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Monday, November 21, 2005

Peter Drucker: Three Criticisms of His Work

[An Excerpt from The Economist, November 17, 2005]

There are three persistent criticisms of Mr Drucker's work. The first is that he was never as good on small organisations—particularly entrepreneurial start-ups—as he was on big ones. “The Concept of the Corporation” was in many ways a fanfare to big organisations: “We know today that in modern industrial production, particularly in modern mass production,” Mr Drucker opined, “the small unit is not only inefficient, it cannot produce at all.” The book helped to launch the “big organisation boom” that dominated business thinking for the next 20 years.

The second criticism is that Mr Drucker's enthusiasm for management by objectives helped to lead business down a dead end. Most of today's best organisations have abandoned this idea—at least in the mechanistic form that it rapidly assumed. They prefer to allow ideas—including ideas for long-term strategies—to bubble up from the bottom and middle of the organisations rather than being imposed from on high. And they tend to eschew the complex management structures of the management-by-objectives era. The reason is that top management is often cut off from the people who know both their markets and their products best (a criticism that certainly rings true in Mr Bush's White House, though that is another story).

Third, Mr Drucker is criticised for being a maverick in the management world—and a maverick who has increasingly been left behind by the increasing rigour of his chosen field. He taught in tiny Claremont rather than at Harvard or Stanford. He never grappled with the rigours of quantitative techniques. There is no single area of academic management theory that he made his own—as Michael Porter did with strategy and Theodore Levitt did with marketing. He would throw out a highly provocative idea—such as the idea that the West has entered a post-capitalist society, thanks to the importance of pension funds—without really clarifying his terms or tying up his arguments.

There is some truth in the first two arguments. Mr Drucker never wrote anything as good as “The Concept of the Corporation” on entrepreneurial start-ups. This is odd, given his personality: this prophet of the “age of organisations” was a quintessential individualist who was happiest ploughing his own furrow. (One of his favourite sayings was, “One either meets or one works.”) It is also remarkable since he spent so much of his life in southern California—a hotbed of individualism and entrepreneurialism that helped to produce the small-business revolution of the 1980s. Mr Drucker's work on management by objectives sits uneasily with his earlier (and later) writing on the importance of knowledge workers and self-directed teams.

But the third argument—that he was too much of a maverick—is both short-sighted and unfair. It is short-sighted because it ignores Mr Drucker's pioneering role in creating the modern profession of management. He produced one of the first systematic studies of a big company. He pioneered the idea that ideas can help galvanise companies. And he helped to make management fashionable with a constant stream of popular writing. It may be over-egging things to claim that Mr Drucker was “the man who invented management”. But he certainly made a unique contribution to the development of the subject.

It is true that he cannot be put into any neat academic pigeonhole: he liked to refer to himself as a “social ecologist” rather than a management theorist, still less a management guru (he once quipped that journalists use the word “guru” only because “charlatan” is too long for a headline). It is true that he eschewed the system-building of some of his fellow academics. And he preferred reading Jane Austen to doing multivariate analysis.

But system-building often produces castles in the air rather than enduring insights. (It is notable that Mr Drucker's most systematic work—on management by objectives—has lasted least well.) Mr Drucker made up for his lack of system with a stream of insights on an extraordinary range of subjects: he was one of the first people to predict, back in the 1950s, that computers would revolutionise business, for example. His reading of history enabled him to see through the fog that clouds less learned minds: he liked to puncture breathless talk of the new age of globalisation by pointing out that companies such as Fiat (founded in 1899) and Siemens (founded in 1847) produced more abroad than at home almost as soon as they got off the ground.


Anonymous Kingsley S. said...

Quite informative and correct.

2:47 AM  

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