The Wisdom of Peter Drucker


Of all the management gurus, Peter Drucker is possibly the only one who made sense most of the time.  He developed management thinking that was sound and rigorous; and that is why his ideas are practiced the world over even today.

Let’s look at some of the ideas he propounded:

  • Decentralisation and simplification. He believed that companies worked best when they were decentralised. He also felt that companies tended to produce too many products, hired employees they didn’t really need (outsourcing would be a better option) and expanded into sectors that they should have avoided.
  • The concept of the “knowledge worker”. He introduced this concept in 1959; since then, knowledge-based work has become increasingly important in businesses worldwide.
  • The concept of what eventually came to be known as “outsourcing”. He used the example of “front room” and “back room” of each business: A company should be engaged in only the front room activities that are critical to supporting its core business. Back room activities should be handed over to other companies, for whom these tasks are the front room activities.
  • The importance of the non-profit sector, which he called the third sector (private sector and the Government sector being the first two). Today, NGOs play a crucial role in the economies of countries around the world.
  • Respect for the worker. Drucker believed that employees are assets not liabilities. He taught that knowledgeable workers are the essential ingredients of the modern economy, and that a hybrid management model is the sole method of demonstrating an employee’s value to the organization. Central to this philosophy is the view that people are an organization’s most valuable resource, and that a manager’s job is both to prepare people to perform and give them freedom to do so.
  • The need for “planned abandonment.” Businesses and governments have a natural human tendency to cling to “yesterday’s successes” rather than seeing when they are no longer useful.
  • A belief that taking action without thinking is the cause of every failure.
  • The need to manage business by balancing a variety of needs and goals, rather than subordinating an institution to a single value. This concept of management by objectives formed the keynote of his 1954 landmark The Practice of Management.
  • A company’s primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company’s continued existence and sustainability.

Here are some quotes from the great man that should have a profound impact on you:

  • “Doing the right thing is more important than doing the thing right.”
  • “If you want something new, you have to stop doing something old.”
  • “There is nothing quite so useless as doing with great efficiency something that should not be done at all.”
  • “The most important thing in communication is to hear what isn’t being said.”
  • “What gets measured gets improved.”
  • “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.”
  • “Results are gained by exploiting opportunities, not by solving problems.”
  • “Business has only two basic functions-marketing and innovation.”
  • “So much of what we call management consists of making it difficult for people to work.”
  • “The best way to predict the future is to create it.”
  • “The only thing we know about the future is that it will be different.”
  • “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.”
  • “People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”
  • “Efficiency is doing things right; effectiveness is doing the right things.”
  • “People in any organization are always attached to the obsolete – the things that should have worked but did not, the things that once were productive and no longer are.”
  • “Meetings are by definition a concession to a deficient organization. For one either meets or one works. One cannot do both at the same time.”
  • “Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you’ve got.”
  • “Long-range planning does not deal with the future decisions, but with the future of present decisions.”
  • “Whenever you see a successful business, someone once made a courageous decision.”
  • “Management is doing things right. Leadership is doing the right things.”
  • “No one learns as much about a subject as one who is forced to teach it.”
  • “My greatest strength as a consultant is to be ignorant and ask a few questions.”
  • “The three most charismatic leaders in this century inflicted more suffering on the human race than almost any trio in history: Hitler, Stalin, and Mao. What matters is not the leader’s charisma. What matters is the leader’s mission.”

Drucker wrote some 40 books and it is difficult to figure out which ones to read. My recommendation would be to read ‘The Essential Drucker’ which is a collection of some of his best writings.

An excellent introduction to Drucker’s thinking is his paper ‘Will the Corporation Survive’ that was published in The Economist in November 2001.  You can read this piece here.


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This article was written by Subhash

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