Hitler: Drucker's first book, The End of Economic Man, was a study not of management but of totalitarianism. Living in Germany during Hitler's rise (two pamphlets he wrote--one praising a German-Jewish philosopher and one roundly condemning the National Socialists--were banned and burned by the Nazis), Drucker was achingly aware of the worst government and society could dish out. His later writing can be interpreted as a lifelong quest for functional, principled institutions.
Innovation: Thomas Edison would get no pushback from Drucker on his 1 percent inspiration-99-percent-perspiration formula. Drucker believed that innovation--"the specific function of entrepreneurship"--must be methodically ferreted out, and he posited seven likely places to find it: in unexpected occurrences, incongruities, process needs, new knowledge, demographics, perceptions, and changes in industries and markets. The crucial characteristic of innovators is focus. Even Thomas Edison, Drucker pointed out, "worked only in the electrical field."
Japan: The Japanese found much to love about Drucker in the 1960s, as industrial giants like Toyota embraced his theories on the primacy of employees and ideas about marketing--a comparably nascent discipline there. The admiration was mutual, with Drucker praising such Japanese practices as lifetime employment (though he later conceded the need for greater flexibility) and deliberative decision-making followed by quick action. Among Drucker's great passions was Japanese art, which he both collected and lectured on extensively.
Knowledge workers: The term "knowledge management" has that PC era smell. But almost 20 years before the founding of Microsoft, Drucker coined the term "knowledge worker" to describe the growing cadre of employees who labored with their brains rather than their hands. Drucker explained that knowledge workers require a new style of management that treats them more as volunteers or partners than as subordinates. He predicted correctly that the ability of leaders to motivate these founts of productivity--"the most valuable asset of a 21st century institution"--would become a cornerstone of competitive advantage.
Lifelong learning: Another Peter--Senge--popularized the concept of "learning organizations" in the 1980s. But learning organizations are predicated on learning individuals. Drucker called teaching people how to learn "the most pressing task" for managers, given the perpetual expansion of skills and knowledge that are products of the information economy. He personally eschewed the designation "guru"--which suggests one who counsels--casting himself rather as a student. True to form, Drucker every year assigned himself a topic about which he knew nothing and made it the subject of intense study.
Marketing: Drucker was born in 1909, the same year that Henry Ford famously declared, "Any customer can have a car painted any color that he wants so long as it is black." Drucker's theories of marketing--the "distinguishing, unique function of business"--amount to an extended refutation of that attitude. The aim of marketing, in Drucker's view, was to "know and understand the customer so well that the product or service fits him and sells itself." Innovation, which Drucker considered the other basic function of business, is responsible for the creation of those self-selling products.
Non-profits: What's better than a run on Thin Mints? Being declared the best-run organization in America by the world's preeminent business thinker. In 1981, Drucker bestowed that encomium on the Girl Scouts USA, one of many non-profits with which he worked closely over the years (others included the American Heart Association and The Salvation Army). Drucker was a passionate proponent of the social and economic importance of non-profits, which he deemed the "most distinguishing feature" of American society. He created a set of management principles specifically for that sector, and urged businesses to draw lessons in establishing a mission and motivating workers from the non-profit world.
Objectives: In the daily scrum of business, employees become so focused on what they're doing they forget why they're doing it. And off the rails they go. In The Process of Management (1954), Drucker called this "the activity trap" and proposed "management by objective" as a way to avoid it. With MBO, employees participate in setting goals and are then evaluated on how they fulfill those goals. Managers can focus on the "what" rather than the "how." "Management by objective works--if you know the objective," Drucker wrote. "Ninety percent of the time you don't."
Profitability: Drucker was all for profit--but not for profit maximization. He viewed healthy margins as a necessary condition for the social good of wealth creation. Yet profits are not the purpose of an organization but rather a constraint: not the reason to behave in a particular way but rather a test of whether the business is behaving appropriately. "If archangels instead of businessmen sat in the directors' chairs, they would still have to be concerned with profitability, despite their total lack of interest in making profits."
Questions: In effective organizations, employees know their roles. And Drucker was acutely aware of his. "My job is to ask questions," he once informed a consulting client, according to an article in Business Week. "It's your job to provide answers." In this Socratic style, Drucker inspired a generation of business leaders to wax introspective about their organizations. Any journey of self-exploration, he believed, should begin with five essential questions. "What is our mission? Who is our customer? What does the customer value? What are our results? What is our plan?"
