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The session begins with Dale E. Zand introducing Peter F. Drucker in his return visit to the graduate school of business at New York University, and the topic of the session, productivity. Zand also introduces Worth Loomis, president of the Dexter Corporation and a graduate of NYU. Drucker begins the topic on productivity with a quotation from Karl Marx, though both capitalism and the concept of productivity predate Marx. Drucker highlights how managers are paid for productivity--for making resources productive, and how half of the tremendous increase in productivity over the last hundred years has come from working smarter. He stresses how the best example of this is the fact that a dollar of banking assets today earns no more than it did in 1875, and that Citibank today gets about sixty times as much volume out of that dollar a year. A very important part of the subject is to make resources more productive where they currently are, alongside shifting them from less productive into more productive employments. Marx, Drucker states, did not see, and perhaps could not see, such developments occurring, but Marx’s insight was profound because he understood that no system could survive if productivity declines. Managers believed that labor is the source of all wealth, but really, productivity is the source of all wealth. Therefore, when the need came for productivity statistics in 1905, they were focused on labor. He moves on to say that most people, after the last twenty-five to thirty years, believe that one can substitute relative unproductivity of one resource for the higher productivity of another--that one can invest capital to save labor, which Drucker dismisses as a delusion. He states that one must make all resources productive, and that one cannot work on aggregates but only component parts. So, management must work on the aggregates, which consist of four parts--capital, key physical resources, time, and people. In terms of capital, Drucker claims, the United States is poor. He goes on to claim that in every country, the leader stands out not because of technology or marketing, but because he gets the most work out of a penny. The question becomes, then, one of being able to manage resources because one is aware of them. Key physical resources change, Drucker says, and one has to work on making such resources yield productive contributions. He identifies the greatest productive profession as the physician, because they are able to see far more patients a day than in the past. Drucker says that it is the job of management to make people productive, which means, primarily, to enable people to do the work they are being paid for. He closes his portion of the session stressing that it is the job of the manager to build continuous learning into the work. Organized abandonment, Drucker stresses, is the key to productivity--one must move in the direction of the results. Over the next decade, Drucker cautions that the U.S. will have to reverse the long slide in productivity or risk becoming like England and its working-class despair. Worth Loomis then takes over the session and begins discussing how the belief in productivity is a universal trait of humankind, but what may get in the way of the productivity is management. Breaking down the modern corporation into segments of analysis has been the only way to completely understand modern and diversified organizations, and what should be done is to have monthly statistics on such business segments, exposing such statistics to a general view of the organization. Moreover, he states that one should not assume that there is any theoretical right answer to pounds per hour measurement. Instead, one should look to history to get the right answer. To Loomis’s remarks, Drucker adds that one should make sure they do their homework before they start--that they know things such as where the money is and concentrate on where it is. Furthermore, he contends that it is the manager’s job to enable people to do their work, but it is their work to do. One must commit themselves to monetary form--and commitment starts with management. Loomis corroborates Drucker’s views by providing the example of Texas Instruments, a company committed to the idea of forcing the learning curve down in their offices. Drucker adds that ideal productivity goals, at least for himself, would include being able to do twice the volume one is doing today without any additional fiscal contributions to the business and without additional workers on the payroll.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Zand, Dale E Productivity Dexter Corporation Marx, Karl, 1818-1883 Capitalism Management Management by objectives Banks and banking Citibank (New York, N.Y.) Resource allocation Resource focus Labor Statistics Capital Capital goods Capital investments Capital market Capital productivity Capital Budget Time Time management Human capital Technology Technological innovations Marketing Physicians Physician and patient England Texas Instruments Incorporated Loomis, Worth Symposia
Original recording, April 18, 1979; Drucker Archives; Box 68