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 39 books and countless scholarly and popular articles explored how humans are organized across all sectors of society—in business, government and the nonprofit 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.

Life

Peter Ferdinand Drucker was born on November 19, 1909 in Vienna, Austria. The son of a high level civil servant in Austria-Hungary—his mother Caroline Bondi had studied medicine and his father Adolph Bertram Drucker was a lawyer—Drucker was born in a small village named Kaasgraben (now part of the 19th district of Vienna, Döbling). 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 Drucker.

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 taught economics part time at Sarah Lawrence College in New York. His career as a freelance writer and business consultant began, and he published The End of Economic Man in 1939. He also served as a columnist for The Wall Street Journal and was a regular contributor to Harper's Magazine.

In 1943, Drucker became a naturalized citizen of the United States. He taught at Bennington College as professor of philosophy and politics from 1942-1949, 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.

Drucker moved to California in 1971, where he 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 to his death he was the Clarke Professor of Social Science and Management at Claremont Graduate University. He taught his last class at the school in the Spring of 2002.

Drucker's books have been translated into more than thirty languages. Two are novels, one an autobiography. He is the co-author of a book on Japanese painting, and made eight series of educational films on management topics. He also 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. He continued to act as a consultant to businesses and non-profit organizations well into his nineties.

Drucker was awarded the Presidential Medal of Freedom by U.S. President George W. Bush on July 9, 2002. He also received orders from the governments of Japan and Austria.

Peter Drucker died November 11, 2005, in Claremont, California of natural causes, aged 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. Drucker disliked the term “guru,” though it was often applied to him; “I have been saying for many years,” Drucker once remarked, “that we are using the word ‘guru’ only because ‘charlatan’ is too long to fit into a headline. His insights into the running of successful businesses, expressed in the many writings published during his long career, have been read and implemented in numerous organizations.

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 would be 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 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.

• 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.

• Serve 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, 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, the honorary chairman of Toyota Motors, and Masatoshi Ito, the 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, the Girl Scouts, the American Red Cross, and the Navajo Indian Tribal Council.

Criticism and Controversy

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. Drucker 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 Out of the Crisis published in 1986, 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 work force. His solution, therefore, was to eliminate quotas and objectives, and substitute leadership.

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 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

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.

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 proven 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.

The Peter F. Drucker Foundation for Nonprofit Management was established in his honor in 1990. Drucker served 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 (1942)
• Concept of the Corporation (1945) (A study of General Motors)
• The New Society (1950)
• The Practice of Management. Butterworth-Heinemann, 1999 (original 1954). ISBN 0750643935
• America's Next 20 Years (1957)
• Landmarks of Tomorrow: A Report on the New 'Post-Modern' World (1959)
• Power and Democracy in America (1961)
• Managing for Results: Economic Tasks and Risk-Taking Decisions (1964)
• The Effective Executive (1966)
• The Age of Discontinuity (1968)
• Technology, Management and Society (1970)
• Men, Ideas and Politics (1971)
• Management: Tasks, Responsibilities and Practices. Collins Business, 1993 (original 1973). ISBN 0887306152
• The Unseen Revolution: How Pension Fund Socialism Came to America (1976)
• An Introductory View of Management (1977)
• Adventures of a Bystander (Autobiography). Harper & Row, 1979. ISBN 0434904023
• Song of the Brush: Japanese Painting from the Sanso Collection (1979)
• Managing in Turbulent Times (1980)
• Toward the Next Economics and Other Essays (1981)
• The Changing World of the Executive (1982)
• The Temptation to Do Good (1984)
• Innovation and Entrepreneurship: Practice and Principles (1985)
• The Discipline of Innovation, Harvard Business Review, 1985
• The Frontiers of Management (1986)
• The New Realities (1989)
• 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 (1995)
• Drucker on Asia: A Dialogue Between Peter Drucker and Isao Nakauchi (1997)
• Peter Drucker on the Profession of Management (1998)
• Management Challenges for the 21st century (1999)
• Managing Oneself, Harvard Business Review, March-April 1999
• The Essential Drucker: The Best of Sixty Years of Peter Drucker's Essential Writings on Management (2001)
• Leading in a Time of Change: What it Will Take to Lead Tomorrow (2001; with Peter Senge)
• The Effective Executive Revised (2002)
• They're Not Employees, They're People, Harvard Business Review, February 2002
• Managing in the Next Society (2002)
• A Functioning Society (2003)
• The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done (2004)
• What Makes An Effective Executive, Harvard Business Review, June 2004.
• The Effective Executive in Action (2005)

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.—"The next society" Economist.com (November 2001)

• 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, No. 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, No. 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, No. 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 (1993)

• 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 (1993)

• 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.—"New Priorities" Dancing Toward The Future, Context Institute, (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 (1959)

• 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 (1959)

• 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 (1954)

• There is only one valid definition of a business purpose: to create a customer.—The Practice of Management (1954)

• The major incentive to productivity and efficiency are social and moral rather than financial.—The New Society (1950)

• 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 (1950)

References

ISBN links support NWE through referral fees

• Edersheim, Elizabeth, The Definitive Drucker (2007) ISBN 0071472339
• Tarrant, John C., Drucker: The Man Who Invented the Corporate Society (1976) ISBN 0843607440
• Beatty, Jack. The World According to Peter Drucker. Free Press, 1998. ISBN 068483801X
• Flaherty, John E., Peter Drucker: Shaping the Managerial Mind (1999) ISBN 0787947644
• Cohen, William A., A Class with Drucker: The lost lessons of the World's greatest management teacher (2008) ISBN 978-0814409190
• Deming, W. Edwards. Out of the Crisis. The MIT Press, 2000 (original 1986). ISBN 0262541157

External links

• Drucker Institute
• Biography Leader to Leader Institute
• The Definitive Drucker
• The Peter F. Drucker and Masatoshi Ito Graduate School of Management
• Peter F. Drucker: A Biography in Progress
• Drucker Workshop (in Japanese)
• Peter F. Drucker, a Pioneer in Social and Management Theory, Is Dead at 95 (The New York Times, November 12, 2005)
• The Man Who Invented Management (BusinessWeek)
• Peter Drucker on Thinkers 50
• Peter Drucker on managementdenker.com
• Special report on Peter Drucker (The Economist, November 19, 2005)
• The icon-speaks: An interview with Peter Drucker - Interview
• Career moves for ages 20 to 70
• Peter Drucker's at it Again! What He REALLY Thinks about Libraries and Librarians
• Current Commentary on AI and Positive Change: Peter Drucker's Advice for Us on the New Ai Project: Business as an Agent of World Benefit
• Full articles at Peter F. Drucker Foundation [1]
  • Managing Knowledge Means Managing Oneself by Peter F. Drucker
  • The New Pluralism by Peter F. Drucker
  • Civilizing the City by Peter F. Drucker
  • The Shape of Things to Come: An Interview with Peter F. Drucker by Peter F. Drucker
  • Drucker, P. F. 2006. "What Executives Should Remember." Harvard Business Review, 84(2): 144 ? 152.

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