Peter Drucker

Peter Ferdinand Drucker (November 19, 1909 – November 11, 2005) was a writer, management consultant, and self-described “social ecologist.”^[1] His books and scholarly and popular articles explored how humans are organized across the business, government and the nonprofit sectors of society.^[2] His writings have 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.^[3] In 1959, Drucker coined the term “knowledge worker" and later in his life considered knowledge work productivity to be the next frontier of management.^[4]

Personal life and roots of his philosophy

The son of a high-level civil servant in Austria-Hungary – his mother Caroline Bondi had studied medicine and his father Adolf Drucker was a lawyer – Drucker was born in Vienna, the capital of Austria, 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 would meet to discuss new ideas.^[5] After graduating from Döbling Gymnasium, Drucker found few opportunities for employment in post-Habsburg Vienna, so he moved to Hamburg, Germany, first working as an apprentice at an established cotton trading company, then as a journalist, writing for Der Österreichische Volkswirt (The Austrian Economist). Drucker then moved to Frankfurt, where he took a job at the Daily Frankfurter General-Anzeiger. While in Frankfurt, he also earned a doctorate in international law and public law from the University of Frankfurt in 1931. Among his early influences was the Austrian economist Joseph Schumpeter, a friend of his father’s, who impressed upon Drucker the importance of innovation and entrepreneurship.^[6] 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.”^[7]

Over the next 70 years, Drucker’s writings would be marked by a 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.^[8]

As a young writer, Drucker wrote two pieces — one on the conservative German philosopher Friedrich Julius Stahl and another called “The Jewish Question in Germany” — that were burned and banned by the Nazis.^[3] In 1933, 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. (His wedding certificate lists his name as Peter Georg Drucker.^[9]) The couple permanently relocated to the United States, where he became a university professor as well as a free-lance writer and business consultant. (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.”)^[10]

In 1943, Drucker became a naturalized citizen of the United States. He taught at Bennington College from 1942-1949, then at New York University as a Professor of Management from 1950 to 1971. Drucker came to California in 1971, where he developed one of the country's first executive MBA programs for working professionals at Claremont Graduate University (then known as Claremont Graduate School). From 1971 to his death he was the Clarke Professor of Social Science and Management at Claremont Graduate University. The 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 2002 at age 92.

Career

His 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, popularized GM's multidivisional structure and led to numerous articles, consulting engagements, and additional books. GM, however, was hardly thrilled with the final product. Drucker had suggested that the auto giant might want to reexamine a host of long-standing policies on customer relations, dealer relations, employee relations and more. Inside the corporation, Drucker’s counsel was viewed as hypercritical. GM's revered chairman, Alfred Sloan, was so upset about the book that he “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.”^[11]

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.^[12] He also believed strongly that all institutions, including those in the private sector, have a responsibility to the whole of society. “The fact is,” Drucker wrote in his 1973 Management: Tasks, Responsibilities, Practices, “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.”^[13]

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 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 poke holes in their beliefs, lest organizations become stale. But he did so in a sympathetic way. He assumed 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; Edward Jones’ John Bachmann; Shoichiro Toyoda, the honorary chairman of Toyota Motor Corp.; and Masatoshi Ito, the honorary chairman of the Ito-Yokado Group, the second largest retailing organization in the world.^[14] Although he helped many corporate executives succeed, he was appalled when the level of Fortune 500 CEO pay in America 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.”^[3]

Drucker served as a consultant for various government agencies in the United States, Canada and Japan. He worked with various nonprofit 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 of the USA, C.A.R.E., the American Red Cross, and the Navajo Indian Tribal Council.^[15]

In fact, Drucker anticipated the rise of the social sector in America, maintaining that it was through volunteering in nonprofits 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,” Drucker wrote. “It restores the civic responsibility that is the mark of citizenship, and the civic pride that is the mark of community.”^[16]

Author

Drucker's 39 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 died November 11, 2005 in Claremont, California of natural causes at 95.

Basic ideas

Several ideas run through most of Drucker's writings:

• 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.
• A profound skepticism of macroeconomic theory. Drucker contended that economists of all schools fail to explain significant aspects of modern economies.
• Respect of the worker. Drucker believed that employees are assets and not liabilities. He taught that knowledge workers are the essential ingredients of the modern economy. Central to this philosophy is the view that people are an organization's most valuable resource and that a manager's job is to prepare and free people to perform. ^[17]
• A belief in what he called "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 the form of government. The chapter "The Sickness of Government" in his book The Age of Discontinuity formed the basis of the New Public Management, a theory of public administration that dominated the discipline in the 1980s and 1990s.
• 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.
• A belief that taking action without thinking is the cause of every failure.^[18]
• 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 nonprofit sector was the key to fostering a healthy society where people found a sense of belonging and civic pride.
• The need to manage business by balancing a variety of needs and goals, rather than subordinating an institution to a single value.^[19][20] This concept of management by objectives forms the keynote of his 1954 landmark The Practice of Management.^[21]
• 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.^[22]
• An organization should have a proper way of executing all its business processes.
• A belief in the notion that great companies could stand among humankind's noblest inventions.^[23]

Awards and honors

Drucker was awarded the Presidential Medal of Freedom by U.S. President George W. Bush on July 9, 2002[1]. He also received honors from the governments of Japan and Austria. He was the Honorary Chairman of the Peter F. Drucker Foundation for Nonprofit Management, now the Leader to Leader Institute, from 1990 through 2002. In 1969 he was awarded New York University’s highest honor, the NYU Presidential Citation. Harvard Business Review honored Drucker in the spring of 2005 with his seventh McKinsey Award for his article, "What Makes an Effective Executive", the most awarded to one person.^[24] Drucker was inducted into the Junior Achievement U.S. Business Hall of Fame in 1996. Additionally he holds 25 honorary doctorates from American, Belgian, Czech, English, Spanish and Swiss Universities.

Criticism

This article's Criticism or Controversy section(s) may mean the article does not present a neutral point of view of the subject. It may be better to integrate the material in those sections into the article as a whole.

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. (Drucker’s defense: “I use anecdotes to make a point, not to write history.”) And while he was known for his prescience, he wasn’t always correct in his forecasts. He anticipated, for instance, that the nation’s financial center would shift from New York to Washington.^[25]

Others maintain that one of Drucker’s core concepts—“management by objectives”—is flawed and has never really been proven to work effectively. Specifically, critics say that the system is difficult to implement, and that companies often wind up overemphasizing control, as opposed to fostering creativity, to meet their goals.^[26]

List of publications

• Friedrich Julius Stahl: konservative Staatslehre und geschichtliche Entwicklung (1932)
• The End of Economic Man: The Origins of Totalitarianism (1939) Google Booksearch Preview
• The Future of Industrial Man (1942)
• Concept of the Corporation (1945) (A study of General Motors)
• The New Society (1950)
• The Practice of Management (1954)
• 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 (1973)
• The Unseen Revolution: How Pension Fund Socialism Came to America (1976)
• An Introductory View of Management (1977)
• Adventures of a Bystander (1979) (Autobiography)
• Song of the Brush: Japanese Paintings 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 Last of All Possible Worlds (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 (1990)
• Managing for the Future: The 1990s and Beyond (1992)
• The Post-Capitalist Society (1993)
• The Ecological Vision: Reflections on the American Condition (1993)
• 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)
• Classic Drucker (2006)

Quotes

Wikiquote has a collection of quotations related to: Peter Drucker

• "In fact, that management has a need for advanced education – as well as for systematic manager development – means only that management today has become an institution of our society."^[27]
• "The best way to predict the future is to create it."
• "Management is doing things right; leadership is doing the right things."
• "What's measured improves."
• “Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you've got.”
• “Efficiency is doing better what is already being done."
• “Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.”
• “People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”
• “The most important thing in communication is hearing what isn't said.”
• “The purpose of business is to create and keep a customer.”
• “There is nothing so useless as doing efficiently that which should not be done at all.”
• “When a subject becomes totally obsolete we make it a required course.”
• "Rank does not confer privilege or give power. It imposes responsibility."
• "To focus on contribution is to focus on effectiveness." ^[28]
• "People in any organization are always attached to the obsolete – the things that should have worked but did not, the things that once were productive and no longer are." ^[29]
• "Wherever you see a successful business, someone once made a courageous decision."
• "Most of what we call management consists of making it difficult for people to get their work done."

References

Further reading

• Tarrant, John C., Drucker: The Man Who Invented the Corporate Society (1976), ISBN 0-8436-0744-0
• Beatty, Jack, The World According to Peter Drucker (1998), ISBN 0-684-83801-X
• Flaherty, John E., Peter Drucker: Shaping the Managerial Mind (1999), ISBN 0-7879-4764-4
• Edersheim, Elizabeth, The Definitive Drucker (2007), ISBN 0-07-147233-9
• Cohen, William A., A Class with Drucker: The lost lessons of the World's greatest management teacher (2008), ISBN 978-0-8144-0919-0

External links

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Wikiquote has a collection of quotations related to: Peter Drucker

• Drucker Institute
• Leader to Leader Institute
• The Definitive Drucker: Final Advice from the Father of Modern Management
• How Peter Drucker Managed Himself over the Decades
• Thought Leaders Forum: Peter F. Drucker
• The Business World According to Peter F. 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
• More links
• WikiPractice regroups by themes extracts of Peter Drucker's books
• Full articles at Peter F. Drucker Foundation [2]
  • 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.
• Drucker Archives in the Claremont Colleges Digital Library
• Drucker Society - First Global Peter Drucker Forum (Vienna) - November 19-20th 2009