On re-reading Peter Drucker

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by Simon Caulkin

When I first read PD in the 1970s, I didn’t really get him. The volumes dropping on my desk – Post-Capitalist Society, The New Realities, or, bafflingly, Landmarks of Tomorrow – appeared to have little bearing on management, and some of his famous one-liners seemed to me both obvious and obscure.‘The purpose of a business is to create and keep a customer’. ‘Management is doing things right; leadership is doing the right things.’ ‘Management and managers are the … constitutive organ of society’. What did these even mean?

I should have paid more attention to his titles. They are the clue to Drucker’s significance, and the reason why it is not an exaggeration to say that the first ‘Day of Drucker’ on 30 June is an event of historic importance. The day is not about paying homage to the ‘father of management’ – a title that like his sayings is both true and only a tiny part of the whole. It is about facing up to our unique and sometimes uncomfortable responsibilities in a time that is nearly as perilous as that in which Drucker grew up in 1930s Vienna – and informs everything he wrote.

A Day of Drucker 2021

Re-reading Drucker today, the paradox hits you on the head with the force of a flying mallet. The reason Drucker stands apart from nearly all other management writers is that he wasn’t primarily interested in management.  ‘Management was neither my first nor has it been my foremost concern. I only became interested in it because of my work on community and society’, he wrote later. And counterintuitive as it seems, that is precisely why his view of management is so urgently relevant to now.

For Drucker, the reason management matters is so simple and fundamental it usually goes unnoticed. Management is a means to an end, not an end in itself. That end is a free and functioning society, which – as was evident to an enquiring young European starting his career under the shadow of totalitarianism – can’t exist in the absence of thriving independently-run organisations and institutions. They in turn depend on good management. The only alternative to bad management is a command economy (‘at least they make the trains run on time’). That is what he meant by management being ‘constitutive’: ‘Performing, responsible management is the alternative to tyranny and our only protection against it.’

Everything else follows from this. For Drucker, management is a moral profession, with a duty primum non nocere, first to do no harm. Companies are part of society and therefore have a direct stake in its health; too systemically important to be under the sway of any single stakeholder, they and their managers have a non-negotiable obligation to put the resources society allots them to productive and effective use. Profit is a test of their effectiveness – and, critically, the essential down payment on the cost of the future jobs and products they will provide.

On the other hand, although absolutely essential (and he fiercely criticised managers for failing to explain why this was so), profit is no more a company’s purpose than a human’s is to breathe. Already in the 1980s, Drucker was alarmed to see managers and capitalism being carried away by the blind pursuit of money and profit. He hated managers benefiting directly from laying people off. Capitalism could not be an end goal in itself: ‘Free enterprise cannot be justified as being good for business. It can only be justified as being good for society,’ he wrote in The Practice of Management, as early as 1954.

You don’t have to agree with everything Drucker said to see many further resonances with today. He would have recognised the super-spreading surveillance business model for what it is, the business equivalent of Covid and perhaps the clearest and most present threat to society. He’d have been contemptuous of assertions by ideologues that the warp-speed delivery of Covid vaccines was due to ‘greed’ and ‘capitalism’. On the contrary, he would have described it as a too-rare case of his ‘society of institutions’ working as it should, a joint effort by government, public and private sector united behind a single purpose – and as such a blueprint for much needed institutional innovation ahead.

Covid is an existential moment for management, amplifying existing challenges at the same time as it opens up a tantalising vision of a different future. The last half century has been fundamentally hostile to Drucker’s idea of management as a central organ of free society, privileging instead the ‘business of business of business is business’ model, based on the economists’ stunted axiom of human self interest. In 1962, Milton Friedman, one of the latter’s chief progenitors, wrote that ‘Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable’.

Well, the boot is now on the other foot. As the neo-liberal ‘Washington consensus’ gives way to what the FT after the recent G7 summit in the UK refers to as a more inclusive, resilient and planet-aware ‘Cornish consensus’, the alternative ideas ‘lying around’ are those of Peter Drucker. Whether they concern the entrepreneurial society, the institutional infrastructure or the management of individual organisations, they are a perfect fit for the job to be done. That is why the Day of Drucker is important – not as a cause for celebration but as a practical start to the managerial heavy lifting that will be needed to bring the ‘new realities’ and ‘post-capitalist society’ of Drucker’s titles into being. To misquote him only slightly, warm words, like plans, are useless ‘unless it all immediately degenerates into hard work’.

About the Author:
Simon Caulkin is senior editor for the Drucker Forum.

This article is one in the “shape the debate” series relating to A Day of Drucker on June 30, 2021.

4 comments

  1. Saw and meet Mr. Drucker in Aspen at a conference. He was, of course, most impressive in the late 70’s.His book on Management was my bible and eventually gave it to a grandson.

  2. Absolutely outstanding and a light to guide us for the future!
    I plan to attend the Day of Drucker and value the great work of the Institute. I had the privilege in the 80’s to attend his lecture series in Pasadena on the Knowledge Worker, which is so relevant to today’s economy and workforce, and had the privilege of applying a number of his principles in both business environments AND with the University of LaVerne, as Sr. Adjunct Professor.
    His insightful “balanced” view of management, and their impact on organizations, is so helpful in giving us a roadmap as we lead organizations into an unknown future with stakeholder capitalism and shared prosperity for all.

  3. Great article, thank you!

    Please fix the “business of business of business is business” quote to the (I believe?) accurate “business of business is business” quote – I spent some time trying to find the difference between the two and the dearth of mentions of “business of business of business is business,” as well as given the original quote being by the same person as the 4xbusiness quote, leads me to believe that was mistaken.

  4. Your article’s substance piques my attention, and I’m pleased by your work. I’m hoping for more excellent blogs in the future.

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