Peter Drucker

Peter Ferdinand Drucker (November 19, 1909 – November 11, 2005) was a writer, management consultant, and self-described “social ecologist.” Widely considered to be the father of modern management, his many books and countless scholarly and popular articles explored how people are organized across all sectors of society—in business, government, and the non-profit world. His writings predicted many of the major developments of the late twentieth century, including privatization and decentralization, the rise of Japan to economic world power, the decisive importance of marketing, and the emergence of the information society with its necessity of lifelong learning and the importance of "people of knowledge" in contemporary and future society.

Having experienced the rise of Nazism in Germany in the 1930s, observed the rise and fall of communism, and aware of the problems with capitalism, Drucker had great concern for the future of human society. He recognized that money or financial rewards were not the real incentive to hard work. Human beings are not just biological and psychological beings, but also spiritual; thus, the true motivation for success lies in the spiritual and moral realm. He spoke out against the extreme difference in salaries between workers and CEOs of major corporations, regarding it as morally and socially wrong. Drucker strongly believed that people needed community, meaningful relationships with others, in order to be happy and productive. His insights into the running of successful organizations, expressed in the many writings published during his long career, have been widely read and implemented. He offered many good suggestions as to how organizations, including the non-profit sector, can improve their operations to the benefit of both individuals and the whole. Although Drucker did not have all the answers, and people have not implemented all his ideas, he contributed much to the establishment of a more harmonious and prosperous global society.

Life

Peter Ferdinand Drucker was born on November 19, 1909 in Austria. The son of Jewish intellectuals—his mother, Caroline Bondi, had studied medicine and his father, Adolph Bertram Drucker, was a lawyer—his family lived in a small village named Kaasgraben (now part of Vienna). He grew up in a home where intellectuals, high government officials and scientists, particularly from the Vienna Circle, would meet to discuss new ideas and ideals. Included among the regular guests were influential Austrian economists Joseph Schumpeter, Ludwig von Mises, and Friedrich von Hayek.

After graduating from Döbling Gymnasium, Drucker found few opportunities for employment in post-Habsburg Vienna so he moved to Hamburg, Germany. He first worked as an apprentice at an established cotton trading company, then as a journalist, writing for the Österreichische Volkswirt (The Austrian Economist). While in Hamburg, he spent much time reading novels and history, and discovered the philosophical writings of Soren Kirkegaard, which had a lasting influence on him.

Drucker then moved to Frankfurt where he took a job at the Daily Frankfurter General Anzeiger. While in Frankfurt, he earned a doctorate in international law and public law from the University of Frankfurt in 1931. As a young writer, Drucker wrote two pieces—one on the conservative German philosopher Friedrich Julius Stahl (1932) and another called “The Jewish Question in Germany”—that were burned and banned by the Nazis. In 1933 when Adolf Hitler came to power, Drucker left Germany for England. In London, he worked for an insurance company, then as the chief economist at a private bank. He also reconnected with Doris Schmitz, an acquaintance from the University of Frankfurt. They married in 1934.

The couple permanently relocated to the United States, where Drucker worked as correspondent for several British newspapers, including the Financial Times. He also served as a columnist for The Wall Street Journal and was a regular contributor to Harper's Magazine. He also taught economics part time at Sarah Lawrence College in Bronxville, New York. His career as a freelance writer and business consultant began when he published The End of Economic Man in 1939.

In 1943, Drucker became a naturalized citizen of the United States. He taught at Bennington College as professor of philosophy and politics from 1942 to 1949, then at New York University as a professor of management from 1950 to 1971.

Drucker took on his first of many consulting projects for General Motors, resulting in the publication of his landmark book, Concept of the Corporation (1946). His The Practice of Management published in 1954 was his first popular book about management. He described it as “the foundation of a discipline.” In 1966, he published the now-classic The Effective Executive.

Moving to California in 1971, Drucker developed one of the country's first executive Master of Business Administration (MBA) programs for working professionals at Claremont Graduate University (then known as Claremont Graduate School). There he wrote his magnum opus, Management: Tasks, Responsibilities and Practices, published in 1973. A flow of significant publications continued over the next three decades. From 1971 until his death he was the Clarke Professor of Social Science and Management at Claremont Graduate University. Claremont University's management school was named the Peter F. Drucker Graduate School of Management (later known as the Peter F. Drucker and Masatoshi Ito Graduate School of Management) in his honor in 1987. He taught his last class at the school in the Spring of 2002.

His books have been translated into more than 30 languages. Two are novels, one an autobiography, and he co-authored a book on Japanese painting. He also made eight series of educational films on management topics. He penned a regular column in the 'Wall Street Journal for 20 years and contributed frequently to the Harvard Business Review, The Atlantic Monthly, and The Economist and continued to act as a consultant to businesses and non-profit organizations well into his nineties.

United States President George W. Bush awarded Drucker the Presidential Medal of Freedom on July 9, 2002. He also received awards from the governments of Japan and Austria.

Peter Drucker died November 11, 2005, in Claremont, California of natural causes, at 95. He was survived by his wife Doris, four children and six grandchildren.

Work

Peter Drucker is considered the "father of modern management," a "guru" of business thinking. His work can be seen as going through several stages. Early works, such as The End of Economic Man (1939) and The New Society (1950) are reflections on the nature of industrial society. He then wrote a series of books, including The Practice of Management (1954) that presented his ideas on modern business management. Another group of books discuss the impact of changes in technology, including Technology, Management, and Society (1970), and yet another focus on issues of corporate management, such as The Changing World of the Executive (1982).

Among Drucker's early influences was the Austrian economist Joseph Schumpeter, one of his father's friends, who impressed upon Drucker the importance of innovation and entrepreneurship. Drucker also was influenced, in a much different way, by John Maynard Keynes, whom he heard lecture in 1934 in Cambridge. “I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behavior of commodities,” Drucker wrote, “while I was interested in the behavior of people.”

Indeed, over the following 70 years, Drucker’s writings were marked by a clear focus on relationships among human beings, as opposed to the crunching of numbers. His books were filled with lessons on how organizations can bring out the best in people, and how workers can find a sense of community and dignity in a modern society organized around large institutions.

Drucker's career as a business thinker took off in 1942, when his initial writings on politics and society won him access to the internal workings of General Motors (GM), one of the largest companies in the world at that time. His experiences in Europe had left him fascinated with the problem of authority. He shared his fascination with Donaldson Brown, the mastermind behind the administrative controls at GM. In 1943 Brown invited him in to conduct what might be called a political audit: a two-year social-scientific analysis of the corporation. Drucker attended every board meeting, interviewed employees, and analyzed production and decision-making processes.

The resulting book, Concept of the Corporation (1945), popularized GM's multidivisional structure and led to numerous articles, consulting engagements, and additional books. However, Drucker's book suggested that the auto giant might want to reexamine a host of long-standing policies on customer relations, dealer relations, employee relations, and more—ideas that GM rejected. GM's chairman, Alfred Sloan, “simply treated it as if it did not exist,” Drucker later recalled, “never mentioning it and never allowing it to be mentioned in his presence.”

Drucker taught that management is “a liberal art,” and he infused his management advice with interdisciplinary lessons from history, sociology, psychology, philosophy, culture and religion. He also believed strongly that all institutions, including those in the private sector, have a responsibility to the whole of society:

The fact is that in modern society there is no other leadership group but managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will.

Drucker was interested in the growing effect of people who worked with their minds rather than their hands. He was intrigued by employees who knew more about certain subjects than their bosses or colleagues and yet had to cooperate with others in a large organization. Rather than simply glorify the phenomenon as the epitome of human progress, Drucker analyzed it and explained how it challenged the common thinking about how organizations should be run.

His basic ideas can be summarized in the following points:

• Decentralization and simplification

Drucker discounted the command and control model and asserted that companies work best when they are decentralized. According to Drucker, corporations tend to produce too many products, hire employees they don't need (when a better solution would be outsourcing), and expand into economic sectors that they should avoid.

• Profound skepticism of macroeconomic theory

Drucker contended that economists of all schools fail to explain significant aspects of modern economies.

• Respect for the worker

Drucker believed that employees are assets and not liabilities. He taught that knowledge workers are the essential ingredients of the modern economy.

• Belief in "the sickness of government"

Drucker made nonpartisan claims that government is often unable or unwilling to provide new services that people need or want, though he believed that this condition is not inherent to democracy.

• The need for "planned abandonment"

Businesses and governments have a natural human tendency to cling to "yesterday's successes" rather than seeing when they are no longer useful.

• The need for community

Early in his career, Drucker predicted the "end of economic man" and advocated the creation of a "plant community" where individuals' social needs could be met. He later acknowledged that the plant community never materialized, and by the 1980s, suggested that volunteering in the non-profit sector was the key to fostering a healthy society where people found a sense of belonging and civic pride.

• Management by objectives

Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are. Managers must avoid the "activity trap" of being busy with day to day activities; they must remain focused on their purpose.

• Balance

Drucker argued that the way to manage a business was by balancing a variety of needs and goals, rather than subordinating an institution to a single value.

• Serving the customer

A company's primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company's continued existence.

This approach worked well in the increasingly mature business world of the second half of the twentieth century. By that time, large corporations had developed the basic manufacturing efficiencies and managerial hierarchies of mass production. Executives thought they knew how to run companies, and Drucker took it upon himself to challenge their beliefs, lest organizations become stale. He did this in a sympathetic way, assuming that his readers were intelligent, rational, hardworking people of good will. If their organizations struggled, he believed it was usually because of outdated ideas, a narrow conception of problems, or internal misunderstandings.

During his long consulting career, Drucker worked with many major corporations, including General Electric (GE), Coca-Cola, Citicorp, IBM, and Intel. He consulted with notable business leaders such as GE’s Jack Welch, Procter & Gamble’s A. G. Lafley, Intel’s Andy Grove, Shoichiro Toyoda, honorary chairman of Toyota Motors, and Masatoshi Ito, honorary chairman of the Ito-Yokado Group, the second largest retailing organization in the world.

Drucker’s insights extended far beyond business. He served as a consultant for various government agencies in the United States, Canada and Japan. And, most notably, he worked with various non-profit organizations to help them become successful, often consulting pro-bono. Among the many social sector groups he advised were the Salvation Army, Girl Scouts, American Red Cross, and the Navajo Indian Tribal Council.

Criticism

Drucker was not immune to criticism. The Wall Street Journal researched several of his lectures in 1987 and reported that he was sometimes loose with the facts. He was off the mark, for example, when he told an audience that English was the official language for all employees at Japan’s Mitsui trading company.

Critics maintain that one of Drucker’s core concepts, “management by objectives,” is flawed and has never really been proven to work effectively. W. Edwards Deming, whose work on management is considered to have made a significant contribution to Japan's later renown for innovative high-quality products and its economic power, in his 1986 Out of the Crisis, outlined "14 points for management" as the basis for transformation of American industry to one of optimization. These points included the elimination of management by objectives. Deming argued that all slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity should be eliminated, as they only create adversarial relationships. Deming believed that the majority of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce. His solution, therefore, was to eliminate quotas and objectives, and substitute leadership.

Drucker agreed that management by objectives did not always work; however he believed the causes of failure were in the implementation; they were not inherent in the basic procedure: "We can't start talking objectives until we know what they are. The things we desire are not objectives …. Management by objectives works if you know the objectives. Ninety percent of the time you don't."

Drucker did not shy away from controversy, either. Although he helped many corporate executives succeed, he was appalled when the level of Fortune 500 chief executives' pay in the United States ballooned to hundreds of times that of the average worker. He argued in a 1984 essay that CEO compensation should be no more than 20 times what the rank and file make—especially at companies where thousands of employees are being laid off. “This is morally and socially unforgivable,” Drucker wrote, “and we will pay a heavy price for it.”

Legacy

Drucker's many writings have been read and implemented widely, in businesses large and small, and continue to be a valuable source for management today. Although criticized by some, his "management by objectives" (MBO) has been implemented to great effect in many organizations. Recognizing that objectives for MBO must be SMART (Specific, Measurable, Achievable, Relevant, and Time-Specific) is essential to success. In some sectors such as healthcare, finance, and so forth, ER has been added to make SMARTER (where E=Extendable and R=Recorded).

Drucker anticipated the rise of the social sector in America, maintaining that it was through volunteering in non-profits that people would find the kind of fulfillment that he originally thought would be provided through their place of work, but that had proved elusive in that arena:

Citizenship in and through the social sector is not a panacea for the ills of post-capitalist society and post-capitalist polity, but it may be a prerequisite for tackling these ills. It restores the civic responsibility that is the mark of citizenship, and the civic pride that is the mark of community.

Drucker was a practicing Christian and recognized that today's "megachurches" are "the most important social phenomenon in American society in the past 30 years." In the early 1990s, he told religious leaders that the key question for churches is, "Can we create enough disciples?"

The Peter F. Drucker Foundation for Nonprofit Management was established in his honor in 1990, with Drucker as its honorary chairman from 1990 through 2002. In 2003, it was renamed the Leader to Leader Institute, and continues its mission "To strengthen the leadership of the social sector by providing social sector leaders with essential leadership wisdom, inspiration and resources to lead for innovation and to build vibrant social sector organizations."

Major publications

• Friedrich Julius Stahl: konservative Staatslehre und geschichtliche Entwicklung. 1932.
• The End of Economic Man: The Origins of Totalitarianism. Transaction Publishers, 1995 (original 1939). ISBN 1560006218
• The Future of Industrial Man. Transaction Publishers, 1995 (original 1942). ISBN 1560006234
• Concept of the Corporation. Transaction Publishers, 1993 (original 1945). ISBN 1560006250
• The New Society. Transaction Publishers, Revised edition, 1993 (original 1950). ISBN 1560006242
• The Practice of Management. Butterworth-Heinemann, 1999 (original 1954). ISBN 0750643935
• America’s Next Twenty Years. Harper Brothers, 1957.
• Landmarks of Tomorrow: A Report on the New 'Post-Modern' World. Transaction Publishers, 1996 (original 1959). ISBN 1560006226
• Power and Democracy in America. Greenwood Press Reprint, 1980 (original 1961). ISBN 031322319X
• Managing for Results: Economic Tasks and Risk-Taking Decisions. Harper & Row, 1964.
• The Effective Executive: The Definitive Guide to Getting the Right Things Done. Collins Business; Revised edition, 2006 (original 1967). ISBN 978-0060833459
• The Age of Discontinuity: Guidelines to Our Changing Society. Transaction Publishers, 1992 (original 1968). ISBN 1560006188
• Technology, Management and Society. Elsevier Limited, 1998 (original 1970). ISBN 0434903965
• Men, Ideas and Politics. Harper & Row, 1971.
• Management: Tasks, Responsibilities and Practices. Collins Business, 1993 (original 1973). ISBN 0887306152
• The Unseen Revolution: How Pension Fund Socialism Came to America. HarperCollins, 1976. ISBN 006011097X
• An Introductory View of Management. Harper's College Press, 1977. ISBN 0061664022
• Adventures of a Bystander (Autobiography). Harper & Row, 1979. ISBN 0434904023
• Managing in Turbulent Times. Collins Business, 1993 (original 1980). ISBN 0887306160
• Toward the Next Economics and Other Essays. Butterworth-Heinemann Ltd, 1981. ISBN 043490404X
• The Changing World of the Executive. Elsevier Limited, 1995 (original 1982). ISBN 0750625031
• The Temptation to Do Good. Harpercollins, 1984. ISBN 0060152532
• Innovation and Entrepreneurship: Practice and Principles. Harper & Row, 1985.
• "The Discipline of Innovation," Harvard Business Review (1985)
• The Frontiers of Management. Elsevier, 1994 (original 1986). ISBN 0750621826
• The New Realities. Transaction Publishers, 2003 (original 1989). ISBN 0765805332
• Managing the Non-Profit Organization: Practices and Principles. Collins, 1992 (original 1990). ISBN 0887306012
• The Post-Capitalist Society Elsevier Limited, 1994 (original 1990). ISBN 0750620250
• Managing for the Future: The 1990s and Beyond. Elsevier Limited, 1993 (original 1992). ISBN 0750609095
• The Ecological Vision: Reflections on the American Condition. Transaction Publishers, 2000 (original 1993). ISBN 0765807254
• "The Theory of the Business," Harvard Business Review (September-October 1994).
• Managing in a Time of Great Change. Elsevier Limited, 1997 (original 1995). ISBN 0750637145
• Drucker on Asia: A Dialogue Between Peter Drucker and Isao Nakauchi. Butterworth-Heinemann, 1997. ISBN 978-0750631327
• Peter Drucker on the Profession of Management. Harvard Business School Press, 2003 (original 1998). ISBN 1591393221
• Management Challenges for the 21st Century. Collins Business, 2001 (original 1999). ISBN 0887309992
• "Managing Oneself," Harvard Business Review (March-April 1999).
• The Essential Drucker: The Best of Sixty Years of Peter Drucker's Essential Writings on Management. Collins Business, 2003 (original 2001). ISBN 006093574X
• Leading in a Time of Change: What it Will Take to Lead Tomorrow (with Peter Senge). Jossey-Bass, 2001. ISBN 0787956686
• "They're Not Employees, They're People," Harvard Business Review (February 2002).
• Managing in the Next Society. Butterworth-Heinemann, 2002. ISBN 0750656247
• A Functioning Society: Selections from Sixty-Five Years of Writing on Community, Society, and Polity. Transaction Publishers, 2002.
• The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done. Collins Business, 2008 (original 2003). ISBN 978-0061345012
• "What Makes An Effective Executive," Harvard Business Review (June 2004).
• "What Executives Should Remember," Harvard Business Review 84(2) (2006): 144-152.

Quotes

• This new knowledge economy will rely heavily on knowledge workers. …the most striking growth will be in “knowledge technologists:” computer technicians, software designers, analysts in clinical labs, manufacturing technologists, paralegals. …They are not, as a rule, much better paid than traditional skilled workers, but they see themselves as “professionals.” Just as unskilled manual workers in manufacturing were the dominant social and political force in the 20th century, knowledge technologists are likely to become the dominant social—and perhaps also political—force over the next decades.

• Knowing Yourself …We also seldom know what gifts we are not endowed with. We will have to learn where we belong, what we have to learn to get the full benefit from our strengths, where our weaknesses lie, what our values are. We also have to know ourselves temperamentally: "Do I work well with people, or am I a loner? What am I committed to? And what is my contribution?" ("Managing Knowledge Means Managing Oneself" Leader to Leader 16 (Spring 2000)

• …all earlier pluralist societies destroyed themselves because no one took care of the common good. They abounded in communities but could not sustain community, let alone create it. ("The New Pluralism" Leader to Leader 14 (Fall 1999)

• …human beings need community. If there are no communities available for constructive ends, there will be destructive, murderous communities... Only the social sector, that is, the nongovernmental, nonprofit organization, can create what we now need, communities for citizens... What the dawning 21st century needs above all is equally explosive growth of the nonprofit social sector in building communities in the newly dominant social environment, the city. ("Civilizing the City" Leader to Leader 7 (Winter 1998)

• If the feudal knight was the clearest embodiment of society in the early Middle Ages, and the "bourgeois" under Capitalism, the educated person will represent society in the post-capitalist society in which knowledge has become the central resource. (Post-Capitalist Society 1994)

• Kierkegaard has another answer: human existence is possible as existence not in despair, as existence not in tragedy; it is possible as existence in faith…. Faith is the belief that in God the impossible is possible, that in Him time and eternity are one, that both life and death are meaningful. (The Ecological Vision: Reflections on the American Condition 2000)

• One of the great movements in my lifetime among educated people is the need to commit themselves to action. Most people are not satisfied with giving money; we also feel we need to work. That is why there is an enormous surge in the number of unpaid staff, volunteers. The needs are not going to go away. Business is not going to take up the slack, and government cannot. ("Dancing Toward The Future" IN CONTEXT 32 (Summer 1992)

• The individual needs the return to spiritual values, for he can survive in the present human situation only by reaffirming that man is not just a biological and psychological being but also a spiritual being, that is creature, and existing for the purposes of his Creator and subject to Him. (Landmarks of Tomorrow: A Report on the New 'Post-Modern' World 1996)

• An organization is "sick"—when promotion becomes more important to its people than accomplishment of their job—when it is more concerned with avoiding mistakes than with taking risks—and with counteracting the weaknesses of its members than with building on their strength—and when good human relations become more important than performance and achievement. …The moment people talk of "implementing" instead of "doing," and of "finalizing" instead of "finishing," the organization is already running a fever. (Landmarks of Tomorrow: A Report on the New 'Post-Modern' World 1996)

• A man should never be appointed into a managerial position if his vision focuses on people's weaknesses rather than on their strengths. (The Practice of Management 1999)

• There is only one valid definition of a business purpose: "to create a customer. (The Practice of Management)

• The major incentive to productivity and efficiency are social and moral rather than financial. (The New Society)

• What the worker needs is to see the plant as if he were a manager. Only thus can he see his part, from his part he can reach the whole. This "seeing" is not a matter of information, training courses, conducted plant tours, or similar devices. What is needed is the actual experience of the whole in and through the individual's work. (The New Society)

References

ISBN links support NWE through referral fees

• Beatty, Jack. The World According to Peter Drucker. Free Press, 1998. ISBN 068483801X
• Cohen, William A. A Class with Drucker: The Lost Lessons of the World's Greatest Management Teacher. AMACOM, 2007. ISBN 978-0814409190
• Deming, W. Edwards. Out of the Crisis. The MIT Press, 2000 (original 1986). ISBN 0262541157
• Edersheim, Elizabeth Haas. The Definitive Drucker. McGraw-Hill, 2006. ISBN 0071472339
• Flaherty, John E. Peter Drucker: Shaping the Managerial Mind. Jossey-Bass, 1999. ISBN 0787947644
• Tarrant, John J. Drucker: The Man Who Invented the Corporate Society. Cahners Books, 1976. ISBN 0843607440

External links

All links retrieved November 23, 2022.

• Drucker Institute
• The Peter F. Drucker and Masatoshi Ito Graduate School of Management
• Drucker Workshop (in Japanese)
• Special report on Peter Drucker (The Economist, November 19, 2005)

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