Management as a Liberal Art Research Institute

The Drucker Difference

William A. Cohen, Ph.D.

PUBLISHED:

May 2, 2024

The Executive PhD program that Peter Drucker, “the Father of Modern Management,” and his dean, Paul Albrecht, developed at Claremont Graduate University in 1975 was the first accredited PhD intended for future top executives. According to Albrecht, this PhD taught the “Drucker Difference” for those “with top management potential.” It was and is expensive.


There were only ten students in the first cohort, and only one of the ten completed the program. This individual eventually rose to the rank of major general in the U.S. Air Force, and, after retirement, founded The California Institute of Advanced Management with Minglo Shao, a Chinese billionaire who had earlier founded Drucker Academies across China. Others graduated in later cohorts and became senior corporate executives, presidents of colleges and universities, and entrepreneurs. 


Was Drucker Really Different?

Most professors built their careers on conventional research and publication in academic journals. Drucker didn’t. His numerous articles were written for practitioners, not primarily researchers. They appeared in the Harvard Business Review, the Wall Street Journal and other journals read primarily by practitioners. In June 2004, Harvard Business Review honored Drucker  with his seventh McKinsey Award for his article, "What Makes an Effective Executive. 


Drucker’s 39 books were written for practitioners as well. They won and received numerous accolades. Yet Drucker did not write synthetic research typical in academia, where one or more hypotheses based on multiple inputs are tested for significant differences. 


Drucker used a different research model. He declared, “corporations are my laboratories.” His conclusions from observation are the basis of the Drucker Difference. They were explained first by Einstein who used the method and explained it in an article in the London Times.


Drucker’s Research Model

Asked in class where he got his vast knowledge and extensive experience to help organizations in so many different industries, Drucker answered: “I have no vast knowledge nor extensive experience on any specific topic. I have only ignorance and lack of experience. Therefore, all I can do is to ask questions. Clients have the knowledge and experience which I lack; they are the real experts on the topics they hire me for.” 


He then gave examples of his questions, beginning with “What business are you in?” “Who is your customer” “What does your customer value? “What are your objectives” and “What is your plan for getting those results?” 


Other Questions

General Electric’s former CEO Jack Welch, who retired with the largest retirement package ever awarded, significantly increased GE’s wealth. He credited Drucker’s consulting. Welch said that Drucker had asked him two questions: “If you have a choice, which GE businesses would you discard?” and “If this is true, what are you going to do about it?” 


Welch explained that he made the decision to sell or liquidate even profitable GE businesses, which were not number one or two in their markets and were unlikely to attain these positions. He used the funds to invest in businesses with better potential.  Over nine years this increased GE’s wealth by 4000 percent. This became known as Drucker’s Abandonment Theory.


Another former client explained: “Drucker got us thinking through our problems and applying our own knowledge and experience in a way we had never considered previously. This was amazingly effective, and we found solutions to our problems with his guidance that we had overlooked.” 


Drucker was Different 

Here was an expert who not only did not claim special talents but rejected the title “guru.” Drucker made no claim as being an extraordinary management researcher. When not at the university, Drucker used his home as his office. He practiced without a staff or even a secretary. He even answered his own phone. He did not claim any special expertise or experience. Yet he reportedly received as much as $10,000 for a few hours work. Few complained. He taught a simple procedure to students. It began with defining the problem and determining the relevant factors including facts, estimates, speculations, assumptions, time available and financial limitations. Only then did he advise clients to identify, discuss, compare, and analyze possible solutions.


Strategy, not Formulae

Drucker refused to develop strategy by formula. There was no BCG nor GE/McKinsey chart with cash cows or dogs. He believed that each situation was so unique, that a manager must know as much as possible to determine strategy. There was no common element of identical importance for all situations. What was decisive and important in one situation might be totally unimportant in another. 


Decisive elements might not even be quantitative or directly associated with profit. While profitability was deemed as necessary to a business as oxygen to breathing, he said that profit maximization was not, and noted that transistor radios were developed in the U.S., but lost the market to the Japanese because American developers tried to maximize profit. Drucker described management as a liberal art and suggested that liberal arts should be employed in developing strategies and management decisions. He noted economics, ethics, history, humanities, philosophy, social science, physical sciences, and psychology, as all being useful in a variety of managerial and business situations. He noted that in addition to external knowledge, self-knowledge of the organization and its people and available resources might be of even greater importance. 


Drucker also wrote that 50% of the outcome of any project was due to its leadership. Once invited by an organization to explain the latest leadership techniques, he rejected the opportunity with the explanation that the latest techniques were known to the ancients and recommended that his inquirer read “the first systematic book on leadership and still the best” which had been written 2000 years earlier by Xenophon, an ancient Grecian general and author.


Drucker and Research 

Most controversial was Drucker’s approach to research, yet it was also employed by Einstein who’d been a researcher in theoretical physics.


In the single year, 1905, Einstein produced four papers, winning the Nobel Prize for theoretical physics. All four were written a year after earning his PhD at the University of Zurich while he was working at the only job he could obtain: as Assistant Patent Examiner in the Swiss Patent Office in Bern. Like Drucker, he had no conventional laboratory or computers.


The Theory of Relativity

Einstein himself described the development of one of his most famous theories, the Theory of Relativity. He imagined himself traveling along side of a moving beam of light. Einstein may have provided Drucker with ideas of research. Drucker observed people in companies in action as Einstein had observed his imaginary beam of light. He used analysis and development of what he observed to develop his theories of management.


Einstein Reveals His Research Methodology 

Einstein described his research methodology in an article in the London Times in 1919, discussing what he called his “Theories of Principle.” Einstein wrote “these theories employ the analytical, not the synthetic method of research. Their starting-point and foundation are not hypothetical components, but empirically observed general properties of phenomena, principles from which mathematical formulae are deduced of such a kind that they apply to every case which presents itself.” 


Synthetic research is what most use in research. It starts with the known and proceeds to the unknown, beginning with a hypothesis or hypotheses. It then tests these hypotheses by proving or disproving each usually by examination of a sufficient number of examples and testing mathematically for significant differences.  Einstein’s analytical research starts with the unknown and proceeds to the known. There is no hypothesis. One definition of analytical research is “a specific type of research that involves critical thinking skills and the evaluation of facts and information relative to the research being conducted.” This analytical process is how Drucker arrived at his theories and is part of the Drucker difference.


This research approach comes from a simple model:

1.   Observation, either real or even imagined

2.   Analysis of the observation or imagination

3.   Construction of theory based on this analysis 


A sampling of Drucker’s theories derived analytically include:

·      That marketing and selling are not the same. 

·      Moreover, selling is not a subset of marketing and marketing and selling could be adversarial. Since, if the product or strategy chosen by the company were better, with the same effort and ability, the same salesmen might sell more product with less effort.

·      What everyone knows (or think they know) is usually wrong. This short statement was the one most uttered by Drucker in the classroom. 

·      Social Responsibility and Ethics are part of good leadership. 

·      Society demands that an organization be profitable, but not the maximum profit attainable.

·      Many managerial decisions are made from the gut, and these may be optimal despite complex analyses. 

·      Managers must ultimately make decisions from the gut.


What Drucker taught, worked, and the “Drucker Difference” produced many successful leaders using “Drucker Difference” skills. While other factors influence results and other research methods are still valuable, researchers using primary analytical research including Einstein confirm the value of the “Drucker Difference” confirming Drucker’s conclusion that Management is a Liberal Art.


By Carol Mendenall Ph.D. March 15, 2025
Stories of travels from a distant land to a new start, a land of opportunity, have always been my favorite. My friends come from exotic countries like Syria, Yemen, Portugal, Mexico, Guam, Kuwait, and India. Countries rich with culture and history, but they came to leave behind poverty, lack of education, war, so much war, to be in America. It is the American Dream, the thread that all of our families whose origin stems from migration at some point in time share. We all come from other lands in search of a new beginning just at different times. My friends came between the ages of 10 and 19, and started as ranch hands, deli shop workers, students working retail, and farmers. Decades later they are a restaurant owner, chief engineer, gas station owner, retired military, and doting grandma. These hard-working individuals are exemplifying the American Dream. First-generation born American descendants of immigrants face a unique challenge. Though the average mantra of a teenager is ‘my parents wouldn’t understand what it is like’ has been heard by many, especially educators, it is believed and demonstrated in the behaviors of first-generation U.S. born children from immigrant families. Research states that ethnic minority males are most likely to become affiliated with gangs (McDaniel, 2012). Different research posits that the likelihood of gang affiliation has to do with the “composition of the neighborhood” (Herbst, 2013). With that being said, I need to point out that ethnic minorities new to the country tend to live in community together, so one does not negate the other. This generation believes their parents only know of the ‘old country’ and are out of touch with American ideology. Therefore, they look for people who are in the know. Many do not fall into this trap of gang life, but more do from the first-born generation than any other. It is disheartening to know friends and acquaintances have come to this country to create a ‘better life’ for themselves and their offspring only to have a child choose the gang life over family. Social Responsibility and Global Corporate Citizenship Why is this a topic of a business journal, you may ask. We who have come before, who have a foundation here, can support newcomers in their individual growth and family support. Social responsibility, specifically Corporate Social Responsibility (CSR), ‘global corporate citizenship,’ and ‘stakeholder management practices’, work on the premise that the welfare of all can be supported by the decisions of businesses (Windsor, 2001). There is an economic, environmental, and social responsibility that organizations have to the general public. Businesses need to have societal benefits in mind because governments do not always do so. Corporate Social Responsibility can be demonstrated in many ways which benefit society. Palacios (2004) posits business can be the positive context of changes in employee citizenship and ‘non-territorial forms of national identity’. As individuals increasingly create self-identity through the workplace and other organizations, it is understandable that societal needs and ‘common concerns’ such as “social equity, human rights and environmental preservation” (p.386) be shared through the business platform (Palacios, 2004). Therefore, education on the prevention of youth affiliation with gangs would be fitting in this context. Gang affiliation negatively affects the health of youth and organizations can have a positive impact. The National Gang Center (NGC) shares risk factors and strategies of intervention and prevention. NGC (2025) posits that youth are enticed by the social activities of a gang or show a range of risk factors, typically 7 or more, that push the individual away from home culture and toward a gang. These risk factors include violence in the home, early dating, academic struggles at school, limited belief in self-success at school, negative labeling by in-groups, concern for safety, community conditions, individual characteristics, peer-group influence, and abuse both physical or sexual (NGC, 2025). Individual characteristics include: “antisocial beliefs, early and persistent noncompliant behavior, early onset aggression/violence, few social ties, high alcohol/drug use, impulsivity, lack of guilt, life stressors, low intelligence, low perceived likelihood of being caught, neutralization, medical/physical condition, mental health problems, poor refusal skills, victim and victimization, family poverty, high parental stress/maternal depression, parent proviolent attitudes, poor parental supervision, poor parent-child relations or communication, sibling antisocial behavior, unhappy parents.” These characteristics are not an exhaustive list and do not include the special circumstance of being a first USA-born child of an immigrant family. Nor do all children with some of these characteristics become gang members. Studies show there is no exact or repeating pattern for why some children and teens chose gang membership, but having 7 or more factors does increase the risk of membership by 13% (NGC, 2025). Researchers indicate that most want to join a gang for socialization, which must be alluring to youths of immigrant families that want to belong to the American culture. Gang Prevention Preventions and interventions include reaching students between 5th and 12 th grades and include positive home, school, neighborhood and community interactions such as extra-curricular activities that build self-esteem and the belief of educational and life fulfillment. A key factor is instilling positive feelings between children and their parents. Positive school factors include improving academic performance, positive and safe school climate, and a positive relationship with key personnel on the campus. Prevention includes a moderate level of parental involvement, which involves warmth and control, the ability to react well to conflict, and positive connections with adults outside of the family unit as explained by McDaniel (2012). Immigrants that I have met are active parents who are actively involved in their children’s education and extracurricular activities, but these parents are combatting an additional issue. Their teens assume their parents do not have knowledge relevant to success in America even though they have proved their ability. McDaniel (2012) states that ethnic minority male children make up the largest percentage of gang members. Their children become friends with gang-affiliated minors who seem more knowledgeable of American current events than immigrant parents from a teen’s perspective. Community involvement in social interventions and gang suppression will lead to organizational change according to the National Gang Center (2025). Organizations presenting risk and protective factors to all employees increases the likelihood of gang prevention and, hopefully, can create willing volunteers to be positive role models in children’s lives for those moments when they don’t listen to their parents. Businesses sharing this knowledge with stakeholders provides support for individuals, organizations, and society. As the numbers of at-risk youth diminish, so do the negative impacts of gangs. This can be achieved through organizations willing to see their social and global influence. Dedicated to A.S. who lived a difficult and short life riddled with the strife of trying to get away from the gang life, which proved easier than getting away from the drugs he was introduced to by that ‘gang family’. To his family and two children who remain. References Dima, J. (2008). A Stakeholder Approach to Corporate Social Responsibility: A Fresh Perspective into Theory and Practice. Journal of Business Ethics : JBE; Dordrecht 82(1) 213-231. Herbst, E. (2013). The likelihood of gang membership: Immigrant generational differences among hispanic youth. A thesis for Graduate College of Bowling Green State University. McDaniel DD. (2012). Risk and protective factors associated with gang affiliation among high- risk youth: a public health approach. Inj Prev. 2012 Aug;18(4).253-8. National Gang Center. (2025). Comprehensive Gang Prevention, Intervention, and Suppression Model. US Department of Justice. Retrieved from https://nationalgangcenter.ojp.gov/spt/Programs/53 Palacios L., J.J. (2004). Corporate Citizenship and Social Responsibility in a Globalized World. Citizenship Studies 8(4). 383–402 Windsor, D. (2001), The future of corporate social responsibility, The International Journal of Organizational Analysis, 9(3). 225-256
By Carol Mendenall Ph.D. March 15, 2025
I had thought that the concept of Corporate Social Responsibility (CSR) was a fairly recent development based on my experience in business and business education. Though two social reformers did not use the term CSR, their actions showed that all stakeholders are responsible for making a positive impact on society. My familiarity with the work of management and social theorist Peter Drucker, who actively published from 1939 to 2005, led me to the conclusion that organizations have a vital role in society. While Drucker may not have used the term CSR, he certainly advocated much of what encompasses this concept. Drucker’s work includes references to the need for social responsibility in business (Drucker and Maciariello, 2008). While recently sitting in a church service, I listened to a recitation of the work of the English theologian John Wesley, who died in the year 1791. Wesley was a social reformer with striking similarities to Drucker. That experience motivated me to look more into the parallels between Wesley and Drucker, and to see the connections of both men’s thoughts to what we now term Corporate Social Responsibility. It seems that this concept is perhaps far older than I thought, showing the sustainability of this idea. A Definition and Use of Corporate Social Responsibility Corporate Social Responsibility can be defined as follows: Corporate social responsibility (CSR) is a business practice that involves integrating social, ethical, and environmental concerns into a company's operations. CSR can also be defined as a company's commitment to respecting the interests of its stakeholders (Google Search, 1-27-25). Examples of CSR include ethical leadership and management techniques, environmental involvement, and being fiscally sound and transparent within reason. It is evident that consumers value CSR activities such as limiting carbon footprint and supporting environmentally friendly fabrication solutions. Lately, some have been selecting products based on that business’ social platform. Society has shown through consumer choice and social media that CSR inspired behaviors are preferred. Many consider CSR as a 21 st century concept, but let’s see how earlier social theorists articulated this concept – one in an era before corporations existed. John Wesley (1703-1791) John Wesley, the ‘Founder and Father of Methodism,’ was a priest for the Church of England who later left this denomination to start his own (GCAH, 2025). In 1727, Wesley was given a fellowship at Lincoln College (Vickers, 2003). Westley became a failed missionary in 1735 and three years later began to speak out against predestination doctrine, arguing that grace and redemption were available to all. He began journaling and sharing his evangelical works through ‘field preaching’ (GCAH, 2025; Vickers, 2003). These actions led to speaking out against corruption in the churches of the day and the need for social reform, including abolition of slavery (Vickers, 2003). According to GCAH (2025), he established Methodist Societies and created their charter in 1784. The Methodists continued based on his writings. Murray Norris (2017) concludes that followers of John Wesley did not separate work life from personal religious development. Wesleyans included charitable donations of volunteerism and finances, high work ethic, and greater outreach as part of their religious outpouring. This early form of social responsibility stemmed from Wesley’s work on economics, politics, and social issues such as workplace safety, prison reform, and education (Nutt & Wilson, 2010; Lunn, 2010). Lunn (2010) states that Wesley was focused on the well-being of the individual worker. Instead of relying on organizations to change society, he supported individuals who were champions of social improvements. Wesley grounded his work in the theology that each person is made in God’s image. Even though the majority of the work was for and with individuals, Stranger’s Friend Societies and some private entities supported Wesley’s efforts to equalize the status of individuals regardless of social class (Murray Norris, 2017; Lunn, 2010). Peter Drucker (1909-2005) Peter Drucker, often called the Father of Management, was primarily interested in society, communities within society, and polity according to A Functioning Society published in 2003. Drucker (2003) posits that management is a knowledge-based social function that influences society and economy (p.11). His first book involving corporations was Concepts of Corporation in 1946 though he did not use the phrase Corporate Social Responsibility (Drucker, 2003). Drucker was raised in Austria and went to Germany for both work and education (2003). He was introduced to the issues of a totalitarian dictatorship when Hitler came to power. Drucker worked for a newspaper in Frankfurt at the time and faced first-hand the censorship of the Nazi party. His experiences brought forth the book The End of Economic Man (1938-1939) and later The Future of Industrial Man (1942). Peter Drucker saw that “social institutions” were “power centers within industrial society” (Drucker, 2003, p.11). Later, Drucker focused on the influence management has on the individual worker as well as on individuals themselves. Unlike Wesley, Drucker supported social change through and with organizations in balance with individuals. Concepts he created teach managers to be people-oriented instead of task-oriented and to consider investment in workers to be a pillar of good business. He found that many organizations had the primary drive of financial stability. Though a business must be stable monetarily to be a functioning organization, it is not the only pillar of ‘good business.’ Rao (2021) reminds us that Drucker posits that “people are our greatest asset” (p.6). Time must be spent on investing in employee development. Another example of how Drucker viewed the balance between society/organizations and the individual is the concept of status and function, a term he learned combing the library in Hamburg, Germany at the age of 18 (Drucker, 2003). Status and function is defined by Drucker in terms of how an individual fits within a social group and what that person’s purpose is independent of any social labels or groupings (Drucker, 1942). This is because status defines where an individual fits within the group as an in-group or out-group member and the role given to that person. Function is how an individual sees themselves with respect to life’s purpose and whether the purpose of society fits within a person’s individual viewpoint. There is a symbiotic relationship between status and function (Drucker, 2003). Status and function can be self-defined or group-generated and is tied to social responsibility and discussed above as CSR. Drucker's emphasis on integrity, social responsibility, and ethical behavior ties leadership decisions and actions in these areas to an organization’s sustainability. Drucker points out the need for sustainability in Managing the Non-Profit Organization and the necessity to balance mission, vision, financial stability, resources and marketing (Drucker 1990). One can conclude that these are of equal importance to a for-profit organization as well. Connections between Wesley and Drucker Related to CSR Wesley focused on “slavery, economics and ethics, his work on aid to the poor, prison reform, and education beyond his scriptural teachings” (Lunn, 2010). Drucker held that individuals and organizations needed to lead the standards of society. These two activists spoke to the issues of the time, and people paid attention. Average people began considering the strategies suggested to alleviate concerns, prevent future negatively impacting events, and create better work environments. These gurus of social responsibility pointed out deficits, gave direction, and inspired others. We stakeholders of today’s society need to continue this work. Uses for CSR Today As we continue to shift from the industrial age to knowledge-based work and work in the service industries, we need to maintain balanced organizations that consider social problems in similar regard as they do business issues. Activities that have been categorized with CSR include organizational ethics, environmental issues, philanthropy, ethical responsibility, charitable global giving, community engagement, economic responsibility, and healthy workplace culture (IBM, 2023). I can see connections between these categories and both Drucker and Wesley. Through similar methods, these social reformers created a sustainable societal norm that created a better environment for individuals in the workplace and society as a whole. We need to maintain these ideals by fostering differences in management and organizational climate and culture. Currently, CSR has been associated with job satisfaction, high performance, and employee trust within organizations that are engaged in social responsibility activities (Brieger, 2019). The benefits of CSR go beyond creating equitable workspace. How do we keep these positive behaviors in the forefront of future organizations and constituents? Sustainability Wesley focused on making safe and ethical workplace conditions a priority. Drucker posits that organizations must measure how well they create and maintain work cultures that support the needs of all stakeholders, status and function, financial stability, innovation, and environmental impact. Organizations that create and maintain a focus on CSR topics such as healthy workplace and environmental issues promote a better society while keeping clientele who share the same interests and concerns. This concept of social responsibility goes far beyond corporations. It lends to sustainable organizations. My question is, who will make sure these concepts are carried into the future? We will. References Brieger, S. A. (2019). Too Much of a Good Thing? On the Relationship Between CSR and Employee Work Addiction. Journal of Business Ethics. Springer Nature B.V. Drucker, P. (2003). A Functioning Society. Transaction Publishers Drucker, P. (1990, 2010). Managing the Non-Profit Organization. Harper-Collins, e-books. Drucker, P. (1942). The future of industrial man. Translation Publishers GCAH, Jan 2025. General Commission on Archives & History: John Westley. https://gcah.org/biographies/john-wesley/ Google Search (Jan, 2025). Definition of Corporate Social Responsibility IBM, Dec 2023. What is Corporate Social Responsibility (CSR)? Found at https://www.ibm.com/think/topics/corporate-social- responsibility#:~:text=Corporate%20social%20responsibility%20is%20the,impact%20is %20measured%20or%20quantified. Murray Norris, C. (2017). Chapter 9 Education, Welfare, and Missions. Oxford Academic. https://doi.org/10.1093/acprof:oso/9780198796411.003.0010 Nutt, P.C. & Wilson, D. C. (2010). Handbook of decision making. Wiley-Blackwell Lunn, J. (2010). Religion & Liberty: John Wesley's Social Ethic. 3.6. Action University. Rao, M.S. (2021). Peter Drucker’s Principles, Philosophies, and Practices. The Journal of Values-Based Leadership. 14.2. Swaminathan, S. (2009). Wesley, John (1703–1791), Methodism, and Social Reform. 1-2. Wiley. https://doi.org/10.1002/9781405198073.wbierp1559 Vickers, J. A. (2003). John Wesley at 300. Historian, (79), 28-33. https://2q21e1s6o-mp01-y- https-www-proquest-com.proxy.lirn.net/scholarly-journals/john-wesley-at-300/docview/275037337/se-2
By Pooya Tabesh Ph.D. March 15, 2025
Despite current political pressures that may seem at odds with sustainable leadership initiatives, the importance of sustainability remains underscored by robust scientific evidence. Research on stakeholder theory consistently shows that sustainable practices not only mitigate environmental degradation but also enhance long-term economic performance and societal well-being (Parmar et al., 2010). Sustainable leadership involves understanding the long-term impacts of organizational decisions on social, environmental, and financial sectors, emphasizing a holistic approach to value creation. In this regard, boardrooms in recent years have implemented an ESG (environment, social and governance) framework for evaluation of organization’s sustainability (Greenbaum, 2022). In the fast-changing global environment today, effective leadership must continue to go beyond the tried-and-failed models that prioritize short-term gains over enduring sustainability. The traditional focus on immediate profits has long given way to a more integrated approach, where long term success is achieved through balancing economic performance with environmental stewardship and social responsibility. In today’s political environment, while some organizations and their leaders appear to have adjusted their language and policies to align with prevailing political sentiments, these changes often reflect a superficial response rather than a genuine shift in strategy. Many organizations remain acutely aware of the scientific consensus on sustainability and continue to integrate these principles into their core operations, recognizing that the long-term benefits of sustainable practices outweigh short-term political pressures. In conclusion, while political landscapes may shift, the imperative for sustainable leadership remains unwavering. Leaders who ground their strategies in this well-established understanding not only navigate political changes effectively but also champion practices that generate long-term economic prosperity and societal well-being for all stakeholders. References Parmar, B. L., Freeman, R. E., Harrison, J. S., Wicks, A. C., Purnell, L., & De Colle, S. (2010). Stakeholder theory: The state of the art. The Academy of Management Annals, 4(1), 403-445. Greenbaum, K. (2022), The Importance Of Sustainable Leadership. Forbes, https://www.forbes.com/councils/forbeshumanresourcescouncil/2022/09/07/the-importance-of-sustainable-leadership/
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