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Peter Drucker

Image of Peter Drucker

Photo: The Drucker Institute at Claremont Graduate University

Peter Drucker (1909-2005) was one of the most widely-known and influential thinkers on management, whose work continues to be used by managers worldwide. He was a prolific author, and among the first (after Taylor and Fayol) to depict management as a distinct function and being a manager as a distinct responsibility. His writing showed real understanding of and sympathy for the difficulties and demands faced by managers. He also predicted several important developments, including decentralisation, outsourcing, the importance of marketing, and the emergence of the information society. Drucker successfully combined consulting, writing and teaching, which he saw as interdependent. His clients ranged from General Electric and Coca-Cola to Toyota.

Life and career

Peter Georg Ferdinand Drucker was born in Vienna on 19 November 1909 to a high-achieving, intellectual family and was surrounded, in his early years, by the cultural elite which characterised pre-war Vienna. He commenced studies at the University of Hamburg but transferred to the University of Frankfurt where he obtained a Doctorate in Public and International Law in 1931.

While still a student in Frankfurt he worked on the city's General Anzeiger newspaper and rose to the posts of foreign and financial editor. Recognised as a talented writer, he was offered a job in the Ministry of Information. Observing the Nazis' rise to power with abhorrence, he wrote a philosophical essay condemning Nazism; this was probably instrumental in hastening his departure to England in 1933. It was in 1937 that he left for the USA to become an investment adviser to British industry and correspondent for several British newspapers, including the Financial Times, then called the Financial News.

His first book, The End of Economic Man, appeared in 1939. In 1940 he set up as a private consultant to business and government policy makers, specialising in the German economy and external politics. From 1940-42 he was a teacher at Sarah Lawrence College and this was followed by the post of Professor of Philosophy, Politics, History and Religion at Bennington College, Vermont.

It was in the early stages of this appointment that he was invited by the Vice-President of General Motors (GM) to investigate what constitutes the modern organisation and to examine what the managers running it actually do. Although Drucker was relatively inexperienced in business at the time, his analysis led to the publication, in 1946, of The Concept of the Corporation - published as Big Business in Britain. This had a mixed reception but nonetheless confirmed Drucker's future as a management writer.

The period 1950-1972 was a time of prolific writing, teaching and consulting activity while he was Professor of Management at New York University Graduate School of Business. From 1971 to 2002 he was the Marie Rankin Clarke Professor of Social Science and Management at the Graduate School in Claremont. In 1994 he was named Godkin Lecturer at Harvard University.
Drucker held decorations from the governments of Austria and Japan as well as 22 honorary doctorates from universities in Belgium, Japan, Spain, Switzerland, the UK and the USA. He was also

  • Fellow of the American Association of Science
  • Honorary Member of the National Academy of Public Administration
  • Fellow of the American Academy of Arts and Sciences
  • Fellow of the American, British, Irish and International Academies of Management. ('Interview with Peter Drucker', Finanical Times)

Drucker lived in Claremont, 40 miles east of Los Angeles, and had four children and six grandchildren. He died on the 11th November 2005.

Drucker's writing

Drucker's management writings were phenomenal in their coverage and impressive in their clarity. With over 33 books to his credit, we can only provide a snapshot of his thinking here. His earlier works made a significant contribution to establishing what constitutes management practice; his later works tackle the complexities - and the management implications - of the post-industrial 1980s and beyond. It is that range and development that we have tried to represent in our comments on the books covered here.

The End of Economic Man - 1939

The End of Economic Man concentrated on the politics and economics of the 1930s in general and the rise of Nazism in particular; Drucker signalled a warning about the Holocaust and predicted that Hitler would forge an alliance with Stalin. This was Drucker's first book in English as sole author and it prompted J B Priestley to say: 'At once the most penetrating and the most stimulating book I have read on the world crisis. At last there is a ray of light in the dark chaos'.

This was followed by The Future of Industrial Man (1942), which assumed Hitler's defeat and started to look ahead to peacetime, warning of the dangers of an approach to planning founded on the denial of freedom. It attracted the interest of critics who argued that it mixed economics with social sciences; it was, in fact, the first book which argued that any organisation is both an economic and social organ. As such it laid the foundations for Drucker's interest in management in general and, as it turned out, General Motors in particular.

The Concept of the Corporation - 1946

When General Motors invited Drucker to write about the company, it was to be expected that the invitation would result in a glowing description of GM's success. What resulted was something different, something that recognised success but also looked to the future.

General Motors provided Drucker with the opportunity to test in practice the theory he had propounded in The Future of Industrial Man, i.e. that an organisation was essentially a social system as well as an economic one. The Concept of the Corporation questioned whether what had worked in the past - a foolproof system of objective policies and procedures throughout every layer of the organisation - would also work in a future of global competition, changing social values, automation, the drive for quality and the growth of the knowledge worker.

The assembly line, he argued, actually created inefficiency because activity was at the pace of the slowest. Demotivation was rife because no one saw the end result, and initiative was reduced to the minutiae of checks, rules and controls. The layers of bureaucracy slowed down decision-making, created adversarial labour relations and did nothing for 'creating the self-governing plant community' (the phrase Drucker used for an empowered workforce). Drucker reported the benefits of decentralised operations - an issue which critics were quick to praise and organisations quick to mimic - but suggested that the GM hierarchy of commands and controls would be slow to respond in a rapidly changing future.

The fundamental difference between Drucker and GM was that GM saw the workforce as a cost in the quest for profits, whereas Drucker saw people as a resource, and considered that they would be more able to satisfy customers if they had more involvement in their jobs and gained some satisfaction from doing them. As such, The Concept of the Corporation was decades ahead of its time in terms of its espousal of empowerment and self-management. Although Alfred Sloan - the Chief Executive and powerhouse behind General Motors' success - had no time for Drucker's book, Drucker was, in the early 1950s, to advise Sloan on setting up a School of Administration at MIT. Drucker's criticism of Sloan was implicit rather than explicit, saying he had vision rather than perspective, and implying that leadership had been sacrificed to the rulebook. Sloan was measured in his reply - after all, at the time, General Motors was the largest and arguably one of the most successful companies in the world. His response came in 1963 with the publication of My Years with General Motors which sets out the scientific credo of GM's philosophy, yet talks little of people, transparently because they had comparably insignificant importance relative to the systems they were following.

Another effect of The Concept of the Corporation was the establishment of the beginnings of management as a discipline, bringing out the notions of the:

  • social and environmental responsibility of the organisation
  • relationship between the individual and the organisation
  • role of top management and the decision-making process
  • need for continual training and re-training of managers with the focus on their own responsibility for self-development
  • nature of labour relations
  • imperatives of community and customer relations.

It is interesting that Japanese industry listened to these messages and American industry did not.

The Practice of Management - 1954

The Practice of Management was Drucker's second book on management and it established him as a leader in his field. It set trends in management for decades and reputations were built by adopting and expanding on the ideas which Drucker set out. It is still regarded by many as the definitive management text.

Drucker stated that there was only one valid purpose for the existence of a business: to create a customer. He argued that an organization is kept afloat not by internal structure, controls, organisation and procedures, but rather by the customer, who pays, and decides what is important. He set out eight areas in which objectives should be set and performance should be measured:

  • market standing
  • innovation
  • productivity
  • physical and financial resources
  • profitability
  • manager's performance and development
  • worker's performance and attitude
  • public responsibility.

The Practice of Management is probably best-remembered for setting out Management by Objectives and Self Control (Drucker's term - he didn't coin the MBO acronym).

The book also identified the seven tasks for the manager of tomorrow. He or she must:

  • manage by objectives
  • take risks and allow risk-taking decisions to take place at lower levels in the organisation
  • be able to make strategic decisions
  • be able to build an integrated team with team members capable of managing and measuring their own performance and results in relation to overall objectives
  • be able to communicate information quickly and clearly, and motivate employees to gain commitment and participation
  • be able to see the business as a whole and to integrate their function within it
  • be able to relate the product and industry to the total environment, to find out what is important and what needs to be taken into account. This perspective must embrace developments outside the company's particular market or country and the manager must begin to see economic, political and social developments on a world-wide scale.

Management: Tasks, Responsibilities, Practices – 1974

Much of the work in The Practice of Management was updated, expanded and revised in Management: Tasks, Responsibilities, Practices, which established where management has come from, where it is now and where it needed to go. It drew upon a wide range of international examples and set out principles for managers and management. It was, effectively, a complete management handbook.

Moving on from his earlier work, Drucker defined the manager's work in terms of five basic operations. He or she:

  • sets objectives
  • organises
  • motivates and communicates
  • measures
  • develops people, including him/herself.

Top management's tasks are to:

  • define the business mission
  • set standards
  • build and maintain the human organisation
  • develop and maintain external relationships
  • perform social and civic functions
  • know how to get on with the task in hand if and when necessary.

Management: Tasks, Responsibilities, Practices, is regarded by many as Drucker's finest book. It was the only management book to be selected by a Desert Island Discs castaway.

The Age of Discontinuity - 1969 (re-issued 1992)

It was in The Age of Discontinuity that Drucker described those very changes which he had signalled to General Motors 23 years earlier.

Drucker wrote in the preface: 'This book does not project trends; it examines discontinuities. It does not forecast tomorrow; it looks at today. It does not ask: 'What will tomorrow look like?' It asks instead: 'What do we have to tackle today to make tomorrow?''

The book dealt with forces he considered were changing society, such as the impact of new technology on old industries, the effects of changing social values on consumer behaviour and the internationalization of markets. Drucker was an advocate of privatisation, pointing out the ineffectiveness of government in leading and stimulating change. He examined the role of organisations in society in an age of discontinuity and looked at different ways of managing the knowledge worker.

Managing in Turbulent Times - 1980

The issues raised in The Age of Discontinuity were re-visited a decade later in Managing in Turbulent Times. Change, uncertainty and turbulence were the underpinning themes as Drucker highlighted the new realities of changing population demographics, global markets and a 'bisexual' workforce.

Drucker issued challenges to junior, middle and senior management:

'In the knowledge organization, the 'supervisor' has to become an 'assistant', a 'resource', a 'teacher'.'

'The very term 'middle management' is becoming meaningless [as some] will have to learn how to work with people over whom they have no direct line control, to work transnationally, and to create, maintain, and run systems - none of which are traditionally middle management tasks.'

'It is top management that faces the challenge of setting directions for the enterprise, of managing the fundamentals. It is top management that will have to re-structure itself to meet the challenges of the 'sea-change', the changes in population structure and population dynamics... And it is top management that will have to concern itself with the turbulences of the environment, the emergence of the world economy, the emergence of the employee society, and the need for the enterprises in its care to take the lead in respect to political process, political concepts and social policies.'

He said it first

Part of Drucker's success and longevity as a management expert was that he had a remarkable knack of spotting trends which have since been picked up and made fashionable by others. Invariably, research will trace the origin back to something Drucker wrote 10 or 20 years ago. It is interesting that Drucker noted that one of the key aspects of leadership is timing; he has, in fact, upbraided himself for being 10 years ahead with his forecasts.

This section is adapted from work by Clutterbuck and Crainer, who have summarised the work of James O'Toole, Professor of Management at the University of Southern California. O'Toole said that Drucker was the first to:

  • define the role of top managers as the keepers of corporate culture
  • advocate mentoring, career planning and executive development as top management tasks
  • say that success hinges on the vision expressed by the CEO
  • show that structure follows strategy
  • suggest a reduction of management layers between the top and the bottom
  • argue that success comes from sticking to the basics
  • state that the primary purpose of the organisation is to create a customer
  • say that success boils down to consumer sensitivity and the marketing of innovative products
  • suggest that quality is a measure of productivity
  • describe the coming knowledge worker
  • state that new approaches to management would be needed in the post-industrial age.

One thing Drucker forecast which has not quite happened as he foretold, however, was that the middle manager would continue to develop and evolve into the knowledge worker of post-industrial society.

'Druckerisms'

On business

A business is not defined by the company's name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when he buys a product or service. (Management: Tasks, Responsibilities, Practices.)

On leadership

There is no substitute for leadership. But management cannot create leaders. It can only create the conditions under which potential leadership qualities become effective; or it can stifle potential leadership. (The Practice of Management)

On management

The function which distinguishes the manager above all others is his educational one. The one contribution he is uniquely expected to make is to give others vision and ability to perform. It is vision and moral responsibility that, in the last analysis, define the manager... (The Practice of Management)

On decision-making

...in these specifically managerial decisions, the important and difficult job is never to find the right answer, it is to find the right question. For there are few things as useless - if not as dangerous - as the right answer to the wrong question. (The Practice of Management)

On the knowledge worker

Increasingly, the knowledge workers of tomorrow will have to know and accept the values, the goals and the policies of the organization - to use current buzzwords, they must be willing -nay, eager - to buy into the company's mission. ('Drucker speaks his mind', Management Review).

(The knowledge worker) may realize that he depends on the organization for access to income and opportunity, and that without the investment the organization has made - and a high investment at that - there would be no opportunity for him. But he also realizes, and rightly so, that the organization equally depends on him. (The Age of Discontinuity)

In perspective

Critical of the business school system in general, Drucker always set himself apart from mainstream management education. He said of himself: 'I have always been a loner. I work best outside. That's where I'm most effective. I would be a very poor manager. Hopeless. And a company job would bore me to death. I enjoy being an outsider.'

An outsider maybe, but commentators pointed consistently to his gentlemanly, old-world charm, his humility and the fact that he never criticised negatively, always politely and constructively.

The content of Drucker's earlier works will not strike current readers with the same force it would have had on people in the 1950s, 1960s and 1970s, and this is to Drucker's enduring credit. His thinking has become absorbed and adopted into the prevailing wisdom behind the philosophy and practice of modern management.

What may strike the modern reader, however, is the sheer force of Drucker's writing, his clear mastery of his subject matter and the clarity of his expression. It is as well to remember that readable books on management were very few and far between when Drucker wrote The Concept of the Corporation and The Practice of Management. At that time, texts for managers tended to concentrate on technical and industrial engineering and were too complex to have a wide readership, or to gain the sort of impact or influence that Drucker's work achieved.

'For many business leaders across the world... (Drucker) remains the doyen of modern management theory, not so much because he can lay claim to being the founder of any particular concept such as business re-engineering, or total quality management, rather that he has demonstrated a rare ability to apply common sense understanding to the analysis of management challenges and their solutions.' ('Interview with Peter Drucker', Financial Times).

Drucker, while a devotee of the Human Relations school, recognised the value of Taylor's scientific, work-study approach, and struck a successful balance between the two approaches. Management by Objectives, when carried out properly, is an effective marriage of both schools which attaches significance to culture and recognizes that organisations are held together by a shared rather than a dictated vision of the future.

So, although Drucker cast the accolade of 'guru's guru' on F W Taylor, the world of management will always attribute it to Drucker himself. His ability to see management with a long historical perspective and in a broad social and political context is very rare in management writers. With his capacity for demystifying the apparent complexities of management for millions world-wide, he stands, as he said of himself, quite alone.

Further reading

Drucker authored over 100 columns in the Wall Street Journal and more articles in Harvard Business Review than anyone else. He had over six million words in print, and the list here gives only the most important of the books he wrote on management. For a comprehensive bibliography, please see this Bibliography by Peter Starbuck. Peter Starbuck is author of a Doctoral Thesis on Drucker, awarded by the Open University in 2005. 

Books

Drucker, P. The daily Drucker: 366 days of insight and motivation for getting the right things done. London: HarperCollins, 2004

Drucker, P. Management challenges for the 21st century. Oxford: Butterworth-Heinemann, 1999

Drucker, P. Managing in a time of great change. Oxford: Butterworth Heinemann, 1995

Drucker, P. The ecological vision: reflections on the American condition. New Brunswick: Transaction Publishers, 1993

Drucker, P. Managing for the future: the 1990s and beyond. Oxford: Butterworth Heinemann, 1992

Drucker, P. Managing the non profit organization: practices and principles. Oxford: Butterworth Heinemann, 1990

Drucker, P. The frontiers of management: where tomorrow's decisions are being made today. London: Heinemann, 1986

Drucker, P. Innovation and entrepreneurship: practice and principles. London: Heinemann, 1985

Drucker, P. The changing world of the executive. London: Heinemann, 1982

Drucker, P. Managing in turbulent times. London: Heinemann, 1980

Drucker, P. Adventures of a bystander. London: Heinemann, 1979

Drucker, P. Management: tasks, responsibilities, practices. New York: Harper and Row, 1973

Drucker, P. Technology, management and society. London: Heinemann, 1970

Drucker, P. The age of discontinuity: guidelines to our changing society. London: Heinemann, 1969

Drucker, P. The end of economic man. New York: Harper and Row, 1969

Drucker, P. The effective executive. London: Heinemann, 1967

Drucker, P. The concept of the corporation. New York: New American Library, 1964

Drucker, P. Managing for results: economic tasks and risk taking decisions. London: Heinemann, 1964

Drucker, P. The Landmarks of tomorrow: on economic and social progress in the twentieth-century. London: Heinemann, 1959

Drucker, P. America's next twenty years. Freeport, N.Y.: Books for Libraries Press, 1957

Drucker, P. The practice of management. London: Heinemann, 1955

Drucker, P. Big business: a study of the political problems of American capitalism. London: Toronto: William Heinemann, 1947

Drucker, P. The future of industrial man: a conservative approach. London: Heinemann, 1943

Heller, R. Peter Drucker. London: Dorling Kindersley, 2000

Starbuck P. The writings of Peter Drucker: a review and a personal appreciation. Wolverhampton: University of Wolverhampton Business School, Management Research Centre, Working Paper series, 1997

Micklethwait, J. & Wooldridge, A. The witch doctors: what the management gurus are saying, why it matters and how to make sense of it. London: Heinemann, 1996

O'Toole, J. Leading change: overcoming the ideology of comfort and the tyranny of custom, San Francisco: Jossey-Bass, 1995

Kennedy, C. Managing with the gurus: top level guidance on 20 management techniques. Century Business Books: 1994

Clutterbuck D. & Crainer, S. Makers of Management: men and women who changed the business world. London: MacMillan, 1990

Journals

Cooper, C. Peter Drucker and the wellbeing agenda. Strategic Direction. 2013, 29 (10) pp.21-22

Donkin, R. Interview with Peter Drucker. Financial Times. 14 June 1996, p.13

Johnson, M. Drucker speaks his mind. Management Review, October 1995, pp.10-14

Websites

The Drucker Society, Austria
http://www.druckersociety.at/index.php

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