Peter Drucker’s article, ‘The Theory of Business’ discusses the different theories and assumptions many businesses, corporations, industries and organizations were once founded and run upon and the strengths and weaknesses that came with those theories. Drucker points out how these former theories and assumptions may have once provided great successes for many businesses, such as GM, now pose upcoming problems for current businesses that are not willing to accept change or accept new reality, theory or assumptions. The once time-tested theories and assumptions no longer work and are simply no longer applicable to fit the present reality of the company or its environment. Drucker then goes on to provide his insight and remedies to help ailing businesses find their correct theory of business.
The Theory of the Business
Peter Drucker’s article identifies the change that comes to every company in a point in time, and how every company no matter how high they once were or how low they were, will go through a change in the theory or assumption of how they run their business and what it will take for them to be successful within the overall environment. A company’s theory does not last forever, and needs re-shaping and re-tooling in order to be successful and to fit the reality around them.
A major problem that Drucker points out in his article is that many companies when faced with problems or troubles blame other circumstances or outside influences for their inner problems and may simply refused to accept it. He pointed out such companies and examples like IBM, GM, Zeiss, Deutsche Bank and others as shining examples of company that once enjoyed long term success and what was perceived as a positive theory of business, only to see their theories and assumptions crash to lows. These companies’ assumptions and theories did not match with their reality and the environment around them.
Drucker points out...