“The one basic difference between a service institution and a business is the way the service institution is paid.”
- Chapter 11: The Multi-Institutional Society
- Chapter 12: Why Service Institutions Do Not Perform
- Chapter 13: The Exceptions and Their Lessons
- Chapter 14: Managing Service Institutions for Performance
Drucker’s main idea is that service institutions—to perform and get results—need a clearly defined idea of what they are trying to achieve, a plan, and a method for cutting out what becomes unproductive or unnecessary.
Service institutions include nonprofits and government organizations. They depend on budgets and overhead and provide what societies need. To become effective and remain so, they need clearly defined purpose, objectives, priorities, standards, and feedback.
Case studies of top performers include: the late 19th century American universities, the mid 20th century Tennessee Valley Authority, and the Meiji Restoration. These groups defined what they were trying to do—their service—and they set clear goals that could be measured, evaluated, and achieved.
Without these elements, service institutions, drift and waste resources, and risk becoming fruitless.
(Management, chapters 11-14)