Drucker Institute

“Performing, responsible management is the alternative to tyranny and our only protection against it.”

—Peter Drucker

Shortly before he died in 2005, Peter Drucker was celebrated by BusinessWeek magazine as “the man who invented management.” Naturally, when most people hear that description, they think of corporate management. And Drucker did, in fact, advise a host of giant companies (along with nonprofits and government agencies). But he came to his life’s work not because he was interested in business per se. What drove him was trying to create what he termed “a functioning society.”

Drucker had, after all, seen firsthand what happens when society stops functioning. This was the central theme of the first of the 39 major books that he would publish over the course of his extraordinarily long and productive career. The End of Economic Man traced the rise of the Nazis in the aftermath of the Great War and Depression.

“These catastrophes broke through the everyday routine which makes men accept existing forms, institutions and tenets as unalterable laws,” Drucker wrote. “They suddenly exposed the vacuum behind the façade of society.” Looking for a miracle, he added, the masses turned toward the “abracadabra of fascism.”

Drucker was determined never to let things break down like that again. And the only way to do that was to build effective and responsible institutions, including those that by the 1940s were emerging to be the most powerful in the world: big American corporations. Management, practiced well, was Drucker’s bulwark against evil.

Timeline

Early Years

Peter Drucker was born in Vienna, Austria, on November 19, 1909. The household in which he grew up was one of great intellectual ferment. His parents, Adolph and Caroline, regularly held evening salons with economists (including Joseph Schumpeter, who would come to have a tremendous influence on Drucker), politicians, musicians, writers and scientists. “That was actually my education,” Drucker later said.

1920s

Drucker moved from Austria to Germany, where he worked at an export firm and took courses in admiralty law at Hamburg University. He later transferred to Frankfurt University, where he studied law at night. He also became senior editor in charge of foreign affairs and business at Frankfurt’s largest daily newspaper, the Frankfurter General-Anzeiger.

1930s

Drucker received his PhD in international law from Frankfurt University in 1932. Three years later, he moved to England after two of his essays—one on Friedrich Julius Stahl, a leading German philosopher, and a second, The Jewish Question in Germany—were banned and burned by the Nazis. In Cambridge, Drucker attended a lecture by leading economist John Maynard Keynes, and there had an epiphany: “I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behavior of commodities while I was interested in the behavior of people.” In 1934, Drucker married Doris Schmitz. They moved to the United States in 1937. Drucker served as a correspondent for several British newspapers, including the Financial Times. He eventually began teaching economics part time at Sarah Lawrence College in New York.

1940s

Drucker’s invitation to take a close peek inside General Motors resulted in the publication of his landmark book Concept of the Corporation in 1946. It was during this engagement that Drucker met legendary gm Chairman Alfred Sloan, who would in many ways become Drucker’s model for the effective executive. “The chief executive must be… absolutely tolerant and pay no attention to how a man does his work, let alone whether he likes a man or not,” Sloan told him. “The only criteria must be performance and character.” Drucker also became professor of philosophy and politics at Bennington College.

1950s

In 1950, Drucker joined the faculty of New York University as professor of management; he would work there for 21 years. He also began his formal consulting practice and took on major assignments with Sears, Roebuck and IBM, among others. In 1954, he published The Practice of Management, widely considered the first book to organize the art and science of running an organization into an integrated body of knowledge. Before this, you could find books on individual aspects of managing a business—finance, for example, or human resources. But there was nothing that pieced it all together. What was out there “reminded me of a book on human anatomy that would discuss one joint in the body—the elbow, for instance—without even mentioning the arm, let alone the skeleton and musculature,” Drucker later recalled. By the time he began work on The Practice of Management, then, Drucker was, as he described it, “very conscious of the fact that I was laying the foundations of a discipline.” In 1959, Drucker coined the term “knowledge work,” foreshadowing a new economy in which brains would trump brawn.

1960s

Drucker received the Presidential Citation at NYU, the school’s highest honor. He published the classic The Effective Executive in 1966. (Forty-two years later the Kalima project, which aims to increase the choice of books available to readers in Arabic, would choose The Effective Executive as one of the first 100 titles it translated, along with The General Theory of Employment, Interest and Money by John Maynard Keynes, The Aeneid by Virgil and The Meaning of Relativity by Albert Einstein.) In 1968’s The Age of Discontinuity, Drucker wrote of a burgeoning phenomenon that, in hindsight, sounds an awful lot like internet culture: “The impact of cheap, reliable, fast, and universally available information will easily be as great as was the impact of electricity. Certainly, young people, a few years hence, will use information systems as their normal tools, much as they now use the typewriters of the telephone.

1970s

In 1973, Drucker authored his magnum opus, Management: Tasks, Responsibilities, Practices, which would become the playbook for generations of corporate executives, nonprofit managers and government leaders. Some have likened it to the Physicians’ Desk Reference for managers. In 1971, Drucker became the Marie Rankin Clarke Professor of Social Science and Management at what was then called the Claremont Graduate School. He also began a 20-year tenure as a monthly columnist for The Wall Street Journal.

1980s

The Claremont Graduate Center of Management was renamed the Peter F. Drucker Management Center in 1987. Drucker published eight new titles during the decade in addition to maintaining active teaching and consulting activities. In 1989, he produced The Nonprofit Drucker, a five-volume audio series featuring insights into the management of the social sector.

1990s

The Peter F. Drucker Foundation for Nonprofit Management (today called the Frances Hesselbein Leadership Institute) was established in 1990. Drucker delivered the prestigious Godkin Lecture at Harvard University in 1994. The Drucker Center became the Peter F. Drucker Graduate School of Management in 1997, and the Drucker Archives (a repository for Drucker’s manuscripts, letter and other material) was inaugurated in 1998. At the age of 87, Drucker was featured on the cover of Forbes under the headline: “Still the Youngest Mind.”

2000s

Drucker taught his last course in the spring of 2002, at the age of 93 (though he’d continue to lecture periodically for the next several years). That summer, he was awarded the Presidential Medal of Freedom, the nation’s highest civilian honor. President Bush called Drucker “the world’s foremost pioneer of management theory.” In 2005, the Drucker Graduate School of Management became the Peter F. Drucker and Masatoshi Ito Graduate School of Management.

Asked near the end of his life what he considered his most important contributions, Drucker replied:

• That I early on—almost sixty years ago—realized that management has become the constitutive organ and function of the Society of Organizations;

• That management is not a “Business Management” … but the governing organ of all institutions of Modern Society;

• That I established the study of management as a discipline in its own right; and

• That I focused this discipline on People and Power; on Values, Structure and Constitution; and above all on responsibilities—that is, focused the Discipline of Management on Management as a truly liberal art.

Drucker died on November 11, 2005, eight days shy of his ninety-sixth birthday. In 2006, the Drucker Archives became the Drucker Institute. Our mission is “strengthening organizations to strengthen society.”

Drucker as Consultant

In many cases, they were deceptively simple: Who is your customer? What have you stopped doing lately (so as to free up resources for the new and innovative)? What business are you in? For those who worked hard enough to puzzle out the answers, the experience could be truly profound. “If you weren’t already in this business,” Drucker asked Jack Welch when Welch became the CEO of General Electric, “would you enter it today? And if the answer is no, what are you going to do about it?” This led Welch to his pivotal strategy of fixing, selling or closing every business in which GE was not No. 1 or No. 2 in the market. Above all, Drucker pushed his clients to stop simply making plans and to start taking action. “Drucker purified my mind,” said Donald Keough, the former president of Coca-Cola. “He would tell me after each session, ‘Don’t tell me you had a wonderful meeting with me. Tell me what you are going to do on Monday that’s different.’”

Drucker’s imprint was broad, affecting companies across the world.

For instance, “Toyota operates exactly the way Drucker-san said a company ought to operate,” Atsuo Ueda, an expert in the automaker’s vaunted production system, has noted. But Drucker’s imprint was also deep, as Jim Collins observed when he and Jerry Porras were researching their book Built to Last: “The more we dug into the formative stages and inflection points of companies like General Electric, Johnson & Johnson, Procter & Gamble, Hewlett-Packard, Merck and Motorola, the more we saw Drucker’s intellectual fingerprints.” The difference: Unlike so many consultants, Drucker wrote and thought “with such exquisite clarity,” said Intel co-founder Andy Grove. That alone made him “a standout among a bunch of muddled fad mongers.”

Drucker as Teacher

He indulged a lot—lecturing on economics at Sarah Lawrence College beginning in 1939, teaching philosophy and politics at Bennington College from 1942 to 1949, serving as a management professor at New York University from 1949 to 1971, and holding the Marie Rankin Clarke Professorship of Social Science and Management at Claremont Graduate University from 1971 to 2002. Drucker gave his last lecture at CGU in spring 2005, not long before his death, at the age of 95.

Drucker as Writer

Sometimes, if he wanted to be provocative, he’d say that he was a “social ecologist,” observing our man-made environment the way a natural ecologist examines the biological world. Most of the time, though, he’d keep it simple: “I’m a writer.”

INTERVIEWER: If you describe your occupation, would it be ‘writer’?

DRUCKER: I always say I write.

INTERVIEWER: What, then, has inspired your books more than anything?

DRUCKER: The same thing that inspires tuberculosis. This is a serious, degenerative, compulsive disorder and addiction.

INTERVIEWER: An addiction to writing?

DRUCKER: To writing, yes.

Through some 10,000 book pages and countless articles, Drucker displayed incredible powers of observation—to “look out the window and see what’s visible but not yet seen,” as he put it. In fact, he discerned many of the major trends of the 20th century before almost anyone else did: the Hitler-Stalin pact, Japan’s impending rise to economic power, the shift from manufacturing to knowledge work, the increasing importance of the social sector, the fall of the Soviet Union. Above all, he wrote about the need for all of our institutions to flourish in order to have a functioning society. In this way, “probably no writer of the second half of the 20th century has had more influence for the good,” Jack Beatty, Drucker’s biographer, has asserted. Drucker wrote 39 books in all. They were mostly about management, economy, polity and society, but there were two novels among them.

Drucker and the
Social Sector

As the story goes, the concept was so counterintuitive that many readers thought the magazine had made a huge typo; surely, it had gotten things backwards. Anyone who was familiar with Drucker, however, knew that he believed in the power of the best nonprofits not only to be effective and highly impactful for the recipients of their services, but also to provide a much-needed sense of fulfillment for their volunteers. “Citizenship in and through the social sector is not a panacea for the ills of … society,” Drucker wrote, but it “restores the civic responsibility that is the mark of community.” Drucker advised the American Red Cross, the Salvation Army, the American Heart Association, the Girl Scouts of America and many others. In 1991, he created the Peter F. Drucker Award for Nonprofit Innovation, which remains among the Drucker Institute’s core programs.

Drucker as Guru

That was surely overstating things. But there is no doubt that they admired him. Tom Peters, the co-author of In Search of Excellence, called Drucker “the creator and inventor of modern management.” Harvard’s Rosabeth Moss Kanter once remarked that “Peter Drucker’s eyeglasses must contain crystal balls because he anticipated so many trends.” Michael Hammer, whose Reengineering the Corporation was the best-selling business book of the 1990s, commented: “I have had the privilege of sharing a podium with Peter Drucker; on such occasions, I felt as though I was playing back-up horn for the archangel Gabriel.” As for Drucker, he actually hated being called a “guru.” People used the word, he said, only because “charlatan” was too hard to spell.