MANAGEMENT IS PRACTICE
The basic work and the foundations of management
were laid by practitioners and not by academicians,
repeats the most influent management writer of the last
Interview by Jorge Nascimento Rodrigues,
editor of www.gurusonline.tv and www.janelanaweb.com
(Portugal). Original version in english. Portuguese
version published in the December edition 2001 of the
portuguese magazine Executive Digest.
© Peter F. Drucker and Janelanaweb.com
The Economist just published a big (more than 20 000
words) Survey about The Next Society (November 3, 2001)
written by Mr. Drucker. It was scheduled to be published
the week of the terrorist attack (September 11), but
had to be postponed. This is the year when Peter Ferdinand
Drucker published THE ESSENTIAL DRUCKER - the book is
published or about to be published in a three volume
edition in Japan, Korea, Taiwan, China, Brazil (portuguese)
and Argentina (spanish), and in a one volume edition
in the US, UK, France, Italy, Germany, Poland, Finland,
Holland and the Czech Republic. A contract with Russia
is pending. Mr. Drucker just sent to Harvard Business
Review a big article, tentatively entitled "People
are our greatest liability", to be published next
One of the things that bother people from Academia
was the fact that it was a journalist recorder of trends
and a consultant with hands on the corporation life
that wrote in the 40´s and 50´s the famous
Concept of the Corporation and the "bible"
The Practice of Management. Management doctrine comes
from this ground and not from the business schools cathedrals?
P.D. - Let's make one self clear about one question
- management is a PRACTICE like medicine or the law.
And in a practice the basic work and foundations are
ALWAYS done and laid by PRACTIONERS and not by academicians.
Not until a PRACTICE is very mature can academicians
- who are not themselves pratictioners - make major
contributions. See the case of medicine: every important
contribution, until the mid-nineteenth century, was
made EXCLUSIVELY by practicing physicians - most of
them, until the 1830ies, without university connection.
From Hippocrates (Greece, 460-377 b.C.) to Joseph Lister
(antisepsis in 1865) and Robert Koch (bacteriology,
Medicine Nobel in 1905). Pasteur himself had no university
connection when he made his great contributions. That
is, medicine as an organized discipline is at least
2500 years old - but no one but a practicing physician
made a major contribution to it until the mid-nineteenth
century. Even now the major MEDICAL work - for example,
heart surgery and heart transplants - have come out
of the practice. The same is true of the law. The greatest
work on law is surely the Corpus Juris Civilis, still
the foundation of your legal system in Portugal. It
is a compilation of the opinions of practicing lawyers!
The two great scholars in American Law are respectively
Oliver Wendell Holmes and Benjamin Cardozo - both practicing
lawyers and judges.
The same applies to Management?
P.D. - Exactly. The founding contributions in Management
were made by Frederic Winslow Taylor (EUA); Henry Fayol
(France); Walther Rathenau (Germany); Shibusawa (Japan);
H. L. Gantt (USA); Mary Parker Follett (USA); Alfred
Sloan (USA). Not one had a university connection! In
fact, without PRACTICE the academician cannot make a
contribution to Management - as shown by the history
of the Harvard Business School.
But when people considered you "Mr. Management"
- the title Jack Beatty, a senior editor of The Atlantic
Monthly, wanted for his 98 book The World According
to Peter Drucker -, it seems you were the "founder",
the "father" of management discipline...
P.D. - First let me add that MANAGEMENT as a DISCIPLINE
was not MY invention - or rather I only carried out
what had been asked for a full twenty years earlier.
The first MANAGEMENT CONGRESS was held in Prague (Czech
Republic today) in the 20's. It was convened by two
eminent NON ACADEMICIANS - Herbert Hoover, the future
US president and then US Secretary of Commerce, and
Thomas Masaryk, the founder and first president of Czechoslovakia.
One of them called for the systematic study of a discipline
of Management - but no one listened.
Returning to the Business Schools, Harvard for instance
is considered one of the "cathedrals" of management
P.D. - The story is this: in the mid-forties the then
Dean decreed that Harvard Business School professors
were not to do more than one day's consulting a week.
Only two were exempt because they had their Harvard
appointment before that dean came in - Georges Doriot
and Ted Levitt. And it isn't accidental that those two
were also the only ones who made major contributions
in the next decades. Doriot is both the "father"
of production management and of venture capitalism -
he actually owned and ran the first venture-capital
firm (and he was probably the greatest teacher the Harvard
Business School ever had). Ted Levitt is the "father"
of Marketing as a discipline (his 1960 article, entitled
"Marketing Myopia", published by Harvard Business
Review of July/August in that year) - he spent three
days a week consulting! But otherwise nothing of any
importance to Management came out of Harvard Business
School for three decades. Then, in the early eighties,
a new dean abolished the ban on practical work. And
in no time at all, the Harvard Business School began
to produce important work - Michael Porter and Rosabeth
Moss Kanter for instance.
So, in the history of Business Schools we had a kind
of gap with reality?
P.D. - Business Schools before World War II were largely
"Schools of Commerce" and held in very low
esteem. So, when after World War II - and especially
after 1960 -, the Business School began to grow very
fast, it yearned for "respect" by academia.
This, unfortunately, meant, especially in the US, a
yearning to be "accepted" by the schools of
the humanities and the arts (US terms), and therefore
to be "research institutions" rather than
"professionals schools". One result of this
was the mad rush into quantification - I happen to be
a very old "quantifier", I wrote in 1929 some
of the first econometric papers (one a mathematical
model of the stock market, the other a mathematical
model of commodity markets). But, in the sixties and
seventies the American business schools excluded everything
that cannot be quantified, which is most of business
and management; and tried to quantify everything, mostly
with ludicrous non-results. In the last ten years the
pendulum has been swinging back - the situation is changing
rapidly. But for twenty years - years of tremendous
growth - the US business schools wasted an enormous
amount of work and brains on quantifying trivia.
And what was the "driver" of that recent
P.D. - One reason are the executive management programs
for mature executives - we, in Claremont, started, in
1972, the first such as degree-giving program. Now there
are some 360 in the US alone. The students in these
programs simply rejected what the Business Schools offered.
It made no sense to them and had nothing to do with
their needs and with PRACTICE of management.
There's a lot of people that ignore you were one of
the first professors of management...
P.D. - I became the first professor of Management in
the US in 1949/50 at the Graduate Business School of
New York University. Before that there had been professors
of production management (Georges Doriot at Harvard
was one), of sales management, of insurance management
and so on - but no professor of management as such.
And when the Harvard Business School wanted me - in
1947 or 1949 after my book CONCEPT OF THE CORPORATION
had appeared - it wanted me as Professor of Human-Relations,
rather than as professor of management. That, the then
Dean argued (and with considerable reason) would be
a total waste since the students - then only about 22
years old and fresh out of undergraduate college - would
not be in management positions for at least 10 years
by which time they would have forgotten everything they
might have learned about Management per se 10 years
And what changed that mood?
P.D. - First, my book (Concept of the Corporation)
- to everybody' surprise, including mine, a huge success
- showed that there was a tremendous interest in management;
and, second, the New York University's Graduate School
of Business (GBA), which before World War II had been
a very small school mainly in finance and accounting,
suddenly faced an enormous demand from older students
and specially from men (no women then) who had made
a good career as specialists - for example, as engineers
in the telephone company or as loan officers in a big
commercial bank - and were now suddenly promoted into
executive and management positions without any knowledge
or background. And these were older people - around
35 or more - that is people who were going to apply
management right away. It also was an evening school
so that its students worked full-time and could apply
on Monday what they had learned the preceding Friday.
And these students wanted management - and there was
no book on it except mine. So, GBA came to me - or rather
their professor of sales management came to me. I had
already accepted a job as Professor of American Studies
at Columbia University though I felt uncomfortable with
all the faculty feuds - Columbia was and is a typical
university which means full of petty feuds and stupid
intrigues - something I have never been interested in.
So, I took the GBA offer to teach management. Something,
by the way, that the University's president did not
believe in (as he told me a few years later) - he thought
it was a fad. And I too thought that I would teach management
a few years and then switch back to History - American
History or the History of Technology - and here I am,
fifty years later, still teaching Management!
But some of your biographers underline that Academia
is not your "love"...
P.D. - To be sure, the university has not been the
CENTER of my work - writing has. But I have been a full-time
faculty member since 1940 or 1941 - first in two independent
colleges, and then as professor and head of the department
at the Graduate Business School of New York University
- and for several years also teaching as a Visiting
Professor at Wharton. And since 1971 at a major Research
university, the Claremont Graduate University [in Claremont,
where Drucker has come to live and still lives]. At
least since 1960, I could have had a senior professorship
at any Graduate Management School in the US or in Europe.
It's simply that I am not primarily interested in Academia.
I love to TEACH - and still do, here in Claremont, despite
my years - but Academia is, as I said, not the center
of my life and work. Writing is.
How you evaluate the last 50 years' buzzwords - like
total quality, excellence, competitive advantage, reengineering,
core competencies, and so on?
P.D. - These things - including most of Michael Porter
writings- are TOOLS. None is the answer. If they are
advertised as such, or bought as such, they turn out
to be "fads" - soon they are replaced by the
next "girl of the month" (which is what the
participants in my EXECUTIVE MANAGEMENT PROGRAM call
them). But as tools, most of them are quite useful,
and some - like the Six-Sigma approach, or EVA, which
I originally called AVA (Added Value Approach) in my
1964 Managing for Results - help greatly. BUT THEY ARE
TOOLS, and like every tool they are applicable to one
task. They are no universal cures! I cannot use a hammer
to cut my toe nails but also cannot use a toe-nail clipper
to drive in a nail. And some of these tools are of very
limited applicability - as is, for instance, a hedge
clipper for a gardener; for other tasks one needs a
garden rake, for instance. But still a garden rake is
of no use to clip a hedge - something I plan to do tomorrow.
By the way the tendency to claim that this or that new
tool is the cure - all is typical for an IMMATURE discipline.
Bleeding, for instance, was hyped in early 19th century
in France as THE CURE for ALL ILLS from an upset stomach
So, what's the advice?
P.D. - What I tell my clients: whenever there is a
new tool, let some else try it out and learn how to
use it rather than be the first one and rush into it.
After a few years one knows - because other people have
made the mistakes. I admit that I have made exceptions
- a few. I have, for instance, urged every one to adopt
some of the new accounting (like EVA; or the Activity-Based
Accounting; or the Economic-Chain Accounting), but only
because a good many of my US clients, and especially
my Japanese friends and clients, had successfully used
these things long before they became "the rage"
in the US.
How you "discovered" the organization concept
as central organ of the modern society?
P.D. - I came to that conclusion as a result of my
work in the nineteen-thirties and early nineteen-forties
on the collapse of Europe - as a corollary of my books
The end of economic man, of 1938/9, and The future of
industrial man, of 1942/3. I then looked for a new organ
of community organization and community integration
and began to realize that we were emerging into a SOCIETY
OF ORGANISATIONS with management as the new and central
organ of the new organizations. As you know, my interest
was not primarily in business but in society - and half
of my books are not on Management (let alone on business
- that is only the center of one of my books: the 1964
Managing for Results), but on History, Society and Community.
But the business enterprise was both the most visible
and the most accessible of the new organizations - and
so I began to study it.
And the knowledge worker?
P.D. - As I told you - management is practice. And
so I look out the window and, above all, look at society,
since management is a social function. And it became
clear, around 1950 or so, that the American population
was moving into knowledge work. Before World War II
only a small percentage of young people went into the
university - and none of them then went into manual
work. Education disqualifies for HONEST work - that
is its main attraction for education, believe me! After
World War II - largely because of the US GI BILL that
guaranteed every returning veteran a university education
- not to go to the university came to be seen as the
exception. When I decided, in 1926, not to go full-time
to the university - and I came from a family of doctors
and lawyers in Vienna (Austria) - no one called me a
"drop out". On the contrary, I was considered
a responsible adult. Twenty-five years later, in the
early nineteen-fifties, not to go to the university
was already considered "dropping out". And
it is probably not true- at least until very recently
- that work today demanded more education than work
demanded in 1910! It is not DEMAND that has created
knowledge work and knowledge worker, but SUPPLY.
The "post-capitalist" society as a knowledge
society was one of your greatest ideas. But for readers
it is difficult to understand the difference with capitalism...
P.D. - And POST CAPITALIST? Very simple. In a capitalist
system capital is the critical resource of production;
and capital is totally separate from and opposed to
"LABOR". In the society into which we are
moving very fast, KNOWLEDGE is the key resource. It
cannot be bought with money or created by "capital
investment". And Knowledge resides in a human being,
the knowledge worker. What's in a book or in a data
base is at best information - and usually only data.
In the knowledge society also the knowledge workers
- through their pension funds and retirement funds -
are the owners of capital who matter. The super-rich
have become economically irrelevant. Capital and Labor
thus are becoming one and the same. You may argue -
my labor union friends do - that there is still the
old "Labor". But, alas, that kind of labor
- the traditional blue-collar worker - is a commodity.
I can get blue-collar workers - and of excellent quality
- any place in the world. That is I can move the production
processes that use traditional labor any place and at
my terms, PROVIDED I HAVE THE MANAGEMENT KNOWLEDGE.
And if I have the KNOWLEDGE I can easily get the money
- capital is fast becoming redundant, i.e. is ceasing
to be a "resource".
You mean money is no more important?
P.D. - Don't misunderstand me. I AM NOT SAYING that
MONEY is becoming unimportant or secondary. In fact,
Money was probably MORE important before CAPITALISM
(as the great French historian Fernand BRAUDEL has convincingly
argued) - also the Old Testament makes it very clear,
let alone all medieval literature whether Chaucer or
that (horrible) german epic poem Helmbrecht by Meyer
or Ronsard. But CAPITAL is not MONEY - it is money as
factor of production, and that is no longer a controlling
Ideas like Fukuyama's "end of history" or
the most recent "The West Won" (meaning the
democratic capitalist model won) launched some confusion
in people's mind. Others talked about "clash of
civilizations" and the peril of a new middle age.
What's your comment?
P.D. - There is an old saying "stupid people make
stupid mistakes and intelligent people make intelligent
mistakes; and intelligent mistakes are much worse".
Fukuyama is easily the most brilliant and most intelligent
thinker of today. And so he makes the most intelligent
mistakes - every one of his "absolutely certain"
predictions has immediately been disproven by events.
Simply because he is so brilliant and therefore has
infinite trust in his own logical conclusions. I doubt
that it ever occurs to him to look out the window. He
starts with a Hegelian premise and follows it to its
logical and absurd conclusion. About the triumph of
democratic capitalism - yes, except in the world of
Islam, where it has been a total failure. The total
failure of Islam - militarily (against puny Israel),
politically and, above all, economically - every Islamic
country is relatively poorer today than it was thirty
or forty years ago, and most are absolutely poorer -
underlies, of course, the present severe crisis. Another
Fukuyama "certainties", the end, or at least
decline, of domestic disorder, it's been heating up,
at least in the US - but also in Spain and, above all,
in Japan; and so on.
THE BEST OF KEYNES AND SCHUMPETER
Between Keynes and Schumpeter what is the most "suitable"
P.D. - We surely need a new economic theory - for many
reasons. So far we have barely the first nibbles. And
both KEYNES and SCUMPETER have a lot to teach us - more
in how one THINKS economically than in their specific
theories. As economic theory KEYNESIANISM has failed
wherever applied - last in Japan these last 10 years.
Japanese strictly followed KEYNESIAN economics, creating
consumer purchasing power, creating unprecedented huge
government deficits and the lowest interest rates EVER
seen - without the slightest impact on the economy.
And Keynes failed just as completely in the US in the
nineteen-thirties or in France under Mitterand. Also,
the basic KEYNESIAN model - (a) the national state is
the only unit of economics; and (b) equilibrium is the
norm [both, of course, traditional 19th/early 20th economics,
well ante-dating Keynes] - is totally obsolete. Yet,
KEYNES way of looking at an economy and his basic mindset
- especially his views of the ends and purposes of economic
policy - will have to guide us. Keynes, the theoretician,
is totally outdated and disproved; Keynes, the thinker
and methodologist, is more important than ever.
And Schumpeter, someone you knew from early years in
P.D. - He had NO ECONOMIC THEORY as such - he had INSIGHTS.
There is no SCHUMPETERIAN ECONOMIC POLICY - except his
distrust of politicians. But there are tremendous SCHUMPETERIAN
INSIGHTS - that DYSEQUILIBRIUM is the normal state of
a healthy economy; that there is NO PROFIT (other than
MONOPOLY RENTS) except the profit of the innovator -
and that is short-lived; that what we call "profit"
is a genuine cost, the cost of capital; and that the
Incidence of Taxation is as important as the level of
taxation, and probably more important (something by
the way, that he learned from an American economist,
Seligman - something Schumpeter freely acknowledged).
The new economics we need will probably start quite
differently from Keynes or from Schumpeter - they may,
I suspect, have to start with the GLOBAL economy as
the unit (though no one yet knows how to do that). But
they have to use both KEYNES' methodology and SCHUMPETER's
© Janelanaweb.com, www.gurusonline.tv,
Jorge Nascimento Rodrigues 2001