Peter Drucker: 15 Uncommonly Wise Observations About Business

Drucker believed that whenever anything important is accomplished, it is usually done by a monomaniac on a mission. That is an apt description of how he felt about business.

“Drucker believed the art of management was more than just profit-making and considered it one of the liberal arts.”

Peter Drucker, an Austrian-born consultant turned professor, is widely regarded as the father of modern management thinking. He played a crucial role in the development of consulting firms like McKinsey or Bain, but his expertise went well beyond their lukewarm engagements offering generic advice for high hourly fees.

You may not realize it, but your job has been shaped by Peter Drucker’s wisdom in one form or another throughout your career.

Although he authored 39 best-selling management books, Drucker prized his ability to mentor some of the most successful executives of his time over all of his many other accolades.

Here are 15 pearls of wisdom he taught me:

1. Whenever anything is being accomplished, it is being done, I have learned, by a monomaniac on a mission.
2. The purpose of a business is to create a customer.
3. The best way to predict the future is to create it.
4. If you want something new, you have to stop doing something old.
5. Knowledge is the source of wealth. Applied to tasks we already know, it becomes productivity. Applied to new jobs, it becomes innovation…
6. People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.
7. Innovation opportunities do not come with the tempest but with the rustling of the breeze.
8. Innovation is the specific instrument of entrepreneurship that endows resources with the capacity to create wealth.
9. Since we live in an age of innovation, a practical education must prepare a man for work that still needs to be created and can be clearly defined.
10. Marketing and innovation make money, produce results and create wealth. Everything else is cost.
11. Innovation requires us to identify changes that have already occurred systematically — and then to look at them as opportunities. It also requires that we abandon rather than defend yesterday.
12. We need an entrepreneurial society where innovation and entrepreneurship are regular, steady, and continuous.
13. The enterprise that does not innovate ages and declines. And in a period of rapid change such as the present, the decline will be fast.
14. No other area offers more stimulation for an innovator than unexpected success.
15. Effective innovations start small. They are not grandiose. They try to do one specific thing.

Despite his immense popularity and success, Drucker remained humble. I had the opportunity to introduce him to several CEOs when I worked at Forbes Magazine. Even at 85 years old and with his distinctive Austrian accent, his listeners rated him the best speaker. I sent him a note conveying this feedback, and his partner Frances Hesselbein reported that he had proudly displayed it on his wall. More than moving the needle, he wanted to move people.

Biography

Peter Drucker, born in Vienna, Austria, in 1909, passed away at 95 on November 11, 2005. He worked as a management consultant before becoming a writer and academic, focusing on the operation and leadership of modern business corporations. Drucker was interested in understanding how people interacted in ways that led to success or failure and sought to systematize his thinking to make it accessible to others. Despite being highly contrarian at the time, he gained prominence during the Japanese economic miracle, as his work led to a renewed respect for Japanese practices after WWII.

Drucker is known for coining the term “knowledge worker” and believing this type of employee was crucial for improving business results. He was influenced by economist Joseph Schumpeter, who used the phrase “creative destruction” and focused on people’s behavior rather than commodity fluctuations to understand markets and productivity. He worked as a professor, consultant, and industrial psychologist. His work on management philosophy in European companies paved the way for a more democratic approach to decision-making in American companies.

Drucker believed management was more than just a profit-chasing activity and defined it as one of the “liberal arts.” He drew lessons from history and religion in his work. He argued that businesses needed to have a greater purpose than just profit-making, with a solid dedication to society, to last through the many challenges that occur in the life cycle of a business. He presciently predicted in his book “Management: Tasks, Responsibilities, Practices” that managers of significant institutions, especially in industry, must take responsibility for the common good in modern society, or else no one else will.

Drucker was a palm reader as much as a philosopher and was known for making predictions that often came true and was criticized for occasional misjudgments. Despite this, he remained a prominent figure in management theory and philosophy. He believed the nation’s financial center would eventually shift from New York to Washington. While he was criticized for this prediction, it is now seen as accurate with the introduction of Sarbanes Oxley and Dodd-Frank regulations.

Fast forward to today. He was right once again. The realization set him on a path as a part professor, consultant, and industrial psychologist.