Though he might have never been a household name, Peter Drucker is widely regarded as the father of modern business. The Austrian-born management consultant and writer has influenced nearly every aspect of how companies are run today, and he was famous for championing both the drive for profit and fairer treatment of employees. For decades, he was considered the world’s leading authority on management and what it means to run a business, before his death in 2005, one week before his 96th birthday. But the most compelling thing about Peter Drucker was that he was often ahead of his time. In 2012, the New York Times labelled him “a prophet for the workplace” and made the argument that his philosophies might be just as relevant now, or even more so, than they were in the past 60 years. How did Peter Drucker think? And what can everyone, from corporate CEOs to small business owners, really learn from him?
DRUCKER’S MANAGEMENT PRINCIPLES
The Wall Street Journal Guide to Management presents Drucker’s five basic tasks for managers, which are the same today as they were in the 1940s, when he first started publishing. He said a manager needs to set objectives for both the short term and the long term future of the business and then decide what needs to be done to meet these objectives. The manager also organizes the division of labour and finds the right people for the right jobs. He motivates, delegating pay raises, promotions, and other incentives for productivity. He finds the right way to measure and appraise productivity, and helps manage peoples time. And lastly, he develops people. The WSJ claims this aspect of management has taken on new importance, and that more than ever, managers realize that people are the most important asset of a business. Drucker was a big believer in this.
THE KNOWLEDGE SOCIETY
While Drucker died slightly before over a billion people were on Facebook, much of his later work was devoted to predicting the rise of technology. He called it the Knowledge Society, which he said began with the invention of the first digital computer in 1946. In 1989, he made incredibly prophetic statements about a “transnational” future, where global communication would be at the heart of the business world, and you could do business with people across the ocean without ever meeting them in the flesh. He said that technology would lead to a greater push for efficiency in business and the rise of the knowledge worker – someone hired specifically for their superior understanding of a particular kind of technology, a particular marketing strategy, or any unique professional skill. Today, there are more irreplaceable knowledge workers in big business than ever before, supporting Drucker’s belief that people are essential to success.
THE ROLE OF SMALL BUSINESS
In creating a new business, Drucker posed three essential questions for every budding CEO to ask themselves. What is our business? Who is our customer? What does our customer find valuable? He thought the real way for a small business to succeed long-term was to keep the focus on serving the customer, with profit being a tool that enables you to continue doing that. As much as Drucker believed in developing your workers, small business owners in the knowledge society can also work to develop themselves and strengthen their own values, skills, and opportunities through hard work and experience. Drucker believed that small business played an important role in the economy through introducing new ideas and providing the customer with a diverse range of choices. A Drucker-like company is defined by the focus on the customer, but also by constantly learning new things and throwing out old policies and practices that haven’t been working.
Much of Peter Drucker’s work is timeless and can easily be applied to the businesses of post-World War II America and the technology-driven corporations of today. But he also made many notable predictions, believing that technology would not only change companies, it would change business philosophies. Managers of both small and large companies still have a lot to learn from him ,not only about how to do business but about why they do business at all.