Early influences Among Drucker's early influences was the Austrian economist
Joseph Schumpeter, a friend of his father's, who impressed upon Drucker the idea of the importance of innovation and entrepreneurship. Drucker was also influenced, in a much different way, by
John Maynard Keynes, whom he heard lecture in 1934 in
Cambridge. "I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behavior of commodities", Drucker wrote, "while I was interested in the behavior of people". Ultimately, his work drew from pioneering management consultant Mary Parker Follett. Over the next 70 years, Drucker's writings would be marked by a focus on relationships among human beings, as opposed to the crunching of numbers. His books were filled with lessons on how organizations can bring out the best in people, and how workers can find a sense of community and dignity in a modern society organized around large institutions. As a young writer, Drucker wrote two pieces – one on the conservative German philosopher
Friedrich Julius Stahl and another called "
The Jewish Question in Germany" – that were burned and banned by the
Nazis.
The "business thinker" Drucker's career as a business thinker took off in 1942, when his initial writings on politics and society won him access to the internal workings of
General Motors (GM), one of the largest companies in the world at that time. His experiences in Europe had left him fascinated with the problem of authority. He shared his fascination with
Donaldson Brown, the mastermind behind the administrative controls at GM. In 1943 Brown invited him in to conduct what might be called a "political audit": a two-year social-scientific analysis of the corporation. Drucker attended every board meeting, interviewed employees, and analyzed production and decision-making processes. The resulting book,
Concept of the Corporation, popularized GM's
multidivisional structure and led to numerous articles, consulting engagements, and additional books. GM, however, was hardly thrilled with the final product. Drucker had suggested that the auto giant might want to re-examine a host of long-standing policies on customer relations, dealer relations, employee relations and more. Inside the corporation, Drucker's counsel was viewed as hypercritical. GM's revered chairman,
Alfred Sloan, was so upset about the book that he "simply treated it as if it did not exist," Drucker later recalled, "never mentioning it and never allowing it to be mentioned in his presence." Drucker taught that management is "a liberal art", and he infused his management advice with
interdisciplinary lessons from history, sociology, psychology, philosophy, culture and religion. Drucker was intrigued by employees who knew more about certain subjects than their bosses or colleagues, and yet had to cooperate with others in a large organization. Rather than simply glorify the phenomenon as the epitome of human progress, Drucker analyzed it, and explained how it challenged the common thinking about how organizations should be run. His approach worked well in the increasingly mature business world of the second half of the twentieth century. By that time large corporations had developed the basic manufacturing efficiencies and managerial hierarchies of
mass production. Executives thought they knew how to run companies, and Drucker took it upon himself to poke holes in their beliefs, lest organizations become stale. But he did so in a sympathetic way. He assumed that his readers were intelligent, rational, hardworking people of goodwill. If their organizations struggled, he believed it was usually because of outdated ideas, a narrow conception of problems, or internal misunderstandings. Drucker developed an extensive consulting business built around his personal relationship with top management. He became legendary among many of post-war Japan's new business leaders trying to rebuild their war-torn homeland. He advised the heads of
General Motors,
Sears,
General Electric,
W.R. Grace and
IBM, among many others. Over time he offered his management advice to nonprofits like the
American Red Cross and the
Salvation Army. His advice was eagerly sought by the senior executives of the
Adela Investment Company, a private initiative of the world's multinational corporations to promote investment in the developing countries of
Latin America.
Writings Drucker's 39 books have been translated into more than thirty-six languages. Two are novels, and one –
Adventures of a Bystander (1978) – is an
autobiography. He is the co-author of a book on
Japanese painting, and made eight series of educational films on management topics. He also penned a regular column in the
Wall Street Journal for 10 years and contributed frequently to the
Harvard Business Review,
The Atlantic Monthly, and
The Economist. His work is especially
popular in Japan, even more so after the publication of "
What If the Female Manager of a High-School Baseball Team Read Drucker's Management", a novel that features the main character using one of his books to great effect, which was also adapted into an anime and a
live action film. His popularity in Japan may be compared with that of his contemporary
W. Edwards Deming.
Key ideas •
Decentralization and simplification. Drucker discounted the
command and control model and asserted that companies work best when they are decentralized. According to Drucker, corporations tend to
produce too many products, hire employees they don't need (when a better solution would be
outsourcing), and expand into economic sectors that they should avoid. • The prediction of the decline and marginalization of the "
blue collar" worker. • The concept of what eventually came to be known as "
outsourcing". He used the example of "front room" and "back room" of each business: a company should be engaged in only the front room activities that are critical to supporting its
core business. Back room activities should be handed over to other companies, for whom these tasks are the front room activities. • The importance of the nonprofit sector, which he calls the third sector (the private and government sectors being the first two). Non-Governmental Organizations (NGOs) play crucial roles in the economies of countries around the world. • A profound skepticism of
macroeconomic theory. Drucker contended that economists of all schools fail to explain significant aspects of modern economies. • A lament that the sole focus of microeconomics is
price. Drucker noted that microeconomics fails to show what products actually do for us, thereby stimulating commercial interest in how to calculate what products actually do for us from their price. • Economic chain costing: the idea that a competitive company needs to know the costs of its entire economic chain, not simply the costs for which it is responsible as an individual business within that chain. "What matters ... is the economic reality, the costs of the entire [production] process, regardless of who owns what." •
Respect for the worker: Drucker believed that employees are assets, not liabilities. He taught that knowledgeable workers are the essential ingredients of the modern economy, and that a hybrid management model is the sole method of demonstrating an employee's value to the organization. Central to this philosophy is the view that people are an organization's most valuable resource, and that a manager's job is both to prepare people to perform and to give them freedom to do so. • A belief in what he called "the sickness of government". Drucker made nonpartisan claims that government is often unable or unwilling to provide new services that people need and/or want, though he believed that this condition is not intrinsic to the form of government. The chapter "The Sickness of Government", in his book
The Age of Discontinuity, formed the basis of
New Public Management, a theory of public administration that dominated the discipline in the 1980s and 1990s. • The need for "planned
abandonment". Businesses and governments have a
natural human tendency to cling to "yesterday's successes" rather than seeing when they are no longer useful. • A belief that taking action without thinking is the cause of every failure. • The
need for community. Early in his career, Drucker predicted the "end of economic man" and advocated the creation of a "plant community", where an individual's social needs could be met. He later acknowledged that the plant community never materialized, and by the 1980s, suggested that volunteering in the nonprofit sector was the key to fostering a healthy society where people found a sense of belonging and civic pride. • The need to manage business by balancing a variety of needs and goals, rather than subordinating an institution to a single value. This concept of
management by objectives and self-control forms the keynote of his 1954 landmark
The Practice of Management. • A company's primary responsibility is to
serve its customers.
Profit is not the primary goal, but rather an essential condition for the company's continued existence and
sustainability. • A belief in the notion that great companies could stand among mankind's noblest inventions. • "Do what you do best and outsource the rest" is a business tagline first "coined and developed" in the 1990s by Drucker. The slogan was used primarily to advocate outsourcing as a viable business strategy. Drucker began explaining the concept of outsourcing as early as 1989 in his Wall Street Journal (WSJ) article entitled "Sell the Mailroom." == Criticism ==