Page 250 - The Drucker Lectures

The Future of the Corporation I [ 231

Around 1955, I ran a study of the management people at Gen-
eral Electric. It was a large group. And while a very substantial
proportion had had their first job elsewhere, something like 89
percent came into GE as their second job and then stayed there
for the rest of their working lives.
That may still be true at some traditional companies, the last
of which is IBM. But it’s not true with Microsoft. A friend of
mine, who is very high up in human resources at Microsoft, told
me that for 90 percent of the people there, it’s their fourth job.
He also said that the company figures on turnover of 60 percent.
If I had told that to anybody at GE, they would have fainted.
Another big change is that companies have given up the basic
assumption, the automatic assumption, that whatever we do, we
do it in-house. The basic assumption today is: What we don’t do
day in and day out, we outsource.
To do things in-house, you have to have core competence in
them because you do them all the time and, therefore, can attain
excellence in them. The rule, increasingly, is: “We do only what
makes us distinct, what makes us unique.”
As for outsourcing, the cost savings are largely accounting
fiction. The real reason for outsourcing to organizations that do
nothing but manage data processing equipment or do a particu-
lar kind of research is that this is the best way to make knowl-
edge productive. The corporation of tomorrow will be a place
that finds the outside organization that does a specialist’s job the
best because it does nothing else.
That friend of mine who called from Europe spent years
building competences within his company. But he has spent the
last 20 years outsourcing them. And he said the newspaper re-
porters covering the company don’t understand it. Total sales
have tripled, while employment is a quarter of what it was. They
think the company has become more productive. No. It has out-
sourced. These people doing the work are not employees of the