PRINCIPLES UNDERLYING THE
DRUCKER INDEX

(all quotations are from Peter F. Drucker)

CUSTOMER

  • “To satisfy the customer is the mission and purpose of every business.”

EMPLOYEE

  • “The enterprise must be able to give [its employees] a vision and a sense of  mission. It must be able to satisfy their desire for a meaningful contribution  to their community and society.”
  • “There . . . is the task of building and leading organizations in which every person sees herself as a ‘manager’ and accepts the full burden of what is basically managerial responsibility: responsibility for her own job and work  group [and] for her contribution to the performance and results of the  entire organization.”
  • “Whenever excellence appears, it must be recognized. . . . Rewards must be based  on performance.”
  • “Developing talent is business’ most important task.”
  • “I have often advised managers that a 20-1 salary ratio is the limit beyond  which they cannot go if they don’t want resentment and falling morale to hit  their companies.”

INNOVATION

  • “Every institution . . . must build into its day-to-day management four entrepreneurial activities that run in parallel:
    1. organized abandonment of products, services, processes, markets . . .  that are no longer an optimal allocation of resources;
    2. systematic, continuing improvement;
    3. systematic and continuous exploitation . . . of its successes;
    4. systematic innovation, that is, create the different tomorrow that makes  obsolete and, to a large extent, replaces even the most successful products  of today.”

Financial Performance

  • “There is only one appropriate yardstick of business performance. This is the  return on all assets employed or on all capital invested.”
  • “Productivity is the first test of management’s competence. . . . The continuous  improvement of productivity [with respect to land, labor and capital] is one of  management’s most important jobs. . . . The goal is not to try to find the one  perfect productivity measurement, but to use a number of measurements.”  (“By measuring the value added over all costs, including the cost of capital, EVA  measures, in effect, the productivity of all factors of production.”)
  • “Despite its follies, foibles and fashions, the stock market is a good deal more  rational than the ‘experts,’ at least over any extended period of time.”  (“Witness the enormous differences in ‘price-earnings ratios.’ . . . The stock  market tends to value a stock primarily on the basis of . . . total return rather  than on the basis of . . . ‘earnings per share.’”)
  • “Market standing has to be measured against the market potential, and against  the performance of suppliers of competing products or services— whether  competition is direct or indirect. . . . To be a marginal producer is always dangerous.”

SOCIAL RESPONSIBILITY

  • “It is management’s . . . responsibility to make whatever is genuinely in the public  good become the enterprise’s own self-interest.”
  • “One is responsible for one’s impacts, whether they are intended or not.”