MANAGEMENT PHILOSOPHY OF PETER DRUCKER

Summary

N. N. Sachitanand’s profile, reprinted by the Forum of Free Enterprise from The Hindu of 29 November 1978, presents Peter F. Drucker as the ‘living prophet’ of management on the occasion of his first visit to India to keynote the Bangalore Management Association’s silver jubilee. Sachitanand sketches Drucker’s biography — Vienna 1909, apprenticeship in Hamburg, doctorate at Frankfurt, flight from Nazi Germany, the 1942 General Motors study that produced ‘Concept of the Corporation’ — and explains his self-description as a management philosopher who treats consulting as his laboratory and society as a ‘Society of Organisations’ in which the manager bears the load that masters once carried.

The booklet then walks the reader through Drucker’s signature positions as he stated them to the Bangalore press: think through purpose and objectives, concentrate resources, and lead from people’s strengths rather than their weaknesses. Drucker’s most polemical claims are aligned with the Forum’s classical-liberal editorial line — that ‘there are no profits in business, there are only costs’, that with prevailing inflation ‘businesses are not making profits but only destroying capital’, and that capital is so scarce in India that ‘it is irresponsible to run a business at a loss or even talk of profiteering.’

A long section catalogues Drucker’s scepticism about the state: governments have demonstrated competence only in waging war and inflating currency; civil-service safeguards built to deter corruption end up shielding bureaucrats from performance demands and obstructing initiative; organisational inertia is most acute in government because failed agencies are not allowed to expire. He nonetheless concedes that Indian state enterprises like Hindustan Machine Tools have run without heavy subsidies and proposes they ‘go really public and autonomous’, freeing capital for fresh investment. He criticises Indian foreign-investment rules such as FERA, defends the multinational as the century’s most fruitful social innovation, attacks worker participation on boards as a ‘conspiracy against the consumer’, and notes with ‘remarkable accuracy’ that India’s small entrepreneur is ‘being killed by kindness — well meaning regulations that he cannot afford.’

The closing pages move from policy to philosophy: Drucker the ‘old existentialist’ sees the world in a philosophical vacuum awaiting a new concept of the whole, suggests that the workable test ‘Does it work?’ may be all we have left in place of ‘Is it right?’, and looks for ‘the acceptable range of imperfection’ rather than the good society. The Forum frames the reprint with epigraphs from A. D. Shroff and Eugene Black insisting that free enterprise is ‘an affirmative good’, and notes that the views in the booklet are not necessarily those of the Forum.

Key points

• Reprint by the Forum of Free Enterprise of Sachitanand’s profile of Peter Drucker, originally in The Hindu of 29 November 1978, occasioned by Drucker’s keynote at the Bangalore Management Association’s silver jubilee.

• Biographical arc: Vienna 1909, Hamburg clerkship, doctorate in law at Frankfurt 1931, anti-Nazi monograph banned 1933, England, then the United States from 1937; the 1942 General Motors study yielded ‘Concept of the Corporation’ and the lifelong project of theorising the modern corporation.

• Drucker’s three rules of good management as he stated them in Bangalore: think through purpose and objectives, concentrate resources, lead from people’s strengths.

• On profit: ‘there are no profits in business, there are only costs’; under current inflation businesses are destroying rather than accumulating capital, and in capital-scarce India running a business at a loss is irresponsible.

• Sharp critique of state capacity — governments have proved competent only at waging war and inflating currency; civil-service safeguards protect bureaucrats from performance demands and block innovation; organisational inertia is worst in government.

• Indian-policy specifics: Drucker urges that successful state enterprises like Hindustan Machine Tools ‘go really public and autonomous’; attacks FERA-style restrictions; defends the multinational as a wealth-generating social innovation; calls worker participation on boards a ‘conspiracy against the consumer’.

• Catalogues the regulatory strangulation of India’s small entrepreneur — ‘being killed by kindness — well meaning regulations that he cannot afford’ — and argues the future managerial frontier is the badly-managed service institution (universities, hospitals, government agencies).

• Closes with Drucker’s philosophical mood — ‘old existentialist’ in a philosophical vacuum, end of ideology, the tolerant society defined by ‘the acceptable range of imperfection’ — framed by Forum epigraphs from A. D. Shroff and Eugene Black affirming private enterprise as an ‘affirmative good’.