This article seeks to apply a systems perspective to the works of Peter F. Drucker, organizing his writings into a coherent whole, to help you navigate the enormous body of knowledge that this remarkable man has created during the past 65 years. This is no small challenge and my approach is only a beginning.

My goal is an understanding of how the parts of Drucker's writings relate to one another, rather than a description of the individual parts. However, to understand how the parts interact with one another, one must have at least some understanding of the parts themselves--that is, the major writings of Peter Drucker.

The Intellectual Journey

Drucker escaped totalitarianism as a young man. This is why in his very first book, The End of Economic Man (1939), he analyzes the causes of totalitarianism and the insecurity, fear, depression, and unemployment ("the demons") that produced a vacuum that created the conditions for the emergence of a dictator. Drucker's whole working life has been devoted to making sure that doesn't happen again. He moved to the United States because of the opportunity it offered and because the institutions of the United States have been designed to promote and to protect freedom.

Some people reading this might think it is far-fetched to say that Drucker's whole working life has been devoted to fighting totalitarianism. They might reasonably ask what is the link between his first book, The End of Economic Man, and later works such as The Practice of Management (1954), Managing for Results (1964), The Effective Executive (1966), or Innovation and Entrepreneurship (1986)? How does writing books on management prevent totalitarianism? Why are corporations so important to Drucker? These are very good questions, the answers to which should shed light on Drucker's writings as a whole.

A strategic passage in Drucker's writings, one that clarifies the purpose of his work on society and management, is found in the preface to the hardcover edition of Management: Tasks, Responsibilities and Practices (1974, pp. ix and x):

Our society has become, within an incredibly short fifty years, a society of institutions. It has become a pluralist society in which every major social task has been entrusted to large organizations--from producing economic goods and services to health care, from social security and welfare to education, from the search for new knowledge to the protection of the natural environment....

If the institutions of our pluralist society of institutions do not perform in responsible autonomy, we will not have individualism and a society in which there is a chance for people to fulfill themselves. We will instead impose on ourselves complete regimentation in which no one will be allowed autonomy. We will have Stalinism rather than participatory democracy, let alone the joyful spontaneity of doing one's own thing. Tyranny is the only alternative to strong, performing autonomous institutions [emphasis added].

Drucker concludes this passage by indicating that it "is managers and management that make institutions perform. Performing, responsible management [emphasis added] is the alternative to tyranny and our only protection against it."

With this strategic passage as background, it is clear why Drucker's books and articles deal more with "community, society, and polity" than they do with management. To capture the essence of the writings of Peter Drucker, one must start with the question, What does it take to create pluralistic institutions of a free society that function and perform?

From his very first book in 1939 through his latest book in 2004, Peter Drucker has pursued the enormous topic, How do we create a society that functions? His answer: we must create institutions or organizations that perform--which in turn leads to the question, How does one create organizations that perform? And then, How does one develop managers who create organizations that perform?

As you read Drucker's writings, you will continually see a thread of concern for all the institutions of society, but in The Concept of the Corporation (1946), The New Society (1950), The Practice of Management (1954), Managing for Results (1964), The Effective Executive (1966), and Management: Tasks, Responsibilities, Practices (1973, 1974), his focus is primarily, although by no means exclusively, on the wealth-producing institutions of society.

Corporations: The Wealth-Producing Institutions of Society

Corporations and other businesses are the wealth-producing institutions of society. Without these private sector institutions, our public sector and social sector institutions would not have the resources to function. It is the private sector that provides the resources to fund social and public sector institutions. It is the private sector that has significant entrepreneurial responsibility for softening the effects of the business cycle and for keeping "the demons" of unemployment and depression at bay.

Drucker started with these basic wealth-creating institutions as he worked toward the goal of creating the conditions that allow the institutions of society to function well. In the mid- to late 1970s, he began to gradually shift themes from the management of private sector institutions to the management of social sector institutions, mostly nonprofit ones. He has, however, always had a concern for the institutions of government and their management challenges. This concern for government is especially notable in The Age of Discontinuity (1969), in which he analyzes "the sickness of government," but also in his earlier book Landmarks of Tomorrow (1957).

But it is true that beginning with the publication of The Future of Industrial Man (1942), he began to address the

Achieving freedom in the corporation and in other institutions of society requires responsibility at every level. MBO with self-control is a philosophy of management that incorporates methods of setting objectives and of monitoring performance by each organizational unit and by each individual. The MBO process, if properly designed, develops both responsibility and freedom for individuals in organizations.

A key feature of MBO is upward communications in which each manager clarifies the objectives of his or her superior and then sets objectives that are both achievable by the manager and congruent with the superior's objectives. Next, the superior reviews all objectives and negotiates agreement with each manager while seeking to integrate the objectives of subordinates on whose performance the superior depends. In the process, the superior seeks to gain enthusiastic acceptance and commitment from each manager for agreed-upon objectives. If the superior is successful, this process of communication and participation will encourage subordinates to internalize these objectives as their own.

Next, the superior coaches subordinates toward achieving objectives and seeks to eliminate any known barriers to performance and to achievement of objectives by subordinates. Finally, the superior ensures that subordinates have timely and accurate information to assess progress toward objectives and to take corrective action without any interference from above. This last step fulfills the "self-control" dimension of MBO.

But MBO with self-control is neither easy to accomplish nor fun. For Drucker, these are ideals and he readily acknowledges that MBO is more widely used than is self-control. This and many additional difficulties in achieving both freedom and individual responsibility in organizations should eradicate any belief that Drucker proposes a "utopian" approach to the practice of management, as some have alleged.

Yet freedom and responsibility are necessary for a society and its organizations to function at high levels of performance. And true freedom in organizations requires responsibility on the part of individuals in each institution of society.

Freedom and Individual Responsibility

In an early article ("The Freedom of Industrial Man," published in the Virginia Quarterly Review, Autumn 1942),

Freedom is not fun. It is not the same as individual happiness, nor is it security or peace or progress. It is a responsible choice. Freedom is not so much a right as a duty. Real freedom is not freedom from something; that would be license. It is freedom to choose between doing or not doing something, to act one way or another, to hold one belief or the opposite.

In a recent interview (reported in Jack Beatty, The World According to Peter Drucker, p. 79), Drucker provides a superb definition of individual responsibility:

Responsibility is both external and internal. Externally it implies accountability to some person or body and accountability for specific performance. Internally it implies commitment. The Responsible Worker is not only a worker who is accountable for specific results but also who has authority to do whatever is necessary to produce these results and who, finally, is committed to these results as a personal achievement.

This is the kind of responsibility in organizations that will provide the conditions for genuine freedom for individuals in organizations. It is also the kind of responsibility required to make MBO with self-control effective.

Leadership and Responsibility

A functioning society requires effective leaders. A systems perspective on leadership, owing to its origin in cybernetics, emphasizes the role of the "helmsman" and the duty of the helmsman to "steer" an entity. Steering requires establishing vision and goals, and inspiring and motivating followers to attain desired results. And this is how Drucker defines leadership. Leadership is taking responsibility for results. Moreover, leadership requires integrity and setting examples for others to follow in the organization ("integrity is the touchstone of management"). Leadership is not charisma! Drucker provides numerous examples of outstanding leaders who were "exceedingly dull" but very effective, and of many "charismatic" leaders who, lacking in integrity, undermined the conditions for a functioning society.

A Society of Pluralistic Organizations

The work of society is carried out through different kinds of organizations, each with its own tasks. Three diverse kinds of organizations make up the society of organizations. First, there are public sector organizations in which the work of federal, state, and local government is carried out. Then there are private sector organizations, established to meet the economic needs and wants of citizens. And finally there are social sector (sometimes referred to as nonprofit) organizations to care for those health and welfare needs of citizens that are not met fully either by public or private sector organizations.

Drucker believes that for a society to function well, its organizations should be single-purpose institutions. For example, multiple-purpose institutions, such as our public schools, in which educators often have responsibilities for teaching sex education, drug and alcohol awareness, and life skills, do not perform as well academically as do the more focused parochial schools.

As a result, each organization, whether for-profit or nonprofit, should focus on a single task--the healing of the sick, the education of a child, and the satisfying of economic wants. And each must be well managed if the society is to function on a high level. But who looks out for the common good if each institution pursues its own narrow task?

In much of his work, Drucker is concerned with each institution taking on the tasks for which it is best equipped. Government is best suited to "governing" and not "doing." Business is at its best when it is concentrating its resources and when it is occupied with wealth-creating activities. A business has no competence to assume responsibility for the major ills of society unless these ills can be turned into business opportunities. But, as he recognizes in The Concept of the Corporation (1946) and thereafter, in a pluralistic society of organizations, what is good for America must be made good for organizations (such as General Motors), and not the reverse.

Each institution is an organ of society. And "no organ can survive the body it serves." Therefore, while focusing on a single task, each institution should also look out for the common good. Free enterprise is defensible only to the extent that it is good for society. Otherwise, in a pluralistic society of special-purpose organizations there will be institutions that work to weaken the conditions for a functioning society.

Seeking the Common Good in a Society of Pluralistic Organizations

Drucker coined the term "reprivatization" in The Age of Discontinuity (1969) and recommends that, for the good of

The concern in reprivatization is to bring back to the private sector and to the nonprofit sector activities that can be done more effectively there, and to leave to government those things that only government can do. Government must fight terrorism and government must deal with the natural environment. Social sector organizations, such as the Girl Scouts, Salvation Army, and Prison Fellowship, on the other hand, are much more effective in, say, developing young girls, making citizens out of the rejected, rehabilitating drug addicts, and reducing recidivism in our prisons.

Drucker's concern that the institutions of society function for the common good has led him to be critical of business practice from time to time and to take on the preaching role of a prophet. For example, some of the ratios between the compensation of top executives and those of the frontline worker are well above 500 to 1 in the Standard & Poors list of 1,500 companies (see www.aflcio.org, Executive Paywatch). To Drucker this is shameful and sends the wrong message to employees and to the public about the ethics of executive conduct. It represents a lack of concern for the welfare of employees and society. There are public corporations that have been very successful over long periods of time who also have maintained, by policy or practice, a much lower ratio between those at the top and those at the bottom (see my Lasting Value, 2000).

Drucker opposes widespread use of stock options. Stock options often cause executives to be preoccupied with

The Role of the Social Ecologist

When asked, "How would you classify yourself?" Peter Drucker replies, "I am a social ecologist." What is a social ecologist?

The end objective of social ecology is action, typically, to improve the functioning of the institutions of society. In this respect, Alexis de Tocqueville was operating as a social ecologist, and probably the best historical example of a social ecologist, when by attempting to understand the institutions of democracy in America he sought to improve the functioning of those institutions in Europe as well as those in America.

One of the most important duties of the social ecologist for Drucker is to identify major trends that have already emerged in the nub but have not yet made their impact felt on the institutions of society ("the future that has already happened"). Once these trends have been identified, Drucker then projects them into the future well before others ever recognize them and alerts society about the opportunities and dangers these emerging trends create for institutions and individuals. Because he identifies these trends well in advance, there is time to test his findings and to take full advantage of emerging trends, while differentiating important trends from fads. Thus he seeks to provide executives and leaders of all of society's institutions the information they need to shape the future rather than being victims of these trends.

Identifying the future that has already happened is very important to Peter Drucker. A principal goal of a social ecologist is to help promote continuity in the conserving institutions of society (for example, the family, religious institutions, and the Supreme Court) while advancing change in the inherently destabilizing institutions of a free society, especially business but also social and public sector institutions. Social ecologists are therefore neither conservative nor liberal. Rather, they seek to promote the values that have stood the test of time while always prodding executives of institutions to innovate, become change leaders, capitalize on "the new realities," and thereby advance the interests of society.

Example of Drucker's Social Ecology: The Next Society

An illustration of Drucker's work as a social ecologist is contained in his article "The Next Society," which appeared in the Economist, November 1, 2001, and in his book Managing in the Next Society (2002). This article and book in many ways exemplify Drucker's work as a social ecologist and demonstrate what it means to be a social ecologist.

The Economist's editors introduce the article with these words: "Tomorrow is closer than you think. Peter Drucker explains how it will differ from today, and what needs to be done to prepare for it." One of the ways the next society will differ from today is the emergence of knowledge as the key wealth-producing resource. He describes the full emergence of the knowledge society and its implications for all three sectors--public, private, and social--of developed countries and for individuals. What is interesting to note, however, is that Drucker actually started to track the emergence of the knowledge worker, the knowledge economy, and the knowledge society almost a half century before the article appeared in the Economist.

Drucker understood that the passage of the GI bill after World War II would lead to the emergence of "the educated person." From the 1950s on he began to talk and write about the knowledge worker (for example, in Landmarks of Tomorrow, 1957) and about the importance of the capital that is in our heads and how it is going to surpass physical capital in importance. He continued to track these events. They appear in detail in The Age of Discontinuity (1969). These events are then even more fully developed in his books: The New Realities (1989), especially Post-Capitalist Society (1993), and Management Challenges for the 21st Century (1999). Knowledge is now the "coin of the realm," the key asset, for individuals, organizations, and nations.

Identifying knowledge as the emerging capital is an example of Drucker's perceptive ability to see "the future that has already happened" and to understand and communicate its implications for all parties long before it becomes an everyday reality. Many individuals and institutions have already seized upon the opportunities of the knowledge society.

Knowledge Work, Knowledge Workers, and the Knowledge Society

Now that knowledge is the key resource in organizations and society, Drucker argues, it is more important than ever

In knowledge work, it is the knowledge worker who has to define the task to be performed, because most often the knowledge worker knows more about the task than any manager. Unlike manual and service work, where the task is specified, the task of the knowledge worker has to be defined. In measuring and increasing productivity of the knowledge worker, therefore, the first step must be to define the task. Once the task is defined, the actual measurement of productivity must include an assessment of the quality of the quantity of output.

Finally, in the knowledge society, executives must integrate the different knowledge areas into an organic whole in order to fulfill the mission of the organization. This in turn means that although the task of the knowledge worker has to be defined by the knowledge worker, executives must integrate the work of all knowledge workers and must approve the definition of the tasks.

Managing Oneself

Just as a functioning society depends on autonomous, well-functioning organizations, so too does it depend on

Knowledge workers own their own capital. Yet knowledge workers need organizations to put their specialized knowledge to work in the design and production of useful products and services. The software designer, for example, needs the operator of hardware to test and use that software. But the relationship between knowledge worker and organization is no longer one where the worker is highly dependent on the organization. The knowledge worker has much more mobility and much more responsibility for maintaining current knowledge than does the manual worker. The employment contract with the knowledge worker is more mutual than that of the manual worker, who is much more dependent upon the employer for security.

Change is a constant in the knowledge society. Knowledge is very perishable. The knowledge worker must act as an entrepreneur and exercise personal management. Knowledge workers must become accustomed to the process of "creative destruction." They must become change leaders, active in the pursuit of change, rather than becoming victims of change. This compels the knowledge worker to engage in continuous learning. The knowledge society is an upwardly mobile society but it does introduce significant risks. The knowledge worker may peak early or become bored, and therefore must prepare for such eventualities by developing a second or parallel career.

Finally, Drucker would advise us, however reluctantly, as a part of the task of managing oneself, to think about fundamental questions concerning the meaning of human existence. He does this himself in a very powerful essay on Kierkegaard.

Society Is Not Enough

Drucker's essay "The Unfashionable Kierkegaard," originally published in 1949 in the Sewanee Review and reprinted in 1993 in his essay volume The Ecological Vision, is a confession that although Drucker has written exclusively about topics "in society," society is not enough to provide for human existence. His essay on Kierkegaard is the only thing Drucker has written "outside of society," except for his two novels.

Why the importance of Kierkegaard? There is an existential or spiritual dimension to human life. For Drucker it is fulfilled by the faith expressed in Kierkegaard's writings, and that faith gives us both a reason to live in society and a hope in death when society becomes immaterial.

An Extraordinary Impact

Any attempt to shed light on how the works of Peter Drucker hang together must necessarily be provisional, for only

A systematic study of the writings of Peter Drucker will convince you that this man has had and continues to have an extraordinary impact on the functioning of the institutions of the United States and of the developed world. More important, such a study will enable you to improve the functioning of your organization, whether it is a business, a nonprofit social institution, or a government entity.

Finally, if you read his 65 years of work, you will see a man devoted to liberty, to institutions that function, to management, to individual achievement, to individual social status and function, to community, and to values that we in free societies widely share. And Drucker's contributions to the functioning of the institutions of society have certainly enhanced freedom. Thus Drucker's Presidential Medal of Freedom is even more fitting than noted in the White House citation.