With skills combining philosophy, politics, and economics, Peter Drucker began defining and reassessing business management in his influential book The Practice of Management.

By the early 1950’s, both popular and scholarly writing began reflecting the immense postwar changes in American life as the country entered an era of relative affluence. Marxist enthusiasms of the Depression-ridden 1930’s, as well as other predictions of national failure, were abating rapidly as it became clearer that Americans had escaped both class warfare and a general social collapse. [kw]Drucker Examines Managerial Roles (1954)
[kw]Managerial Roles, Drucker Examines (1954)
Practice of Management, The (Drucker)
Management, theories of
Practice of Management, The (Drucker)
Management, theories of
[g]North America;1954: Drucker Examines Managerial Roles[04300]
[g]United States;1954: Drucker Examines Managerial Roles[04300]
[c]Business and labor;1954: Drucker Examines Managerial Roles[04300]
[c]Economics;1954: Drucker Examines Managerial Roles[04300]
Drucker, Peter F.
Schumpeter, Joseph
Rosenwald, Julius
McCormick, Cyrus Hall
Ford, Henry
Sloan, Alfred P.

The U.S. economy United States;postwar economy had performed spectacularly during the 1940’s, and by the 1950’s it appeared to be the healthiest in the world, one upon which many of the world’s war-ravaged major economies depended for leadership, for experience, and for resultant productivity. An important component of postwar literature included fresh examinations and interpretations of American economic life, both current and historical, particularly the roles and functions of the corporations and corporate leaders that occupied the economy’s strategic heights.

The publication of Peter Drucker’s The Practice of Management (1954) therefore was timely. It contributed to the reevaluation of major American institutions then under way, and it perceptively caught many corporations in the midst of changes in leadership. The older generation of corporate founders and entrepreneurs, often characterized by autocratic rule, either lingered on with atrophying firms, as did Henry Ford, or temporarily masked the dissipation of corporate resources, as did Howard Hughes. This generation, along with those company officers confused by or unable to adapt to mass-production techniques or new technologies associated with electronics, automation, and computerization, was rapidly passing from the scene. The new generation of managers needed to understand the new technology as well as labor relations in this era of expanding labor unionism.

Drucker’s work almost instantly proved to be influential, though hardly popular. It became staple reading among a rising generation of practicing or fledgling executives by whom Drucker increasingly would be solicited as a consultant. It similarly appeared as standard reading in the nation’s burgeoning schools of business administration and schools of management, in liberal arts courses, and among government officials. It continued to be used widely into the 1990’s, often supplemented by some of Drucker’s many subsequent books that expand, detail, and amend his earlier themes. By the mid-1980’s, Drucker had established himself, notably in conservative circles, as a leading thinker about questions of corporate objectives, organization, and management.

Heritage and training helped Drucker develop a broad intellectual background, and his experiences, from early in life, were international in scope. He left continental Europe in 1933 upon Adolf Hitler’s election as chancellor. In England for the next four years, he served as an economist with an international bank. In 1937, when he emigrated to the United States, he continued working as an adviser to British banks and investment houses.

In 1942, he started an academic career, initially at Bennington College and then at Sarah Lawrence, moving from the latter in 1950 to become a professor of management at New York University’s Graduate School of Business, where The Practice of Management, his fourth book, was written. In 1971, he assumed the Clarke Chair in Social Sciences at the Claremont Graduate School (now Claremont Graduate University) in Claremont, California. Drucker combined academic writing with work on editorials for The Wall Street Journal, one of the nation’s most intelligent and literate newspapers, and scores of ongoing corporate consultancies.

The Practice of Management came as close as any work of its time to reintroducing and giving a common currency to the words “management” and “manager.” Drucker gilded both with a fresh, almost professional, aura. In doing so, without distilling the “art” from the practical objectives that he clarified for management, he redefined what management ought to be, namely “a multi-purpose organ that manages a business and manages managers and manages workers and work.”

Drucker’s ideas about what management ought not to be were drawn from his analyses of corporate operations as well as from reports from the nation’s financial pages. Never, he cautioned, should managerial responsibilities be invested in one person, whether an owner or a chief executive. The days of the Carnegies, Morgans, and Vanderbilts had gone. Henry Ford’s one-person regime at the Ford Motor Company, abetted by a few obsequious aides, after all, had nearly driven his once great and advantaged concern into bankruptcy.

Above all, management and managers, in Drucker’s view, should assume the functions of the innovator and entrepreneur, or risk taker. The examples to be followed, then, were more like those of the “father of management,” Cyrus Hall McCormick, famed for the invention of the reaper but to Drucker more important because of his grasp of marketing as the central function of a business. Another positive example was Julius Rosenwald, who rebuilt Sears through market analysis, launched a marketing and distribution revolution, and dispersed both organizational responsibilities and ownership.

Clear lines of vertical and lateral authority, responsibilities, and communication, acting to establish synchrony and combined with teamwork, marked Drucker’s operational view of management. Adaptability, innovativeness, and risk taking were his criteria for judging the character of managers. Drucker believed that the objectives, and hence the performance, of managers needed recasting. Businesses’ objectives ought to include increasing the number of consumers and, as done by General Motors’ Alfred P. Sloan and General Electric’s Ralph Cordiner Cordiner, Ralph , affording them better products or services. To succeed in this, managers had to restore dignity to the earning of profits. Drucker believed in avoiding the error of maximizing short-run profits only but also believed that managers should seek a level of return that could maintain the business and its resources. Such behavior was economically necessary as well as socially valuable.

Contrary to the inherited wisdom of the 1940’s, managements’ foremost task, he insisted, was not the cultivation of human or community relations. Managerial concentration should be on business performance, with proper attention paid to making plans that would ensure a company’s future.

The Practice of Management is not a handbook. Drucker wrote it to draw attention to several strategic problems confronting the postwar world. The first was that governmental economic plans, whatever their goals, were bankrupt. Modern politics and political establishments, Drucker maintained, faced obsolescence, mired down as they were in battles over political fiefdoms. Politicians, Drucker believed, failed to comprehend the vast changes effected by modern technologies and were oblivious of society’s need to adapt to them. Drucker saw evidence of this everywhere.

The political response of Franklin D. Roosevelt’s Roosevelt, Franklin D.
[p]Roosevelt, Franklin D.;New Deal New Deal New Deal to the Great Depression Great Depression , for example, had failed when measured by economic indices. War rather than the New Deal had rescued the economy from its unprecedented collapse. In addition, fascist and national socialist economies similarly had failed, and Drucker guessed that the Soviet economy also faced extinction. Unless the full import of these facts was recognized, Drucker warned, even the U.S. economy, one that had saved the free world of the 1940’s, would falter without a reprivatization of economic decisions.

The means of survival, Drucker believed, lay at hand in the dynamics latent in the unexplored realm of management as a creative “scientific” institution. Drucker’s conservative ideas were derived from his reflections on several of Joseph Schumpeter’s principal themes.

Drucker’s views on the mainsprings of economic development frequently coincide with Schumpeter’s. Both sought to understand how and why economies grow, or how they fail to grow and decline. Both found profit to be the essential motivating force for capitalist Economic systems;capitalism
Capitalism growth. Contrary to Marxist interpretations of profit, both perceived it not as surplus value stolen from workers but as a positive source of jobs and income. Capitalist profits were simply short-term rewards for innovation and a necessity for keeping business going. Paradoxically, Schumpeter reckoned the weaknesses of capitalism to be derived from its success; that is, capitalism’s continuous innovations produced “gales of creative destruction” that quickly rendered capital equipment and investments obsolete. Further, Schumpeter concluded that capitalism’s achievement, the forging of a new society, would also phase out its risk takers and innovators, upon whom progress depended, replacing them with bureaucrats, professors, journalists, and intellectuals—all living on, but critical of, profits.

Drucker and Schumpeter shared interests in entrepreneurs and innovators. Schumpeter doubted the future of Western capitalism, but Drucker found hope in drawing entrepreneurs and innovators from within managerial ranks. Apprised of their missions and critical responsibilities, and divorced from politics and public relations, managers could concentrate on the resources and profits upon which their firms depended and expand their markets by better satisfying the desires of consumers.

Still publishing until his death in 2005, he was the self-appointed father of the “managerial revolution,” with a wide following for his books and articles. He provided rationales for the abolition of old-style chief executives and tycoons, for disassembling corporate bureaucracies, and for assembling disciplined managerial teams. He augmented the prestige of the graduate training of managers. Equally important, he invested management with a central function—the application of the best available knowledge both to earn profits at individual firms and to drive economic growth and ensure the survival of Western institutions.

Drucker’s visions of a reprivatized society salvaged and dominated by professional managers, fixated on their performance and behaving as they might in small, well-run plants or the most efficient larger firms, brought deluges of criticism. William H. Whyte, Jr., for example, explained the conformist plights of the “organization man” and questioned how innovative leaders could emerge from corporate bureaucracies. Robert Presthus’s theoretical analysis of the “organizational society,” exemplifying many other works, raised questions about a managerial revolution’s impacts on democratic and humanist values. These complex issues were touched upon, but in many critics’ views were left unresolved, in Drucker’s subsequent work. Practice of Management, The (Drucker)
Management, theories of

• Chandler, Alfred D. Strategy and Structure: Chapters in the History of the Industrial Enterprise. Cambridge, Mass.: MIT Press, 1990. A pioneering work, first published in 1962, that sees the varied corporate strategies of Sears, General Motors, and Du Pont as determinants of their structure. Authoritative, easy to read, and invaluable as an addition to Drucker’s writings. Notes, bibliography, some tables, useful index.
• Drucker, Peter F. Classic Drucker: Essential Wisdom of Peter Drucker from the Pages of “Harvard Business Review.” Boston: Harvard Business Review Book, 2006. A compendium of Drucker’s writings from the Harvard Business Review, a respected business journal.
• _______. Concept of the Corporation. New ed. New Brunswick, N.J.: Transaction, 1993. This work, originally published in 1946, is important for its incorporation of Drucker’s explanation of the limitations of technocracy. A few notes, brief index.
• _______. The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management. New York: Collins Business, 2005. A collection of Drucker’s most significant writings on business management. First published in 1991.
• _______. The Frontiers of Management: Where Tomorrow’s Decisions Are Being Shaped Today. New York: Truman Talley Books, 1986. Drucker’s foundational articles on economics, people, management, and the organization. An informative guide to Drucker’s economic and humanistic values. No notes or bibliography. Good index.
• _______. Management: Tasks, Responsibilities, Practices. 1974. Reprint. New York: Harper & Row, 1985. A sampling of many of Drucker’s ideas and articles, updating earlier works. Easy to read. Few notes, good select bibliography, excellent index.
• Shepherd, William G. Public Policies Toward Business. 8th ed. Homewood, Ill.: Richard D. Irwin, 1991. Authoritative survey explaining why government has assumed much of private economic decision making and has limited competition. Balances Drucker. Indexes of cases, names, and subjects. Notes replace bibliography. Excellent index.

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