Originally published on February 7, 2018
This is the fourth article in the Profiles in Knowledge series featuring thought leaders in knowledge management who are gone but not forgotten. Peter Drucker was born on November 19, 1909 and died on November 11, 2005. He was an Austrian-born American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation. In 1959, Drucker coined the term “knowledge worker” in Landmarks of Tomorrow, and later in his life considered knowledge worker productivity to be the next frontier of management.
Drucker’s books and scholarly and popular articles explored how humans are organized across the business, government, and nonprofit sectors of society. He is one of the best-known and most widely influential thinkers and writers on the subject of management theory and practice. His writings have predicted many of the major developments of the late twentieth century, including privatization and decentralization; the rise of Japan to economic world power; the decisive importance of marketing; and the emergence of the information society with its necessity of lifelong learning. He was also a leader in the development of management education, he invented the concept known as management by objectives and self-control, and he has been described as the founder of modern management.
Every three or four years I pick a new subject. It may be Japanese art; it may be economics. Three years of study are by no means enough to master a subject, but they are enough to understand it. So for more than 60 years I have kept on studying one subject at a time. That not only has given me a substantial fund of knowledge. It has also forced me to be open to new disciplines and new approaches and new methods — for every one of the subjects I have studied makes different assumptions and employs a different methodology.
In this society, knowledge is the primary resource for individuals and for the economy overall. Land, labor, and capital — the economist’s traditional factors of production — do not disappear, but they become secondary. They can be obtained, and obtained easily, provided there is specialized knowledge. At the same time, however, specialized knowledge by itself produces nothing. It can become productive only when it is integrated into a task. And that is why the knowledge society is also a society of organizations: the purpose and function of every organization, business and non-business alike, is the integration of specialized knowledges into a common task.
Articles about Peter Drucker
1. 7 Lessons on Business and Life That I Learned From Peter Drucker by Thomas Koulopoulos
- Don’t just manage, lead.
- The way to keep good people is to give them a chance at the moon.
- Before figuring out how it should be done, ask why it’s being done.
- If you are bored it’s your fault.
- Treat your employees as though they were volunteers.
- Abandon the past. (No, really, I mean bury it!)
- Be humble
2. What is Knowledge Management? by Alan Frost
Peter Drucker said that knowledge management is “the coordination and exploitation of organizational knowledge resources, in order to create benefit and competitive advantage.”
3. Knowledge Management — Back to Basic Principles by Ron Young
Drucker provided much original insight, inspiration and common sense in the founding age of Management science, and also to the start of Knowledge Management. He said, “The most important, and indeed truly unique contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing”. This is indeed a great achievement and a great accolade for the development of Management science.
Drucker went on to say that “The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge work and the knowledge worker”. Herein lies our first challenge. How can we dramatically increase the productivity of knowledge work? I propose that the answer is to implement effective knowledge management at all levels, for individuals, teams, organizations and communities, locally, nationally, regionally, and across the globe.
4. Lessons from Peter Drucker by Mary Abraham
Jeanne Harris had the privilege of working with Peter Drucker early in her career. Here are some of the data-related lessons she learned from him:
- Look for patterns. Analytics help reveal patterns, which in turn reveal what is happening below the surface of the organization.
- Don’t settle for just a single insight. Businesses are complicated animals so it is rare for a single insight to explain everything about an organization. Look for several insights that shed light on the business as a system.
- What gets measured gets done. Things don’t get implemented unless people and processes are measured and monitored.
5. Drucker’s Five Deadly Sins in Business by Abigail Heller
- Sin #1: Seeking High Profit Margins and Premium Pricing
- Sin #2: Charging What the Market Will Bear
- Sin #3: Using Cost-Driven Pricing
- Sin #4: Focusing on Past Winners
- Sin #5: Giving Problems Priority over Opportunities
6. Making Sense of the Knowledge Era by Steve Denning
Peter Drucker and the Knowledge Era
Peter Drucker’s book, Post-Capitalist Society was a startling book when it was published in 1993 and it is still quite thought-provoking to read it again today. The book presented an apocalyptic vision of the world economy: a new era was appearing. He called it the knowledge era, although he never explicitly defined “knowledge”.
In the new era, according to Drucker, the basic economic resource would be knowledge — which seemed to include an ability to manipulate ideas and innovate. The leading social groups would be knowledge workers. The key economic challenge would be the productivity of knowledge work and the knowledge worker. The result, he said, would be a transformation of the world: “as profound, devastating, far reaching, and unimaginable,” as the Industrial Revolution. Even more scary: for those who had eyes to see, the revolution was already happening.
In the 21st Century, according to Drucker, knowledge would be applied to knowledge itself. “Knowledge is now being applied to systematically and purposefully define what new knowledge is needed, whether it is feasible, and what has to be done to make knowledge effective. It is being applied, in other words, to systematic innovation. As a result, knowledge has become the resource rather than a resource. This fact changes — fundamentally — the structure of society. It creates new social, economic and political dynamics.” Command and control won’t work in this new era, because the workers own most of the means of production — knowledge. Instead, one has to proceed through leadership by persuasion and inducement.
According to Drucker, the winners in this new game will be those who master knowledge about knowledge. The new competitive arena includes universities, libraries, the arts and the humanities, but also: learning, knowledge sharing, “knowledge worker” organizations, insights, deep smarts, wisdom, risk management, disruptive innovation, brands, values and transformational leadership.
In this era, the name of the game won’t be command and control of “stuff” –hard material things — but an ability to master “fluff” — a capacity to change the way people think about, invest in, and pay for, immaterial things like ideas, experiences, brands, values and knowledge. In the new knowledge era, real men engineer brands, not engines. They don’t generate electricity, they generate ideas. They don’t mine the ground for minerals: they trawl the world for new innovations. They don’t command and control: they instill values. They don’t just manage: they lead.
7. Ten Steps Towards Getting Business Value from Knowledge Management by Steve Denning
Over the decades, many pearls of wisdom fell from Peter Drucker’s lips, but when he said that “knowledge has become … the dominant — and perhaps the only source — of competitive advantage,” he helped launch a dense and pervasive fog of misleading hyperbole. Drucker’s qualifier, “perhaps,” was forgotten; possibility was turned into a certainty — and the unqualified statement became the endlessly repeated mantra of the knowledge management movement.
Not everyone in the KM world stopped to consider whether Drucker’s dictum was true. The reality is that knowledge is an important source of competitive advantage, but clearly not the only one — not in 1993, when Drucker said it, or now in 2006, or ever. There are other sources of competitive advantage — focus, consistency, values, imagination, a capacity to innovate. Moreover, knowledge isn’t necessarily a sustainable competitive advantage: while low-value knowledge is often “sticky” and not easily imitable or appropriable by competitors, high-value knowledge is very “leaky,” and tends to fly out the door at the speed of light.
8. The Best Of Peter Drucker by Steve Denning
- The corporation is no longer the master of the employee because “the means of production is knowledge, which is owned by knowledge workers and is highly portable.”
- “A growing number of people who work for an organisation will not be full-time employees but part-timers, temporaries, consultants or contractors… or employees of, an outsourcing contractor.”
- It no longer makes sense to bring everything under one management, because (a) “the knowledge needed for any activity has become highly specialised. It is therefore increasingly expensive, and also increasingly difficult, to maintain.” (b) Transaction costs are drastically reduced, particularly the cost communications.
- “The customer now has the information…. the manufacturer will cease to be a seller and instead become a buyer for the customer.”
- “There are few unique technologies. Increasingly, the knowledge needed in a given industry comes out of some totally different technology.”
9. Improving Knowledge Worker Productivity by Nancy Dixon
I have drawn heavily on the ideas of Peter Drucker, who invented the term knowledge worker and who has been the most prolific and insightful voice in describing how knowledge work should be managed.
10. Where Knowledge Management Has Been and Where It Is Going by Nancy Dixon
The language of knowledge management drew most directly from Peter Drucker, who wrote about the Knowledge Age. Framing the growing importance of knowledge, Drucker predicted the knowledge-based economy, noting that wealth and power, which had previously been based on land and capital, was shifting and would increasingly be based on knowledge. He coined the term knowledge worker to describe a new kind of work and worker in the knowledge-based economy.
The First Category of Knowledge Management — Leveraging Explicit Knowledge
Building on Drucker’s framing, the new way of thinking about knowledge, that began in the mid 90s was that knowledge was an organizational asset and if an asset then it needed to be managed. After all, organizations manage their other assets, (e.g., capital, people) so it made sense to also manage an organization’s knowledge — thus the term (which nearly everyone now regrets) “knowledge management.” CEOs began to declare, “Knowledge is our competitive advantage.”
11. Knowledge management from The Economist
In 1988 Peter Drucker wrote: The typical business [of the future] will be knowledge-based, an organisation composed largely of specialists who direct and discipline their own performance through feedback from colleagues, customers and headquarters. For this reason it will be what I call an information-based organisation. In such an organisation, the management of knowledge and information becomes a key to gaining competitive advantage.
12. Knowledge management — An Overview by R. Suresh
Peter Drucker has declared that knowledge is just not another resource like labor, capital, but is the only important resource today.
13. Why Read Peter Drucker? By Alan Kantrow
Most important of all is The Practice of Management, Drucker’s best book on the managerial profession. Far more crisp than the larger compendium on Management, nicely balanced between precept and example, this book is eminently practical yet of genuine intellectual breadth. If Drucker’s work holds anything of immediate value for you, you will most likely find it here. Remember, however, that the greatest value of reading Drucker consists in a sustained exposure to the disciplined activity of his mind — and not merely to the paraphrasable substance of his ideas. The ideas, of course, are there in abundance and are certainly worth close attention.
14. What Would Peter Say? by Rosabeth Moss Kanter
Far too many people — especially people with great expertise in one area — are contemptuous of knowledge in other areas or believe that being bright is a substitute for knowledge. First-rate engineers, for instance, tend to take pride in not knowing anything about people….Human resource professionals, by contrast, often pride themselves on their ignorance of elementary accounting. But taking pride in such ignorance is self-defeating.
15. What Peter Drucker Knew About 2020 by Rick Wartzman
“Every few hundred years throughout Western history, a sharp transformation has occurred,” Peter Drucker observed in a 1992 essay for Harvard Business Review. For Drucker, the newest new world was marked, above all, by one dominant factor: “the shift to a knowledge society.”
16. Peter Drucker on the New Knowledge Manager by Mary Kalantzis and Bill Cope
A manager is responsible for the application and performance of knowledge. Knowledge is now fast becoming the one factor of production, sidelining both capital and labor. This change means that we now see knowledge as the essential resource. Where there is effective management, that is, application of knowledge, we can always obtain the other resources.
You can’t manage knowledge. Knowledge is between two ears and only between two ears.
My assumption, for what it’s worth, is that Drucker meant something like this: “Information only becomes actionable in the hands of someone who knows what to do with it.” In other words, knowledge makes information actionable.
Consultants should be butterflies or bees, cross pollinating ideas between organisations and industries. They should never be in there doing the work itself; people in the organisation know how to do that, they just have to be listened to.
Drucker contended that change is normal, inevitable and not to be feared. He advocated making peace with uncertainty and becoming organized for change, particularly for what he called systematic or planned abandonment. If you were not already engaged in a particular activity, or offering a particular service or product, would you start now? And if not, what would be your next step in either eliminating or scaling it back?
21. My favourite Drucker quote by Euan Semple
In a knowledge economy there are no such things as conscripts — there are only volunteers. The trouble is we have trained our managers to manage conscripts
Drucker is one of the most-quoted thinkers, with multiple sites compiling hundreds of quotations from his writing and speaking. Here is a mere sampling.
- There’s no such thing as knowledge management; there are only knowledgeable people. Information only becomes knowledge in the hands of someone who knows what to do with it.
- The purpose of information is not knowledge. It is being able to take the right action.
- Culture eats strategy for breakfast,
- If you want something new, you have to stop doing something old.
- Knowledge is information that changes something or somebody — either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action.
- The knowledge that we consider knowledge proves itself in action. What we now mean by knowledge is information in action, information focused on results.
- We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.
- Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you’ve got.
- The most important thing in communication is hearing what isn’t said.
- Knowledge has to be improved, challenged, and increased constantly, or it vanishes.
- Today knowledge has power. It controls access to opportunity and advancement.
- A manager is responsible for the application and performance of knowledge.
- Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information.
- Management is doing things right; leadership is doing the right things.
- Making good decisions is a crucial skill at every level.
- The leaders who work most effectively, it seems to me, never say “I.” And that’s not because they have trained themselves not to say “I.” They don’t think “I.” They think “we”; they think “team.” They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but “we” gets the credit. This is what creates trust, what enables you to get the task done.
1. From Manual Work to Knowledge Work by Bob Moore
2. Leadership Insights by Charles Stone: Great leaders have followers; get results, do the right things, and don’t worry about popularity; know that leadership is responsibility, not rank, privileges, or titles; and set good examples.
3. Management By Objectives: The MBO Cycle by Mike Clayton
8. Create Your Future the Peter Drucker Way by Bruce Rosenstein
3. Harvard Business Review on Knowledge Management 6th Edition — Chapter 1 is Peter Drucker’s prophetic “The Coming of the New Organization”