The Impact of Peter Drucker on Management Theory

Jamie Johnson

in Tallyfy Project Management

Peter Drucker is an author, teacher, and consultant who is well-known in the business world. He is often referred to as the Father of Modern Management and is known for his high standards and genuine desire to help others grow.

Business, that’s easily defined – it’s other people’s money. Peter Drucker

His people-centered approach to business management became the foundation of both his writing and his consulting practice. He believed that management has an obligation to people that goes far beyond just meeting the bottom line. Peter Drucker taught that the most durable organizations were the ones who developed individuals both intellectually and morally.

Peter Drucker believed in the guiding principles of ethics and morals in business. This article will look at the history that shaped many of Peter Drucker’s beliefs, his contributions to management theory, and how he helped businesses by asking them the five most important questions.

The History of Peter Drucker

Peter Drucker was born in Vienna in 1909. He lived through World War I and witnessed the fear and destruction people lived with on a daily basis. This had a profound impact on his life and future career. He studied law at Frankfurt University, where he began writing for the city newspaper, Der Frankfurter General-Anzeiger. During this time he received his Ph.D. in international law.

Drucker realized the danger of being a person of Jewish descent in such a prominent position in Germany. Because of this, he left to go to England in 1933 where he worked in investment banking before coming to the United States. After emigrating to the United States he became a became a writer, a teacher, and began consulting with business in both the private and public sector.

It was during his time in London while Drucker was studying economics that he developed the core foundation of his beliefs about business and society. He realized that while others were interested in discussing commodities, he was more interested in the behaviors of individuals.

Largely influenced by his upbringing, Peter Drucker became interested in the idea of building a strong, functioning society. Peter Drucker first came into business and management due to his fundamental belief that a healthy, functioning society needed responsible and effective organizations.

Peter Drucker’s Contribution to Management Theory

In 1943, Peter Drucker began his own consulting business which allowed him to work with companies like IBM and Procter & Gamble. He realized that the two most important things for a business to achieve were innovation and marketing.

Drucker taught that management is a liberal art and is about much more than productivity. To be an effective manager you must understand things like psychology, science, religion, and the other things that go into that subject.

Drucker observed that often managers would try to take charge of everything. This was usually out of a desire for control or the belief that they were the only person who could accomplish a task correctly. Because of this, he advocated strongly for the decentralization of management. He taught that managers needed to delegate tasks to empower their employees.

Throughout his career, Peter Drucker wrote 39 books where he coined several terms which are still used today. “Knowledge worker” is one of the many terms coined by Peter Drucker. A knowledge worker is someone whose job involves handling or using information. He was one of the first people to foresee our society’s shift to a knowledge society.

In his 1954 book “The Practice of Management”, Peter Drucker coined the term “management by objectives” or MBO. MBO compares the performance of employees to the typical standards required for that position. The belief behind MBO is that if employees help determine the standards, they will have more incentive to fulfill them.

Peter’s Drucker’s 5 Most Important Questions

One of the biggest ways Peter Drucker was able to contribute to business and management was by teaching organizations how to best allocate their energy and resources. His book, “The 5 Most Important Questions You Will Ever Ask About Your Organization”, outlined five important questions every executive should ask about their business.

  • What is your mission?

Every business needs an effective and concise mission statement. Your mission statement doesn’t explain what you do but rather why you do what you do. Your mission statement should be the driving force behind the actions of you and everyone in your company.

  • Who is your customer?

Peter Drucker understood that many businesses didn’t even really know who it was they were serving. You must find out who your customer is and then organize all of your efforts toward meeting their needs and bringing them value.

  • What does your customer value?

This question is perhaps the most important of all five questions. The key is that it can only truly be answered by your customer themselves. You must know what your customer wants and needs.

  • What are your results?

Drucker stated that you must be able to measure your results in both qualitative and quantitative terms. You must not only know what your results are but you must have a standard for evaluating them as well.

  • What is your plan?

In order to reach your goal, you must have a plan for how to get there. According to Peter Drucker, your plan should include your mission statement, action steps, and a way to evaluate your results. If you can’t summarize those points then you don’t have a plan to achieve your goals.

Conclusion

Peter Drucker is known worldwide for his innovative ideas about business management. His work has proved to be an invaluable contribution to management theory and helped turn it into a serious discipline. His theories reflect how important business environments are and the opportunity that managers have to create positive change and progress in the workplace.

Peter Drucker’s contributions to management theory continue to influence modern aspects of business management. In 2002, he was awarded the Presidential Medal of Freedom for his contributions to management theory. After his death in 2005, the Drucker Institute was created to continue to advance his belief that strong organizations lead to a stronger society.

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