PETER

DRUCKER
MANAGEMENT THEORIES – PRINCIPLES & PRACTICES –
ASSIGNMENT II

MUHAMMAD ALI M.J. MERCHANT

F.Y. M.ARCH - 19011

CTES COLLEGE OF ARCHITECTURE

PETER DRUCKER 1
American Economist & Author

INDEX

1. WHO IS PETER DRUCKER 02

2. HISTORY & GROWTH 02

3. THEORIES, WORKS, PRINCIPLES & DRUCKERISMS 04

3.1. DRUCKER’S CONTRIBUTION TO MANAGEMENT THEORY 04

3.1.1. NATURE OF MANAGEMENT 04

3.1.2. MANAGEMENT BY OBJECTIVES (MBO) 05
3.1.3. MANAGEMENT FUNCTIONS 06
3.1.4. ORGANISATION STRUCTURE 08
3.1.5. ORGANISATION CHANGES 08
3.1.6. FEDERALISM 08
3.2. PETER’S DRUCKER’S 5 MOST IMPORTANT QUESTIONS 09

4. WORKS BY DRUCKER 10

5. CONCLUSION 12

6. BIBLIOGRAPHY 12

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 2
American Economist & Author

1. WHO IS PETER DRUCKER

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.

Peter Drucker, also known as the Father of Modern Management Theory, coined
leadership terms and strategies that are still used today. He advocated for a more flexible,
collaborative workplace and the delegation of power across the board.

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.

2. HISTORY & GROWTH

Peter Drucker was born in Vienna in 1909. He lived through World War I and
witnessed the fear and destruction people lived with on a daily basis. This had a profound
impact on his life and future career. He studied law at Frankfurt University, where he began
writing for the city newspaper, Der Frankfurter General-Anzeiger. During this time, he
received his Ph.D. in international law.

Drucker realized the danger of being a person of Jewish descent in such a prominent
position in Germany. Because of this, he left to go to England in 1933 where he worked in
investment banking before coming to the United States. 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. After
immigrating to the United States, he became a writer, a teacher, and began consulting with
business in both the private and public sector.

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

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 3
American Economist & Author

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', 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.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 4
American Economist & Author

3. THEORIES, WORKS, PRINCIPLES & DRUCKERISMS

3.1. DRUCKER’S CONTRIBUTION TO MANAGEMENT THEORY

In 1943, Peter Drucker began his own consulting business which allowed him to work
with companies like IBM and Procter & Gamble. He realized that the two most important
things for a business to achieve were innovation and marketing.

Drucker taught that management is a liberal art and is about much more than
productivity. To be an effective manager you must understand things like psychology,
science, religion, and the other things that go into that subject.

Drucker observed that often managers would try to take charge of everything. This
was usually out of a desire for control or the belief that they were the only person who could
accomplish a task correctly. Because of this, he advocated strongly for the decentralization of
management. He taught that managers needed to delegate tasks to empower their employees.

Throughout his career, Peter Drucker wrote 39 books where he coined several terms
which are still used today. “Knowledge worker” is one of the many terms coined by Peter
Drucker. A knowledge worker is someone whose job involves handling or using information.
He was one of the first people to foresee our society’s shift to a knowledge society.

In his 1954 book “The Practice of Management”, Peter Drucker coined the term
“management by objectives” or MBO. MBO compares the performance of employees to the
typical standards required for that position. The belief behind MBO is that if employees help
determine the standards, they will have more incentive to fulfil them.

3.1.1. NATURE OF MANAGEMENT

According to Drucker the basic objective of management is to lead towards

innovation. He advocates that management is creative and innovative in nature rather than
bureaucratic. Because managers practice their activities in an ever-changing environment,
they always deal with the human beings whose behaviour is complex and unpredictable. He
was warned that too much professionalization of management is dangerous. He has also
emphasized that managers should not only have skills and techniques but also should have
right perspective putting the things into practice.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 5
American Economist & Author

3.1.2. MANAGEMENT BY OBJECTIVES (MBO)

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.

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

There are five steps of MBO:

i. Review goals
ii. Set objectives
iii. Monitor progress
iv. Evaluate performance
v. Reward employees

Management by objectives (MBO) is regarded as one of the important contributions

of Drucker to the discipline of management. He introduced this concept in 1954. MBO has
further been modified by Schleh, which has been termed as management by results’. MBO
includes method of planning, setting standards, performance appraisal, and motivation.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 6
American Economist & Author

According to Drucker, MBO is not only a technique of management but it is a

philosophy of managing. It transforms the basic assumptions of managing from exercising
cattalo to self-control. Therefore, in order to practice MBO, the organisation must change
itself. MBO has become such a popular way of managing that today it is regarded as the most
modern management approach. In fact, it has revolutionised the management process.

3.1.3. MANAGEMENT FUNCTIONS

According to Drucker, management is the organ of its institution. It has no functions

in itself, and no existence in itself. He sees management through its tasks. Accordingly, there
are three basic functions of management:

i. Managing a Business
ii. Managing Managers
iii. Managing workers and work

A manager has to act as administrator where he has to improve upon what already
exists and is already known. He has to act as an entrepreneur in redirecting the resources
from seas of tow or diminishing results to areas of high or increasing results.

Thus, a manager has to perform several functions: setting of objectives, making,

organising and motivating. Drucker has attached great importance to the objective setting
function and has specified eight areas where clear objective setting is required. These are-
market standing, innovation, productivity, physical and financial resources, profitability,
managerial performance and development, worker performance and attitude, and public
responsibility.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 7
American Economist & Author

Mr. Drucker divided the job of the manager into five basic tasks. The manager, he
wrote:

i. Sets objectives. The manager sets goals for the group, and decides what work needs to
be done to meet those goals.
ii. Organizes. The manager divides the work into manageable activities, and selects
people to accomplish the tasks that need to be done.
iii. Motivates and communicates. The manager creates a team out of his people, through
decisions on pay, placement, promotion, and through his communications with the
team. Drucker also referred to this as the “integrating” function of the manager.
iv. Measures. The manager establishes appropriate targets and yardsticks, and analyzes,
appraises and interprets performance.
v. Develops people. With the rise of the knowledge worker, this task has taken on added
importance. In a knowledge economy, people are the company’s most important asset,
and it is up to the manager to develop that asset.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 8
American Economist & Author

3.1.4. ORGANISATION STRUCTURE

Drucker has decried bureaucratic structure because of its too many dysfunctional
effects. Therefore, it should be replaced. He has emphasised three basic characteristics of an
effective organisation structure.

i. Enterprise should be organised for performance;

ii. It should contain the least possible number of managerial levels;
iii. It must make possible the training and testing of tomorrow’s top managers—
responsibility to a manager while still he is young.

He has identified three basic aspects in organising activity analysis, decision analysis,
and relation analysis. An activity analysis shows what work has to be performed, what kind
of work should be put together, and what emphasis is to be given to each activity in the
organisation structure.

3.1.5. Drucker has visualised rapid changes in the society because of rapid technological
development. Though he is not resistant to change, he feels concerned for the rapid
ORGANISATION CHANGES

changes and their impact on human life. Normally, some changes can be absorbed by
the organisation but not the rapid changes.

Since rapid changes are occurring in the society, human beings should develop
philosophy to face the changes and take them as challenges for making the society better.
This can be done by developing dynamic organizations, which are able to absorb changes
much faster than static ones. Drucker’s contributions have made tremendous impact on the
management practices. Even the management thinkers of Socialist Bloc have recognised his
contributions.

3.1.6. FEDRALISM

Drucker has advocated the concept of federalism. Federalism refers to centralised

control in decentralised structure Decentralised structure goes far beyond the delegation of
authority. It creates a new constitution and new ordering principle. He has emphasised the

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 9
American Economist & Author

close links between the decisions adopted by the top management on the one hand and by the
autonomous unit on the other.

This is just like a relationship between federal government and state governments. In
a federal organisation, local managements should participate in the decision that set the limits
of their own authority. Federalism has certain positive values over other methods of
organising.

3.2. PETER’S DRUCKER’S 5 MOST IMPORTANT QUESTIONS

One of the biggest ways Peter Drucker was able to contribute to business and
management was by teaching organizations how to best allocate their energy and resources.
His book, “The 5 Most Important Questions You Will Ever Ask About Your Organization”,
outlined five important questions every executive should ask about their business.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 10
American Economist & Author

What is your mission?

Every business needs an effective and concise mission statement. Your mission
statement does not explain what you do but rather why you do what you do. Your mission
statement should be the driving force behind the actions of you and everyone in your
company.

Who is your customer?

Peter Drucker understood that many businesses did not even really know who it was
they were serving. You must find out who your customer is and then organize all of your
efforts toward meeting their needs and bringing them value.

What does your customer value?

This question is perhaps the most important of all five questions. The key is that it can
only truly be answered by your customer themselves. You must know what your customer
wants and needs.

What are your results?

Drucker stated that you must be able to measure your results in both qualitative and
quantitative terms. You must not only know what your results are but you must have a
standard for evaluating them as well.

What is your plan?

In order to reach your goal, you must have a plan for how to get there. According to
Peter Drucker, your plan should include your mission statement, action steps, and a way to
evaluate your results. If you cannot summarize those points then you do not have a plan to
achieve your goals.

4. 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.

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 11
American Economist & Author

BOOKS BY DRUCKER

 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

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I
PETER DRUCKER 12
American Economist & Author

JOURNAL ARTICLES

 Managing oneself. Harvard Business Review, 77 (2) 1999, pp.65-74

Harvard Business Review, 77 (2) 1999, pp.65-74

 What makes an effective executive? Harvard Business Review, 82 (6) 2004,

pp.58-63

Harvard Business Review, 82 (6) 2004, pp.58-63

 The discipline of innovation. Harvard Business Review, 76 (6) 1998, pp149-

150,152,154-157 (First published in HBR May-June 1985)

Harvard Business Review, 76 (6) 1998, pp149-150,152,154-157 (First published in

HBR May-June 1985)
5. CONCLUSION
Drucker’s realistic way of looking at the organizations and society has earned him the
status of a management guru. His contributions have made tremendous impact on the
management practices all over the world. His work has proved to be an invaluable
contribution to management theory and helped turn it into a serious discipline. His theories
reflect how important business environments are and the opportunity that managers have to
create positive change and progress in the workplace.

Peter Drucker’s contributions to management theory continue to influence modern

aspects of business management. In 2002, he was awarded the Presidential Medal of Freedom
for his contributions to management theory. After his death in 2005, the Drucker Institute was
created to continue to advance his belief that strong organizations lead to a stronger society.

6. BIBLIOGRAPHY
https://www.drucker.institute/perspective/about-peter-drucker/
http://guides.wsj.com/management/developing-a-leadership-style/what-do-managers-do/
https://article1000.com/contribution-peter-f-drucker/
https://tallyfy.com/peter-drucker/
http://www.yourarticlelibrary.com/business-management/6-major-contributions-of-peter-
drucker-to-management/27900
https://www.managementstudyhq.com/contribution-by-peter-drucker-mbo.html
https://en.wikiquote.org/wiki/Peter_Drucker
https://en.wikipedia.org/wiki/Peter_Drucker
https://www.bl.uk/people/peter-drucker

Name: Muhammad Ali Merchant Management Theories – M. Arch CTES College of Architecture
Principles & Practices – Sem I