QuoteProject
An institution which is financed by a budget - or which enjoys a monopoly which the customer cannot escape - is rewarded for what it deserves rather than what it earns. It is paid for 'good intentions' and 'programs'. It is paid for not alienating important constituents rather than satisfying any one group. It is misdirected by the way it is being paid into defining performance and results as what will produce the budget rather than as what will produce contribution.
Peter Drucker
ShareWTF𝕏

Interpretation

What this quote means

Institutions funded by budgets prioritize intentions over actual performance and results.

Peter Drucker emphasizes that institutions dependent on budgets or monopolistic funding often lose sight of true performance and efficacy. Instead of being driven by outcomes that contribute meaningfully, they become complacent, focusing more on maintaining their funding sources, which ultimately distorts their purpose and effectiveness. This highlights the risk of misaligned incentives in such organizations, leading to a focus on satisfying stakeholders rather than delivering genuine value to their customers or constituents.

Themes

PerformanceFundingIntentionsOrganizationsIncentives

In practice

Example use cases

In a business meeting discussing budget allocations.

More from Peter Drucker

The purpose of an organization is to enable ordinary humans beings to do extraordinary things.
Peter DruckerRead
In the Western tradition, we have focused on teaching as a skill and forgotten what Socrates knew: teaching is a gift, learning is a skill.
Peter DruckerRead
We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.
Peter DruckerRead
The basic economic resource - the means of production -_x000D_ _x000D_ is no longer capital, nor natural resources, nor labor._x000D_ _x000D_ It is and will be knowledge.
Peter DruckerRead
Unless commitment is made, there are only promises and hopes... but no plans.
Peter DruckerRead
The strength of the computer lies in its being a logic machine. It does precisely what it is programed to do. This makes it fast and precise. It also makes it a total moron; for logic is essentially stupid.
Peter DruckerRead

Similar quotes

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
John Maynard KeynesRead
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
Henry HazlittRead
The rich are always going to say that, you know, just give us more money and we'll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on.
Warren BuffettRead
That's the problem with very high taxes - they don't redistribute wealth; they redistribute people.
Daniel HannanRead
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
Henry HazlittRead
For most Americans, economic growth is a spectator sport.
Paul KrugmanRead

A little wisdom, now and then

Subscribe for the occasional hand-picked quote. No noise.