Do Words Matter?

Karen Linkletter, Ph.D.

PUBLISHED:

November 16, 2022

Peter Drucker's distinction between language and communication

Peter Drucker made a clear distinction in his writing between language and communication. For Drucker, language was part of culture. It was “substance…the cement that holds humanity together. It creates community and communion” (Drucker, 1992). Language was not just communication. It was something much more important. In our current time, I don’t think we share this respect for language. With the explosion of social media, it has become too easy to type a few words into a text or a tweet, or even an email, and expect that the reader will understand the essence of that communication.


I’ve been leading a course on Drucker Philosophy and Theory 101 for faculty and administrators at CIAM, as well as participants from MLARI, since the summer. Although we’ve been delving into the intricacies of Drucker’s ideas and how to implement them, our sessions have focused on Drucker’s language; what did Drucker actually SAY about topics such as a functioning society of organizations, or management as a liberal art? What role do words play in how we interpret meaning – in short, how do words function in communication?


Communication can take many forms that are nonverbal: body language, facial expression, tone, etc. These are very important, particularly as we emerge from a remote world where many of us are rusty in using these kinds of communication skills. But the role of verbal communication is crucial to any society, particularly a society of organizations where people need to convey complex ideas and information.


Drucker was well aware of the problem of communicating. In a paper presented in 1969, he stated that “communications has [sic] proven as elusive as the Unicorn” (Drucker, 1993, p. 320). Despite the increased focus on the subject, managers in the mid-twentieth century were woefully poor at this skill. Can we argue that the same is not true for today in any sector (government, for-profit, health care, education) save for some exceptions?


I suppose we need to clarify what “effective communication” looks like. In today’s world, communication can look like a Zoom meeting, a tweet, a social media post, a highly-scripted interview, or an administratively-driven process of internal interactions. Are these effective forms of communication for organizations? They can be, but, if misused or poorly crafted, they can be remarkably ineffective.


In his seminal work, Management: Tasks, Responsibilities, Practices (1974), Drucker cited four fundamentals of communication:

·     Communication is perception

·     Communication is expectation

·     Communication makes demands

·     Communication and information are different and indeed largely opposite – yet interdependent (Drucker, 1974, p. 391).


Much of this material derives from the 1969 paper presented to the Fellows of the International Academy of Management in Tokyo.


Communication is perception: Drucker has a lot to say about this, but I can summarize: Did he/she/they “get it”? You may be an incredible speaker (or writer), or you may not be. The point is: did your audience get what you were trying to convey? If not, why? Was it the words you used, the delivery, the body language, etc. It’s hard to admit that, even though you are a professional speaker or writer, “it is the recipient who communicates. The so-called communicator, the person who emits the communication, does not communicate. He or she utters. Unless there is someone who hears, there is no communication” (Drucker, 1974, p. 391). That’s a hard pill to swallow if you fancy yourself an eloquent speaker, leader, or teacher. But it really doesn’t matter, does it? What matters is whether or not your “utterance” was understood. And was it understood the way you intended?  You may think you conveyed an idea or thought, but the language you used may have been perceived in a different way due to cultural differences, gender or ethnic conflicts, class inequalities, or other sources of miscommunication (see, for example, https://www.tandfonline.com/doi/full/10.1080/23311975.2017.1408943).


Our more recent problems with communication and perception have to do with virtual interactions that accelerated during the pandemic and have remained an integral part of how we talk to each other. Various platforms have attempted to upgrade their interfaces to improve communication, such as features that allow one to avoid seeing themselves (which can be distracting, as some tend to focus on their appearance rather than on the content of the meeting or the reactions of others). How can you assess the perception of your Zoom audience during a presentation? Especially when the cameras are turned off? Many have lost their perception skills because of the reliance on technology rather than face-to-face interactions. What does that emoji mean? How do I interpret the exclamation point in that text? Drucker’s first element of communication – perception – is difficult to assess virtually. Is it any wonder we are so poor at real communication today? (See https://www.harvardbusiness.org/wp-content/uploads/2020/03/HBR_How_to_Avoid_Virtual_Miscommunication-1.pdf, and https://www.forbes.com/sites/forbesbusinesscouncil/2021/10/07/zoom-gloom-is-real-how-to-improve-communication-and-connection-without-video/?sh=63c86ebd243d)


Communication is expectation: Humans try to make sense out of our worlds and assemble information into some kind of order. We all have a set of expectations based on experience that influence our processing of information. In Drucker’s words, “We see largely what we expect to see, and we hear largely what we expect to hear” (Drucker, 1974, p. 393). The unexpected is either ignored or largely misunderstood. People try to fit information into their existing framework or understanding of how things work.


We have to understand what people expect to see and hear before we can effectively communicate. If information fits within someone’s expectations, it will be perceived. If the message is contrary to the recipient’s expectations, that must be clearly signaled. The worst mistake is to attempt “a gradual change in which the mind is supposedly led by small steps to realize that what is perceived is not what it expects” (Drucker, 1974, p. 393). This only reinforces expectations. Instead, clearly communicate that “This is different!”, creating an awakening that breaks through expectations.


This is easier said than done! Such a signal can create a sense of panic or distress, as it implies the need for a change in approach, strategy, outlook, and/or tactics. In the United States, the poor messaging with respect to public health measures needed to combat the impacts of the COVID-19 pandemic illustrates the dangers of mismanaging human expectation in communications. In the early stages of the pandemic, when data were limited, public communications did not emphasize that this was, in fact, a novel coronavirus, and that the potential threat was unique and serious. As a result, much of the public discounted later attempts to curb mortality rates through lockdowns, distancing, and masking. The COVID-19 pandemic did not fit within anyone’s expectations (save for the handful of experts trained in virology and public health). Yet, other nations, notably Germany, Taiwan, and South Korea took the threat seriously, communicated it effectively, and managed to avoid significant deaths in the early stages of the pandemic. Researchers are evaluating the various responses to the pandemic, and how the public reacted to communications from scientists and government representatives (see, for example, https://www.sciencedirect.com/science/article/pii/S2212420921004775 and

https://journals.sagepub.com/doi/full/10.1177/09636625221093194

 

Communication makes demands: In his 1969 paper, Drucker used the subtitle “Communication is Involvement” (Drucker, 1993, p. 326). That header actual encapsulates his argument more effectively; he likely modified it to appeal to a management audience in his later work. Drucker says that communication “always demands that that the recipient become somebody, do something, believe something. It always appeals to motivation. If communication fits in with the aspirations, values and purposes of the recipient, it is powerful. If it goes against them, it is likely not to be received at all…By and large, therefore, there is no communication unless the message can key in to the recipient’s own values [emphasis mine],” (Drucker, 1974, p. 395). I think this is possibly the most important message Drucker gives us about communication. Real communication involves some kind of expectation of action. A salesperson asks for the order. A human resources manager requests her team to implement a new policy. A non-profit director asks volunteers to show up for an important event. Drucker remarks that “Communication is always ‘propaganda’” (Drucker, 1974, p. 394), but, frankly, I find his word usage ineffective here. Propaganda is associated with the misuse of language - the attempt to promote a biased perspective or a particular point of view. But the point that communication expects some kind of action - physical, intellectual, or spiritual – is important. Clear communication is not propaganda. It conveys information that is congruent with values that are shared by the individual and the organization (or the communicator). If a leader asks team members to participate in a project, the project needs to make sense in terms of the organization’s values and objectives, as well as the individual participants’ sense of purpose and meaning. This is why it is so critical for organizations to make sure that team members share the same values and goals of the larger institution. If individuals are not aligned with a higher purpose, their efforts are solely their own, with no greater function. Communication that asks them to do something for the “team,” or the “organization,” or “society” will not be received. Conversely, organizations need to make sure that they are communicating in a way that speaks to the motivations of the individual; how will that person grow from this experience? How will they become more effective in their role, or as a leader, or as a person?

 

Communication and information are different and largely opposite – yet interdependent: Information is pure. It is logic, without meaning, impersonal, and free of human intervention. Communication, however, is steeped in human intervention. Communication seeks to make meaning out of information. As Drucker noted in 1974, humans were awash in information, but lacking in ways of making sense out of that information: “…information is, above all, a principle of economy. The fewer data needed, the better the information. And an overload of information leads to information blackout. It does not enrich, but impoverishes” (Drucker, 1974, p. 395-396).


Fast forward to today, and we are in the same situation on steroids. Misinformation abounds on social media platforms, leading to political division and violence. Organizations are overwhelmed by data, struggling to find meaning in the mass of information. Data analytics has exploded as a field of study and application. Fifty years ago, Drucker commented that the information revolution of that age did not really produce information; it merely produced data (Drucker, 1974, p. 398). This is not communication. Communication involves understanding the human component: emotions, values, expectations and perceptions. Thus, communication and information are, as Drucker states, largely opposite, but yet they are interdependent, particularly today. How can we use information constructively in communications? By understanding the human component of communication.


So, do words matter? Do what we say and write make a difference in communication? Absolutely.


If communication is perception, it requires effectively conveying concepts or ideas in a way that another person can actually hear and comprehend. This may require using a variety of words to communicate; not everyone understands a particular term the same way, as words carry associations, cultural references, and other information. In our class, for example, we discussed the fact that Drucker’s use of the terms “conservative” and “liberal” can be very jarring for a modern audience, as those words today are particularly loaded politically. In Drucker’s writing, they are not; Drucker uses those terms in a historical context that is largely unfamiliar to a contemporary audience, particularly an American audience. In academia, the use of jargon is another example of where language can get in the way of perception. The term “rationality” in decision making has specific connotations that may be unclear to someone who comes from a humanities background, where “rationality” may mean something more philosophical. Particularly when we are attempting to discuss complex problems or subjects, our word choice can actually make a complicated subject more confusing.

 

If communication is expectation, we need to understand what our audience expects to hear, read, or see. What is “expected” for this particular person or group of people? Can we use language that fits with their worldview or perspective? Or do we need to signal clearly that something is out of the ordinary? Some individuals are more flexible and open to change; they are resilient in the face of adversity and have coping skills to adapt. Others are less capable in this area; they fear change and prefer routine and the safety of predictability. If you are introducing a new program, method of performance evaluation, or other change, how does your language impact the reception of that action? If someone expects change as the norm, the communication can take one form. If another person expects the absence of change as the status quo, then the communication needs to be modified, using a completely different tone and approach. This is why it is crucial for you to know your team members and assess them without passing judgment. What do they expect? How can you most effectively institute a change without having people ignore that something is different and needs to be noticed?

 

If communication makes demands, our language needs to consider the values of the recipient so that we effectively stimulate action. If we are asking someone to do something, or believe something, or comprehend a point of view, our words have to align with the worldview of the recipient. This is particularly true if we are asking people to be part of a team or organization, or to do something that benefits society. Drucker’s discussions of the social responsibility of business, for example, emphasize the fact that actions that mitigate negative impacts can be profitable for an organization. It actually can benefit a company to remedy its negative social impacts – not just because it’s “the right thing to do,” but because it is financially beneficial. This kind of thinking would aid communication involving corporate social responsibility, particularly efforts to mitigate climate change.

 

Finally, if communication and information are different and largely opposite – yet interdependent, we need to do a better job of integrating the two, particularly in today’s society that is awash in data. What information is relevant to decisions? How do we glean meaning out of big data? How do we use information as part of effective communication? Simply reporting data is not communication. Communication involves taking information and telling a story, making that information useful to the world of problem solving, decision making, and the often messy practice of management. How do we craft written articles and oral presentations to make data meaningful and useful? We need to consider all of the factors Drucker mentions earlier. How will the data be perceived? As a threat? An opportunity? How can I use language to effectively communicate the meaning of the information? How does the information fit with the expectations of the audience? Is it shocking, or expected? How do I need to convey data to motivate people to act? Information alone won’t motivate, so what words do I use, or do I use pictures or some other method to illustrate the information? In short, what is the best way to present my analysis that will reach my audience and actually make them listen, understand, and respond?


What does effective communication look like in your organization? If language is important, and not just “communication,” shouldn’t we pay attention to how we use it, particularly with the vehicles we have? With all of the media available to us, are we as careful about the words we use as we should be? Language may not be the realm of culture that it was in Drucker’s era, but words do matter, whether they are used on Twitter, email, voicemail, text, or in a meeting on Zoom or in person. In this time of rapid change and response, perhaps it benefits us to slow our response down to make sure we are communicating with each other effectively.

 

 

Sources

Drucker, P. F. (1974). Management: Tasks, Responsibilities, Practices. Oxford: Butterworth-Heinemann.

Drucker, P.F. (1969). “Information, Communication, and Understanding.” Reprinted in The Ecological Vision: Reflections on the American Condition. New Brunswick: Transaction Publishers, 1993, pp. 319-337.

Drucker, P.F. (1992). “Reflections of a Social Ecologist.” Reprinted in The Ecological Vision: Reflections on the American Condition. New Brunswick: Transaction Publishers, 1993, pp. 441-457.

Evans, A., Suklun, H. (2017). “Workplace diversity and intercultural communication: A phenomenological study.” Cogent Business Management, Vol. 4, Issue 1, 5 December.

Ferrazzi, K. (2013). “Managing People: How to Avoid Virtual Miscommunication.” Harvard Business Review, April 12.

Lui, L., Wu, W., McEntire, D. (2021). “Six Cs of pandemic emergency management: A case study of Taiwan’s initial response to the COVID-19 pandemic.” International Journal of Disaster Risk Reduction, Vol. 64, October.

Trejo, B. (2021). “Zoom Gloom is Real: How to Improve Communication and Connection Without Video.” Forbes, October 7.

Utz, S., Gaiser, F., Wolfers, L. (2022). “Guidance in the chaos: Effects of science communication by virologists during the COVID-19 crisis in in Germany and the role of parasocial phenomena.” Public Understanding of Science, Vol. 31, Issue 6, May 18.

 

 

 

On Leadership, Legitimate Power, and Influence

By Byron Ramirez, Ph.D. and Bo Yang, Ph.D. • April 23, 2025
When we describe leaders, we often cite the importance of their ability to influence others. For decades scholars have focused their work on studying and describing how this capacity to influence works and why it tends to elicit a positive response from people, who are inspired to follow the leader’s vision. We have read about that mystifying ability to persuade others and guide them towards a common purpose. However, when analyzing the leader there is another aspect we ought to also consider - where does their power originate from, and is this power considered legitimate? What these questions intend to imply is that when we analyze the interactions of leaders and their followers, we should contemplate how their relationship is built, and moreover, how the power of the leader is used to shape those relationships. Let us first discuss what power is and why it is important. Power in its general sense is the capacity to influence, lead, dominate, or impact the actions of others. The German sociologist, Max Weber referred to power as the capacity to create a desired outcome within a social relationship. As such, power enables the leader to influence and lead the actions of people. Legitimate power is often referred to as power that the person derives from formal position or office held in the organization's hierarchy of authority. And it is this notion of authority that helps legitimatize power in the eyes of the follower. For instance, a manager has legitimate power over their subordinates, allowing them to assign tasks. Teachers possess legitimate power in the classroom, enabling them to assign grades and set learning objectives. We can then surmise that legitimate power is based on the authority granted by a position or title. And individuals will comply with requests or decisions made by the person with authority because they recognize the authority of the person holding the position. However, unlike authority, which implies legitimacy, power can be exercised illegitimately. As history shows us, there are plenty of examples where power did not originate simply from a place of authority and legitimacy, and instead flowed from coercion. Joseph Stalin and his Great Terror campaign certainly comes to mind. And although Stalin did have a position of “authority”, much of his power and influence were coercive and deceptive in nature. In fact, Stalin had used his political positions throughout his life to “remove” opponents while bolstering his image in the pursuit of greater personal power. According to biographer Robert Service (2005), Stalin took pleasure in degrading and humiliating people and kept even close associates in a state of "unrelieved fear”. Of course, there are other instances in which coercive power is used to elicit compliance. A more common example of coercive power is a manager who uses threats of demotion or termination to get employees to comply. And so, when we consider the influence a leader (manager) has, we ought to consider the very nature and source of their power. Do people follow the leader because they are truly inspired by the leader’s vision? Or do they follow because they have no other choice? Managers who threaten the job security of others to ensure compliance, leaders who exploit their positions for personal gain, or individuals who rise through favoritism rather than merit – are manifestations of illegitimate power. Regardless of context, illegitimate power tends to erode morale, limit creativity, and foster toxic environments where people operate out of fear rather than purpose. Illegitimate power wields influence without moral justification, ethical values, or the consent of those affected. And because this form of power often derives from manipulation, coercion, intimidation, or exploitation rather than genuine respect for people, it undermines trust, breeds fear, and corrodes the ethical foundations of organizations and communities. Coercive leaders who use threats, punishment, or psychological pressure to force compliance, may certainly achieve short-term results, but at a significant long-term cost. Coercion strips individuals of their autonomy and creates environments of resentment and disengagement. People may comply outwardly, but internally they may withdraw, resist, or leave. Furthermore, coercive leadership discourages open dialogue and constructive feedback, which are essential for innovation, growth, and continuous improvement. When fear becomes the primary motivator, organizations and societies become stagnant, rigid, and vulnerable to collapse. And this brings us to an important question – what does legitimate power look like? On this issue, Peter Drucker offers unique insights. In his first book, The End of Economic Man (1939), Drucker discussed the issue of legitimate power (although he did not use the term legitimate power, but rather the justification of authority). Drucker believed that the power of rulers must possess legitimacy, a tradition that has continued in Western civilization since Plato and Aristotle. In Drucker’s view, legitimate power involves a functional relationship between power, social beliefs, and social realities: does power commit to social beliefs? At the same time, can it effectively organize social reality based on that commitment to create order? In his books, Concept of the Corporation (1946) and The New Society (1950), Drucker began to use both terms legitimate power and leadership simultaneously. Drucker would go on to argue that a government that commits to the well-being of its people can be said to have legitimate power. Over time, Drucker shifted his analysis of legitimate power from the political realm to social organizations. According to Drucker, if the management of a social organization (such as a company) claims that its principal purpose is to benefit employees, this particular focus would constitute an abuse of power. Instead, Drucker argued that the primary mission of an economic organization is to always achieve economic performance, thereby contributing to society – and this is in fact, the source of the legitimacy of corporate management's power. Of course, a company is also a community. For employees, management undoubtedly holds power and must exercise it. However, the legitimacy of management’s power does not come from the commitment to benefit employees, but rather from two functions: 1. Through institutional design and innovation, shaping effective community communication, thereby enabling middle-level and lower-level employees to gain an overall vision of the organization. This allows employees to have a managerial attitude. 2. By setting clear and reasonable performance standards, prompting employees to take responsibility and achieve success through effective work. If management can perform these functions within the organization, then it is considered to exercise legitimate power. In Drucker's early works, exercising legitimate power was almost synonymous with leadership. Drucker was not enthusiastic about discussing the personal style or charm of leaders, and he was even less inclined to associate leadership with a mystifying ability to persuade others, especially if such persuasion appealed to propaganda, indoctrination, or mental manipulation. For Drucker, discussing leadership primarily meant enabling power to function effectively. Therefore, leadership is not a matter of individual leaders' techniques and styles, but rather a matter of the responsibility and function of power itself. We can surmise from these functions that legitimate power aligns with the goals, beliefs, and aspirations of the people being led. Leaders who wield this kind of power do not need to resort to threats or manipulation. Instead, they inspire, guide, and collaborate. Their authority is accepted because it is seen as fair, earned, and beneficial to the collective. It is vital to foster leaders who operate from legitimate power—power that is granted through trust, expertise, shared values, and recognized authority. Legitimate power is grounded in the formal authority granted to a manager through their role within an organization, but its true strength comes from how that authority is exercised. Unlike coercive power, legitimate power is perceived as rightful and appropriate because it is based on clear expectations, mutual respect, and established structures. When managers consistently act with fairness, integrity, and transparency, their authority is more likely to be accepted and trusted by their teams. This creates a healthy power dynamic where employees feel secure in leadership decisions, understand their roles, and are motivated to contribute toward shared goals. Managers can build legitimate power by aligning their actions with the organization's values and demonstrating competence, consistency, and accountability. For instance, making decisions that reflect the organization’s mission and treating all team members equitably strengthens a manager’s credibility. Communication is also key—leaders who listen actively, provide clear direction, and explain the rationale behind their decisions foster trust and buy-in. Investing in personal growth, staying informed, and modeling a strong work ethic all reinforce the perception that a manager has earned their position and is acting in the best interest of the team and the organization. When managers lead through legitimate power, the benefits to the organization are substantial. Teams are more engaged, morale improves, and collaboration increases because people trust the leadership and feel aligned with the organization’s purpose. This creates a positive feedback loop where employees are more likely to take initiative, innovate, and remain committed, reducing turnover and boosting overall performance. In essence, legitimate power forms the foundation of a sustainable leadership culture—one that empowers individuals, strengthens organizational integrity, and drives long-term success. Developing leaders who influence through legitimate power requires a shift in how we define and nurture leadership. It involves prioritizing emotional intelligence, ethical reasoning, transparency, and empathy. Such leaders model integrity and authenticity, aligning their decisions with shared values and long-term visions. They create environments where people feel valued, heard, and empowered. In turn, this fosters loyalty, engagement, and a strong sense of purpose. To build healthier workplaces and more just societies, we must champion leaders who embody legitimate power: those who influence not by fear, but by vision, credibility, and alignment with shared values. This approach not only promotes ethical leadership but also cultivates trust, innovation, and collective well-being. References Drucker, P. F. (1946). Concept of the corporation. New York: John Day Company Drucker, P. F. (1939). The end of economic man: A study of the new totalitarianism. New York: John Day Company Drucker, P. F. (1950). The new society: The anatomy of the industrial order. New York: Harper Service, R. (2005). Stalin: a biography. Belknap Press of Harvard University Press. Weber, M. (1965). Politics as a vocation. Fortress Press.

Helping Civilization Understand Business

By Bo Yang Ph.D. • April 23, 2025
In China, you can see countless interviews with successful entrepreneurs on TV, online, or in magazines. The same is true in the U.S.—probably even more so. I imagine this stylish trend must have originated in America. These interviews often show entrepreneurs sincerely talking about childhood dreams and beliefs they’ve held for decades. They’ll share how they stayed committed to those dreams and step by step made them come true. Over the past few years, I’ve had the chance to meet a few Chinese entrepreneurs—some of whom I had previously seen on TV or in magazines. Once we got to know each other better, they started sharing stories that were quite different from their media narratives. They admitted that their childhoods were hardly filled with grand dreams. What truly pushed them into business were hunger, poverty, cunning—or sometimes, just luck. I am not a nihilist, nor am I trying to say that dreams and beliefs are nothing but marketing gimmicks, exposed through off-the-record conversations. What I mean is: this is a realist world. It’s entirely possible for people to achieve business success through the pursuit of profit, intelligence, hard work, and a bit of luck. Many people don’t fully understand how they even became successful—until they already are. Of course, the world isn’t just about realism. Some people, once successful, begin to seek meaning in their lives. They want to keep doing valuable things—not just by luck, but through genuine understanding. At this point, they need to go back and reexamine what business really means. So what does business really mean? If you asked a Chinese scholar from a thousand years ago, he would most likely say that business is linked to something like original sin. Of course, Chinese culture doesn’t contain the Christian idea of original sin, but when talking about commerce or merchants, scholars would often describe businesspeople as inherently tainted by something spiritually corrupt. If you asked a classical economist like Adam Smith, you’d get a much more generous answer. Classical economists openly accept the profit motive as part of human nature, and they’d go further to say that this motive is a major driver of civilization. The accumulation of social wealth, improved quality of life, and progress of civilization all rely on individuals—driven by profit—to create rules, use their talents, and generate value. After classical economics, this line of thinking became the default lens for understanding business and commercial civilization. Even though Marxism and Nazism have violently attacked the profit motive, modern commercial civilization has not only survived—it has thrived. The great achievement of classical economics was to build a causal relationship between the pursuit of profit and the progress of civilization. But the question remains: is that all there is? The entrepreneurs I know, who fought their way through tough business landscapes, would never doubt the role of the profit motive. But some of them also have a vague sense that business isn’t just about making money. After a few successful ventures, some start to long—consciously or unconsciously—for cleaner businesses, meaningful businesses, even beautiful ones. They may not be able to articulate this impulse, so instead, they go on TV or into magazines and talk about childhood dreams and ideals. These aren’t real memories—they’re symbolic stories. What exactly drives commercial civilization? Peter Drucker agreed with the classical economists, but only halfway—because they only got it halfway right. Drucker never denied the profit motive. But he believed that all successful business activity is a discovery and creation of order. And that’s what makes it so important. Not only do entrepreneurs and managers need to rethink the meaning of business, but ordinary citizens in modern society do too. Drucker’s book Managing for Results, published in 1964, is still seen by many as a hands-on business guide—and rightly so. Few of his works are as focused on practical application, packed with diagrams and terminology. But what’s truly interesting about the book is how, while walking readers through practical operations, Drucker is also helping them rethink what business actually is. He starts right where most businesspeople do—with the desire to make money. But he warns: not every boss who makes money actually understands how they made it—or which products brought in the profit. To figure that out, they have to understand their business as a whole. But doing that means stepping out of personal ego and illusions of success. It means knowing which accounting method reveals the truth. It means identifying which products are making money—and then asking why. And the right way to find out why a product makes money isn’t to ask the product manager, engineer, or designer—it’s to understand the customer’s needs. If the boss and the product manager are serious about understanding the customer, they’ll realize the customer isn’t buying a product—they’re buying value, value that meets a particular need. And customer needs change constantly—just like the weather. Even the smartest people can only partly predict these shifts. The wise approach is to treat change as a given and figure out how to deal with it, manage it, and adapt to it. Once they accept this truth, bosses and managers begin to see the market differently. Results are not things created inside a company—they’re things selected by customers in the marketplace. Profit isn’t wealth created by the company and kept by it; it’s a risk buffer that allows the company to stay in the market. Innovation isn’t a CEO suddenly struck by inspiration; it’s people with entrepreneurial spirit using new combinations of resources to meet customer needs and produce performance. A boss who’s serious about business—and honest about reality—can start out wanting to make money and end up with an entirely new perspective, and a deeper understanding of business. At the end of Managing for Results, Drucker wrote something striking. He believed that not only entrepreneurs and managers need to understand business—they have a responsibility to help the public understand it too. They must become educators in civil society. Even today, in modern, industrialized nations with booming economies, many well-educated citizens still don’t understand business. They look down on it. Some even hate it. They don’t lack conscience—if anything, they’re overflowing with it—but they lack imagination and understanding. They don’t see that business is actually a form of rational exchange and creative mutual benefit between people. And because they don’t understand this, they not only despise business—they become impatient with any kind of rational exchange or creative collaboration. Instead, they get used to imposing their moral preferences on others. That kind of moral arrogance keeps producing hatred and division in modern society. Of course, Drucker didn’t believe business could solve all of society’s problems. But he did believe that the motive behind commercial civilization isn’t only about profit. He also believed that civilized business itself is a form of education for modern society. Because civilization—no matter where it appears—always involves understanding, creating, sharing, and exchanging organizational frameworks. As he wrote: “The economic task, if done purposefully, responsibly, with knowledge and forethought, can indeed be exciting and stimulating, as this book has, I hope, conveyed. It offers intellectual challenge, the reward of accomplishment, and the unique enjoyment man derives from bringing order out of chaos.” Drucker often quoted the British philosopher Alfred North Whitehead (1861–1947). As far as I know, Whitehead may be the only modern philosopher—besides Drucker—who truly understood the beauty of business. In his 1925 book Science and the Modern World, Whitehead wrote something strikingly similar: “Art is not limited to sunsets. A factory—by virtue of its machines, its community of workers, its service to the general public, its reliance on organizational and design genius, and its potential as a source of wealth for shareholders—is a living organism rich with value.” But Whitehead also said something even more important, in The Adventure of Ideas (1933): “Plato was right: The creation of the world—the world of civilized institutions—is the victory of persuasion over force.” And business civilization—especially the kind that Drucker and Whitehead envisioned, one that creates order and beauty—is perhaps the most brilliant demonstration of how persuasion can triumph over conquest.  As Drucker said, it’s not just businesspeople who need to understand this. Every citizen of the modern world should too. Because even now, the opposite impulse is still alive—the desire to replace persuasion with conquest and turn business into a game of domination.

Satya Nadella and the Liberal Art of Management

By Robert Kirkland Ph.D. • April 21, 2025
When Satya Nadella assumed the role of Microsoft’s Chief Executive Officer in February 2014, the company was experiencing the early symptoms of organizational sclerosis. Though still profitable, it had lost ground to more agile competitors in the mobile and cloud sectors. Internally, Microsoft had become fragmented—defined more by turf battles than innovation. The challenges Nadella inherited resembled those Peter Drucker articulated decades earlier in his conceptualization of the Functioning Society of Institutions (Drucker, 1946). Drucker’s view—deeply shaped by the failure of social cohesion in interwar Europe—called for institutions to reorient themselves not just around efficiency, but around meaning, moral purpose, and self-development. Nadella’s Microsoft has arguably become one of the clearest corporate embodiments of Drucker’s philosophy of Management as a Liberal Art (Drucker, 1989). Much of Nadella’s success can be attributed to his emphasis on empathy and cultural reinvention. Prior to his appointment, Microsoft was widely seen as a combative, insular organization (Lohr, 2014). Nadella moved swiftly to change this. In his internal communications and public interviews, he spoke often of empathy—not as a rhetorical flourish, but as a managerial imperative. This commitment mirrored Drucker’s belief that management must engage the whole human being, acknowledging both rational capability and emotional complexity (Drucker, 1989). Drucker emphasized that organizations ought to be places where people grow in both skill and character. Nadella’s redefinition of leadership as empathetic listening and continuous learning operationalized that belief in a modern, corporate context. At the center of Nadella’s early cultural transformation was the introduction of a "growth mindset," a concept he borrowed from psychologist Carol Dweck (Dweck, 2006). Employees were encouraged to ask questions, seek feedback, and approach problems with humility. Drucker had long argued that a functioning institution required the cultivation of self-awareness and wisdom (Drucker, 1993). Nadella, in fostering a company-wide learning orientation, aligned Microsoft's trajectory with the MLA principle that personal development and organizational mission must progress hand-in-hand. The result was an environment that encouraged intellectual humility without sacrificing performance. Equally important in understanding Nadella’s alignment with Drucker’s MLA framework is the redefinition of Microsoft's mission. Under Steve Ballmer, the mission had been tightly product-focused: "a PC on every desk and in every home." Nadella’s version was broader and more aspirational: “to empower every person and every organization on the planet to achieve more” (Microsoft, 2017). Drucker might have called this a shift from a narrow economic mandate to a wider societal purpose. In The Concept of the Corporation, Drucker (1946) warned against corporations existing as islands of profit, detached from community responsibilities. Nadella’s mission reframed Microsoft not just as a tech vendor but as a social actor—a stakeholder in global development. Drucker’s emphasis on function and status within a functioning institution also finds modern expression in Nadella’s restructuring of Microsoft's performance evaluation system. The previous stack-ranking model—which pitted employees against each other—was scrapped (Wingfield, 2013). It had rewarded individual performance over team cohesion, eroding trust and stifling creativity. Nadella implemented a performance system that rewarded collaboration, curiosity, and contributions to others’ success. This pivot acknowledged Drucker’s claim that organizations succeed not when individuals compete within them, but when their actions contribute meaningfully to a shared mission (Drucker, 1989). In accordance with Drucker’s MLA principle that organizations must exist within society—not apart from it—Nadella also led Microsoft into a new era of corporate social responsibility. Under his watch, Microsoft committed to becoming carbon negative by 2030, developed AI tools for accessibility, and began publicly advocating for ethical technology development (Microsoft, 2020). Drucker (1999) asserted that institutions must balance individual rights with societal duties. Nadella’s policies gave concrete expression to this ideal, embedding corporate ethics into strategy, not as appendages but as essential elements of long-term resilience. Crucially, Nadella has approached leadership with the recognition that authority alone does not confer legitimacy. Drucker emphasized the importance of persuasion over coercion, process over fiat (Drucker, 1990). Nadella, rather than enforcing top-down directives, frequently invites employee participation in major shifts. Microsoft’s move into open source software—once unthinkable—was carefully socialized within the organization and presented not as an edict, but as a necessary cultural and business evolution (Miller, 2018). The broader implications of Nadella’s leadership can be understood through Drucker’s transdisciplinary lens. Drucker saw management as a “liberal art” because it required the application of ethics, psychology, history, and even theology in decision-making (Drucker, 1989). Nadella frequently cites literature, philosophy, and biography in his public remarks. His personal reflections often involve moral and philosophical introspection, underscoring Drucker’s belief that leadership is a humanistic endeavor requiring breadth of thought and emotional depth (Nadella, 2017). Despite Microsoft’s technological focus, Nadella’s management philosophy resists technocratic reductionism. His belief that people—not platforms—are the key to innovation affirms Drucker’s warning that effective management is not merely quantitative but judgment-based (Drucker, 1990). Microsoft’s market capitalization under Nadella has more than tripled, underscoring that an ethical, human-centered organization is not incompatible with economic success (Nasdaq, 2024). As Drucker argued in The New Realities, leadership in a knowledge society must move beyond command structures and embrace complexity, diversity, and continual learning (Drucker, 1989). Nadella has not only embraced these values—he has embedded them into Microsoft’s organizational DNA. His leadership demonstrates that Management as a Liberal Art is more than a theoretical framework; it is a viable, proven, and necessary strategy for organizational renewal and social relevance in the 21st century. References · Drucker, P. F. (1946). The concept of the corporation. New York: The John Day Company. · Drucker, P. F. (1989). The new realities: In government and politics, in economics and business, in society and world view. New York: Harper & Row. · Drucker, P. F. (1990). Managing the non-profit organization: Practices and principles. New York: HarperBusiness. · Drucker, P. F. (1993). Post-capitalist society. New York: HarperBusiness. · Drucker, P. F. (1999). Management challenges for the 21st century. New York: HarperBusiness. · Dweck, C. S. (2006). Mindset: The new psychology of success. New York: Random House. · Lohr, S. (2014, February 4). Satya Nadella, Microsoft’s new chief, is a company man. The New York Times. https://www.nytimes.com/2014/02/05/technology/satya-nadella-named-chief-of-microsoft.html · Microsoft. (2017). Our mission. https://www.microsoft.com/en-us/about · Microsoft. (2020). Microsoft will be carbon negative by 2030. https://blogs.microsoft.com/blog/2020/01/16/microsoft-will-be-carbon-negative-by-2030/ · Miller, C. C. (2018, October 22). How Satya Nadella remade Microsoft as an open source company. The New York Times. https://www.nytimes.com/2018/10/22/technology/microsoft-open-source.html · Nadella, S. (2017). Hit refresh: The quest to rediscover Microsoft’s soul and imagine a better future for everyone. Harper Business. · Nasdaq. (2024). Microsoft Corporation (MSFT) stock performance. Nasdaq.com. https://www.nasdaq.com/market-activity/stocks/msft · Wingfield, N. (2013, November 12). Microsoft alters employee review process. The New York Times. https://www.nytimes.com/2013/11/13/technology/microsoft-alters-employee-review-process.html
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