The document discusses key concepts from management expert Peter Drucker including: 1) Management is about human beings and making their strengths effective and weaknesses irrelevant. 2) Knowledge workers must have autonomy, opportunities for mastery, and a sense of purpose. 3) Intrinsic motivation is more effective than incentives for knowledge work requiring creativity. 4) Companies should focus on hiring and retaining self-directed employees motivated by autonomy, mastery, and purpose rather than incentives.

1. CHAPTER 5 DISCUSSION QUESTIONS
1) Fill in the blanks from the Drucker quote at the beginning of page 157. "Management is about _________. Its task is to make
people capable of ___________, to make their strengths _____________ and their weaknesses ________________.
2) What 3 questions should everyone in an organization be able to answer "yes" to?
3) How did Alcoa put Drucker's ideas about putting people (employees) first into practice?
4) Between 1987 & 2000:
A) Alcoa's lost workday rate fell from 1.87 to how many days per 100 workers?
B) Productivity went up by a factor of what?
C) Quality issues fell by a factor of what?
5) By the end of 2000, Alcoa increased market value by what %?
6) In 2005 Alcoa's lost work-day rate was down to what?
7) What term did Drucker coin in the late 1950's?
8) What did Drucker use the above term to mean?
9) What is the difference between efficiency & effectiveness?
10) Today, knowledge & service workers together constitute just over what % of the US workforce?
11) What is Whole Foods method for successfully finding the right people?
12) Fill in the blank. "A mission statement should fit on your ___________________."
13) What is FPU's mission statement?
14) What is the mission statement of your favorite organization?
15) Fill in the blanks. "Especially for knowledge workers, Drucker was a strong advocate for ________________ rather than
____________________.
16) There is no better motivation for working hard than what?
17) What did the PARC scientists refer to Xerox officials as?
18) Who is the world's largest producer of appliances?
19) What general category of people & knowledge strategies typically involves the highest investment in knowledge?
20) What general category of people & knowledge strategies has a smaller knowledge component in its offering?
21) What general category of people & knowledge strategies is all about low price?
22) What general category of people & knowledge strategies has a high knowledge content within its offerings & needs few
people to operate?

2. “MANAGEMENT IS ABOUT HUMAN BEINGS. ITS TASK IS TO
MAKE PEOPLE CAPABLE OF JOINT PERFORMANCE, TO MAKE
THEIR STRENGTHS EFFECTIVE & THEIR WEAKNESSES
IRRELEVANT.”

3. WHAT DO EMPLOYEES EXPECT FROM THEIR MANAGERS?
-EVERY PERSON IN AN ORGANIZATION SHOULD BE ABLE TO
ANSWER YES TO 3 QUESTIONS:
1) ARE YOU TREATED EVERY DAY WITH DIGNITY & RESPECT
BY EVERYONE YOU ENCOUNTER?
2) ARE YOU GIVEN THE THINGS THAT YOU NEED (EDUCATION,
TRAINING, ENCOURAGEMENT, SUPPORT) SO THAT YOU
CAN MAKE A CONTRIBUTION?
3) DO PEOPLE NOTICE THAT YOU DID IT?

4. HOW DID ALCOA PUT DRUCKER’S IDEAS ABOUT “PUTTING PEOPLE
FIRST” INTO PRACTICE?
-MADE A CONNECTION BETWEEN HUMAN VALUES, EMPLOYEE
SAFETY, & FINANCIAL SUCCESS.
-SOUGHT OUT TO BE THE FIRST 100% INJURY FREE WORK PLACE.

5. WHAT IS THE DIFFERENCE BETWEEN EFFICIENCY & EFFECTIVENESS?
EFFICIENCY:
-THE ABILITY TO GET THINGS DONE. (MANUAL WORK)
EFFECTIVENESS:
-THE ABILITY TO GET THE RIGHT THING DONE. (KNOWLEDGE WORKERS)
WHY DOES MANAGEMENT NEED TO APPROACH KNOWLEDGE WORKERS &
SERVICE WORKERS DIFFERENTLY FROM THE TRADITIONAL BLUE-COLLAR
WORKER?

6. WHAT MUST MANAGEMENT OFFER KNOWLEDGE WORKERS?
THE OPPORTUNITY TO:
1) COMBINE THEIR EXPERTISE WITH OTHER PEOPLE’S
COMPLIMENTARY SKILLS, INSIGHT, & RELATIONSHIPS.
2) WORK TOWARD A MISSION THAT HAS AN IMPACT ON THE
CUSTOMER.
3) BE ABLE TO MEASURE THEIR EFFECTIVENESS.

7. AS MANAGERS, HOW CAN WE MOTIVATE OUR
KNOWLEDGE WORKERS SO THAT THEY WILL BE
EFFECTIVE & ENGAGED EMPLOYEES?
“PEOPLE WORK JUST HARD ENOUGH NOT TO GET
FIRED.” PETER GIBBONS

8. •FIRST, WE MUST RECOGNIZE THAT PEOPLE ARE AN
ORGANIZATION’S MOST VALUABLE ASSET.
-PEOPLE: CUSTOMERS & EMPLOYEES
•SECOND, WE MUST FIGURE OUT WHAT MOTIVATES EACH
OF OUR INDIVIDUAL EMPLOYEES.
-THE CANDLE PROBLEM
DANIEL PINK CLIP ON MOTIVATION

9. THE CANDLE PROBLEM

10. THE CANDLE PROBLEM
-CREATED IN 1945 BY PSYCHOLOGIST KARL DUNCKER.
-A COGNITIVE PERFORMANCE TEST THAT MEASURES THE INFLUENCE
OF FUNCTIONAL FIXEDNESS ON A PARTICIPANT’S PROBLEM SOLVING
CAPABILITIES.
-FUNCTIONAL FIXEDNESS: A MENTAL BLOCK AGAINST USING AN
OBJECT IN A NEW WAY THAT IS REQUIRED TO SOLVE A PROBLEM.
-CANDLE PROBLEM BLOCK: THE BOX OF MATCHES.

11. HOW THE CANDLE PROBLEM APPLIES TO EMPLOYEE
MOTIVATION
WHY REWARDS, COMMISSIONS, & BONUSES TO MOTIVATE
YOUR WORKERS DOES NOT WORK
-SAM GLUCKSBERG (SCIENTIST FROM PRINCETON UNIV.)
CONDUCTED AN EXPERIMENT TO SEE IF OFFERING A
FINANCIAL REWARD HELPED PEOPLE PERFORM A TASK.
-HE FOUND THAT WHEN A FINANCIAL INCENTIVE WAS
OFFERED FOR SOLVING A PROBLEM IN A SHORTER
AMOUNT OF TIME, THE TEST GROUP TOOK LONGER TO
SOLVE THE PROBLEM THAN THE GROUP THAT WAS NOT
INCENTIVIZED.
WHY?

12. -WHEN WE ARE OFFERED A REWARD/INCENTIVE FOR A BEHAVIOR,
PART OF OUR BRAIN FOCUSES ON THAT REWARD. THAT’S HOW
INCENTIVES WORK.

13. -HOWEVER, IF WE ARE DOING A TASK THAT REQUIRES CREATIVITY, NARROW FOCUS LIMITS
THE RANGE OF THOUGHT ESSENTIAL TO CREATIVE OUTPUT.
-WHEN WE ARE NOT GIVEN AN INCENTIVE TO FOCUS ON, WE BECOME FREE TO COMPLETELY
DEVOTE OUR MENTAL EFFORTS TO JUST SOLVING THE PROBLEM.
-THUS, OUR MIND IS ABLE TO GENERATE CREATIVE SOLUTIONS FASTER.

14. -CONTINGENT MOTIVATORS (IF YOU DO THIS, THEN YOU GET THIS) OFTEN DO MORE HARM
THAN GOOD. THEY NARROW OUR FOCUS, & RESTRICT OUR POSSIBILITY.
-STUDIES SHOW THAT AS LONG AS A TASK INVOLVES MECHANICAL SKILL, REWARDS WORK
AS EXPECTED: THE HIGHER THE PAY, THE BETTER THE PERFORMANCE.
-BUT ONCE A TASK REQUIRES EVEN BASIC COGNITIVE SKILL, A LARGER REWARD OFTEN
LEADS TO POORER PERFORMANCE.
-IF/THEN REWARDS WORK WELL FOR NARROW FOCUSED 20TH CENTURY TASKS (BUILDING A
CAR) BUT DO NOT WORK WELL FOR 21ST CENTURY TASKS THAT REQUIRE CREATIVITY
(DEVELOPING THE NEXT IPOD).
-STUDIES SHOW THAT FINANCIAL INCENTIVES OFTEN RESULT IN A NEGATIVE IMPACT ON
OVERALL PERFORMANCE.
-SO WHAT’S THE BEST WAY TO MOTIVATE EMPLOYEES?

15. HIRE EMPLOYEES THAT ARE INTRINSICALLY MOTIVATED & SELF-
DIRECTED.
-INTRINSIC MOTIVATION: BASED ON TAKING PLEASURE IN AN
ACTIVITY RATHER THAN WORKING TOWARDS AN EXTERNAL
REWARD FOR COMPLETING THE ACTIVITY.
-INTRINSIC MOTITATION REVOLVES AROUND 3 ELEMENTS.
1) AUTONOMY: THE URGE TO DIRECT OUR OWN LIVES.
2) MASTERY: THE DESIRE TO GET BETTER AT SOMETHING THAT
MATTERS.
3) PURPOSE: THE YEARNING TO DO WHAT WE DO IN THE SERVICE OF
SOMETHING LARGER THAN OURSELVES.

16. “THE ONLY THING THAT REQUIRES MORE TIME & WORK THAN PUTTING THE
RIGHT PEOPLE INTO A JOB IS UNMAKING A WRONG PEOPLE DECISION.”
DRUCKER’S 5 RULES FOR HIRING PEOPLE
1) LOOK AT A NUMBER OF POTENTIALLY QUALIFIED PEOPLE
2) THINK HARD ABOUT WHAT EACH CANDIDATE BRINGS TO THE POSITION & THE
ORGANIZATION
3) HAVE A VARIETY OF PEOPLE GET TO KNOW THE CANDIDATE AS A PERSON
4) DISCUSS EACH OF THE CANDIDATES WITH SEVERAL PEOPLE WHO HAVE WORKED
WITH THEM
5) AFTER THE HIRE, FOLLOW UP TO MAKE SURE THE APPOINTEE UNDERSTANDS
THE JOB

17. WHAT IS WHOLE FOODS METHOD FOR SUCCESSFULLY FINDING THE RIGHT PEOPLE?
-EMPLOYEES OF EACH STORE ARE ORGANZED INTO SELF-MANAGING TEAMS
RESPONSIBLE FOR THE OPERATIONS OF THE STORE (MERCHANDISING,
SCHEDULING, HIRING).
-THEY ARE ALSO CHARGED WITH WRITING JOB DESCRIPTIONS.
-EVERY HIRE MUST BE APPROVED BY 2/3 MAJORITY VOTEOF THE TEAM AFTER
A 30-DAY TRIAL PERIOD.
-RESULT: HIGH MORALE & LOWER EMPLOYEE TURNOVER THAN THE
INDUSTRY AVERAGE.

18. “WHAT DIFFERENTIATES ORGANIZATIONS IS WHETHER THEY CAN MAKE COMMON
PEOPLE PERFORM UNCOMMON THINGS.”
WHEN EMPLOYEES STOP BEING INTRINSICALLY MOTIVATED, IT’S TIME FOR THEM TO
GO.

19. THREE TYPES OF PEOPLE TO FIRE IMMEDIATELY
IF YOU WANT A HAPPY CULTURE, FIRE ALL THE UNHAPPY PEOPLE.

20. 1) THE VICTIMS
“CAN YOU BELIEVE WHAT THEY WANT US TO DO NOW? AND OF COURSE WE
HAVE NO TIME TO DO IT. I DON’T GET PAID ENOUGH FOR THIS. THE BOSS IS
CLUELESS.”
-PEOPLE WHO SEE PROBLEMS AS OCCASIONS FOR PERSECUTION RATHER
THAN CHALLENGES TO OVERCOME.
-GLOOMY, PESSIMISTIC PEOPLE WHO ALWAYS FEEL PERSECUTED.

21. 2) THE NONBELIEVERS
“WHY SHOULD WE WORK SO HARD ON THIS? EVEN IF WE COME UP WITH A
GOOD IDEA, THE BOSS WILL PROBABLY KILL IT. IF HE/SHE DOESN’T, THE
MARKET WILL. I’VE SEEN THIS 100 TIMES BEFORE.”
-OFTEN, THE DIFFERENCE BETWEEN A WINNER & A LOSER IS WILLPOWER.
-WINNERS BELIEVE THEY CAN DO IT, WHILE LOSERS DOUBTED IT WAS
POSSIBLE.
“IF YOU THINK YOU CAN OR YOU THINK YOU CANNOT, YOU ARE CORRECT.”
HENRY FORD

22. 3) THE KNOW-IT-ALLS
“YOU PEOPLE OBVIOUSLY DON’T UNDERSTAND THE BUSINESS WE ARE IN. THE
REGULATIONS WILL NOT ALLOW AN IDEA LIKE THIS, & OUR STAKEHOLDERS WON’T
EMBRACE IT.”
-THE BEST INNOVATORS ARE LEARNERS, NOT KNOWERS.
-TOO OFTEN THE SMARTEST, MOST-SEASONED EMPLOYEE EVENTUALLY BECOMES
EXPERT IN USING HIS/HER KNOWLEDGE TO EXPLAIN WHY THINGS ARE IMPOSSIBLE
RATHER THAN POSSIBLE.
“THIS ‘TELEPHONE’ HAS TOO MANY SHORTCOMINGS TO BE SERIOUSLY CONSIDERED AS
A MEANS OF COMMUNICAION. THE DEVICE IS INHERENTLY OF NO VALUE TO US.”
WESTERN UNION INTERNAL MEMO, 1876