How to Apply Management as a Liberal Art *

Five years before he died, Peter Drucker revealed his basic belief about management for the first time. What a surprise!  He wrote: “Management is what tradition used to call a liberal art - ‘liberal’ because it deals with the four fundamentals of knowledge, self-knowledge, wisdom, and leadership; ‘art’ because it deals with practice and application.”

That’s not what others said. They said that management was a science.  The popular manta was and is “quantitative analysis for business decisions.” Most management practitioners ignored the liberal arts and focused on economics and quantitative analysis.

If Drucker is correct, a different approach is desirable. The impacts of ethics and social responsibility in management are not just desirable, they are required. But there’s more emphasis than Drucker’s words. To neglect the fact that liberal arts are necessary in decision-making, problem-solving, and discovery, is also to ignore the fact they have been used and their need proven by scientists for centuries. They have not only verified the liberal arts as effective, but in many cases proven them critical to success. Albert Einstein, a world-renowned scientist who accomplished amazing discoveries in theoretical physics, used not quantitative analysis, but the liberal arts in his work. Einstein’s theory of relativity, for example,  was accomplished by his imagining himself traveling with a beam of light and what was observed to those remaining stationery, not computers and economic analysis.

Einstein employed liberal arts in many other discoveries. He was awarded the Nobel prize in Theoretical Physics for four papers  all published in one year, 1905. How he did this he explained in a letter to the London Times dated November 28, 1919. Among these is probably the world’s best known equation, E = MC²,  representing the conservation of energy. He calculated this the same way,  using the liberal arts along with the theory of relativity the same year.  For these four major papers, he was awarded the Nobel Prize in Theoretical Physics. He used the liberal arts. Einstein didn’t use computers, had no lab assistants, and didn’t have a room with chalk-filled blackboards. He was an unknown and did the research while in an entry level position as a patent examiner at the Swiss Patent Office in Bern after receiving his PhD at the University of Zurich.

Economics are but One of Many Topics

Drucker demonstrated that though numbers may be a factor in successful profitability in decision-making, there are always other factors which may be significant in a different situation which can be more important and must not be ignored. Ethics and social responsibility are two important examples. Because management is an art and decisions must be made about an issue and environment that are more complicated and subject to more variability than numbers alone, other topics are equally, and sometimes more important. As an art, such work deserves to be accomplished as if you were developing a musical sonata, painting, or sculpture because, that’s pretty much what you’re doing.

Drucker’s Approach

When Drucker wrote that management was a liberal art, some thought he was anti-science. He wasn’t. But Drucker frequently found advantages to the use of the liberal arts and sometimes even non-quantifiable factors were more important than “quantitative analyses.” He used quantitative methods when appropriate but did not omit important non-quantifiable facts. For example, he showed that while profitability in business was necessary, maximum profitability might not even be a worthwhile or even an ethical goal, even if it were possible by segmenting the market.

Earning a PhD Under Drucker

Ten years after I received my MBA at a first-class business school which prided itself on being arguably the leading school in quantitative management decision making, I entered the PhD program which had been co-developed by Drucker including courses taught only by him and his dean, Paul Albrecht. Their methods differed significantly from other professors. Drucker maintained that at the end of the day, managers make decisions from the gut, and that economics was just one input, and not the only one. He specified four fundamentals necessary for what is now known as Management as a Liberal Art or MLA: 1. Knowledge, 2. Self-knowledge, 3. Wisdom, and  4. Leadership.

Specific Knowledge, the First Fundamental

Drucker listed the following topics that are traditionally included among liberal arts topics: Humanities, Social Sciences, Psychology, Philosophy, Economics, History, Physical Sciences, and Ethics. Unsurprisingly unique knowledge is frequently generated when someone from a different organization, industry, company, country or specialty joins yours. Drucker’s experience was that the most important innovations tend to arrive in this way. Therefore, any knowledge may be useful in a particular situation for a successful solution. Therefore, potential solutions based on unfamiliar ideas should be welcomed, evaluated, and not ignored regardless of source.

Self-Knowledge, the Frequently Overlooked Fundamental

“Self-knowledge” refers to knowledge of one’s own sensations, thoughts, beliefs, and other mental states, but also the state of your organization. Self-knowledge comes from experience, success, failure, observation, and reflection on lessons learned and applied, but also an examination of conditions and resources in your own organization including both strengths and weaknesses.

Two thousand years ago the Chinese philosopher and successful military general, Sun Tzu, wrote: “If I know myself and know my enemy, I need not fear defeat in 100 battles. If I know only myself, I will lose half. If I know only my enemy and not myself, I will lose all.” This says that while knowing your potential competition is important, knowing your own capabilities and limitations may be even more so.

The Fourth Fundamental is Wisdom

Most believe that wisdom originates from experience, but one must use the experience gained and review results before it can be said that wisdom has been assimilated and demonstrated. Though difficult to acquire, many cultures, including our own, believe in its importance. The Chinese culture, one of the oldest existing cultures assign it a high value. There are also 222 mentions of wisdom in the Jewish Holy Scriptures and wisdom is thought to be a foundation of Jewish thought. Certain wisdom was observed abroad and considered unique in America as early as 1815.

In that year, an artistic  work on his impression of this unfamiliar new country was completed by James Barralet, an emigrant of Irish and French origin. He described it simply as “America Guided by Wisdom” and created an engraving representing this concept that still hangs today in the Library of Congress in Washington, DC. Of course, a lot has happened since 1815, and we sometimes make mistakes during wisdom’s formation, but the effort and its results are still self-evident.

The Most Important Element of MLA: Leadership

Drucker investigated and found that 50% of the results of management decisions come from leadership, while all other actions contribute smaller individual percentages to constitute the remaining 50%. However, Drucker made it clear that the leadership he recommended must be practiced ethically.

A business must be profitable to continue to operate, but society also demands from businesses social responsibility. Drucker constantly pointed out examples. One of his favorites was case of Julius Rosenwald, President and later Board Chair of Sears Roebuck from 1908 until his death in 1932 which was a period of its great growth. He established the Rosenwald Fund, which was the first of its kind and donated millions of dollars in matching funds to promote the vocational and technical education of minority employees, noting that he considered this a duty. In those days this was a highly unusual act.

Drucker added that while society expected a company to be profitable it had no expectation or requirement that a company generate maximum profits especially through questionable or unethical tactics.

An Art Concerns Practice, Application and Results

As Drucker pointed out, as an art, MLA deals with practice, application, and results.  Contrary to the poor conduct and practices that sometimes appear, Drucker maintained that only the best and highest ethical conduct was acceptable. As Drucker’s former student and remembering his values and teachings, I doubt whether he would change his opinion as to what he believed regardless of what others might think or some of the poor examples of leadership sometimes observed by leaders in well-known business or government .

This sets MLA apart and the leadership he demanded is not always easy. Unlike use of mathematic formulae, the learning of which may be confirmed by memorization, paper application, and testing for significance, mastery of MLA can only be demonstrated by application, which includes not only performance, but maintaining ethical values and responsibility. As Doris Drucker, Peter’s widow, said on several occasions “I admired much about my husband, but most of all, I admired the values he believed in and represented.”

References

*Adapted from the following with extracts published internationally

Drucker on Leadership by William A. Cohen (Jossey - Bass, 2010

Drucker’s Way to the Top by William A. Cohen (LID, 2019)

The New Art of the Leader, by William A. Cohen (Prentice Hall, 2000)

The Art of the Leader, 3^rd edition by William A. Cohen (Pyramid Press, 2018)

The Art of the Strategist (audio version) by William A. Cohen (Harper Collins, forthcoming, 2023-24)