Book Summary Preview : What Management Is

The Big Idea
Management affects everyone because it is present in every aspect of the world. It applies to managing oneself – focusing our abilities towards our goals. It applies to our working relationships with others because it affects our choices about them. Management is about putting together organizations that work to accomplish a mission.

The basic tasks of the manager are to plan and to execute. The manager assesses the organization’s goals and resources. He defines these clearly for others. The manager formulates a plan of action or a kind of road map. Having the plan, the manager then proceeds to implement it. The manager must constantly keep careful track of where the organization is (Are we heading towards our goal?) and how the organization is performing (Are we utilizing best value from our resources?).

Chapter 1 Value Creation: From the Outside In
Creating value is the primary duty of management. The term Value Creation is important because it underscores the shift from managing resources (which was the main focus of management from the late 19th to the early 20th century) to managing the results or performance of the organization. Warren Buffet succinctly defines it as what you get in exchange for what you pay.

Customers Define Value
Value takes many forms and is recognized in different ways by different people. It can be tangible, for example cell phones, or intangible, like the mobile connection service and instant information the cell phone provides. By thinking of Value as how a customer defines it focuses management on the consumer/customer: if no one buys it, what good is it?

Value as Efficiency: The Manufacturing Mindset
In the late 19th to early 20th century, businesses were what they made. A business manufactured steel, automobiles, etc. To increase a business’ value, one increased manufacturing efficiency to produce more steel or more automobiles, etc.

The Marketing Mindset: What Does the Customer Value?
In 1954, Peter Drucker wrote The Practice Management, an introduction to management. He concluded that customers don’t buy products; they buy the fulfillment of their needs. He encouraged a change in perspective, to see from the customer’s eyes. Drucker encouraged managers to ask: “What is our business?” “Who is the customer?” “What does the customer value?”

Maximizing Shareholder Value: The New Mantra
During the 1980s it was common to hear of hostile takeovers and battles for corporate control, these goings on even became the theme of movies. Takeovers become possible when the value of the whole company being taken over was less than the sum of its parts or in other words, undervalued. This pressured management to do more than create value; they must maximize it for the shareholders.

How Is Value Created?
In Michael Porter’s Competitive Strategy, he developed the concept of the value chain which is the sequence of events, data, and processes that turns out and delivers the product. One major consequence of value chain thinking is that each activity is not a cost but a step in adding value to the final product. Another major consequence is that it looks at the total process of value creation that includes suppliers, distributors, marketers, etc, each one’s role in it and how it affects the whole.

The Right Discipline for Nonprofits: Mission, Not Markets
Non-profit organizations, for example environment conservationists, require a different focus. The value they create is not necessarily determined by the market. The value they create is tied up in their mission. According to Magretta, their focus questions are: “What is our mission?” “What is the unique value we exist to create?” “Who will support us in fulfilling our mission, and how can we align their interests with our mission?”

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