Trusting the teacher in the grey-flannel suit
Peter Drucker: the one management thinker every educated person should read
From The Economist print edition
On November 11th, a few days short of his 96th birthday, Peter Drucker died. The most important management thinker of the past century, he wrote about 40 books (the last, “The Effective Executive in Action” will be published in January) and thousands of articles. He was a guru to the world’s corporate elite, not just in his native Europe and his adoptive America, but also in Japan and the developing world (one devoted South Korean businessman even changed his first name to Mr Drucker). And he never rested in his mission to persuade the world that management matters—that, in his own rather portentous formula, “Management is the organ of institutions…the organ that converts a mob into an organisation, and human efforts into performance.”
Did he succeed? The range of his influence was extraordinary. George Bush is a devotee of Mr Drucker’s idea of “management by objectives”. (“I had read Peter Drucker,” Karl Rove once told the Atlantic Monthly, “but I’d never seen Drucker until I saw Bush in action.”) Newt Gingrich mentions him in almost every speech. Mr Drucker helped to inspire privatisation—an idea that in the 1980s galvanised Britain’s sclerotic economy.
He changed the course of thousands of businesses. He spawned two huge revolutions at General Electric—first when GE followed the radical decentralisation he preached in the 1950s, and again in the 1980s when Jack Welch rebuilt the company around Mr Drucker’s belief that it should be first or second in a line of business, or else get out. Yet Mr Drucker is also cited as a muse by both the Salvation Army and the modern mega-church movement. Wherever people grapple with tricky management problems, from big organisations to small ones, from the public sector to the private, and increasingly in the voluntary sector, you can find Mr Drucker’s fingerprints.
This is not to say that Mr Drucker was invariably right—or even always sensible. He was given to making sweeping statements that sometimes turned out to be nonsense. He argued, for example, that the great American research universities are “failures” that would soon become “relics”—odd for a man who made so much of the knowledge economy. He was slow to shift his attention from big firms to entrepreneurial start-ups. But he was much more often right than wrong. And even when he was wrong he had a way of being thought-provoking.
The man who became famous as an American management thinker was really a Viennese Jewish intellectual. The author of this article once visited him in his home in Claremont, California—a modest affair when set beside the mansions of most management gurus. His choice of a restaurant for lunch was more modest still. But as Mr Drucker talked it was easy to forget about the giant plastic wagon wheels that decorated the walls or even the execrable food. He talked with his deep, heavy Teutonic accent about meeting Sigmund Freud (as a boy), John Maynard Keynes and Ludwig Wittgenstein (as a student at Cambridge). He said that he liked to keep his mind fresh by taking up a new subject every three or four years (he was heavily immersed in early medieval Paris at the time). The overall effect was rather like listening to Isaiah Berlin channelled by Henry Kissinger.
Mr Drucker was born in 1909 in the Austrian upper middle class—his father was a government official—and educated in Vienna and Germany. He earned a doctorate in international and public law from Frankfurt university in 1931. In normal times this would have led to a distinguished, if predictable, academic career. But those were not normal times—and Mr Drucker was not a man to bow down to the confines of academic disciplines. He spent his 20s trying to avoid Adolf Hitler and drifting among a number of jobs, including banking, consultancy, academic law and journalism (his journalistic career included a spell as the acting editor of a women’s page).
Along the way, he became increasingly convinced that the best hope for saving civilisation from barbarism lay in the humdrum science of management. He was too sensitive to the thinness of the crust of civilisation to share the classic liberal faith in the market, but too clear-sighted to embrace the growing fashion for big-government solutions. The man in the grey-flannel suit held out more hope for mankind than either the hidden hand or the gentleman in Whitehall.
He finally found a home in American academia, teaching politics, philosophy and economics. But it was not exactly a happy home. His first two books—“The End of Economic Man” (1939) and “The Future of Industrial Man” (1942)—had their admirers, including Winston Churchill, but they annoyed academic critics by ranging so widely over so many different subjects. This might have sealed his fate as just another discontented academic maverick. But “The Future of Industrial Man” attracted the attention of General Motors—then the world’s biggest company—with its passionate insistence that companies had a social dimension as well as an economic purpose.
The car company invited Mr Drucker to paint its portrait—and offered him unique access to GMers from Alfred Sloan down. The resulting book—“The Concept of the Corporation”—changed the young man’s life. The book not only became an instant bestseller, in Japan as well as in America, remaining in print ever since. It also helped to create a management fashion for decentralisation. By the 1980s, about three-quarters of American companies had adopted a decentralised model. Mr Drucker later boasted that the book “had an immediate impact on American business, on public service institutions, on government agencies—and none on General Motors.” Mr Drucker the management guru had been born.