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Drucker’s principles still relevant today

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Kai Ryssdal: The name Peter Drucker might not ring a bell with you. But it’s a fair bet the company you work for follows at least some of his rules of organizational behavior. Drucker was the first real management guru. Although he did prefer the term “social ecologist.” He wrote about emerging markets well before they emerged. And he warned of problems in the American auto industry decades ago.

This week management-types are marking the 100th anniversary of Drucker’s birth. Rosabeth Moss Kanter is one of them. She’s a professor at Harvard Business School. She wrote about Peter Drucker in this month’s Harvard Business Review. Welcome to the program.

ROSABETH MOSS KANTER: Thank you, my pleasure.

Ryssdal: First things first I suppose, we should say that Peter Drucker really hated the phrase management guru, didn’t he?

KANTER: He didn’t love the word “guru.” It sounded a little like a putdown. But he clearly was. He was the first and the best.

Ryssdal: He had obviously many, many, many ideas about how companies and organizations ought to run themselves, guiding principles. What were the top two or three that come to your mind right away?

KANTER: First was the importance of a company having a sense of mission or a purpose, and that that’s not identical with its strategy, it’s not identical with its business model, it’s why it exists and what social good or greater good that it’s serving. That’s a very important Drucker idea. A second is the importance of knowledge workers, that increasingly in the world we live in people who have information, who work with their heads, are the leading edge of the economy and those people can’t be ordered around, they have to be empowered. So he was a big believer in giving people the power to do their jobs and listening to their voices.

Ryssdal: This idea of the company’s mission, and having to have a clear sense of that, he did not subscribe to the belief that management ought to be thinking of shareholders all the time at all, did he?

KANTER: He talked about all the responsibilities of management, so shareholders were certainly one for businesses but also employees, customers, suppliers, and society in general.

Ryssdal: What would he have to say though about the context that a lot of big businesses find themselves in today of really having to cut their costs and get their share price up, and maximize their profitability.

KANTER: Peter was a very big believer in management by objectives. I mean, you know what your goals are and then you organize to get those goals met, which means that you do have to operate efficiently. But it also means that you don’t sacrifice the long term for the short term. So ever since he started writing about high CEO compensation in the 1980s, he said that companies were often not fair. They often did have resources, but they were concentrated at the top. And that letting the shareholders, but also executives, walk away with the lion’s share of the profits rather than reinvesting them, that would not create a productive future for business.

Ryssdal: What would he have to say about how to get out of this recession today, and the corporate role in the economic recovery?

KANTER: I think he would have two things to say. First, he would say small business has a big role to play, entrepreneurs who create new businesses ideas, and also the nonprofit world has a role to play because they’re also big employers. I think he would also say that we have to return to values and purpose, and remember what is essential about a company and that is not whatever its short-term financial performance is, but its responsibilities for the long term. And so he would encourage companies to maintain employment at high levels even at some small financial sacrifice because they have to be ready for the future for when we come out of the recession.

Ryssdal: Rosabeth Moss Kanter. She teaches at the Harvard Business School. She writes about Peter Drucker in this month’s Harvard Business Review. She’s got a new book out, too, it’s called “SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good.” Thanks very much for your time.

KANTER: My pleasure. Thank you.

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