Drucker on the theory of the business

The theory of the business must be known and understood throughout the organisation. This is easy in the organization’s early days. But as it becomes successful, an organization tends increasingly to take its theory for granted, becoming less and less conscious of it. Then the organization becomes sloppy. It begins to cut corners. It begins to pursue what is expedient rather than what is right. It stops thinking. It stops questioning. It remembers the answers but has forgotten the questions. The theory of the business becomes “culture.” But culture is no substitute for discipline, and the theory of the business is a discipline.

The theory of the business has to be tested constantly. It is not graven on tablets of stone. It is a hypothesis, And it is a hypothesis about things that are in constant flux – society, markets, customers, technology. And so, built into the theory of the business must be the ability to change itself. Some theories are so powerful that they last for a long time. Eventually every theory becomes obsolete and then invalid. It happened to the GMs and the AT&Ts. It happened to IBM…*

Peter Drucker – Managing in a Time of Great Change (From The Daily Drucker)

*It happened to Compuserve, MySpace, Yahoo, Nokia…

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