PETER Drucker, who died last week just before his 95th birthday, once said that the 20th century would have been impossible without management. It was a typical Druckerism: no one before him would have conceived of management in such large, even flamboyant, terms – and in doing so he helped to make it come true, with all that that means in terms of both good and ill.
As he proclaimed himself (he was never one to hide his light under a bushel), Drucker was the first to identify management as a distinct function and managing as distinct work with its own responsibilities. In Concept of the Corporation (1946), an analysis of General Motors, he put forward a seminal view of the company as not just an economic but a social entity (GM, in the middle of a bitter 113-day strike, hated it and tried to have it suppressed).
He also claims to have given currency to such now-familiar terms as ‘post-modern’, ‘privatisation’ and ‘knowledge work’. He predicted a time when companies would be owned by employees’ pension funds (‘pension-fund socialism’), wrote presciently of corporate responsibility long before it became a fashion, and was way ahead of the field in picking up the importance of not-for-profit organisations (the focus of his eponymous Foundation, set up in the 1990s).
For all these things he is unreservedly lauded. At Judge Business School in Cambridge, Charles Hampden-Turner, a seasoned international observer, notes that he was a guru before there were such things and his work as a consultant pre-dated academic striving for ‘relevance’. ‘He got there long before anyone else – the work he did half a century ago is remarkable,’ he maintains.
Charles Handy is another admirer. ‘Drucker was the great conceptualiser,’ he says. ‘Management research looks backward he was able to look forward. He had the gift of seeing the future in the present and showing us what it was.’
Part of Drucker’s authority derived from his experience and the extraordinary range of his reference, uncommon in business. Born in Vienna, where his family knew Sigmund Freud and the great economist Joseph Schumpeter, Drucker as a student interviewed Hitler before being forced to emigrate from Frankfurt, where he was by then working, after he had a publication burned by the Nazis. Together with his great cultural and historical erudition, this experience provided a unique framework for his ideas on management.
Management, as Drucker saw it, was a ‘liberal art’. Of course, profit – a tax on the present to provide for the future – and the disciplines to make it were absolutely necessary. But profit did not justify itself: ‘Free enterprise,’ he wrote in The Practice of Management (1954), ‘cannot be justified as being good for business. It can be justified only as being good for society.’
For Drucker, the heart of management was people – orchestrating individual effort so that it became more than the sum of its parts, amplifying strengths and neutralising weaknesses. Management was thus the dynamic, lifegiving part of business but more than that, it had a stewardship role, as protector of institutions from ‘the dark forces that lurk just beneath the thin veneer of civilisation that we had thought to have repaired during and after World War Two’.
There is some irony here. On the one hand, Drucker is venerated by his peers and regularly tops the poll in surveys of the most respected management thinkers. ‘Drucker comes in head and shoulders above everyone else,’ says Des Dearlove, of Suntop Media, producer of ‘Thinkers 50’. ‘In a fad-driven industry, that’s a remarkable achievement.’ On the other hand, never have his views about business been less fashionable.
Although a professor of management for half a century, Drucker was never a conventional business academic, and his brand of ideas-based rather than research-based scholarship – what the late Sumantra Ghoshal termed ‘the scholarship of common sense’ – was increasingly edged out of the mainstream as business schools tried to turn management into a science.
Drucker himself was aware of this, and made no secret of his disapproval. ‘I am not a fan of business education in its present form,’ he observed in 1999. ‘Management education has focused far too much on (a) being academically respectable, which means forgetting that management is a practice, not a science, and (b) believing quantification is management.’
He admitted being ‘appalled – and rather scared – by the greed of today’s executives’. ‘I have said frequently that it is both obscene and socially destructive for chief executives to get a $20m bonus for firing 10,000 workers,’ he said. ‘And I am not impressed by the way many businesses – including old friends and clients of mine – are being managed.’
But this too is part of Drucker’s complicated legacy. Among his other firsts, he invented not only the importance of management but also, perhaps inevitably, the importance of managers – with less favourable consequences. As Chris Grey of Judge Business School points out, Drucker was uniquely of his time and place, and when in the 1950s and 1960s he held up to corporate managers the flattering mirror of themselves as new cultural and economic heroes, they were dazzled by what they saw.
That they revelled in the image, but progressively trivialised before abandoning the humanist substance that Drucker had erected to carry it, was not his fault, but it was deeply wounding. There is similar ambivalence around management by objectives – perhaps his most famous management prescription. While many admire the negotiating of individual and corporate aspirations that were characteristic of his original version, others believe that with hindsight it was the first step on the road to the crude regimes of rigid imposed targets and quantification that he hated and that dishonour so much management today.
Drucker, says Henry Mintzberg of McGill University, was indeed ‘the father of modern management, with everything that that entails. His contribution was phenomenal. He was also a wonderfully warm and engaging human being.’ As Mintzberg suggests, the contribution and the humanity go together. If managers are to make sense of their difficult inheritance, they will need the latter attributes just as much as the business insights and wisdom of the founding pioneer.
The Observer, 20 November 2005