Peter Drucker on Leadership
A Starting Point for Understanding Leadership
Who is Peter Drucker and Why Does He Matter
Peter Drucker is the Father of Modern Management. He was born in 1909 in the Vienna of the old Austria-Hungary Empire. He died 95 years later in 2005. His career spanned a century marked by the rise of the middle class in the West, the emergence of Soviet and Maoist Communism, and the birth of the information age. He was a prolific writer, especially in his later years as he looked at the transformation of society, business, and the practice of leadership.
His book Innovation and Entrepreneurship had a huge effect upon me in my early years of interest in the principles and practice of leadership. The development of my Circle of Impact model of leadership is a product of my immersion in Drucker’s thought.
Peter Drucker on Leadership
“ALL the effective leaders I have encountered - both those I worked with and those I merely watched – knew four simple things.
1. The only definition of a leader is someone who has followers. Some people are thinkers. Some are prophets. But roles are important and badly needed. But without followers, there can be no leaders.
2. An effective leader is not someone who is loved or admired. He or she is someone whose followers do the right things. Popularity is not leadership. Results are.
3. Leaders are highly visible. They therefore set examples.
4. Leadership is not rank, privileges, titles, or money. It is responsibility.
Regardless of their limitless diversity with respect to personality, style, abilities, and interests, the effective leaders I have met, worked with, and observed also behaved much the same way.
1. They did not start out with the question, “What do I want?” They started out asking, “What needs to be done!”
2. They asked, “What can and should I do to make a difference?” This has to be something that both needs to be done and fits the leader’s strengths and the way she or he is most effective.
3. They constantly asked, “What are the organization’s mission and goals? What constitutes performance and results in this organization?
4. They are extremely tolerant of diversity in people and did not look for carbon copies of themselves. It rarely even occurred to them to ask, “Do I like or dislike this person?” But they were totally – fiendishly – intolerant when it came to a person’s performance, standards, and values.
5. They were not afraid of strength in their associates. They gloried in it. Whether they had heard of it or not, the motto was what Andrew Carnegie wanted to have put on his tombstone: “Here lies a man who attracted better people into his service than he was himself.”
6. One way or another, they submitted themselves to the “mirror test” – that is, they made sure that the person they saw in the mirror in the morning was the kind of person they wanted to be, respect, and believe in. This way they fortified themselves against the leader’s greatest temptations – to do thing that are popular rather than right and to do petty, mean, sleazy things.
Finally, these effective leaders were not preachers; they were doers.
In the mid-1920s, when I was in my final high school years, a whole spate of books on World War I and its campaigns suddenly appeared in English, French, and German. For our term project, our excellent history teacher – himself a badly wounded war veteran – told each of us to pick several of these books, read them carefully, and write a major essay on our selections. When we then discussed these essays in class, one of my fellow students said, “Every one of these books says that the Great War was a war of total military incompetence. Why was it? Our teacher did not hesitate a second but shot right back, “Because not enough generals were killed, they stayed way behind the lines and let others do the fighting and dying.”
Effective leaders delegate a good many things; they have to or they drown in trivia. But they do not delegate the one thing that only they can do with excellence, the one thing that will make a difference, the one thing that will set standards, the one thing they want to be remembered for. They do it.
from the Forward by Peter Drucker for The Drucker Foundation’s The Leader of the Future (1996).
Peter Drucker on Change and Innovation
“Entrepreneurs see change as the norm and as healthy. Usually, they do not bring about the change themselves. But – and this defines entrepreneur and entrepreneurship – the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
Entrepreneurs innovate. Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth. Innovation, indeed, creates a resource. There is not such thing as a “resource” until man(sic.) finds a use for something in nature and thus endows it with economic value.
Entrepreneurs will have to learn to practice systematic innovation.
Successful entrepreneurs do not wait until “the Muse kisses them” and gives them a “bright idea”; they go to work. Altogether, they do not look for the “biggie,” the innovation that will “revolutionize the industry, “ create a “billion–dollar business,” or “make one rich overnight.” Those entrepreneurs who start out with the idea that they’ll make it big – and in a hurry – can be guaranteed failure. They are almost bound to do the wrong things. An innovation that looks very big may turn out to be nothing but technical virtuosity; and innovations with a modest intellectual pretensions ... may turn into gigantic, highly profitable businesses. The same applies to nonbusiness, public–service innovations.
Systematic innovation therefore consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation.
The Seven Sources of Innovative Opportunity
1. The unexpected – the unexpected success, the unexpected failure, the unexpected outside event;
2. The incongruity – between reality as it actually is and reality as it is assumed to be or as it “ought to be”;
3. Innovation based on process need;
4. Changes in industry structure or market structure that catch everyone unawares
5. Demographics (population changes)
6. Changes in perception, mood, and meaning;
7. New knowledge, both scientific and nonscientific.” …
Innovation ... is organized, systematic, rational work. But it is perceptual fully as much as conceptual. To be sure, what the innovator sees and learns is to be subjected to rigorous logical analysis. Intuition is not good enough; indeed , it is no good at all if by “intuition” is meant “what I feel.” For that usually is another way of saying “What I like it to be” rather than “What I perceive it to be.” But the analysis, with all its rigor – its requirements for testing, piloting, and evaluating – has to be based on a perception of change, of opportunity, of the new realities, of the incongruity between what most people still are quite sure is the reality and what has actually become a new reality. This requires the willingness to say: “I don’t know enough to analyze, but I shall find out. I’ll go out, look around, ask questions, and listen.
There are several kinds of incongruity:
An incongruity between the economic realities of an industry (or of a public–service area);
An incongruity between the reality of an industry (or of a public service area) and the assumptions about it;
An incongruity between the efforts of an industry (or a public service area) and the values and expectations of its customers;
An internal incongruity within the rhythm or the logic of a process.”
from Innovation and Entrepreneurship: Practice and Principles, by Peter Drucker, 1986.
Peter Drucker on The Need for Social and Political Innovation
“No century in recorded history has experienced so many social transformations and such radical ones as the twentieth century. They, I submit, may turn out to be the most significant events of this, our century, and its lasting legacy. In the developed free-market countries--which contain less than a fifth of the earth's population but are a model for the rest--work and work force, society and polity, are all, in the last decade of this century, qualitatively and quantitatively different not only from what they were in the first years of this century but also from what has existed at any other time in history: in their configurations, in their processes, in their problems, and in their structures.
Far smaller and far slower social changes in earlier periods triggered civil wars, rebellions, and violent intellectual and spiritual crises. The extreme social transformations of this century have caused hardly any stir. They have proceeded with a minimum of friction, with a minimum of upheavals, and, indeed, with a minimum of attention from scholars, politicians, the press, and the public. To be sure, this century of ours may well have been the cruelest and most violent in history, with its world and civil wars, its mass tortures, ethnic cleansings, genocides, and holocausts. But all these killings, all these horrors inflicted on the human race by this century's murderous "charismatics," hindsight clearly shows, were just that: senseless killings, senseless horrors, "sound and fury, signifying nothing." Hitler, Stalin, and Mao, the three evil geniuses of this century, destroyed. They created nothing.
Indeed, if this century proves one thing, it is the futility of politics. Even the most dogmatic believer in historical determinism would have a hard time explaining the social transformations of this century as caused by the headline-making political events, or the headline-making political events as caused by the social transformations. But it is the social transformations, like ocean currents deep below the hurricane-tormented surface of the sea, that have had the lasting, indeed the permanent, effect. They, rather than all the violence of the political surface, have transformed not only the society but also the economy, the community, and the polity we live in. The age of social transformation will not come to an end with the year 2000--it will not even have peaked by then.” …
The twenty-first century will surely be one of continuing social, economic, and political turmoil and challenge, at least in its early decades. What I have called the age of social transformation is not over yet. And the challenges looming ahead may be more serious and more daunting than those posed by the social transformations that have already come about, the social transformations of the twentieth century.
Yet we will not even have a chance to resolve these new and looming problems of tomorrow unless we first address the challenges posed by the developments that are already accomplished facts, the developments reported in the earlier sections of this essay. These are the priority tasks. For only if they are tackled can we in the developed democratic free market countries hope to have the social cohesion, the economic strength, and the governmental capacity needed to tackle the new challenges. The first order of business--for sociologists, political scientists, and economists; for educators; for business executives, politicians, and nonprofit-group leaders; for people in all walks of life, as parents, as employees, as citizens--is to work on these priority tasks, for few of which we so far have a precedent, let alone tested solutions.
We will have to think through education--its purpose, its values, its content.
We will have to learn to define the quality of education and the productivity of education, to measure both and to manage both.
We need systematic work on the quality of knowledge and the productivity of knowledge-- neither even defined so far. The performance capacity, if not the survival, of any organization in the knowledge society will come increasingly to depend on those two factors. But so will the performance capacity, if not the survival, of any individual in the knowledge society. And what responsibility does knowledge have? What are the responsibilities of the knowledge worker, and especially of a person with highly specialized knowledge?
Increasingly, the policy of any country--and especially of any developed country--will have to give primacy to the country's competitive position in an increasingly competitive world economy. Any proposed domestic policy needs to be shaped so as to improve that position, or at least to minimize adverse impacts on it. The same holds true for the policies and strategies of any institution within a nation, whether a local government, a business, a university, or a hospital.
But then we also need to develop an economic theory appropriate to a world economy in which knowledge has become the key economic resource and the dominant, if not the only, source of comparative advantage.
We are beginning to understand the new integrating mechanism: organization. But we still have to think through how to balance two apparently contradictory requirements. Organizations must competently perform the one social function for the sake of which they exist--the school to teach, the hospital to cure the sick, and the business to produce goods, services, or the capital to provide for the risks of the future. They can do so only if they single-mindedly concentrate on their specialized mission. But there is also society's need for these organizations to take social responsibility--to work on the problems and challenges of the community. Together these organizations are the community. The emergence of a strong, independent, capable social sector- -neither public sector nor private sector--is thus a central need of the society of organizations. But by itself it is not enough--the organizations of both the public and the private sector must share in the work.
The function of government and its functioning must be central to political thought and political action. The megastate in which this century indulged has not performed, either in its totalitarian or in its democratic version. It has not delivered on a single one of its promises. And government by countervailing lobbyists is neither particularly effective--in fact, it is paralysis-- nor particularly attractive. Yet effective government has never been needed more than in this highly competitive and fast-changing world of ours, in which the dangers created by the pollution of the physical environment are matched only by the dangers of worldwide armaments pollution. And we do not have even the beginnings of political theory or the political institutions needed for effective government in the knowledge-based society of organizations.
If the twentieth century was one of social transformations, the twenty first century needs to be one of social and political innovations, whose nature cannot be so clear to us now as their necessity.”
Reflection of Drucker’s Perspective
The world has gone through a dramatic transformation during the quarter-century since Peter Drucker wrote the above. We are no longer a traditional society organized around kinship but around political ideology. We are no longer a society of landlines and handwritten letters. We are no longer a society that trusts leaders and institutions. We are a society where patterns of leadership behavior have led us to the brink of economic collapse, nuclear war, and a perpetual viral pandemic. We are now leadership-starved.
The distinction between the 1990s and today should be evident. Unfortunately, it is not for many people. Many have a fantastical belief that all these problems are accidents without a cause. Wars and viral pandemics don’t just appear out of thin air. They are products of human behavior that are often compromised by fear, greed, or a righteous justification of the perception of truth.
We need to understand the underlying realities that made our current global situation possible. This column is the beginning of a series of essays on how we got here and what we can do to address our problems as a global society.
My Substack, The Future of Leadership, is in many respects a product of Peter Drucker’s influence on me nearly 40 years ago. From him, I saw how to observe, reflect, and articulate how our global society has developed over the past century. From him, I learned to describe how leadership has changed in its relation to society over the past century capturing my curiosity and imagination that is leading me to take a deeper look at what happens when a society begins to rapidly decline, and finally, what we as individuals and local communities can do to restore health and vitality to society.