Noneconomic institutions need a yardstick that does for them what profitability does for business.
Nonbusiness institutions flock in increasing numbers to business management to learn from it how to manage themselves. The hospital, the armed service, the Catholic diocese, the civil service—all want to go to school for business management.
This does not mean that business management can be transferred to other, nonbusiness institutions. On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of objectives and that, therefore, noneconomic institutions, such as a university or a hospital, will also need very different management from that of a business. But these institutions are right in seeing business management as the prototype. Business, far from being exceptional, is simply the first of the species and the one we have studied the most intensively. Noneconomic institutions need a yardstick that does for them what profitability does for the business. “Profitability,” in other words, rather than being the “exception” and distinct from “human” or “social” needs, emerges, in the pluralist society of organizations, as the prototype of the measurement needed by every institution in order to be managed and manageable.
ACTION POINT: What is the most important nonbusiness institution with which you are associated? Does it use a specific yardstick to assess performance? How successful is the organization?
The Ecological Vision
* Source: The Daily Drucker by Peter F. Drucker