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The Wisdom of Peter Drucker from A to Z

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.

The Drucker Institute, Claremont Graduate University

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."