Peter Ferdinand Drucker, the man who defined management, foresaw the future and told us all about it, says Ashwin Tombat.
Writer, teacher, consultant and guru to the gurus; the man who foresaw the future and told us all about it, Peter Drucker, died on Friday 11 November, a few days short of his 96th birthday, at his home in Claremont, California.
If this is the age of ideas, the influence has been Drucker's. In the business firmament, managers (from aspiring graduates to veteran corporate professionals that included the likes of Jack Welch) have uttered his name unconsciously more times than they may ever be able to recall. Drucker specialised in strategy and policy not just for business but also for social sector organisations, better known in India as NGOs. He worked with the world's largest corporations, NGOs, small entrepreneurial companies, and with governments.
He authored 31 books, which have been translated into more than 20 languages. While 13 books deal with society, economics, and politics; 15 deal with management. Two are novels, one is autobiographical, and he co-authored a book on Japanese painting. He also made four films based on his books. He was a columnist for a number of influential periodicals in the US.
Peter Ferdinand Drucker was born 19 November 1909 in Vienna, Austria. He worked as a financial reporter in Frankfurt, Germany, while he earned a doctoral degree in public and international law at Frankfurt University, which he received in 1931. The next year, he published an essay on a leading conservative philosopher that offended the Nazi government. His pamphlet was banned. Worried by the Nazis, Drucker moved to London and worked for a bank. In 1937, he moved to the United States, where he became a correspondent for several British newspapers.
His first book: The End of Economic Man: The Origins of Totalitarianism, published in 1939, was an examination of the roots of fascism. British prime minister Winston Churchill liked it, and made it compulsory reading for every new British officer. Guru he may have been, but Drucker's books were noted for their clarity and simplicity of thought. He studded them with unusual references - from Tang-dynasty China, seventh-century Byzantium to the 19th century novelist Jane Austen, his favourite writer.
Returning to academics, Drucker first taught part time at Sarah Lawrence College and then full time at Bennington College in Vermont. After the publication of his second book, The Future of Industrial Man in 1943, General Motors - then the world's largest company - invited him to study its corporate structure.
The book that emerged from the 30-month stint, The Concept of the Corporation in 1945, introduced a number of radical concepts that made management a subject of study and later created the field of consulting. But, apparently, GM wasn't pleased at first. Drucker is quoted as having said he was told that any manager found with a copy would be sacked.
The ideas in it, however, were path breaking. Along with The Practice of Management (1954) and The Effective Executive (1964) Drucker became essential reading in the world's leading business management schools. These early works argued that the corporation was the single most important institution in society and that management was one of the major social innovations of the century. Rather than being a machine, the modern corporation was an organisation of human beings whose interactions were crucial to its success. They also placed the customer at the very centre of the business equation, posing three questions now regarded as classics - What is our business? Who is our customer? What does our customer consider valuable?
Other notable books included: Management: Tasks, Responsibilities, Practices in 1974 and Managing in a Time of Great Change in 1995. In 2004, he wrote The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done. His 1979 autobiography was called Adventures of a Bystander.
Drucker called on management to regard workers not as a cost but as a resource. He predicted a company could earn bigger profits if it treated workers decently, paid them well, decentralised decision-making and delegated authority within the workplace. As a result, in due course, GM began providing healthcare and pension benefits that made its workforce one of the best rewarded in the world.
Later, of course, this caused its own problems. It was ironical that Drucker's long and distinguished life ended on the same day that GM and the United Auto Workers union formally ratified an agreement to cut the company's healthcare liabilities by $1 billion a year, as the company struggles to stay afloat citing unsustainable healthcare and pension costs.
His writings established Drucker as a 'futurist', a person who saw business and economic trends before anyone else. In the 1950s, he predicted that computers would play a major role in business. In the early 1960s he said that low overheads would eventually give Asia's developing economies - then principally Japan - a massive competitive edge over the West. Two decades later, he warned of Japan's impending economic stagnation. He also predicted the decline of trade unions and said the 'knowledge worker' would become fundamental to business success. In the 1990s, he warned of a backlash against outrageous executive salaries.
Drucker was the first to advocate that corporations hired too many people they didn't need. He said contracting out work - what's known now as 'outsourcing' - was smarter. In 1981, he said the best-run organisation in the United States was the Girl Scouts of America. He was one of the earliest votaries of privatisation, saying governments ought not to be producing goods or providing services at an unacceptably high cost to the taxpayer.
But one of the guru's mantras made almost no impression at all on his 'devotees'. Drucker believed the corporation demanded a community as well as a commercial purpose from those privileged enough to be part of management. He once said: "Although I believe in the free market, I have serious reservations about capitalism." His 1997 view that bosses should be paid no more than 20 times the salary of their lowest-paid employees found very few takers. But he persisted, saying, "In the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions."
Drucker prescribed that public and private organisations should operate ethically. He railed against managers who sought short cuts to 'success' by massively laying off employees to cut costs. "This is morally and socially unforgivable, and we will pay a heavy price for it," he predicted.
After the New York Stock Exchange crash of October 1987, Drucker said he had expected it. "Pigs gorging themselves at the trough are always a disgusting spectacle, and you know it won't last long," he said of Wall Street brokers, calling them 'a totally non-productive crowd which is out for a lot of easy money'. "The average duration of a soap bubble is known. It's about 26 seconds. Then the surface tension becomes too great and it begins to burst. For speculative crazes, it's about 18 months," he said, in a rare outburst.
Of course, he wasn't always right. Some academics criticised his approach, calling him 'popularist' for relying on anecdotes. Some others accused him of manipulating the facts to fit his views. But evidence of his influence is everywhere. In the world of management, Peter Drucker was the one guru to whom other gurus kowtowed. "When some people call me the father of marketing, I tell them that if this the case, then Peter Drucker is the grandfather of marketing," says Philip Kotler.
Drucker's extraordinary professional longevity took him from the rise of Hitler to the excesses of Enron. For more than 20 years, he was professor of management at the Graduate Business School of New York University. He moved to California in 1971, where he helped establish the Claremont Graduate University, the United States' first executive Masters of Business Administration program for working managers, since named after him. He taught at the school until 2002. His impact was felt even as far as communist China. The Beijing Corporate Management Institute was established in 1996, to study Drucker's ideas. He became the institute's chief advisor in 1999.
In his later years, Drucker dedicated much of his time to the social service sector, founding the New York-based Peter F Drucker Foundation for Nonprofit Management, known since 2003 as the Leader to Leader Institute. He has received honorary doctorates from universities around the world. President George W Bush awarded him the Presidential Medal of Freedom in 2002.
He is survived by his wife Doris, four children and six grandchildren.