Peter Drucker: The Father of Management Theory

UPDATED: June 8, 2010
PUBLISHED: June 8, 2010

Drucker, the man who invented management theory, put great currency in listening, asking questions and letting natural patterns emerge from the answers.

The author of 39 books during his long career, and counselor to titans of business and rulers of nations, Drucker championed the powers of observation, often formulating simple ideas that triggered startling results. The Practice of Management (1954) and The Effective Executive (1966) are considered his landmark works. Part of Drucker’s genius lay in his ability to find patterns among seemingly unconnected disciplines. “The most important thing in communication is to hear what isn’t being said,” he once said.

“Whether it’s recognized or not, the organization and practice of management today is derived largely from the thinking of Peter Drucker,” BusinessWeek reported shortly after his death at 95 in 2005. “What John Maynard Keynes is to economics or W. Edwards Deming to quality, Drucker is to management.”

The magazine called Drucker’s teachings “a blueprint for every thinking leader,” noting that Drucker taught generations of managers the importance of picking the best people, of focusing on opportunities and not problems, of getting on the same side of the desk as their customer, of the need to understand their competitive advantages and to continue to refine them.

During the inaugural Peter Drucker Forum in Vienna celebrating Drucker’s 100th birthday in 2009, Rick Warren, author of The Purpose Driven Life and founding pastor of the Saddleback Church in Lake Forest, Calif., talked about his mentor’s breadth of influence.

“I’m often embarrassed at how often I quote Peter Drucker,” Warren said. “He had a way of saying things simply. Peter was far more than the founder of modern management, far more than a brilliant man, one of the greatest minds of the 20th century. He was a great soul. If I summed up Peter’s life in three words, it would be integrity, humility and generosity…. Peter was the only truly Renaissance man I’ve ever known. He had a way of looking at the world in a systems view that said it all matters.”

High-Octane Testimonials
Many of Drucker’s notions might be considered common sense today, but they broke considerable new ground when he first started studying and writing about them in the 1940s. His work, and personal contact, shaped the thinking of the top management minds in the world.

“He was the creator and inventor of modern management,” management expert Tom Peters told Newsweek in 2005. “In the early 1950s, nobody had a tool kit to manage these incredibly complex organizations that had gone out of control. Drucker was the first person to give us a handbook for that.”

Drucker, born in Austria in 1909, gained his first experience in this listening-and-learning approach from his parents, Adolph and Caroline, highly educated professionals who reveled in inviting cadres of intellectually stimulating characters into their Vienna home for broad discourses on medicine, politics and music.

Drucker earned a doctorate in public and international law from Frankfurt University in Frankfurt, Germany. He toiled as an economist and journalist in London before moving in 1937 to the United States as a correspondent for the Financial Times, along with his new wife, the former Doris Schmitz, whom he had met in Frankfurt and married in London.

Making His Mark
Drucker’s first book, The End of Economic Man, published in 1939, attracted the enthusiastic praise of British Prime Minister Winston Churchill. That same year, he began teaching part time at Sarah Lawrence College and, in 1942, joined the faculty at Bennington College in Vermont. While at Bennington, Drucker got the chance to study General Motors Corp., which led to his groundbreaking book, Concept of the Corporation. In 1950, he joined the faculty of New York University’s Graduate Business School as professor of management.

He moved to California in 1971 as the Clarke Professor of Social Science and Management at the Claremont Graduate University in Claremont, Calif., where he taught for 30 years. During that time, the Druckers received corporate and social-sector leaders from around the world in their modest home in Claremont, where they also raised four children and lived for nearly four decades. In 1987, the university named its management school after him.

Drucker called himself a “social ecologist,” a close observer of the way humans are organized across all sectors—in business, but also in government and in the nonprofit world.

“None of my books or ideas means anything to me in the long run,” he said. “What are theories? Nothing. The only thing that matters is how you touch people. Have I given anyone insight? That’s what I want to have done. Insight lasts; theories don’t. And even insight decays into small details, which is how it should be. A few details that have meaning in one’s life are important.”

Although many MBA programs ignored his texts because administrators felt his work was short on pure research, he had great impact on the business world through his books and consulting work with dozens of organizations—including the world’s largest corporations, entrepreneurial startups, and various government and nonprofit agencies. He was a Wall Street Journal columnist from 1975 to 1995, and contributed to such publications as the Harvard Business Review, The Atlantic Monthly and The Economist.

Ahead of His Time
Drucker’s track record is impressive, as BusinessWeek succinctly summarized upon his death in 2005. Among his accomplishments:

–He introduced the idea of decentralization—in the 1940s—which became a bedrock principle for virtually every large organization in the world.

–He was the first to assert—in the 1950s—that workers should be treated as assets, not as liabilities to be eliminated.

–He originated the view of the corporation as a human community—again, in the 1950s—built on trust and respect for the worker and not just a profit-making machine, a perspective that won Drucker an almost godlike reverence among the Japanese.

–He first made clear—still the ’50s—that there is “no business without a customer,” a simple notion that ushered in a new marketing mindset.

–He argued in the 1960s—long before others—for the importance of substance over style, for institutionalized practices over charismatic, cult leaders.

–He wrote about the contribution of knowledge workers—in the 1970s—long before anyone knew or understood how knowledge would trump raw material as the essential capital of the New Economy.

Beyond Words on a Page
As he aged, Drucker appeared to assume more gravitas, slowing his speech, projecting a more authoritative presence, allowing his audience to hang on his words. He expressed dismay with the greed and self-interest that pervaded corporate America in his later years, shifting his focus to nonprofits. In writings and speeches during the 1980s, Drucker emerged as one of corporate America’s most important critics, preaching against reckless mergers and acquisitions. He warned that CEO pay had rocketed out of control and implored boards to hold CEO compensation to no more than 20 times what the rank and file made.

In The Definitive Drucker: Challenges for Tomorrow’s Executives—Final Advice from the Father of Modern Management (2007), author Elizabeth Haas Edersheim wrote, “Peter’s ideas were the catalyst that freed people to pursue opportunities they had never expected to have. He liberated people by asking them questions and eliciting a vision that just felt right. He liberated people by getting them to challenge their own assumptions. He liberated people by raising their awareness of, and their faith in, things they knew intuitively. He liberated people by forcing them to think. He liberated people by talking to them. He liberated people by getting them to ask the right questions.”

For his many contributions, President George W. Bush awarded Drucker the Presidential Medal of Freedom on July 9, 2002.

A Lifelong Student
Drucker was all business, but he never lost his humanity or good sense of humor. He once said people use the word “guru” only because they do not want to say “charlatan.”

“He had kind of a stern, formidable image, but he also had a funny, warm side,” writer Bruce Rosenstein tells SUCCESS. “He wanted to be relevant and productive deep into old age, and he certainly didn’t take his readers for granted.”

Rosenstein interviewed Drucker several times for USA Today and his book, Living In More Than One World: How Peter Drucker's Wisdom Can Inspire and Transform Your Life, published in 2009 by Berrett-Koehler Publishers Inc.

One of the fruits of his work is that it remains relevant, Rosenstein notes. “During the GM bankruptcy, for example, his Concept of a Corporation book, which was published in 1946, was referenced a number of times,” he says. “I think a whole-new generation of students can really learn a lot from Drucker’s work.”

One notable disciple summed up the Drucker persona in the following way shortly after his death:

“For me, Drucker’s most important lessons cannot be found in any text or lecture but in the example of his life,” wrote Jim Collins, best-selling author of Good to Great and Built to Last. “I made a personal pilgrimage to Claremont, Calif., in 1994 seeking wisdom from the greatest management thinker of our age, and I came away feeling that I’d met a compassionate and generous human being who—almost as a side benefit—was a prolific genius.… Peter F. Drucker was driven not by the desire to say something, but by the desire to learn something from every student he met—and that is why he became one of the most influential teachers most of us have ever known.”