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Bill Corsair provides the introduction for Peter F. Drucker’s book, Concept of the Corporation. He begins by describing Drucker’s book as the famous study of General Motors, which was and still is the prototype of the modern organization. The narrator then begins summarizing the book and starts with the topic of big business, stating that it is required in an industrialized society, and that using up-to-date technology is also a necessity in a modern capitalist civilization. The use of such modern technology requires big business organizations, and the central problem of all modern society is what, exactly, is wanted from big businesses, as they have become America’s representative social institution. The first rule of any business is survival, and survival is based on human effort. Good will and informality should characterize this human touch, and a management style that relies upon information and persuasion, rather than management by edict, should be its governing function, and it should rely on a tool Drucker calls the objective yardstick. In any institution, it is advisable to place people in situations where their talents can be developed, for example, transferring employees to different departments, but not giving them executive positions until they have worked in all departments of the business. This kind of employee training should be continuous. Efficient and cheap production can always be obtained in various ways, but without enterprising leadership, the most efficient institution cannot maintain its efficiency. The problem of executive isolation is a problem that exists in companies of every size, but in smaller companies, isolation almost takes care of itself. In large corporations, however, the problem of isolation should be solved by special means. There are three areas in which GM has developed specific instruments in order to break the isolation of the corporation executive, namely, customer relations, dealer relations, and community relations. The oldest of these three areas is customer relations. Decentralization, or, division of labor, is a basic requirement for managing any organization, whether it’s a business or an army. At General Motors, decentralization is meant to extend to all supervisory positions as much as possible. The idea that top management is trying to communicate is that it will always be open to persuasion based on facts or logic, but not by orders from below. The test of policy in management should be whether or not it works--management is, at bottom, a clinical discipline. The test is not whether the treatment is scientific, but whether the patient recovers. The corporation should have authority only in its own sphere, and GM will probably be in a defensive position for years to come. However, it may, over the years, develop into a true transnational company that integrates the markets of the developed world and its purchasing power with the labor resources of the developing world. Peter F. Drucker is then interviewed through a question-and-answer format, and comments that GM will likely be one of four or five strong automobile companies and continue to grow, or that it will continue to shrink while still retaining its strength, or, lastly, that there will be no GM. Drucker then discusses Alfred Sloan’s management policies and innovations in relation to his own, Sloan’s contribution to GM, his personal characteristics, and his attitude toward competition. Drucker closes with comments on his personal interactions with Sloan, as well as his meeting and management traits and protocol.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration General Motors General Motors automobiles General Motors Company General Motors Corporation Big business Industrialization Capitalism Survival Employee selection Continuing education Customer relations Community relations Decentralization in management Division of labor Globalization Global economy and development Sloan, Alfred P. (Alfred Pritchard), 1875-1966 Management Management by objectives Competition Western society Western civilization Industrialized society Objective yardstick Executive isolation Dealer relations Clinical discipline Transnational corporation
Original recording, 1992; Drucker Archives; Box 68