Last week, it appears that all major business and news publications in the developed world carried articles celebrating the life of Peter F. Drucker who passed on at age 95 on November 11. He was often called ‘the world's most influential business guru’. His thinking transformed corporate management in the latter half of the 20th century. His work influenced my approach to understanding the world of work. The reports indicate that many people were equally influenced. The list includes Winston Churchill, Bill Gates, Jack Welch and the Japanese business establishment.
The Major Works
Drucker published his first book “The End of Economic Man”, in 1939. He wrote 35 books in all: 15 dealt with management. His books have sold tens of millions of copies in more than 30 languages. He also produced thousands of articles, including a monthly op-ed column in The Wall Street Journal from 1975 to 1995. His most recent book, “Managing in the Next Society”, was published in Fall 2002. His most influential books include “The Concept of the Corporation” (1946), “The Practice of Management”(1954) and “The Effective Executive” (1964), which became standards in the world's leading business management schools.
In "The Practice of Management," which argued that management was one of the major social innovations of the century, Drucker posed three now-classic business questions: What is our business? Who is our customer? What does our customer consider valuable? In “The Concept of the Corporation”, which Drucker wrote after a pioneering study of General Motors, he crafted the basis of his analysis of company management. For many years GM ignored nearly every recommendation in the book even though its own executives had commissioned it. This seminal study introduced the concept of decentralization as a principle of organization, in contrast to the practice of command and control in business. Drucker reported that he was told that any manager found with a copy would be fired. The ideas in this book, however, launched the field of management and essentially created the field of consulting.
The Major Insights
Drucker thought of himself, first and foremost, as a writer and teacher, though he eventually settled on the term "social ecologist." He became internationally renowned for urging corporate leaders to agree with subordinates on objectives and goals and then get out of the way of decisions about how to achieve them. He challenged both business and labor leaders to search for ways to give workers more control over their work environment. He also argued that governments should turn many functions over to private enterprise and urged organizing in teams to exploit the rise of a technology-astute class of "knowledge workers."
Drucker staunchly defended the need for businesses to be profitable but he preached that employees were a resource, not a cost. His constant focus on the human impact of management decisions did not always appeal to executives, but they could not help noticing how it helped him foresee many major trends in business and politics. He foresaw that Japanese manufacturers would become major competitors for the United States and that union power would decline. However, I do believe that he erred when he advocated guaranteed wages and lifetime employment for industrial workers.
For over 50 years, at least half of his consulting work was done free for nonprofits and small businesses. He became increasingly interested in "the social sector," as he called the nonprofit groups. He counseled groups like the Girl Scouts to think like businesses even though their bottom line was "changed lives" rather than profits. He warned them that donors would increasingly judge them on results rather than intentions.
Among the sayings of Chairman Peter, as he was sometimes called, were these:
"Marketing is a fashionable term. The sales manager becomes a marketing vice president. But a gravedigger is still a gravedigger even when … called a mortician - only the price of the burial goes up."
"One either meets or one works."
"The only things that evolve by themselves in an organization are disorder, friction and male performance."
"Stock option plans reward the executive for doing the wrong thing. Instead of asking, 'Are we making the right decision?' he asks, 'How did we close today?' It is encouragement to loot the corporation."
“A company should streamline bureaucracy. Managers should look for more efficient models for organizing work. Results are obtained by exploiting opportunities, not solving problems.”
"There is only one valid definition of business purpose: to create a customer"
Drucker pioneered the idea of privatization and the corporation as a social institution. He coined the terms "knowledge workers" and "management by objectives." Central to his philosophy was the belief that highly skilled people are an organization's most valuable resource and that a manager's job is to prepare and free people to perform. In the early 1950s, when other business leaders figured the worldwide market for computers was in the single digits, he predicted that computer technology would thoroughly transform business. In 1997, he predicted a backlash to burgeoning executive pay, saying, "In the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions."
Peter Ferdinand Drucker was born Nov. 19, 1909 in Vienna. He worked as a financial reporter in Frankfurt, Germany, while he earned a doctoral degree in public and international law at Frankfurt University. He received his doctorate in 1931. The next year, he published an essay on a leading conservative philosopher that offended the Nazi government; his pamphlet was banned and burned. Mr. Drucker, increasingly worried by the Nazis, moved to London, where he worked for a merchant bank. In 1937, he moved to the United States where he blossomed and bloomed. We are all better for his insights.
