The Hindu Business Line : The grand old man of management

THE passing of Peter Ferdinand Drucker, the grand old man of management and internationally renowned management philosopher, eight days short of his 96th birthday, will be mourned all over the world. Hyperbole and eulogy, the common in obituaries, in this case are richly deserved because of the extraordinary volume and variety of his achievement. He founded the concept of a `theory of the business' and defined the very purpose of a business as creating a satisfied customer. He drew attention to the overwhelming importance of marketing orientation. He recognised only two unique roles for leaders — innovation and strategy. His insights always made you wonder why others had missed something so obvious. For example, marketing creates revenues while everything else adds costs.

This seemingly simple statement has far-reaching implications. Because marketing creates revenues directly you cannot treat it the same way as material costs, which fact is still an eye-opener to some accountants and CEOs.

A fundamental generalisation we can make about Drucker and his rich career spanning over 75 years is that he defied the American stereotype, and was by no means the usual business school professor.

Austrian by birth, Peter Drucker remained European in values, culture and world view despite living in America for over six decades. He firmly believed that managing was a liberal art and ought to be taught as part of humanities, taking into account not only economics, but also history, social theory, law, and the sciences. Commitment to this integrating vision and cross-disciplinary study inspires the university and the business school named after him, in California, which he made his home since 1971.

Management thus was not to be confused with an exact science with emphasis on number crunching research in which the average student and teacher are so apt to indulge. So different was this view from the prevailing wisdom that even to this day, Drucker has not been accorded a top drawer slot in typical MBA courses alongside the likes of Porter, Samuelson and Kotler. His own family background was largely responsible for the kind of intellectual capacity and interests — ranging from political philosophy and macro-economics, to sociology, environment, international law, and journalism on to organisational structures and culture and of course the art of managing.

For Drucker the polymath, the true test of management learning was its applicability. Similarly, the test of business was its relevance to the larger purposes of society. This approach is, with a few exceptions, still rather rare on campuses.

To understand Drucker in depth, one must remember that he grew up in the rich intellectual and artistic milieu of Vienna between the wars. Born in 1909, Drucker was educated in Vienna and England, doing his doctorate in public and international law, while working for a German newspaper as a reporter. He worked as an economist for an international bank in London before fleeing the rising bigotry and the ascendancy of the Nazis, driving thousands of intellectuals like himself and his wife across the ocean. Coming to the US in 1937, he began his teaching career as a professor of politics and philosophy at Bennington College. The failure of markets and the limitations of unbridled `greed is good' society too were fresh in Drucker's mind all his life.

Dean Kees de Kluyver of the Peter F. Drucker and Masatoshi Ito Graduate School of Management observes that Drucker differed from others in going beyond mere managerial efficiency, to how public and private organisations operate morally and ethically within society. "His true legacy is his insistence on this value system, and its effect on business, society, and individual lives." Peter Drucker arrived in Claremont in 1971. His groundbreaking work turned modern management theory into a serious discipline.

As Intel co-founder, Mr Andrew Grove, said Drucker writes and thinks with exquisite clarity among a bunch of muddled fad-mongers. One treasures his pithy definitions. My favourite is one about how to decide whether to outsource a function. You can outsource a job, if the job-holder will have a better natural career progression outside the firm. Think of a company lawyer or doctor). Here are some more:

"Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Accept the fact that we have to treat almost anybody as a volunteer.

Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you've got.

Management by objective works — if you know the objectives. Ninety per cent of the time you don't.

Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands."

Try putting all of that simpler!

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Long-distance bonanza

For a win-win business plan

Infrastructure investments — Not needed, yet another financing entity

The Volcker inquiry saga

Turning to faith to find the missing daughters

Peter Drucker

The grand old man of management

Perils of parallel processing

Ombudsman Scheme

Fuel efficiency