How Assumptions Drive the Theory and Success of a Business Peter F. Drucker is a highly notable management expert whose books and articles on...

How Assumptions Drive the Theory and Success of a BusinessPeter F. Drucker is a highly notable management expert whose books and articles on management have had an enormous impact on modern management practices. In this article, Drucker describes how important it is for businesses to understand the assumptions that underlie the actions they take.“The root cause of nearly every [management crisis] 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 fit reality. These are the assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company’s theory of the business.”“It usually takes years of hard work, thinking and experimenting to reach a clear, consistent, and valid theory of the business. Yet to be successful, every organization must work one out. What are the specifications of a valid theory of the business? There are four:1.