The Theory of the Business (Harvard Business Review Classics)

Article Summary

Idea in Brief

In his thirty-first article for HBR, Peter F. Drucker argues that what underlies the current malaise of so many large and successful organizations worldwide is that their theory of the business no longer works. The story is a familiar one: a company that was a superstar only yesterday finds itself stagnating and frustrated, in trouble and, often, in a seemingly unmanageable crisis. The root cause of nearly every one of these crises is not that things are being done poorly. It is not even that the wrong things are being done. Indeed, in most cases, the right things are being done—but fruitlessly.

What accounts for this apparent paradox? The assumptions on which the organization has been built and is being run no longer ...