Peter Drucker and His Quest for a Better Society

Peter Drucker is one of the most influential business writers of the past hundred years. Even if you have never read any of his books, you have encountered his ideas. For example, he single-handedly created the concept of business strategy!

However, calling Peter Drucker a “business writer” doesn’t fully capture his genius. He wasn’t only driven to figure out how to run a successful business. Instead, he was obsessed with a bigger and more difficult question.

What is the best way to create a just and fair society?

I discovered the above question by accident. I embarked on a quest to read all of Drucker’s books, an ambitious task with over 60 titles. Reading an author’s work chronologically is the best way to understand their thinking. It’s like watching the construction of a building in real-time.

When I began, I was surprised to learn that his first book had nothing to do with business. People see him as a business guru today, but he had an impressive breadth of knowledge. He effortlessly weaved examples from history, philosophy, and politics as he tried to understand what made societies tick. 

How he went from thinking of the perfect society to accidentally creating business strategy as we know it is the story of this essay. 

Three Books to Understand Drucker

Peter Drucker was born in Vienna, Austria, in 1909. Both his parents were Jewish, which eventually forced him to relocate to America shortly before WWII. He spent time as a journalist, economist, and professor. In 1939, he wrote his first book, where our story begins.

We can look at his first three books to understand how he transitions from writing about societies to what it takes to run a business successfully. There’s plenty of wisdom in the other fifty-seven, but these three books lay the seeds for the first of his career. 

The End of Economic Man: The Origins of Totalitarianism (1939)

His first book, The End of Economic Man, captured Drucker’s first passion. He analyzed why the Nazi government would struggle to build a sustainable society and would be forced to wage total war across Europe. 

The book discredited fascism as a potential model for society and explained its challenges. He believed Hitler was a “magician”1Drucker concluded that people believed “magicians” because their alternatives were worse. Struggling economies like Germany had to make tough choices, but fascism offered an easy way. He eloquently said that “if you are trapped in the torrent of the past, unable to go back to the road, and there is a white wall ahead that obviously cannot be climbed, you can only hope that magic will miraculously save you.” trying to perform miracles—telling the German people that he would give them “lower bread prices and more jobs.” The German economy was in a severe depression, and these two outcomes were impossible to accomplish together.

Drucker explained why the economic decisions made by the Nazis would not be successful. For example, he explained how they struggled to establish win-win trade agreements with others countries like Czechoslovakia. 

Nazi Germany wanted to reduce unemployment by reducing production and exports, but that also made it harder to trade for the resources they needed. Drucker reasoned that the Nazis would be forced to conquer other countries as a way to secure the resources they needed.  Through these examples, Drucker predicted the future with eerie accuracy.

The book made Peter Drucker famous within the political world. Winston Churchill recommended the book as mandatory reading for all British soldiers and allies. Many of Drucker’s predictions came to pass during WWII and established him as a first-rate political thinker. 

The End of Economic Man is my favorite Drucker book. I was in awe of how diverse his examples were. He would go from writing about the Nazis to showing similar examples from the Roman Empire or the Rennaisance. He wasn’t always right, but he was always fascinating to read.

The Future of Industrial Man (1942)

Drucker followed his first book with The Future of Industrial Man. In it, he provided a theory2The theory provided by Drucker isn’t easy to summarize in a few lines. He was fascinated by the role of “legitimate” power and how it arose from social authority. Previously, only governments and religious institutions such as the Catholic Church had been able to manifest this power. Corporations had to figure out how to become a legitimate power source in future societies. He talks about the specific role played by owners, workers, managers while maintaining the freedom of individuals. for building fair societies. The book was ambitious and focused on solutions instead of just reporting the failings of other approaches.

It is also the first book where he wrote about the rising importance of modern organization. We take it for granted that we all work as employees in large organizations today (bigger than ten people), but things weren’t always this way. 

Before WWII, most people worked for themselves—as farmers, craftsmen, lawyers, physicians, small shopkeepers—or in small businesses. Many people worked “blue-collar” jobs in factories, but few were “knowledge workers.” Someone working at a factory was closer to a craftsman than what we consider an average employee today. 

The Future of Industrial Man made it easier for me to connect the dots. I realized that he felt compelled to write about how to run organizations because they became the building blocks of our society. He followed that thread until his death. 

Concept of Corporation (1946)

The third book is what lays the seeds for how to see Peter Drucker today. His astute political analysis got the attention of Donaldson Brown, who was responsible for the administrative controls at GM. He asked Drucker to conduct a “political audit” of GM and make recommendations for improvements. 

For context, GM was the hottest company post-WWII. They had a significant role in producing weapons during the war and were transitioning back into serving civilians. Life was fantastic for Americans after the war, and corporations like GM benefited from increased consumer demand.

Drucker spent two years attending meetings, talking to executives, and analyzing the business. It was the first time that someone treated corporations as a “social structure that brings together human beings to satisfy economic needs and wants of a community.”

Drucker coined the term “management” for what the folks at GM were doing. The book was groundbreaking. Jack Beatty, a senior writer for the Atlantic, referred to it as “a book about business, the way Moby Dick is a book about whaling.” 

Within GM, the book was like a bomb. Even though the book was mostly positive about what GM was doing, Drucker identified several areas for improvement. As a result, GM executives and Alfred Sloan3Alfred Sloan was the long-time president and CEO of General Motors. He was responsible for the growth of GM from the 1920s through the 1950s and was highly influential in the business world at this time. Think of him as the Steve Jobs of his era. His memoir, My Years with General Motors, challenged many of the conclusions drawn by Drucker in his third book. felt betrayed by Drucker—making him  “persona non-grata” within the company. 

Ironically, the changes that Drucker recommended would eventually be adopted after GM started to struggle over the next forty years.

Drucker Beyond 1946

Drucker continued to publish books focusing more and more on the intricacies of what made corporations successful. In addition, he fleshed out the management field and the role of executives in managing the business. 

He advocated corporate responsibilities years before they became popular. In a way, he foresaw the rise of the idea that corporations can and should be forces of good in our societies.

He coined terms like “knowledge worker” and “outsourcing,” recognizing trends before most people noticed them. He thought that the best way to predict the future was to create it. His books felt like the work of a time traveler.

Conclusion

Drucker’s ideas changed how I think about business. I no longer see it as an isolated island, separated from the rest of the world. He cultivated my love for the liberal arts as a way of understanding our world. 

I’m nowhere close to reading all his sixty books, but I look forward to seeing the evolution of his ideas. When someone mentions Drucker, I always point them to his first three books as a great starting point to understand his thinking.

Footnotes

  • 1
    Drucker concluded that people believed “magicians” because their alternatives were worse. Struggling economies like Germany had to make tough choices, but fascism offered an easy way. He eloquently said that “if you are trapped in the torrent of the past, unable to go back to the road, and there is a white wall ahead that obviously cannot be climbed, you can only hope that magic will miraculously save you.”
  • 2
    The theory provided by Drucker isn’t easy to summarize in a few lines. He was fascinated by the role of “legitimate” power and how it arose from social authority. Previously, only governments and religious institutions such as the Catholic Church had been able to manifest this power. Corporations had to figure out how to become a legitimate power source in future societies. He talks about the specific role played by owners, workers, managers while maintaining the freedom of individuals.
  • 3
    Alfred Sloan was the long-time president and CEO of General Motors. He was responsible for the growth of GM from the 1920s through the 1950s and was highly influential in the business world at this time. Think of him as the Steve Jobs of his era. His memoir, My Years with General Motors, challenged many of the conclusions drawn by Drucker in his third book.

One more thing before you go!

I send a weekly newsletter called the Growth Needle. It's short, sweet, and full of interesting—and dare I say provocative—ideas. It's the best way to access my latest thinking and share your own thoughts. The next edition will be out on Tuesday, and you can receive it by subscribing below.

Want to see the goods before signing up? No problem! Here are a few of the recent editions: