SOUTHEASTERN BAPTIST THEOLOGICAL SEMINARY

PETER DRUCKER

SUBMITTED TO DR. LARRY PURCELLIN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF

LED9335 LEADERSHIP, MANAGEMENT, & ORGANIZATIONAL THEORY

BYMICHAEL LEWIS

JANUARY 12, 2011

PETER DRUCKER

“I’m often embarrassed at how often I quote Peter Drucker, he had a way of saying things simply. Peter was far more than the founder of modern management, far more than a brilliant man, one of the greatest minds of the 20th century. He was a great soul. If I summed up Peter’s life in three words, it would be integrity, humility and generosity.... Peter was the only truly Renaissance man I’ve ever known. He had a way of looking at the world in a systems view that said it all matters.”1 – Rick Warren

Introduction

“I taught religion once, many years ago, and I greatly enjoyed it. But I never had much

use for theology.”2 Those are the words the man BusinessWeek credited with inventing

management3 chose to use in the preface to the most auto-biographical work he ever wrote.

“Adventures of a Bystander” was a clever title for this work because Drucker always saw

himself as an outside observer looking in on American business culture. From GM to GE, from

the Girl Scouts to Rick Warren, the observations of this “bystander” have helped shape the way

America, and, since his writings have been translated in to thirty-seven different languages, the

world does business. A committed member of the Episcopal church until his death in 1995, Peter

Drucker is one of the most influential thinkers of the last century. Though he claimed to have

little use for theology, he injected the themes of stewardship and responsibility into modern

society more effectively than many pastors in his lifetime.

1 John H. Osdick, “Peter Drucker: The Father of Management Theory” n.p. [Cited January 12, 2012] http://www.successmagazine.com/article?articleId=1115&taxonomyId=15

2 Peter F. Drucker, Adventures of a Bystander (New York: HarperCollins, 1991) vi.3 Business Week, The Man Who Invented Management (Nov 28, 2005) Cover Story [Cited January

12.2012] http://www.businessweek.com/magazine/content/05_48/b3961001.htm

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Biographical Sketch

Born in Austria in 1909, Peter Drucker traveled an interesting route through Europe

before becoming the pioneer of management theory in America. Living through the First World

War in Austria, he moved to Germany for college where he earned a doctorate in law. Wisely,

he decided to leave Germany just as Hitler was coming in to power. It was a good thing he left

too, his first publication was confiscated and banned by the Nazis just two months after it was

printed.4 While in Germany he discovered two of the most influential people in his life; his

wife, Doris, whom he would marry in 1937, and Kierkegaard, who he would later claim as the

most important intellectual influence on his ideas.5

Leaving Germany for London in 1933, he worked at a bank and began freelance writing.

While in London, he traveled weekly to attend seminars by economist John Maynard Keynes. It

was here that he has somewhat of an epiphany, “I suddenly realized that Keynes and all the

brilliant economics students in the room were interested in the behavior of commodities while I

was interested in the behavior of people.”6 He would go on to devote the remainder of his life to

helping people work with people.

Leaving London in 1937, he married Doris Schmitz and moved to the United States as a

foreign correspondent for several British newspapers.7 He began teaching at Sarah Lawrence

College in 1939 and held positions at Bennignton College (1942-1949), New York University

(1949-1971), and Claremont College (1972-2002) where they named their graduate school of

management in his honor. A prolific writer, he authored 39 books that have been translated in to

more than 35 languages and wrote a regular column for the Wall Street Journal for 20 years.

4 John E. Flaherty, Shaping the Managerial Mind (San Francisco : Jossey-Bass Inc. , 1999) 14. 5 Karen Linkletter, “Drucker Redux: Management as Intellectual and Philosophical Product” Ph.D. diss.

(Claremont College, CA : 2004) 34.6 Jack Beatty, The World According to Peter Drucker (New York: Broadway Books, 1998) 17. 7 Linkletter, Drucker Redux, 43.

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Peter Drucker passed away at his home in Claremont, California on Veterans Day, November 11, 2005.

Summary of Teachings / Ministry Applications

Because he was such a prolific writer and teacher for over sixty years, any attempt at a

summary of his management theory will exclude some of the key nuances and teachings that

made Drucker, “Drucker”. Nevertheless, the overwhelming volume of the material he produced

does seem to have some recurring themes. A.G. Lafley, in the forward to the book that Drucker

asked to be written about his teachings just before he died, listed five characteristics that made

Peter Drucker so extraordinary. According to WHO?Lafley, Drucker kept the importance of

serving the customer first, insisted on the practice of management above theorizing, reduced

complex ideas to simple statements, focused on the responsibility of leaders, and he treated

everyone with deep respect. 8 Emerging from a time in business culture where workers were

often dehumanized and viewed only for the value of what they could produce, he elevated the

worker and published thoughts like, “A business enterprise (or any other institution) has only

one true resource: people.”9

Questions

Much of Drucker’s teaching has a Socratic flair to it in that he uses questions as an

effective way to make his point. He so believed in the power of questions that he said,

“The most important thing anybody in a leadership position can do is ask what needs to be

done.”10 It is surprising how revolutionary some of the questions Drucker proposed seem to be

because, on the surface, they seem so mundane. Drucker defined the first function of

8 Elizabeth Haas Edesheim, The Definitive Drucker, (New York: McGraw-Hill, 2007) x-xi.9 Peter F. Drucker, The Essential Drucker (New York: HarperCollins, 2001) 15.10 Edersheim, Definitive Drucker, 12.

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management as asking three questions, “ What is our business?; What will be our business?; and

What should be our business?”11 Failure to ask ‘what is our business?” is what Drucker labeled

“the most important single cause of business failure.”12 As a lifelong observer of management,

much of what Drucker attempted to do centered around getting managers to step back and

observe themselves and their companies. Simply asking “What is our business? Who is our

customer? What does the customer consider value?”13 could have a profound effect on many

existing businesses that are going through the motions of work because it’s what they did last

year.

When it comes to job performance, Drucker taught that individuals should ask

themselves “What can I contribute?” with an outward focus toward the ultimate mission and

purpose of the organization.14 Too often, he believed, people were either self-focused, seeing

what the company could do for them, or down-focused, merely focusing on the task at hand for

sake of finishing the task. “Knowledge workers who do not ask themselves, ‘What can I

contribute?’ are not only likely to aim too low, they are likely to aim at the wrong things.”15

The most important lesson Jack Welch, CEO of GE learned from Peter Drucker was to

ask the following question: “If you weren’t in this business today, would you invest the resources

to enter it?”16 Again, Drucker directs the leader to take a step back and observe what it actually

happening in the corporation. This incessant questioning of the status-quo was an often plucked

string on Drucker’s management guitar.

11 Jack Beatty, The World According to Peter Drucker. (New York: Free Press, 1998) 109.12 Ibid.13 Edersheim, Definitive Drucker.46.14 Peter F. Drucker, The Effective Executive. (New York: Harper Business, 1993) 52.15 Drucker, The Essential Drucker. 208.16 Edersheim, The Definitive Drucker, 88.

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Ministry Application

It would be helpful for pastors to step back and evaluate their ministries throughout the

year. Answering the question “What is our business?” would force them to think about what they

should be doing, regardless of what activities were actually occurring. They should also ask the

question “what needs to be done?” Many times in ministry, decisions are made and actions are

taken based on tradition, political motives, or simple expediency. Asking these questions will

help focus the ministry leader on God’s mission for the ministry they are leading. It is vital that a

pastor answer the question “Who is our customer?” This question needs to be answered from

three angles. “Who are we trying to please?”, “Who are we trying to reach?”, and “Who are we

talking to on Sunday?” The way the pastor answers these questions will determine the direction

of his ministry, the contextualization of his strategy, and the style and substance of his preaching.

Purpose and Mission

Rick Warren considered Peter Drucker to be one of his mentors. 17 It should come as no

surprise then that purpose was an important part of Drucker’s philosophy. In his book dedicated

to managing non-profit organizations, he wrote, “We hear a great deal these days about

leadership, and it’s high time we did. But, actually, mission comes first. Non-profit institutions

exist for the sake of their mission.”18 Throughout his writings, Drucker encourages leaders to

determine why they are doing what they are doing and exactly what it is they hope to accomplish.

This purpose and mission will then drive every other aspect of the organization.

Jack Beatty suggests that the most famous Drucker dictum in the world is “There is only

one valid definition of business purpose: to create a customer.”19 This is not to say that Drucker

17 John H. Osdick, “Peter Drucker: The Father of Management Theory” n.p. [Cited January 12, 2012] Online: http://www.successmagazine.com/article?articleId=1115&taxonomyId=15

18 Drucker, Managing the Non-Profit Organization. (New York: Harper Buisiness, 1992)45.19 Beatty, The World According to Peter Drucker

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thought management was all about getting customers and making a profit. “Drucker discusses

economic life in terms of values, integrity, character, knowledge, vision, responsibility, self-

control, social integration, teamwork, community, competence, social responsibility, the quality

of life, self-fulfillment, leadership, duty, purpose, dignity, meaning – but rarely money. He

defends profit, but as if it were broccoli: a distasteful obligation of managers who would rather

be reading Kierkegaard.”20 Drucker saw the purpose of business as providing something

customers wanted and needed, something that made their lives better. In this, he helped focus

businesses on results that would not only affect their bottom line, but the quality of life for the

society they served.

Ministry Application

Ministry leaders should be able to clearly articulate the mission of their organization. If

they can not do this, it is certain that the ones who work in their organization won’t be able to

either. In reality, the people who work in the organization will probably assume they know what

the mission is or create their own ideas about what the mission is and try to take the organization

in many different directions creating confusion and conflict.

One starts with the mission, and that is exceedingly important. What do you want to remembered for and as organization-but also as an individual? The mission is something that transcends today, guides today, informs today. The moment we lose sight of the mission, we begin to stray, we waste resources. From the mission, one goes to very concrete goals.21

Management by Objectives

While he is not credited with developing the theory of management by objectives, his

concepts laid the foundation for this theory.22 Originally written about in The Practice of 20 Beatty, The World According to Peter Drucker. 176. 21 Drucker, Managing the Non- profit Organization. 141.22 Paul Hersey, Kenneth Blanchard, Dewey Johnson, Management of Organizational Behavior.(Upper

Saddle River, NJ, Prentice Hall, 2001)139.

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Mananagement, 1954, management by objectives emphasized that once the mission and purpose

of an organization were determined, measurable objectives needed to be determined and

communicated clearly so that every person in the organization could know what the goals were

for their specific area of work. The success or failure of an organization could only be defined by

whether or not it reached its objectives. To illustrate the importance of understanding and being

committed to objectives, Drucker shared what has become a classic illustration of three

stonecutters who were asked about what they were doing. “The first replied, ‘I am making a

living’ – the second replied, ‘I am doing the best job of stonecutting in the country’ – the third

replied, ‘I am building a cathedral.’ The third man is, of course, the true ‘manager’”.23

Drucker referred to management by objectives as the only principle of management “that

will give full scope to individual strength and responsibility, and at the same time give common

direction of vision and effort, establish team work, and harmonize the goals of the individual

with the commonweal.”24 Managing by objectives involves the worker in goal setting and helps

them measure for themselves whether or not they are contributing to the organization’s mission

in a positive way. Managing by objectives helps the organization to determine what success

looks like and leads them to seek measurable results from their actions.

Ministry Application

Sometimes, ministry is done for the sake of looking busy in ministry. Pastors are busy,

but not very effective. If a pastor could determine some measurable objectives for his preaching,

discipleship, and visitation ministry, he would be able to better evaluate the impact of his

ministry. This would also help workers and volunteers in the organization know that they are

contributing to the overall mission of the organization in a meaningful and tangible way.

23 Jack Beatty, The World According to Peter Drucker (New York: Broadway Books, 1998 ) 106.24 Drucker, The Essential Drucker, 125.

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“The measurement used determines what one pays attention to. It makes things visible

and tangible. The things included in the measurement become relevant; the things omitted are

out of sight and out of mind.”25 Ministry leaders must pay attention to the ways they decide to

measure the effectiveness of their ministry. If they set objectives that do not really measure

things that glorify God, they will spend their organization’s capital and resources pursuing

unworthy goals. However, if a ministry leader can set measurable objectives that are consistent

with the Bible and God’s glory, he will help people fulfill God’s will and advance the Great

Commission. It is important that ministry objectives be set according to God’s word and not only

by measurable results.

Strengths

“If you ask someone, ‘What did you learn from Peter Drucker?’ one of the most likely

answers is ‘That managers must match strength to opportunity.’”26 Throughout his writings,

Peter Drucker emphasized the importance of playing to one’s strengths. Since everyone has

weaknesses, it is better to find out what areas people are strong in and help them succeed in those

areas. “Management is about human beings. Its task is to make people capable of joint

performance, to make their strengths effective and their weaknesses irrelevant.”27 So Drucker

encouraged choosing people for positions based on their strengths and the strengths of the

organization, not just to cover up for weaknesses.“Whoever tries to place a man or staff an

organization to avoid weakness will end up at best with mediocrity:28

Drucker also challenged leaders to evaluate their own areas of strength and focus their

energies on those areas. “What can I and no one else do which, if done really well, would make a

25 Peter F. Drucker, The Practice of Management. (New York: Harper&Row, 1954) 64-65.26 Edersheim, The Definitive Drucker. 17727 Edersheim, The Definitive Drucker. 157.28 Drucker The Effective Executive. 72.

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real difference to this company?”29 Instead of focusing on retraining and trying to overcome

weaknesses, the leader is encouraged to focus on his or her strengths and let others take care of

the areas in which they are weak. This means they need to intentionally neglect some things in

order to do a few things well. Drucker put it this way, “Focus only on those things you are

competent to do.”30 In doing this, the individual is free to become the best that they can be and

benefit the organization to their utmost potential.

Ministry Application

This means that some good things need to be intentionally neglected in ministry. Instead

of pumping more resources into a program that doesn’t produce results, shut that program down

and build up the areas of the ministry that are most effective. Too often ministries will try to be

all things to all people when God created them to be one thing for His glory.

Decentralization

The cry for decentralization echoes throughout Drucker’s work. Perhaps this is a reaction

to his exposure to Hitler and totalitarianism in his early life in Austria and Germany. He was

constantly pushing for authority to be delegated along with responsibility. “Every knowledge

worker in a modern organization is an ‘executive’ if, by virtue of his position or knowledge, he

or she is responsible for a contribution that materially affects the capacity of the organization to

perform and to obtain results.”31 He saw the executive as a decision maker, but despised the idea

of micro-management and wanted most decisions to be made by those immediately effected by

them. “Very few decisions need to be the responsibility of top management.”32

29 Ibid. 5930 Drucker, Managing the Non-Profit Organization. 55.31 Drucker, The Effective Executive. 5.32 Edersheim, The Definitive Drucker. 237.

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Ministry Application

Ministry leaders should delegate as much responsibility and authority as possible to

everyone in the organization. Ephesians 4:12 teaches that pastors were given to the church to

equip the saints for the work of the ministry. Too often, the pastor won’t relinquish control of

things and ends up doing too many things and leaving people out of ministry that have many

gifts and abilities to offer.

Pragmatism/Leadership

Drucker’s teaching were very pragmatic in nature. His life was all about helping

organizations work better. He had no room for management theory for theories sake.

“Leadership is doing. It isn’t just thinking great thoughts; it isn’t just charisma; it isn’t play-

acting. It is doing.”33 If he were writing a book of the Bible, he would write one like the epistle of

James. He was concerned that people be doers of the things he taught, not just hearers. Even

activity needed to be measured by the purpose, mission, and objectives of the organization. Just

because someone is busy, it doesn’t mean they are effective. “Don’t confuse motion with

progress.”34

He encouraged leaders to stay task-oriented. “The most important thing to do, I have said

again and again already: Keep your eye on the task, not on yourself. The task matters, and you

are a servant.” 35 He viewed practical actions as the ultimate measure of success or failure, “For

the ultimate test is not the beauty of the mission statement. The ultimate test is right action.” 36

Ministry Application

33 Drucker, Managing the Non-Profit Organization. 47.34 Edersheim, The Definitive Drucker, 2.35 Drucker, Managing the Non-Profit Organization. 27.36 Ibid. 3.

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This is vital counsel for ministry today. Just as faith without works is dead, so planning

and pontificating about ministry without actually helping people is a waste of resources.

Ministers need to be action oriented if they are going to shepherd effectively. Planning,

discussion and meetings about how to reach the world have their place, but at the end of the day,

someone has to get out of the office chair and execute that plan. It would be wise for the ministry

leader to keep his eyes on his task and not himself. This way, when he is insulted or praised, he

won’t be phased, he’ll just keep striving to fulfill the Great Commission. Drucker wrote that

leadership was doing. That is true of ministry as well. Ministry is doing.

Evaluation of Peter Drucker’s Management Teaching

While Drucker has many critics in the academic world because of his practical, down to

earth writing style and a tendency to avoid footnotes and proper citation, he also has many critics

in the theological world. However, many who are opposed to the modern church growth

movement blame Drucker for the invasion of pragmatism into the world of religion. They are at

least correct in their assessment of the extent of his influence. Rick Warren claims him as a

mentor. Bob Buford has incorporated Drucker’s theory as a major part of his Leadership

Network. It is difficult to find a book on church growth or leadership that does not incorporate

some aspect of Drucker’s teaching even if it doesn’t credit him with its origin.

Overall, Drucker’s philosophy is theologically sound. Though he is often cited as having

a humanistic approach, this is only true in the sense that he elevates the value of the person over

the objective. An overemphasis on the customer could lead some to have the pleasure of people

as the ultimate measure of their success rather than faithfulness to God and his word. His

emphasis on practical action and focus on the mission would be beneficial to anyone. The

problem comes when one determines a measure for success that is unbiblical. If getting more

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people in pews becomes the ultimate measure, some might compromise the offensive message of

the cross in order to reach that objective. However, if reaching people for the glory of God is the

ultimate goal, then Drucker’s teachings can be applied to the church with great benefit. The main

danger with his teaching is that its emphasis on results could lead some to become too pragmatic

and neglect the mystery of the work of the Spirit of God in ministry. William Clemmons wrote:

An illustration of the functional approach to religious life is seen in the church and denominational acceptance of the management-by-objectives approach of Peter Drucker. Its almost exclusive dominance as the planning tool for religious life in America (and overseas through missions) has increased our expectations that religious life, church and denominational, can be totally analyzed, planned, and predicted as one would a rocket trip to the moon. Enough time, printed materials, and workshops on church and denominational planning have been spent to project five-year, ten-year, and “by the end of this century” plans that have failed to surrender to mystery. 37

This was not so much a criticism of Drucker as it was of those who apply his teachings without

proper Biblical consideration, which could be a criticism of any prominent thinker in history.

Another danger of Drucker’s practical approach to management is that it could lead one

to abandon a moral cause because of a lack of measurable results. The faithful small church

pastor may be tempted to abandon his little flock because the growth rate of the church is not

comparable to the church down the road. Rather than continuing in the ministry God called him

to, he may seek a bigger community or abandon the pastorate altogether. Or, an opponent of

abortion might be tempted to just give up the fight because there seems to be no measurable

change in American society from all their efforts. While Drucker allowed for such people, he

questioned the worthiness of their efforts. “There are also true believers who are dedicated to a

cause where success, failure and results are irrelevant, and we need such people. They are our

37 William P. Clemmons, Awe: Foundation Of Faith And Mission. Vol. 1: Faith and Mission Volume 1. (Wake Forest, NC: Southeastern Baptist Theological Seminary, 1983) 31.

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conscience. But very few of them achieve. Maybe their rewards are in Heaven. But that’s not

sure either.”38 Drucker elaborated on this thought when he wrote:

To believe that whatever we do is a moral cause, and should be pursued whether there are results or not, is a perennial temptation for non-profit executives—and even more for their boards. But even if the cause itself is a moral cause, the specific way it is pursued better have results. There are always so many more maoral causes to be served than we have resources for that the non-profit institution has a duty—toward its donars, towar it customers, and toward its own staff—toallocatee its scarce resources for results tranther than to squander them on being righteous.39

Another concern with Drucker’s management philosophy is a more general concern of

the managing for results mindset than it is with anything he taught in particular. While it is not

Drucker’s fault how people who read him applied his teaching, he was so identified with mindset

that one writer even referred to those who want to be better manager as being a part of “the

Drucker cult.”

Many pastors are caught up in the contemporary emphasis on being better managers—what we might call the Peter Drucker cult. This group, in my opinion, misreads Drucker, but nonetheless they attempt to be superefficient clergy managers. The managerial approach calls for you to be goal oriented: to chart your aims, to set a schedule for meeting those goals, to plan each day’s activities with your goals clearly in mind, and to see people as one of the resources you use to reach your goals.

There are pastors who follow that approach faithfully. Some want to build big churches; some have other visions. But whatever the specific goals, they begin to see people primarily as a means to an end. You’ll even hear some pastors referring to people as “donor units.”40

While it is prudent to beware of becoming too pragmatic or placing improper emphasis

on measurable, unworthy results, Drucker’s philosophies of management do not necessarily lead

to that end. It is ultimately the responsibility of the manager to set what exactly will be deemed

as a worthy goal. It is the individual, not Drucker who decides whether to treat people with

38 Drucker, Managing the Non-Profit Organization. 71.39 Ibid. 112.40 J. Kessler, Being holy, being human : Dealing with the expectations of ministry. The Leadership Library

Vol. 13: (Carol Stream, Ill.; Waco, Tex.: CTI; Word Books, 1998) 54.

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respect due to someone created in the image of God (something Drucker’s teachings repeatedly

emphasize) or as “donor units” to be used to achieve a less than noble, albeit tangible goal.

While his teachings may be criticized as being too pragmatic, those who knew him best

understood him to be a Christian, with a heart and philosophy that would glorify God. His

teachings will continue to be beneficial to the church as they are viewed and applied through the

lens of Scripture.

BIBLIOGRAPHY

Beatty, Jack, The World According to Peter Drucker. New York: Broadway Books, 1998.

Business Week, The Man Who Invented Management. No Pages, Cited January 12, 2012 Online: http://www.businessweek.com/magazine/content/05_48/b3961001.htm

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William P. Clemmons. “Awe: Foundation Of Faith And Mission.” Vol. 1: Faith and Mission Volume 1. Wake Forest, NC: Southeastern Baptist Theological Seminary, 1983.

Drucker, Peter F. Adventures of a Bystander. New York: Harper-Collins, 1991.

Drucker, Peter F. Managing the Non-Profit Organization: Principles and Practices. New York: Harper Business, 1992.

Drucker, Peter F. Management: Tasks, Responsibilities, Practices. New York: Harper & Row, 1974.

Drucker, Peter F. The Essential Drucker. New York: Harper Collins, 2001.

Drucker, Peter F. The Effective Executive. New York: Harper Business, 1993.

Drucker, Peter F. The Practice of Management. New York: Harper & Row, 1954.

Edersheim, Elizabeth Haas, The Definitive Drucker. New York: McGraw-Hill, 2007.

Flaherty, John E. Peter Drucker: Shaping the Managerial Mind. San Francisco: Jossey-Bass, 1999.

Hersey, Paul, Kenneth Blanchard, & Dewey Johnson, Management of Organizational Behavior. Upper Saddle River, NJ: Prentice Hall, 2001.

Kessler, J. “Being holy, being human : Dealing with the expectations of ministry”. The Leadership Library Vol. 13: Carol Stream, Ill.; Waco, Tex.: CTI; Word Books, 1998.

Linkletter, Karen. “Drucker Redux: Management as Intellectual and Philosophical Product” Ph.D. diss., Claremont College, CA , 2004

Osdick, John H. “Peter Drucker: The Father of Management Theory” No Pages. Cited January 12, 2012, Online: http://www.successmagazine.com/article?articleId=1115&taxonomyId=15

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