The Daily Drucker: January 17 - Management: The Central Social Function

Non-economic institutions need a yardstick that does for them what profitability does for business.

Non-business institutions flock in increasing numbers to business management to learn from it how to manage themselves.  The hospital, the armed service, the Catholic diocese, the civil service - all want to go to school for business management.

This does not mean that business management can be transferred to the other , non-business institutions.  On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of the objectives and that, therefore, non-economic institutions, such as a university or a hospital, will also need very different management from that of a business.  But these institutions are right in seeing business management as a prototype.  Business, far from being exceptional, is simply the first of the species and the one we have studied most intensively. Non-economic institutions need a yardstick that does for them what profitability does for business.  "Profitability," in other words, rather than being the "exception" and being distinct from "human" or "social" needs, emerges, in the pluralist society of organizations, as the prototype of measurement needed by every institution in order to be managed and manageable.

ACTION POINT: What is the most important non-business institution with which you are associated?  Does it use a specific yardstick to assess performance?  How successful is the organization?

Quoted from The Daily Drucker, January 17 , Page 19