Archivist’s Pick: The Birth of the Theory of Business

Here’s this month’s piece from the Drucker Institute’s archivist, Bridget Lawlor. By drawing lessons from the vast treasure trove of papers and other objects that are collected in Peter Drucker’s archives, Bridget is giving new life to decades-old material.

Among the most influential articles that Peter Drucker ever wrote for Harvard Business Review was one titled “The Theory of the Business.” The piece, which explores the decision-driving assumptions that companies make about customers and competitors, technology and core competencies, was published in 1994.

But Drucker had actually been playing with this concept for a very long time. In fact, this 1958 report written by Drucker for Mel Hurni and his team at General Electric was meant to serve as a “thought starter” on an idea still taking shape.

Drucker explained that his ruminations on the “Theory of the Business” did not “go into anything that could be called ‘quantification.’ This partly expresses my strong belief that mathematics, while it may be the ‘Queen of the Sciences,’ is only a ‘Handmaiden of OR&S [operations research and statistics].’ It expresses my belief that the definition of a ‘Theory of the Business’ is rarely a mathematical job, but usually one of creative entrepreneurial imagination, though one capable of discipline and system.”