Management Visionary Peter Drucker Dies
Saturday, November 12, 2005
Peter F. Drucker, 95, who was often called the world's most influential business guru and whose thinking transformed corporate management in the latter half of the 20th century, died Nov. 11 at his home in Claremont, Calif. No cause of death was reported, but he was under hospice care. His work influenced Winston Churchill, Bill Gates, Jack Welch and the Japanese business establishment. His more than three dozen books, written over 66 years and translated into 30 languages, also delivered his philosophy to newly promoted managers just out of the office cubicle.
Mr. Drucker pioneered the idea of privatization and the corporation as a social institution. He coined the terms "knowledge workers" and "management by objectives." His seminal study of General Motors in 1945 introduced the concept of decentralization as a principle of organization, in contrast to the practice of command and control in business.
"There is only one valid definition of business purpose: to create a customer," he said 45 years ago. Central to his philosophy was the belief that highly skilled people are an organization's most valuable resource and that a manager's job is to prepare and free people to perform. Good management can bring economic progress and social harmony, he said, adding that "although I believe in the free market, I have serious reservations about capitalism."
It was a typical remark for a man who believed in the empowerment of workers and the futility of big government, which he called "obese, muscle-bound and senile."
The most effective president, he told Forbes magazine 11 months ago, was Harry Truman, because "everybody who worked for him worshiped him because he was absolutely trustworthy." Ronald Reagan took second place: "His great strength was not charisma, as is commonly thought, but his awareness and acceptance of exactly what he could do and what he could not do."
Mr. Drucker's extraordinary professional longevity took him from the rise of Hitler to the excesses of Enron. The Austrian native wrote for a mass business audience, but he studded his books with unusual references -- from Tang-dynasty China to seventh-century Byzantium to his heroine, novelist Jane Austen. In 1981, he said the best-run organization in the United States was the Girl Scouts of America.
Peter Ferdinand Drucker was born Nov. 19, 1909 in Vienna. He worked as a financial reporter in Frankfurt, Germany, while he earned a doctoral degree in public and international law at Frankfurt University. He received his doctorate in 1931. The next year, he published an essay on a leading conservative philosopher that offended the Nazi government; his pamphlet was banned and burned. Mr. Drucker, increasingly worried by the Nazis, moved to London, where he worked for a merchant bank. In 1937, he moved to the United States and began working as a correspondent for several British newspapers.
His first book, "The End of Economic Man: The Origins of Totalitarianism" (1939), was favorably reviewed by Churchill, and it was made required reading for every new British officer.
Mr. Drucker taught part time at Sarah Lawrence College and then full time at Bennington College in Vermont. After publication of his second book, "The Future of Industrial Man" (1943), General Motors Corp. invited him to study GM's corporate structure. The two-year study put him in close contact with GM's legendary patriarch Alfred P. Sloan.
The book that resulted, "The Concept of the Corporation" (1945), introduced the ideas of decentralizing decision-making and managing for the long-term by setting a series of short-term objectives. It was an immediate bestseller, although GM wasn't pleased initially; Mr. Drucker said he was told that a manager found with a copy would be fired.
The ideas in it, however, launched the field of management and essentially created the field of consulting. He became professor of management in the graduate business school at New York University in 1950, and four years later, he published "The Practice of Management," which argued that management was one of the major social innovations of the century and posed three now-classic business questions: What is our business? Who is our customer? What does our customer consider valuable?
In the early 1950s, when other business leaders figured the worldwide market for computers was in the single digits, he predicted that computer technology would thoroughly transform business. In 1961, he alerted his followers to the rise of Japan as an industrial power, and two decades later, he warned of its impending economic stagnation. In 1997, he predicted a backlash to burgeoning executive pay, saying, "In the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions."
Mr. Drucker demanded that public and private organizations operate ethically and decried managers who reap bonuses by laying off employees. "This is morally and socially unforgivable, and we will pay a heavy price for it," he said.
He wasn't always right, and academics disdained his popular approach, criticizing him for relying on anecdotes and accusing him of manipulating facts to fit his positions. But evidence of his influence is found in just how ordinary his insights now seem: A company should streamline bureaucracy. Managers should look for more efficient models for organizing work. Results are obtained by exploiting opportunities, not solving problems.
In 1971, Mr. Drucker moved to California, where he helped develop the country's first executive master's of business administration program for working professionals at Claremont Graduate University. Its management school, where he taught until 2002, is named after him.
"In the world of management gurus, however, there is no debate. Peter Drucker is the one guru to whom other gurus kowtow," said the McKinsley Quarterly in 1996.
Among Drucker's many honors, President George W. Bush awarded him the Presidential Medal of Freedom in 2002.
Survivors include his wife, Doris Drucker of Claremont, Calif.; four children; and six grandchildren.