Frank Thoughts: The Consultant
Frank Boland
August 17, 2020

Professor Peter Drucker was sitting on a hard wooden chair center stage. Below him, a large lecture hall was filled with middle age businessmen. They all looked as though they had attended elite business schools and ran major corporations. Most of them did. The professor was there not to give a lecture but to answer questions. It was totally unscripted. Dr. Drucker was the business consultant and they wanted to hear his insights. The respect these men showed when asking questions was astonishing. It was complete deference, exceeded only by the remarkable answers he gave them.

Drucker had been born into an intellectually elite family in Vienna Austria in 1909. His father was friends with famous Austrian economist, Joseph Schumpeter. Schumpeter would continually inculcate the young Drucker with the importance of innovation and entrepreneurship in the development of capitalism. A process Schumpeter once referred to in a Harvard lecture as “creative destruction.” That phrase had been imbued in Drucker years earlier. It meant something new displacing something that had previously existed. It was how capitalism evolved and continued to grow.

Paradoxically, a 25 year-old Drucker had been influenced by attending just ONE lecture given by the economist, John Maynard Keynes. Afterwards he wrote, “I suddenly realized Keynes and all the brilliant economic students in the room were interested in the behavior of commodities, while I was interested in the behavior of people.” It would take eighty years to change economic thinking to a more humanistic approach. As you may know, Professor Richard Thaler was recently awarded the Nobel Prize in economics for combining psychology and economics. It’s called behavioral economics.

Peter Drucker first came to prominence in 1946 with the publication of his book, “The Concept of the Corporation.” He had been hired by General Motors, at the time the largest corporation in the world, to research their organizational structure. But there was a fundamental difference in his view of a corporation’s purpose. Managers at GM saw workers as a cost in their search for profits while Drucker viewed workers not as a cost but an asset. It was the beginning of behavioral economics in that Drucker believed the customer was the purpose of the organization not the corporate structure.

Within the last couple of years, applications to prestigious business schools have begun to stagnate … even decline. Cost is a factor. But the larger issue is, most entrepreneurs do not feel the need to finish college, especially in today’s “knowledge” economy. Ironic. For generations, business schools taught students how to join and be part of a managerial elite. It was an implicit social contract. If you went to a business school you could make a good living and the business model would last for decades. In an industrial economy, it often did. U.S. Steel and General Motors are prima fascia examples.   

Today most manufacturing is globally outsourced. Drucker, the man who was the “guru” of industrial management, is now also considered the founder of modern management. That respect was earned in 1969 with another book titled, “The Age of Discontinuity.” In it, he coined the term the “knowledge worker.” He believed that worker would replace the physical laborer of the industrial economy. It was written before many of the entrepreneurs of Facebook, Apple, Amazon, Netflix and Google were even born. All facilitate the transfer of knowledge. Eventually, he wrote 39 books published in thirty-six languages. The men in the lecture hall that day were, understandably, in awe of Drucker’s brilliance.

-Francis Patrick Boland

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