Peter Drucker’s Management: Tasks, Responsibilities, Practices, Chapter 43: How Organizations Join Together
Introduction
In 2006, a dispute broke out at a large manufacturing company. The R&D team had spent two years co-developing a new technology with a supplier. When the project moved to mass production, however, decision-making authority shifted to the procurement department — which promptly moved to replace that supplier with a different one. Easier to manage, they said. The engineers who had built the partnership were furious. The supplier felt betrayed.
Twenty years later, the same company is having the same fight. The org chart has been redrawn multiple times. The heads of R&D and procurement have turned over several times each. The structure of the conflict is unchanged.
Our reading group’s conclusion this week was straightforward: the problem is not the people. The problem is that the organization has been designed to make people responsible for what the structure itself should be solving.
Drucker’s Diagnosis: Sub-Optimization
The most damaging organizational pathology Drucker identifies is sub-optimization — when each function makes a locally rational decision that damages the whole.
The R&D-procurement conflict is a textbook case. From procurement’s perspective, diversifying suppliers is the right call. It reduces cost and manages supply risk. The metrics reward it. You cannot fault the procurement manager — he is doing his job well. The R&D engineer is equally blameless. Wanting to carry a trusted development partner through to production is not only reasonable, it is essential for future collaboration. He too is doing his job well.
So why does their meeting become a fight? Drucker’s answer is unambiguous: this decision should never have belonged to either department in the first place. Selecting a mass-production supplier carries consequences that ripple across R&D, procurement, quality, and the broader supplier ecosystem. By Drucker’s framework, it belongs at a higher level — decided with input from all affected functions. Instead, it lands on one department’s desk. Everything breaks down from there.
The Coordinator as Symptom
One participant who has watched this conflict play out over two decades noted a recurring pattern: every time the dispute flares up, the company creates a new coordinating role. A committee is formed. Someone gets a title like “Strategic Sourcing Manager” or “Technology Procurement Lead” and is tasked with bridging the two sides.
The conflict persists. The person in the new role spends most of their time shuttling between departments, persuading and negotiating, with little time left for actual work. When they burn out, someone else takes the seat. The fight continues.
Drucker anticipated this exactly. When an organization relies heavily on coordinators — people whose job is essentially to patch together what should never have been separated — it is a sign that the structure itself is wrong. Adding coordinators is not a cure. It is the disease making itself visible. As another participant put it: “If your people spend more time persuading other departments than doing their actual work, that is a symptom of organizational illness.”
When You Change the People, and When You Change the Chart
The most uncomfortable truth in this story is that replacing the individuals changes nothing. A new R&D head and a new procurement head, placed in the same structure, will have the same fight. Not because they are inadequate, but because the structure demands it of them.
Simply redrawing the org chart is no different. I have run enough organizational design projects to recognize my own blind spot here. We moved boxes. We redrew reporting lines. What we rarely did — and what Drucker makes uncomfortably clear — was systematically ask how far into the future a decision commits the organization, how many functions it affects, and what level should actually own it. Instead, authority followed seniority. When the rank of the person rather than the nature of the decision determines where authority sits, cross-functional calls like supplier selection will keep falling to the wrong desk.
A participant who has studied Drucker for years put it simply: “Reorganization is surgery. Surgery is sometimes necessary. But operating frequently does not make the patient healthy. Diagnosis comes first.”
Closing
What this chapter pressed on me most was the question of where we direct responsibility.
We are quick to frame organizational problems as people problems. The R&D-procurement conflict has been consumed that way for twenty years — debating who is more cooperative, who is more reasonable, who is more at fault. Drucker’s Chapter 43 refuses that framing. Neither party is at fault. The structure put them in that position.
So here is the question worth sitting with: the recurring conflict in your organization, the meeting that keeps being called, the frustration that never quite resolves — is it really a people problem? Or is the structure asking people to do what it should be doing itself?
Organizational design is not an answer. It is a hypothesis. When the same problems keep returning, that is the hypothesis telling you it was wrong. Before you redraw the chart, ask the prior question: Who should own this decision — and does that person actually have the authority to make it?
Every Monday at 7:00 AM, four senior leaders gather to read and discuss Peter Drucker’s Management. This post is drawn from our session on Chapter 43.