Management as a Liberal Art Research Institute

Loving Drucker, Fearing the Full Drucker

Bo Yang Ph.D.

PUBLISHED:

August 8, 2024

"Although Peter Drucker did not like autocratic management, I must be autocratic about one thing: all employees must learn Drucker's management theories," said Cheng Zhenshuo, the owner of a chemical company in Huangshan, Anhui. Despite the economic downturn in China, his business has grown this year. Like many Chinese bosses, Mr. Cheng enjoys drinking tea, reading Buddhist scriptures, and discussing ancient Chinese classics like Laozi and "Da Xue" in his spare time. However, he believes that Drucker's management theories are more practical for businesses and employees. When Mr. Cheng requires his employees to study Drucker, he refers to Drucker's smart advice on how to work efficiently, such as how managers should manage time, how to hold more effective meetings, and how to motivate partners and employees with high goals. In his view, Drucker's works provide him with a toolbox for "working smarter."


"When the boss is the most powerful person in the company, he should be wary of his own arrogance. If the boss is always smarter than the employees, likes to hear praise, and the employees feel they need to rely on the boss for everything, then despite past successes, the company's future is unlikely to be bright," said Sun Zhiyong, the owner of a high-end furniture company ranked second in China's luxury furniture market. Mr. Sun discovered Peter Drucker earlier than Mr. Cheng. In the early 2000s, to understand Drucker's management theories, he would take the night train from Hefei to Beijing every month, a time when China's high-speed rail was not yet developed. He believes the most important lesson he learned from Drucker is the restraint and caution of power. Among Drucker's "entrepreneur readers," Mr. Sun is one of the few who discovered the theme of "power" in Drucker's books. Over more than 20 years of entrepreneurial life, Mr. Sun has grown increasingly appreciative of Drucker's wisdom: if an entrepreneur enjoys the glory brought by power and thus does everything possible to seize power, it may bring disaster to the enterprise. Because overly concentrated and therefore ineffective power can drain the vitality of the enterprise. However, Mr. Sun discusses this topic very cautiously. He likes to express his views on "power" to familiar entrepreneur friends. But he never allows his topics to go beyond the boundaries of business management. In China, avoiding political discussions is a protective measure for entrepreneurs and their companies.


In today's China, entrepreneurs like Mr. Cheng and Mr. Sun are very typical. Born in the 1970s, they did not receive a complete formal education and built medium-sized enterprises from scratch. They have a clear understanding of their abilities, knowing their success comes from the era, luck, and rich life experiences. They also know these factors cannot guarantee continued success in future competition. To manage their companies more wisely, they need a sound methodology to help them better understand the world, politics, economy, work, and life itself.


Many Chinese entrepreneurs and professional managers need a methodology for work and life. As a result, various methodologies have become hot commodities, creating a huge market. Every year, publishers release a large number of best-selling books on methodologies. Countless training courses are offered online and in high-end hotel conference rooms. Business lecturers sell various methodologies promising success to entrepreneurs. Some claim their wisdom comes from ancient Chinese texts, while others come from the latest research in American business schools. Among these courses, Peter Drucker's management theories are not popular. Compared to those trendy success courses, Drucker's philosophy always seems out of place because Drucker emphasizes responsibility over profit.


Chinese entrepreneurs also like to talk about the word "responsibility." However, most bosses think "responsibility" is a tool to restrain and punish employees. Even if they read the word "responsibility" in Drucker's books, they habitually understand it in their own way. As a result, many employees in Chinese companies do not particularly like their bosses studying Drucker. Therefore, whenever a boss talks about Drucker, employees guess that "this year's workload will definitely be greater." In the boss's dictionary, "responsibility" is synonymous with "work tasks." Bosses like to pat employees on the shoulder and kindly tell them, "Your responsibility this year will be greater than last year."


If these bosses seriously read a few of Drucker's articles, they would likely not enjoy talking about Drucker as much. This is because Drucker's understanding of "responsibility" is completely opposite to theirs. Drucker believes responsibility is primarily about self-awareness and self-discipline. Only by understanding responsibility can people effectively use knowledge and power to create performance. Few entrepreneurs can understand and appreciate Drucker's concepts. When they translate their understanding into action, they find that Drucker can help them lead their companies better.


Therefore, despite being born in the early 20th century and passing away in the early 21st century, Peter Drucker's books are still bestsellers in China.


The China Machine Press is the agent for Drucker's works in China. They have just published commemorative editions of "The Effective Executive" and "Managing for Results." These two books have been popular in China for many years, with many pirated copies circulating. Nevertheless, the latest commemorative editions are still bestsellers. The editors at the China Machine Press are smart. They know Drucker's books have a good market in China, so they actively form marketing teams and use various methods to promote Drucker's works. Usually, these marketing methods are only used for newly published books. However, the editors' cleverness is also reflected in another aspect: they have published the complete works of Drucker, but most of the works have been abridged.


They want entrepreneurs to buy Drucker's books but do not want political censors to notice them.


This brings us to the interesting aspect of Peter Drucker. He was a renowned management theorist, and his books are useful to entrepreneurs and professional managers. However, Mr. Drucker never wrote solely for entrepreneurs, and his interests were not limited to business management. Politics and society were deeply concerned topics for Drucker. He predicted the collaboration between Hitler and Stalin in the 1920s and the collapse of the Soviet Union in the 1980s. His first book was titled "The End of Economic Man."


The China Machine Press published the complete works of Peter Drucker, but this collection does not include Drucker's first book because its theme is totalitarianism. Moreover, you will not find discussions about Stalin, Mao Zedong, and communism in this collection. You can read Drucker's insightful views on Christianity in this collection, but you may find it difficult to understand because the necessary context has been removed.


The editors believe Drucker's books are valuable but also know that unabridged versions are dangerous. Entrepreneurs who like Drucker have similar views. They like Drucker because they found some methodology in one of his books or a particular sentence, but sometimes they also find Drucker annoying because they do not intend to think or discuss politics like Drucker. Discussing politics in China is risky; discussing politics like Drucker is especially dangerous. According to Drucker, the prerequisites for a healthy political environment are:


·                Freedom based on responsibility

·                Power with clear boundaries

·                Vigilance against totalitarianism

·                A diverse social ecology

·                Pluralistic and autonomous social organizations

·                Respect for individual freedom and dignity


Every editor and entrepreneur knows these are dangerous topics.


This is the situation of Peter Drucker in China. People love Drucker, but fear the full Drucker.

The Future of Knowledge Work: What Drucker can teach us

By Karen Linkletter Ph.D. • November 19, 2024
Interview with Karen Linkletter at the 16th Global Peter Drucker Forum 2024  Video Interview

The Specifics of Management of the Knowledge Worker

By Ryan Lee • November 7, 2024
Nowhere is management theory demanded more than in managing the knowledge worker, and yet nowhere is management theory more inadequate in addressing a field’s issues than in knowledge work. This is the point Peter Drucker posited in his work Management Challenges for the 21st Century (1991), and to resolve it he came up with six factors that determine the productivity of the management worker. Among these, his final point that management workers “must be treated as an ‘asset’ rather than a ‘cost’” by any given organization is an important concept1. While it only gradually emerged within management theory over the century, it is crucial for any employer and any government to understand and apply if they are to retain a competitive advantage going into the future. Historically, management theory has been about improving the output of the worker through banal efficiency: how to increase the production of steel per head, how to increase the production of cars per hour, how to minimize deficient products, etc. In all these considerations, the worker is a disposable resource. When he is hired, he is set to a particular task that is typically repetitive and thus easily taught, and when he is not needed because of shortcomings in his work, company difficulties, or automation, he is laid off. Referred to as “dumb oxen”, workers were seen in management theory as machines to have productivity squeezed out of. The shift from a majority manufacturing to service-based economy during the first half of the twentieth century changed this dynamic to some extent. The American postwar economic boom introduced the office worker as a common source of employment. This trend continued throughout the conglomerate era of the 1960s and was helped by the decline of the American manufacturing industry in the 1970s. Now in a stage dominated by service and knowledge work, the American economy must approach management differently. The aforementioned cost-asset shift is a demonstration of why this is so, as Drucker’s emphasis on the knowledge worker’s autonomy means that they wield control, not only within their job but over who they should work for as well. This in addition to the high-capital nature of knowledge workers means that the old management theory approach to labor as disposable will backfire catastrophically for any company that tries it with their knowledge workers. It is also important to remember the demographic trends of the United States, and more so the world, in considering why the cost-asset shift is vital. For all of human history until some fifty years ago, population was considered to be in tandem with economic power, given larger populations yielded larger labor forces and consumer markets. Economic growth was thus also correlated with population growth, demonstrated by the historic development of Europe and the United States and the more recent examples of the developing world. Consequently, the worldwide decline in fertility rates, and the decline in population numbers in some developed countries, signals economic decline for the future. In the labor market, smaller populations mean fewer jobs that produce for and service fewer people. Although the knowledge worker has grown in proportion to the total labor market, these demographic declines will affect knowledge workers as well, meaning employers will have a vested interest in retaining their high-capital labor. To enforce this, the cost-asset shift will have to come into play. The wants and needs of the knowledge worker pose a unique challenge in the field of management. Autonomy, for the first time, can be regarded as a significant factor affecting all other aspects of this labor base. What good does a large salary provide a knowledge worker if they don’t feel that they are welcome at an institution? How would they perceive that their work is not being directed towards productive pursuits at their corporation, especially given the brain work and dedication given to it? Of course, the fruits of one’s labor has been a contentious issue in management ever since compensation and workers’ rights became a universal constant with the Industrial Revolution, but this is augmented by the knowledge worker’s particular method of generating value. Given that Drucker poses their largest asset and source of value as their own mind, they will intrinsically have a special attachment to their work almost as their brainchild. Incentivizing the knowledge worker is also only one part of this picture. Per Drucker, the knowledge worker’s labor does not follow the linear relationship between quantity invested and returned. The elaborate nature of knowledge work makes it heavily dependent upon synergy: the right combination of talent can grow an organization by leaps and bounds, while virtually incompatible teams or partnerships can render all potential talent useless. And the human capital cost of the knowledge worker, both in their parents and the state educating them and in cost to their employers, is astronomical compared to all previous kinds of labor. In conclusion, the needs and wants of the knowledge worker must be met adequately, especially in the field of management. Management must almost undergo a revolution to adapt to this novel challenge, for the knowledge worker is the future of economic productivity in the developed world. Those employers that successfully accommodate the demands of this class of talent will eventually reign over those that do not accept that this is the direction economic productivity is headed.  References Drucker, P. F. (1991) Management Challenges for the 21st Century. Harper Business.

The Wisdom and Continuing Relevance of Peter Drucker

By Michael Cortrite Ph.D. • November 7, 2024
What is wisdom? The dictionary says it is knowledge of what is true and right coupled with just judgment as to action. Jennifer Rowley reports that it is the “ability to act critically or practically in a given situation. It is based on ethical judgment related to an individual's belief system.” (Rowley 2006 p. 255). So, wisdom seems to be about deciding on or doing an action based on moral or ethical belief in helping other people. This clearly describes Peter Drucker and his often prescient ideas For the 100 th anniversary of Peter Drucker’s birth, Harvard Business Review dedicated its November 2009 magazine to Drucker. In one of the articles about Drucker by Rosabeth Moss Kanter (2009 p. 1), What Would Peter Say? Kanter posits that, Heeding Peter Drucker's wisdom might have helped us avoid—and will help us solve numerous challenges, from restoring trust in business to tackling climate change. He issued early warnings about excessive executive pay, the auto industry’s failure to adapt and innovate, competitive threats from emerging markets, and the perils of neglecting nonprofit organizations and other agents of societal reform. Meynhardt (2010) calls Drucker a towering figure in Twentieth Century management. He says no other writer has had such an impact. He is well-known to practitioners and scholars for his practical wisdom and common sense approach to management as a liberal art. Drucker believed that there is no how-to solution for management practice and education. Doing more of “this” and less of “that” and vice versa is not how Drucker suggests managers do their work. Rather, Drucker relies more on morality and the virtue of practical wisdom to solve problems related to organizations. The virtue that Drucker talks about cannot be taught. It must be experienced and self-developed over time. A good example of this is Drucker’s Management by Objectives (MBO). Drucker does not give technical advice on how to initiate MBO. Rather he wisdomizes his moral convictions that integrating personal needs for autonomy with the quest of submitting one’s efforts to a higher principle (helping people) ensures performance by converting objective needs into personal goals. (Meynhardt, 2010). Peter Drucker published thirty-eight articles in the Harvard Business Review (HBR) and seven times won the McKinsey Award presented annually to the author of the best article published during the previous year in HBR. No other person has won as many McKinsey awards as Drucker The former editor-in-chief of Harvard Business Review, Thomas A. Stewart, quotes Peter Drucker; “The few of us who talked of management forty years ago were considered more or less deranged.” Stewart says that this was essentially correct. Harvard Business Review's very mission is to improve management practice. Stewart says this mission is inconceivable without Drucker’s work. Drucker’s work in management planted ideas that are as fruitful today as they ever were. Stewart posits that each year, managers discover extraordinary and immediate relevance in articles and books that were written before they were born or even before their parents were born. Stewart (2016) tries to answer the questions: Why does Drucker’s work endure? and Why is Drucker still relevant? First, was Drucker’s talent for asking the right questions. He had an instinct for being able to not let the urgent drive out the important, for seeing the trees, not just the forest. This allowed him to calmly ask pertinent questions that encouraged clients to find the proper course to take. Secondly, Drucker was able to see whole organizations. Instead of focusing on small particular problems. Ducker had the ability to find the overarching problem as well. Stewart uses Drucker’s 1994 HBR article, The Theory of the Business to make this point. Many people were trying to analyze the problems of IBM and General Motors by looking for root causes and trying to fix the blame. Drucker, on the other hand, argued correctly that the theories and assumptions on which they had managed successfully for many years were outdated. This article is as relevant today as it was in 1994 because Drucker took the “big picture view.” And no one else has ever been so skillful at describing it. Thirdly, starting in 1934, Drucker spent two years at General Motors with the legendary Alfred P. Sloan, immersed in the workings of the automaker and learning the business from within. This allowed him to talk with authority, but he has always stayed “street smart and wise.” This mentoring helped give Drucker the gift of being able to reason inductively and deductively. He could infer a new principle or a theory from a set of data or being confronted with a particular problem; he could find the right principle to apply to solve it. Drucker’s first article published in HBR, Management Must Manage, challenged managers to learn their profession not in terms of prerogatives but in terms of their responsibilities, to assume the burden of leadership rather than the mantle of privilege. Many in the management/leadership field probably found Drucker to be “deranged,” but in 2024, this is important advice for leader (Stewart 2006). Just a few more of Drucker’s ideas that seemed well outside the mainstream when he proposed them but are standard practice today include: Managing Oneself, Privatization, Decentralization, Knowledge Workers, Management by Objectives, Charismatic Leadership Being Overrated, CEO Outsize Pay Packages, and Enthusiasm of the Work of the Salvation Army (Rees, 2014). Clearly, Drucker remains relevant! References: Kanter, R. 2009. What would Peter say? Harvard Business Review. November, 2009. Meynhardt, T. 2010. The practical wisdom of Peter Drucker: Roots in the Christian tradition. Journal of Management Development Vol. 29. No. 7/8. Rees, M. 2014 The wisdom of Peter Drucker. Wall Street Journal. Dec. 12, 2014. Rowley, J. 2006. Where is the knowledge that we have lost in knowledge? Journal of Documentation. Vol. 62, Iss. 2. 251-270. Stewart, T. 2006. Classic Drucker. Editor Thomas A. Stewart. Harvard Business School Publishing Corporation.
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