The Definitive Drucker by Elizabeth Haas Edersheim

Peter Drucker is a business legend. He has contributed more to management theory than any other thinker, and he has inspired, mentored, and consulted with the CEOs of the world’s most successful companies. In 2005, at the age of 94, he invited Elizabeth Haas Edersheim to have unprecedented access to his person. For sixteen months, and for four to eight hours every day, Edersheim interviewed Drucker with the ultimate goal of creating a biography of his ideas. The result is The Definitive Drucker, which is both a primer of Drucker’s main ideas and a catalogue of personal quotes and wisdom. Edersheim supports Drucker’s theories with case studies and interviews (surprisingly in-depth), and she directs the book at “tomorrow’s executives” (every chapter heading is a question to provoke self-analysis and reflection).

Drucker coined the term “knowledge worker.” He is responsible for identifying the shift in the late 1980s from an industrial, manufacturing-oriented business landscape to a modern “Lego World” in which (1) information flies at hyperspeed; (2) companies have never-before-seen geographic reach; (3) customers defy demographic assumptions; (4) customers have increasing control of companies; (5) and the boundaries within and between companies are blurry and fluid.

Drucker repeatedly emphasized the value of knowing and connecting with customers. Companies need to continually ask themselves: Who are my customers, and what are their needs? The relationship between customer and company is increasingly complex, and Edersheim’s case study of Proctor & Gamble reveals that the company became successful only after focusing not on retailers (who valued simple product lines and timely delivery) but on consumers (whose needs were personal).

Drucker’s prescription for innovation echoes (or, rather, inspired) Timothy Ferriss. Drucker’s advice is to be aggressive where you lead but abandon profitable ventures. Edersheim offers the example of General Electric, which began as an industrial manufacturer but is increasingly involved in financial services and media. Innovators do more than tweak existing products: like Steve Jobs and Apple, they anticipate demands and create new markets.

Drucker’s most lasting contribution is his insight into managing and retaining knowledge workers. Because knowledge is intangible and fluid, employees who feel unfulfilled can easily take their skills to another company. Workers who are invested in and engaged in their work are more productive (organizations like Electrolux use online message boards to allow employees to “bid” for projects). It also helps if employees feel like they are part of a special team (Bob Taylor demonstrated the power of this culture at the famous the Palo Alto Research Center, where the modern personal computer was born). Drucker and Edersheim believe that the companies of tomorrow will be flat and decentralized. Management’s role will be to coordinate and unite disparate teams.