fair-sized, playing little or no role in the world economy and only a limited role in the U.S. economy.
While business has grown in these seventy years, other institutions have grown much faster. There was no university in the world before 1914 that had much more than 6,000 studentsand only a handful that had more than 5,000. Today the university of 6,000 students is a pygmy; there are even some who doubt that it is viable. The hospital, similarly, has grown from a marginal institution to which the poor went to die into the center of health care and a giant in its own rightand also into one of the most complex social institutions around. Labor unions, research institutes, and many others have similarly grown to giant size and complexity.
In the early 1900s the citizens of Zurich built themselves a splendid City Hall, which they confidently believed would serve the needs of the city for all time to come. Indeed, it was bitterly attacked by conservatives as gross extravagance, if not as megalomania. Government in Switzerland has grown far less than in any other country in the world. Yet the Zurich City Hall long ago ceased to be adequate to house all the offices of the city administration. By now, these offices occupy ten times or more the space that seventyfive years ago seemed so splendid-if not extravagant.
The Employee Society
The citizen of today in every developed country is typically an employee. He works for one of the institutions. He looks to them for his livelihood. He looks to them for his opportunities. He looks to them for access to status and function in society, as well as for personal fulfillment and achievement.
The citizen of 1900 if employed worked for a small family-type operation; the small pop-and-mom store employing a helper or two; the family household; and so on. And of course, the great majority of people in those days, except in the most highly industrialized countriessuch as Britain or Belgiumworked on the farm.
Our society has become an employee society. In the early 1900s people asked, "What do you do?" Today they tend to ask, "Whom do you work for?"
We have neither political nor social theory for the society of institutions and its new pluralism. It is, indeed, incompatible with the political and social theories which still dominate our view of society and our approach to political and social issues. We still use as political and social model what the great thinkers of the late sixteenth and seventeenth centuries, Bodin, Locke, Hume, and Harrington, codified: the society which knows no power centers and no autonomous institution, save only one central government. Reality has long outgrown this modelbut it is still the only one we have.
A new theory to fit the new reality will be a long time coming. For new theory, to be more than idle speculation and vague dreaming, must come after the event. It codifies what we have already learned, have already achieved, have already done. But we cannot wait till we have the theory we need. We have to act. We have to use the little we know. And there is one thing we do know: management is the specific organ of the new institution, whether business enterprise or university, hospital or armed service, research lab or government agency. If institutions are to function, managements must perform.
The word "management" is a singularly difficult one. It is, in the first place, specifically American and can hardly be translated into any other language, not even into British English. It denotes a function but also the people who discharge it. It denotes a social position and rank but also a discipline and field of study.
But even within the American usage, management is not adequate as a term, for institutions other than business do not speak of management or managers, as a rule. Universities or government agencies have administrators, as have hospitals. Armed services have commanders. Other institutions speak of executives, and so on.Management. Copyright © by Peter F. Drucker. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.