I am laid up with the flu so I am still having trouble processing the reality that Drucker’s gone. Drucker was an iconoclast who lived on the edge throughout his life. Prolific until the very end of a long life (he was 95 when he passed away last Friday), he always sought to move beyond established boundaries, believing that they limit the potential for insight and understanding.
It is hard (and unfair) to distil work of enormous insight that spans more than thirty books and thousands of articles but, for me, the key themes that pervaded all of Drucker’s work were people, processes, direction and simplicity.
People. Drucker insisted throughout his writing that enduring economic value creation depends ultimately on people - as he liked to say, "people are a resource, not a cost". Finding ways to help people discover and develop their talents and then working to amplify the efforts of people – that is the real rationale for any firm and, indeed, any institution. For Drucker, economizing on transaction costs was far too narrow and sterile a way to characterize the role of the firm. In many different forms, he kept reiterating that the role of all institutions is to make human strengths effective and human weaknesses irrelevant.
Processes. Drucker also took a process view of the world. By process, I don’t mean the static boxes and lines that we tend to associate with business process maps. Again, this was much too narrow for Drucker. Drucker instead focused on the basic insight that our world continues to evolve through dynamic processes that continually re-shape the landscape we play on.
Static views of the world were anathema to Drucker. He had little patience for most of the economic profession with its obsession with equilibria and closed systems. He saw that real understanding came from focusing on dynamic processes shaped by new knowledge, technological progress, entrepreneurs, innovation and growth – exactly those areas that conventional economists have the most difficult time explaining with their “rigorous” mathematical models.
Perhaps this was why he had such affection for two fellow Austrian émigrés - Joseph Schumpeter who shifted attention to the gales of creative destruction that re-shape our economic landscape and Friedrich Hayek who championed a process view of economic activity and institutional development (although, ever the individualist, Drucker resisted efforts to group him with the Austrian school of economics).
Direction. Drucker also understood that the only way to harness these processes was to have a clear sense of direction – not only at the institutional level, but at the level of each individual. He was not a big fan of adaptation as a business strategy. Of course, he believed that firms had to be flexible and responsive to their environments but, in his view, that mattered little if the people in the enterprise did not have a shared sense of long-term direction and persistence in pursuing that direction.
Simplicity. Drucker was also a strong proponent of simplicity. He believed that most of the problems that businesses (and indeed all institutions) run into stem from making things more complicated than they need to be. People and dynamic processes are complicated enough. Simplicity was one of the reasons he emphasized the importance of a sense of direction. Direction helps people to make choices and to prioritize their actions - it helps them to decide what not to do, as well as what to do. He applied this principle in his own writing – it was a model of simplicity, using rich metaphors wherever possible to communicate simple but powerful points. As he observed, “my best ideas have only one moving part.”
Now, at one level, these are pretty basic and obvious themes. But that was part of Drucker’s genius. He took basic and obvious themes and relentlessly applied them to a broad range of business issues. His great insights on concepts like “management by objectives” and “knowledge workers” all stemmed ultimately from his focus on these four basic pillars. By staying focused on the basic and obvious, Drucker managed not only to be relevant, but at the center of innovative management thinking throughout a career that spanned almost sixty years from the publication of his path-breaking Concept of the Corporation in 1946. One small indicator of Drucker’s continuing relevance is that his name remained in the top 10 search items on Technorati for several days following his death - even the new generation of "technorati" seem to have an abiding interest in his perspectives.
The following excerpt on outsourcing from an interview almost ten years ago provides one example of how Drucker ties his core themes together while addressing new themes:
One of the things to understand about outsourcing is that the woman who works for the hospital, cleaning floors, is very bored by the job. But if she works for ServiceMaster, an outsourcing company, she's very excited by it because people listen to her, people challenge her. She is expected to improve the job and gets paid for doing it -- whereas before no one would listen. These days, her supervisor had a broom in her hands only five years ago. So the outsourcing people have a great strength in making what we might call a dead-end job much more challenging, because they take it seriously.
Although a participant in the academic world for most of his professional career, Drucker was always suspicious of his academic colleagues with their narrow focus on disciplinary boundaries. His audience was business managers and he wrote for them, not for his academic colleagues. Tom Peters in the FT obituary on Drucker commented on the curious absence of Drucker’s writings from any of his graduate college courses: “Drucker effectively by-passed the intellectual establishment. So it’s not surprising that they hated his guts.”
There’s a lot being written about Drucker on his death, but for my money, two of the best obituaries are the ones by Steve Forbes in the Wall Street Journal today and by Simon London in the Financial Times a few days ago (my colleague Christian Sarkar somehow has a more detailed version of the column than the one that is available on the FT web site). The Wikipedia entry on Peter Drucker has a pretty good bibliography and there’s also an interesting audio interview with Drucker done just a few months ago that is available from WBUR (hat tip to Christian Sarkar). There's also a very good intellectual biography of Drucker - Shaping the Managerial Mind by John E. Flaherty.
Drucker’s gone and we will all be poorer for it. If there is one lesson we should take from his writing and his life, it is that living on the edge has its rewards in terms of insight and understanding.