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Known widely as the father of management, Peter Drucker formulated many concepts about business that we now take for granted. On the 100th anniversary of his birth, we take a look at Drucker's contributions, from A to Z. By Leigh Buchanan | Nov 19, 2009 Peter Drucker was known to gently chide ambitious acolytes to replace their pursuit of success with the pursuit of contribution. Certainly few people contributed as much to Twentieth Century business, social, and political thought as Drucker, who was born 100 years ago--on November 19, 1909--in a suburb of Vienna. Known widely as the father of management, Drucker immigrated to the United States in 1937. In a career that produced 39 books, as well as lectures, classes, consultations, and even movies, Drucker anatomized the functioning (and dysfunctioning) of companies. It would be easier to list the ideas he didn't promulgate in some form than those he did. (As far as we know he never weighed in on Secret Santa or pets in the workplace.) Much of the business lexicon bruited about in offices--from "knowledge worker" to "management by objective"--can be traced to Druckerian coinage. For decades harried CEOs have restructured their work lives based on Drucker's almost zen insights about efficiency and time management. His pronouncements on customers, marketing, and profitability deserve to be framed and hung in every corner office to remind business leaders where their priorities should lie. Encountering Drucker for the first time, readers may dismiss as obvious his observations on subjects like motivating workers and encouraging innovation. But such observations were far from obvious when Drucker first made them; and if they seem so now it is because his wisdom and clarity compelled so many companies to act as he advised. "What I find is that whenever I think I have got a really creative idea, if I go back [to] Peter's books I always find he already said it first," said One-Minute Manager author Ken Blanchard during a celebration of the centary at Claremont University's Peter F. Drucker and Masatoshi Ito Graduate School of Management. Drucker had the ears of CEOs, heads of state, and major philanthropists. Corporate titans like General Electric and Toyota were swayed by his ideas. "Drucker gave us the language, the metaphor, the lens, the understanding of the role of management as the critical function," said Good to Great author Jim Collins at the Claremont event. In honor of the centenary, we have compiled an alphabetical list of some people, places, and concepts drawn from the life and works of Drucker. Abandonment: Jim Collins earns applause when he lectures about his "stop doing" list. Jack Welch gained fame for shedding businesses in which General Electric wasn't first or second. But it was Drucker who first suggested that choosing what not to do was a decision as strategic as its opposite. Drucker's theory of "purposeful abandonment" exhorted business leaders to quickly sever projects, policies and processes that had outlived their usefulness. "The first step in a growth policy is not to decide where and how to grow," he told author Jeffrey Krames in 2003. "It is to decide what to abandon. In order to grow, a business must have a systematic policy to get rid of the outgrown, the obsolete, the unproductive." Bystander: Though he bestrode the management world like a Colossus, Drucker was less assuming than many of today's mega-wattage gurus. An early advocate of servant leadership, he both valued and practiced humility, describing himself as a "bystander" who is "on the stage but not part of the action." Even his quasi-autobiography, Adventures of a Bystander, refracts Drucker's life through the stories of people he had known, such as Sigmund Freud and Henry Luce. Customers: Having trouble formulating a mission statement? Let Drucker boil it down for you: "The purpose of business is to create and keep a customer," he argued. And: "What does our customer find valuable?" is the most important question companies can ask themselves. This focus helped reorient marketing away from advertising and onto a higher plane. Decentralization: Little fish learn to be big fish in little ponds. Drucker favored decentralized organizations because they create small pools in which employees gain satisfaction by witnessing the fruits of their efforts, and nascent leaders can make mistakes without bringing down the business. When Drucker laid out these ideas in the mid-1940s, the command-and-controllers who dominated corporations were not amused. Today, of course, "stovepipe" organizations--those that remain--are widely maligned for their failure to make the most of human and information resources. Effectiveness: Perhaps the most revelatory insight in the history of time management tore the bottom out of Frederick Taylor's time-and-motion studies: "Efficiency is doing things right," Drucker wrote in The Effective Executive. Effectiveness is doing the right things." What's true for individual managers is also true for organizations, which often squander time and resources trying to improve processes for products not worth producing. The solution? See "abandonment," above. Future: Drucker dismissed attempts to label him a "futurist," insisting that "the best way to predict the future is to create it" and "the only thing we know about the future is that it will be different." Still, his forecasting tended to be spot-on. Among other things, he anticipated the rise of Japan, the importance of computers, and the backlash against executive pay. His method was to study significant events that had already occurred and had predictable effects going forward. Or to use Drucker's elegant oxymoron: "the future that has already happened." General Motors: Drucker's Concept of the Corporation (1945) was arguably the first drop in what would become a deluge of organizational and management studies. The corporation in question was GM, to which Drucker was given the kind of access for which today's business scholars would sell their grandmas up the river. Drucker's conclusions about corporate structure and management style and their effect on worker productivity and morale were enormously influential--although they so annoyed then-CEO Alfred Sloan, that he pretended the book didn't exist.
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and unless it is managed nothing else can be managed. in Drucker's view." Profitability: Drucker was all for profit--but not for profit maximization.com/articles/2009/11/Drucker_Printer_Friendly."In a sense. Given that knowledge skills are more portable than manual ones. Managers can focus on the "what" rather than the "how. as industrial giants like Toyota embraced his theories on the primacy of employees and ideas about marketing--a comparably nascent discipline there. then make the requisite modifications. demanding that managers be mathematical and creative. process needs. But learning organizations are predicated on learning individuals. The admiration was mutual. Drucker bestowed that encomium on the Girl Scouts USA. "worked only in the electrical field. is responsible for the creation of those self-selling products. And Drucker was acutely aware of his." In this Socratic style. employees become so focused on what they're doing they forget why they're doing it. The crucial characteristic of innovators is focus. His later writing can be interpreted as a lifelong quest for functional. the same year that Henry Ford famously declared." he once informed a consulting client. Innovation: Thomas Edison would get no pushback from Drucker on his 1 percent inspiration-99-percent-perspiration formula. He predicted correctly that the ability of leaders to motivate these founts of productivity--"the most valuable asset of a 21st century institution"--would become a cornerstone of competitive advantage. Non-profits: What's better than a run on Thin Mints? Being declared the best-run organization in America by the world's preeminent business thinker. deciding how to use it becomes is the most strategic of decisions. Drucker inspired a generation of business leaders to wax introspective about their organizations. and should be treated with respect. The aim of marketing. was to "know and understand the customer so well that the product or service fits him and sells itself. The End of Economic Man. an appreciation spawned in part by the work of Austrian economist Joseph Schumpeter. Drucker was a passionate proponent of the social and economic importance of non-profits. He created a set of management principles specifically for that sector. perceptions. which Drucker considered the other basic function of business. Lifelong learning: Another Peter--Senge--popularized the concept of "learning organizations" in the 1980s. Schumpeter introduced the idea of creative destruction: the necessary collateral damage that occurs when entrepreneurs--whom he called "wild spirits"--breach established markets. "What is our mission? Who is our customer? What does the customer value? What are our results? What is our plan?" Respect: For more than 60 years. they would still have to be concerned with profitability. which he deemed the "most distinguishing feature" of American society. Drucker coined the term "knowledge worker" to describe the growing cadre of employees who labored with their brains rather than their hands. Drucker every year assigned himself a topic about which he knew nothing and made it the subject of intense study.html Hitler: Drucker's first book. was a study not of management but of totalitarianism. "The management of knowledge workers should be based on the assumption that the corporation needs them more than they need the corporation. Schumpeter believed." Drucker's theories of marketing--the "distinguishing. should begin with five essential questions. unique function of business"--amount to an extended refutation of that attitude. he believed." Schumpeter: Drucker really understood entrepreneurs. Drucker pointed out. given the perpetual expansion of skills and knowledge that are products of the information economy. incongruities. and exploits it as an opportunity. principled institutions. "The entrepreneur always searches for change. "If archangels instead of businessmen sat in the directors' chairs." "Management by objective works--if you know the objective. "My job is to ask questions. On a more personal level. then judge how persuasive he was. which he both collected and lectured on extensively. and changes in industries and markets. Drucker preached that workers are assets not liabilities. Objectives: In the daily scrum of business. responds to it. demographics. new knowledge. Drucker called this "the activity trap" and proposed "management by objective" as a way to avoid it. True to form. That attitude wasn't just nice. "Any customer can have a car painted any color that he wants so long as it is black. Entrepreneurs drive progress and create wealth." Drucker wrote. "It's your job to provide answers." Questions: In effective organizations. a mantra Drucker took up in his own copious writings on innovation. with Drucker praising such Japanese practices as lifetime employment (though he later conceded the need for greater flexibility) and deliberative decision-making followed by quick action.inc. according to an article in Business Week. Drucker called teaching people how to learn "the most pressing task" for managers. In The Process of Management (1954). In 1981. Drucker was achingly aware of the worst government and society could dish out. employees participate in setting goals and are then evaluated on how they fulfill those goals. Drucker explained that knowledge workers require a new style of management that treats them more as volunteers or partners than as subordinates. "Ninety percent of the time you don't. He viewed healthy margins as a necessary condition for the social good of wealth creation. With MBO. Knowledge workers: The term "knowledge management" has that PC era smell. But almost 20 years before the founding of Microsoft." Innovation. adept at decision-making and analysis. His overarching question: "What needs to be done right now for the business?" Universals: Drucker faulted business literature for raising performance expectations unrealistically high. Yet profits are not the purpose of an organization but rather a constraint: not the reason to behave in a particular way but rather a test of whether the business is behaving appropriately.) Drucker reimagined the organization as a human community and the job of management as preparing people to perform and then getting out of their way." Japan: The Japanese found much to love about Drucker in the 1960s. employees know their roles. Marketing: Drucker was born in 1909. Any journey of self-exploration." Drucker wrote.The Wisdom of Peter Drucker from A to Z http://www. and in possession of excellent people skills and a firm grasp of organizational dynamics. "What 2 of 3 3/3/2011 11:12 AM . And off the rails they go. it was also smart. He personally eschewed the designation "guru"--which suggests one who counsels-casting himself rather as a student. and he posited seven likely places to find it: in unexpected occurrences. one of many non-profits with which he worked closely over the years (others included the American Heart Association and The Salvation Army). Among Drucker's great passions was Japanese art. despite their total lack of interest in making profits. Living in Germany during Hitler's rise (two pamphlets he wrote--one praising a German-Jewish philosopher and one roundly condemning the National Socialists--were banned and burned by the Nazis). Even Thomas Edison. Drucker believed that innovation--"the specific function of entrepreneurship"--must be methodically ferreted out. and urged businesses to draw lessons in establishing a mission and motivating workers from the non-profit world. (Pick up your Daily Dilbert or watch an episode of The Office. much of Drucker's writing about effective organizations boils down to time management. Drucker suggested managers measure how they spend their time and compare that with how they should be spending it. If time is the insurmountable constraint. Time management:"Time is the scarcest resource.
That yardstick: productivity. waiting patiently until he saw an idea whole. he is expected to be able to seize inner truth in a swordlike stroke of the brush.com. what are you going to do about it?" Those questions inspired Welch's dramatic restructuring of General Electric. whose conversation instilled in Drucker a lifelong curiosity and interest in ideas. All rights reserved.com/articles/2009/11/Drucker_Printer_Friendly. like that of religion. NY 10007-2195. 7 World Trade Center.000 positions."Similarly.inc. New York. they fill that gap with--what else?--innovation." he observed. Inc.. which Drucker defined as "the degree to which resources are utilized and their yield. and universal genius has always been in short supply. They then identify the gap between those offerings' expected future performance and their own larger goals.. then rendering universal truth in the swift space of a sentence.. "The entrepreneurial achievement must be large enough to fill that gap and timely enough to fill it before the old becomes obsolescent. Drucker achieved enlightenment through quiet observation. Friedrich August von Hayek. When evaluating management effectiveness. market-leading corporation with an employee-development program ambitious enough even for Drucker. Drucker posed two questions to Welch. This allows no time for careful detailed draftsmanship. including the elimination of many low-growth businesses and 240. and Ludwig Heinrich Edler von Mises. Welch: The chemical combustion that birthed "Neutron Jack" Welch was set off in a meeting with Drucker in 1981. 3 of 3 3/3/2011 11:12 AM . Living near the starry seat of the Hapsburg monarchy. But he worried that managers often measure the wrong things (for example." Vienna: Drucker grew up in a small suburb of the city named Dobling. From there. he touted one metric (or "yardstick" as he often it) above others. in sudden enlightenment. who had just been named General Electric's CEO: "If you weren't already in this business. things unrelated to the leader's desired outcome) or that they measure too much.html seems to be wanted is universal genius. would you enter it today? And if not. the family was able to attract prominent economists and political philosophers like Joseph Schumpeter. Finally. After long contemplation. Yardsticks: With his emphasis on results. where his parents--a government official and a doctor--hosted soirees for scientists and intellectuals. X-ray: How do you know when it's time for the next Next New Thing? In Managing for Results (1964) Drucker introduced the concept of a "business x-ray"--a tool for determining innovation strategies. Copyright © 2011 Mansueto Ventures LLC. when the writer Harriet Rubin interviewed Drucker at his home for Inc. Companies use the x-ray to evaluate the life cycles of their existing offerings. or that they express their measurements in the wrong way." Drucker wrote. "The experience of the human race indicates strongly that the only person in abundant supply is the universal incompetent. Thus was the essence of the master. Drucker was bullish on metrics.The Wisdom of Peter Drucker from A to Z http://www. Welch rebuilt GE into a hugely successful. he showed her this passage from a book on Japanese art: " he T Zen-inspired painter seeks the 'truth' of a landscape." Zen: In 1998..