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Managing the Future: Selections from the 1st Global Peter F. Drucker Forum 2009
Edited by David Lamond
1. Introduction
Peter [6] Drucker (1994) proposed a universal "theory of the business". It suggested a new business paradigm built around organisation assumptions. It sought to be a blueprint for management and a template for executive action and business development.
Organisations, Drucker suggested, exist because someone made assumptions about what they do, how they perform, how they are structured, how they operate, how they create value and how they get paid for what they do ([6] Drucker, 1994).
In proposing his "theory of the business", Drucker positioned assumptions as central constructs in modern management and business practice and argued that assumptions were the philosophical base of the business, the fundamental hypothesis of the enterprise and therefore demand careful attention from practising managers.
The theory of the business thus gives us a unique perspective on business and provides a grounded view of the role played by assumptions in business and organisations as the fundamental building blocks of the business.
When viewed from this perspective it allows any organisation to recognise and engage with the assumptions that underpin the business. The ability to do this, while also managing the existing enterprise and the existing assumptions lies at the heart of the papers debate.
The method by which the activity of engagement with the assumptions can be facilitated and validated by the organisation is the key to enabling the "assumption function" to become the platform for continuous development and renewal as the theory of the business is presented in this paper which is constructed in four parts.
First, the theory of the business is introduced as a conceptual framework. Second, assumptions are explored as constructs in recent business and management literature. The third section considers the two business case studies that led to development of theory of business, while part four attempts to synthesise and conclude the chapter.
2. The theory of the business
In a thought-provoking article in the September/October 1994 edition of the Harvard Business Review , Drucker proposed his "theory of the business" arguing "Every organisation, whether a business or not, has a theory of the business" ([6] Drucker, 1994, p. 96).
Drucker contended that every organisation operates...