Table Speech

“The Essence of Management Philosophy by Drucker”

June 17, 2009

Mr. Atsuo Ueda
Workshop for Studies of Peter F. Drucker's Management Philosophy
Visiting Professor, Ritsumeikan University
Professor Emeritus, Institute of Technologists

 49 years ago, a young man dropped in the secretariat of the Rotary Club of Tokyo and asked for support for his journey to the United States. A month later, he got a call inviting him to the Club’s weekly meeting, where he received a 2nd class passage to Los Angeles, as part of events commemorating the 40th anniversary of the Club. This young man was me. I started my career at the Japan Federation of Economic Organizations, where, as though by fate I came across the world of Peter Drucker. My life itself is the living proof of Drucker’s theory of “butterfly effect” in the post-modern era.

 Drucker is said to be the best philosopher of the modern society. He predicted that Japan would become the world’s economic superpower, even in the rubbles of World War II devastation.

 Early in the 20th century, the deprived and impoverished European masses sought refuge in Fascism, which started as a social reform movement at the time when neither capitalism nor socialism gave solutions. Drucker believed that although this inhuman ideology swept across Europe, it would not endure.

 He published his maiden work The End of Economic Man (1939) and predicted the “end of economic animal” and stopped putting utmost priority to the economy, which is exactly the issue we face today.

 The Industrial revolution started in 1776, with the invention of the steam engine by James Watt. Productivity improved dramatically and Adam Smith wrote The Wealth of Nations based on his creed that “everything goes well in free economic activities.” This was the epoch-making year when both physical infrastructure and theoretical basis of capitalism were established. Later on, Marxist socialism emerged as an essential reaction to capitalism. When both didn’t work, fascism became prevalent.

 Drucker realized that “time has come for people to work together.” James Watt invented a new means for production, which brought a new era to mankind of working together in an organization. Successful organizational “management” will bring out the best in people and motivate workers to make positive social contributions, which are key factors to bring happiness to mankind both as workers and consumers.

 Drucker was born in 1909 in Austria, just before the outbreak of World War I which brought total destruction across Europe with 10 million war deaths. In spite of progress made in productivity, people’s living conditions did not improve. Adolf Hitler rose to power from the devastation and impoverishment of the German economy.

 Drucker moved to Germany, where he studied law while working as a clerk at a trading company, later to join an American securities company. He published two theses in business magazines, based on the latest model of “ever-growing economy.” Right after their publication, the 1929 Great Depression hit Europe and made him jobless at the age of 19. Drucker managed to get a job at the local newspaper publishing company, writing 2 editorials on his first day in the office.

 Hitler came into power, and Drucker left Germany for the United States, as he sensed the era of economic man was waning and fascism was rising. He devoted himself to the studies of “management,” hoping European vitality would find its way out of fascism.

 Though he was discriminated against for being a Communist, Drucker made his living by lecture tours in the US. One day, he got a call from the Vice President of General Motors, who read his 2nd work The Future of Industrial Man (1942) and requested him to conduct a 18-month-analysis of the corporation. At the end he published Concept of the Corporation (1946) in which he insisted that “industrial activities create good society. Politics should aim at activating industrial activities to the fullest.” He also published The Practice of Management (1954), Managing for Results: Economic Tasks and Risk-Taking Decisions (1964) and The Effective Executive (1966).

 The first point Drucker insisted in his report was “everything created by mankind must be re-examined, no matter how good it may be.” The second point was the blue-collar workers “at the actual job site know best about economic activities so managers must listen to their opinions.” The third point was companies must “raise awareness of their social responsibilities.” In those days, profit-making was regarded to be the ultimate goal for companies. For Drucker, profit was not the goal but a condition to “improve future production activities.”

 Drucker as a political scientist was interested in “society” and “whether industrial society will make mankind, the social existence, happier.”

 Drucker published “Landmarks of Tomorrow: A Report on the New ‘Post-Modern’ World” in 1957 and declared that “we have shifted from the modern (rationalism) era into a nameless new era, where yesterday’s modern and latest worldview, critical mind, and basis for judgment do not make any sense today.”

 Drucker predicted that mankind would face serious issues which cannot be analyzed simply by theory, and pointed out the limits and mistakes in the methodology of modern rationalism.

 Although we owe our present life to the progress made in technology, industry and science, Drucker insisted, 50 years ago, that we must “grasp everything as a living whole.”

 Drucker is the best philosopher of the modern society, father of management, and the best mentor for each individual. I hope you will read his books, once again, as they speak directly to you.