Peter Drucker

Father of Post-War Management Thinking

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.

Throughout his long career he has had interests as diverse as journalism, art appreciation, mountaineering,
reading - drawing inspiration from the works of Jane Austen - and, of course, management teaching,
writing and consultancy.

With 39 books published over seven decades (and translated into at least 30 languages) and many books
written about him since his death, Drucker was, by common consent, the founding father of modern
management studies.

Life and career

Peter Georg Ferdinand Drucker was born in Vienna in 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:

o Fellow of the American Association of Science

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

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

Drucker's writing

Drucker's management writings were phenomenal in their coverage and impressive in their clarity. With
more than 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:

o social and environmental responsibility of the organization

o relationship between the individual and the organization
o role of top management and the decision-making process
o need for continual training and re-training of managers with the focus on their own responsibility
for self-development
o nature of labour relations
 o 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 organisation 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:

o market standing
o innovation
o productivity
o physical and financial resources
o profitability
o manager's performance and development
o worker's performance and attitude, and
o 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:

o manage by objectives
o take risks and allow risk-taking decisions to take place at lower levels in the organization
o be able to make strategic decisions
o 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
 o be able to communicate information quickly and clearly, and motivate employees to gain
commitment and participation
o be able to see the business as a whole and to integrate their function within it, and 
o 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:

o sets objectives
o organizes
o motivates and communicates
o measures, and
o develops people, including him/herself.

Top management's tasks are to:

o define the business mission

o set standards
o build and maintain the human organization
o develop and maintain external relationships
o perform social and civic functions, and
o 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:

o define the role of top managers as the keepers of corporate culture

o advocate mentoring, career planning and executive development as top management tasks
o say that success hinges on the vision expressed by the CEO
o show that structure follows strategy
o suggest a reduction of management layers between the top and the bottom
o argue that success comes from sticking to the basics
o state that the primary purpose of the organisation is to create a customer
o say that success boils down to consumer sensitivity and the marketing of innovative products
o suggest that quality is a measure of productivity
o describe the coming knowledge worker, and
o 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 ca pacity for
demystifying the apparent complexities of management for millions worldwide, he stands, as he said of
himself, quite alone.

Key works by Drucker

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 and a few of his articles.

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

The five most important questions you will ever ask about your organisation. Oxford: Wiley, 2008

With Maciariello, J. Management (revised edition). New York: Collins, 2008

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

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

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

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

Managing the non profit organization: practices and principles. Oxford: Butterworth Heinemann,
1990
The frontiers of management: where tomorrow's decisions are being made today. London:
Heinemann, 1986

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

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

Managing in turbulent times. London: Heinemann, 1980

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

Technology, management and society. London: Heinemann, 1970

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

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

The effective executive. London: Heinemann, 1967

Managing for results. London, Heinemann, 1964

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

The practice of management. London: Heinemann, 1955

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