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Why Your Company Needs to Know Peter Drucker

Why Your Company Needs to Know Peter Drucker

Considered by many to be “the founder of modern management,” Peter Drucker defies easy summation. In a career spanning over 70 years, Drucker gave a whole new meaning to the concept of “prolific,” publishing over 39 books.

If you’ve ever taken a business class or management seminar, chances are you’ve heard the name “Peter Drucker.” Even if you’re a little fuzzy on his bio, you’re almost certainly using his ideas in your business. Considered by many to be “the founder of modern management,” Drucker defies easy summation. In a career spanning over 70 years, Drucker gave a whole new meaning to the concept of “prolific,” publishing over 39 books, including foundational works such as The Concept of Corporation, The Practice of Management, and The Age of Discontinuity.

Drucker was a professor, a journalist, a writer, and a management consultant who worked with some of the biggest corporate titans of his day. His observations and ideas have become so interwoven into business operations that, these days, they seem glaringly obvious.

As a manager or executive, you would do well to study up on Drucker. Not only will your knowledge of Drucker help you impress the boss at the next corporate dinner, but studying Drucker will also give you important insights into the roots of modern managerial thought.

Peter Drucker: A Prolific Author Who Helped Revolutionize Business

  • Born in Vienna, Austria, on November 19, 1909
  • In the 1920s, he moved from Austria to Germany and became the senior editor of foreign affairs and business at Frankfurt’s largest daily newspaper, the Frankfurter General-Anzeiger.
  • Received a PhD in international law from Frankfurt University in 1932
  • Moved to England in 1935 after two of his essays were banned and burned by the Nazis
  • Moved to the United States in 1937
  • In the 1930s, he published The End of Economic Man.
  • Visited General Motors and published Concept of the Corporation in 1946
  • In the 1940s, he also published The Future of Industrial Man.
  • Joined the faculty of New York University in 1950 as professor of management
  • Published The Practice of Management in 1954
  • Coined the term “knowledge work” in 1959
  • In the 1950s, he published
    • The New Society
    • America’s Next Twenty Years
    • The Landmarks of Tomorrow
  • In 1966, he published The Effective Executive.
  • In 1968, he wrote The Age of Discontinuity.
  • Also published Managing for Results in the 1960s
  • Published Management: Tasks, Responsibilities, Practices in 1973
  • Began a 20-year tenure as a monthly columnist for The Wall Street Journal
  • In the 1970s, he published:
    • Technology, Management and Society
    • The New Markets and Other Essays
    • Men, Ideas and Politics
    • Drucker on Management
    • The Unseen Revolution
    • People and Performance: The Best of Peter Drucker on Management
    • Adventures of a Bystander
  • In 1989, he produced a five-volume audio series called The Nonprofit Drucker.
  • In the 1980s, he published:
    • Managing in Turbulent Times
    • Toward the Next Economics and Other Essays
    • The Changing World of the Executive
    • The Last of All Possible Worlds (fiction)
    • The Temptation to Do Good (fiction)
    • Innovation and Entrepreneurship
    • Frontiers of Management
    • The New Realities
  • In the 1990s, he published:
    • Managing the Nonprofit Organization: Principles and Practices
    • Managing for the Future
    • The Ecological Vision
    • Post-Capitalist Society
    • Managing in a Time of Great Change
    • Drucker on Asia: A Dialogue between Peter Drucker and Isao Nakauchi
    • Peter Drucker on the Profession of Management
    • Management Challenges for the 21st Century
  • In 2002, at age 93, he taught his last course, although he continued to lecture periodically.
  • In the summer of 2002, he was awarded the Presidential Medal of Freedom, the U.S.’s highest civilian honor.
  • In the 2000s, he published:
    • The Essential Drucker
    • Managing in the Next Society
    • A Functioning Society
    • The Daily Drucker, with Joseph A. Maciariello
    • The Five Most Important Questions (posthumously released)
  • Died on November 11, 2005, just before his 96th birthday

Who Was Peter Drucker?

“My greatest strength as a consultant is to be ignorant and ask a few questions.” —Peter Drucker

According to the Drucker Institute, Drucker often described himself as a writer, but he was much, much more. Throughout his career, he taught at top universities and held the post of Clarke Professor of Social Science and Management at Claremont Graduate University from 1971 until his death. He was also a prized business consultant, advising the leaders of Sears, General Electric, General Motors, and IBM.

Perhaps more accurately, Drucker was an inspired thinker. He was one of the first people to deeply study the way businesses work and consider business operations and employee development from a social science perspective. Thankfully, Drucker was able to translate his thinking into dozens of readable, thoughtful books in a time before the business management genre even existed. As a result, his books ended up in the hands of young managers who rose through the ranks and implemented his ideas so thoroughly that’s it’s hard to imagine a time before them.

Writing for the Harvard Business Review (a publication to which Drucker regularly contributed during his lifetime), Alan Kantrow sums up Drucker’s lasting impact:

“How remarkably familiar has become his vision of modern industrial society as constituted by large-scale organizations. How obvious it now seems to regard business as the representative institution of that society, and how matter-of-fact an exercise it now is to apply to business the same modes of analysis appropriate to any social or political institution.”

Management by Objectives and Self-Control

If one piece of knowledge related to Peter Drucker remains in your memory from business class, it is likely to be his development of a concept called “Management by Objectives and Self-Control,” usually shortened to MBO.

In his 1954 book The Practice of Management, Drucker suggests that managers outline an organizational goal and then work with employees to set specific objectives for the employee to achieve. The manager would then monitor the employee’s progress, evaluate the employee, and reward the employee for successfully meeting their objectives.

Sound familiar? MBO is the framework for today’s proliferation of employee management and assessment systems. If you’ve ever sweated through an employee evaluation with your boss or worked with your own employees to create goals and achievement criteria, you have Peter Drucker to thank for it.

While setting objectives for employees and actively monitoring their progress seems like a no-brainer today, Drucker helped make the initial case for this system. He also helped define the concept of the “knowledge worker” and correctly predicted that as blue-collar jobs faded, companies would need to expend more effort to train, mentor, and grow their knowledge workers.

Some of Peter Drucker’s Most Important Quotations

  • “Doing the right thing is more important than doing the thing right.”
  • “If you want something new, you have to stop doing something old.”
  • “There is nothing quite so useless as doing with great efficiency something that should not be done at all.”
  • “What gets measured gets improved.”
  • “Results are gained by exploiting opportunities, not by solving problems.”
  • “So much of what we call management consists of making it difficult for people to work.”
  • “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.”
  • “Long-range planning does not deal with the future decisions, but with the future of present decisions.”
  • “Meetings are by definition a concession to a deficient organization. For one either meets or one works. One cannot do both at the same time.”
  • “Management is doing things right. Leadership is doing the right things.”

Workers Are Assets

Drucker actually planted the seeds of the MBO system a decade earlier when he was invited to observe the ins and outs of General Motors, then one of the biggest and most prosperous companies in the United States. The company’s leadership expected a glowing review, but Drucker surprised them when he released Concept of the Corporation in 1946. In the book, Drucker notes that workers on the assembly line were highly demotivated. Weighed down by rules and bureaucracy, the workers had little control over their jobs and an adversarial relationship with management. Drucker argued that if employees were given more opportunities for self-management and empowerment, they would do a better job, which would lead to greater customer satisfaction.

Though Alfred Sloan, the CEO of General Motors, was so displeased with Drucker’s book that he refused to acknowledge its existence, Drucker’s idea that workers are assets (rather than just overhead) took off. We are all better off for this change in corporate philosophy.

Building Up Managers

“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…” —Peter Drucker

Two of Drucker’s most seminal works revolve around the development of strong managerial leaders. In The Practice of Management and Management: Tasks, Responsibilities, Practices, Drucker not only laid out the concept behind MBO, but also clearly defined what a manager is and what a manager does. Of course, it’s not like no one knew what a manager was before Drucker’s books; rather, Drucker helped define the nebulous goals and purpose of a manager, creating a standard that companies can use when training and evaluating their rising leaders.

If you have the chance to read either of these books, you will likely find the ideas unremarkable. That is a testament to how much these works changed managerial thought and how thoroughly they’ve been adopted over the last 60 years.

The 5 Principles Underlying the Drucker Institute’s Company Rankings

  • Customer satisfaction
  • Employee engagement and development
  • Innovation
  • Social responsibility
  • Financial strength

Businesses as Pillars of Society

“Performing responsible management is the alternative to tyranny and our only protection against it.” —Peter Drucker

Drucker was born in 1909 in Austria, and his formative years coincided with the two World Wars. He lived for a time in Germany after World War I, but moved to London and then to the United States, where he would live for the rest of his life.

Watching the rise of fascism affected him deeply, and he believed that large, successful businesses could play a role in helping stabilize countries by offering citizens a path to achievement and fulfillment.

According to Alan Kantrow:

“If the institutions of business cannot meet the cumulative needs of economic performance, society, and the individual, nothing stands between any of us and the forces of chaos and terror. No wonder, then, that Drucker puts such great emphasis on the character of managers and on the immense responsibilities they bear.”

It may not be surprising to learn that Drucker embraced non-profits and suggested his managerial observations could also improve the functioning of NGOs. Among the many organizations he consulted for were the Red Cross and The Salvation Army.

The Legacy of Peter Drucker

When Peter Drucker died in 2005 at the age of 95, he left behind over 6 million written words. More importantly, he left behind ideas that have been absorbed into the very fabric of the way businesses operate in the United States and around the world.

From his archives rose the Drucker Institute, an organization of Drucker devotees that use his teachings and writing to help strengthen organizations, which the organization believes can then help strengthen societies. In a nod to Drucker’s passion for NGOs, the Institute also awards the $100,000 Drucker Prize to a worthy non-profit organization each year.

Though many of Drucker’s ideas are now mainstream, you can still learn plenty by picking up some of his more famous works. Reading Drucker will help you understand how some of today’s more common-sense management practices took root. It may also help you reassess your own role as a leader in your company, as well as how you view your responsibilities to your employees.

One final reason you should take some time to explore Drucker’s archives and legacy is because you owe him. His ideas have almost certainly helped you build a better, stronger company.

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