“Leadership is Marketing” – Peter Drucker Said What?

The following is a guest post by William A. Cohen.

Peter F. Drucker was a genius. Unlike Sir Isaac Newton he didn’t choose to spend his time observing that an apple fell down rather than up. Nor did he ponder on the inner workings and hidden mechanisms of the human mind as did Sigmund Freud. Drucker didn’t even care to emulate Albert Einstein and imagine himself on the business end of a beam of light.

Instead he spent the better part of his 96 years unraveling the secrets of management. He did this to such a degree that he became recognized as the “Father of Modern Management.” I had the good fortune to be Drucker’s PhD student at Claremont Graduate University back in the mid to late 1970s and later, his protégé and student for thirty years when he was still alive. I still consider myself his student today.

Drucker’s Contributions

You can’t talk about Drucker’s spectacular success as a management guru and fortune teller without noting that his first big public prediction was a bust. It was published shortly before the stock market crash which preceded the Great Depression. In a public newspaper column Drucker predicted a rosy future and a bull market.

He ate crow a few weeks later when, with an article on the stock market crash published in the Frankfurter General-Anzeiger entitled “Panic on the New York Stock Exchange.” That must have been difficult for him and it was the last time he attempted to predict the stock market.

It may also have been the root of his well-known dictum that “The best way to predict the future is to create it” something he couldn’t much do with the stock market but felt that he was able to help managers accomplish elsewhere.

As the cover story for Bloomberg Businessweek written shortly after his death recorded, “He was always able to discern trends — sometimes 20 years or more before they were visible to anyone else.” However his reputation was based on far more than his abilities as a fortune teller.

Shortly after his death business journalist John Byrne attempted to access Drucker’s contributions and strived to explain “why Drucker’s ideas still matter.” Byrne’s list of Drucker’s major accomplishments included:

• Introducing the idea of decentralization, a concept that became basic to every large organization in the world. This was an idea he thought up 70 years ago.
• In the 1950s Drucker became the first to assert that workers should be treated on the asset side of the ledger, and not listed as liabilities. It was one of the main conclusions of his 1946 book, Concept of the Corporation which departed radically from the previous focus on efficiency resulting from technology to reduce worker cost.
• Drucker completed the decade by expounding the revolutionary idea that since there was no business without a customer, the purpose of a business was not profit at all, but to create a customer. Profit was simply a necessary element to accomplish this.
• It was Drucker who wrote about the contribution of knowledge workers, and in fact he invented the term, long before anyone knew or understood how knowledge would be of importance above other inputs.

Of course there was more, but you get the general idea. His contributions were massive. However, for a long time he seemed to acknowledge its importance, but ignored the concept of leadership.

Drucker Avoided Leadership. . . at First

In his first book devoted entirely to management Drucker wrote: “Leadership is of upmost importance. Indeed there is no substitute for it.” However, in the same book and only a few short sentences later, he concluded that “Leadership cannot be taught or learned.”

Almost thirty years later in Management: Tasks, Responsibilities, Practices he wrote “There is no substitute for leadership. But management cannot create leaders.”

He proceeded to essentially ignore leadership as a separate topic and it wasn’t until another fifteen years that Drucker put “leadership” prominently in an article title, and then he refused to give advice, saying only that everything on the topic had already been worked out by the ancients.

In fact he had said in class that the first systematic book on leadership was written by Xenophon 2000 years earlier, and that it was still the best.

However, beginning in the 1990s he began to comment on leadership. He seemed to realize that much of what he had been writing for the previous fifty years really was all about leadership, even though he avoided giving it this title.

One of Drucker’s Most Astounding Ideas Is Still Little Known

After he began to turn his genius to the subject, his ideas began to crystalize. Early on he realized that the basic elements of all business were but two: marketing and innovation. Then fifty years later he wrote that good leadership was essentially marketing. He actually called leadership a “marketing job.”

Unfortunately, many leadership scholars and practitioners have never heard of this or if they have they assume Drucker meant manipulation and trickery. While selling and persuasion is certainly part of what he meant, the basic notion that “leadership is essentially a marketing job” is based on Drucker’s view that knowledge workers are partners in an organization.

As partners, they cannot be simply ordered around or “managed.” They must be led – and this integrates persuasion with strategic thinking, segmentation, differentiation and many other marketing elements.

Drucker’s contention can have far-reaching consequences of learning, teaching and practice of leadership. In fact, an important corollary which he introduced only a few short years before his death was that if one wanted a short guide to leadership, this could be expressed very succinctly in how to treat subordinates. “You must treat them as if they were all volunteers,” he said. “Because in today’s world, they are.”

One can argue whether freedom of mobility exists so perfectly, especially during the current economic situation and job market. However, there is no doubt that subordinate treatment of this kind is probably the best leadership advice, and it was probably always true.

It was certainly known and described by Xenophon. In The Education of Cyrus the Great, Cyrus the Great’s father taught leadership to the teenage Cyrus. Here’s an example. Cyrus’ father speaking to the future Cyrus the Great: “ ‘Tell me how best to get a man to do something that must be done,’ he instructed the young man.

‘Father, I think the best way is to reward the man who complies and to punish the man who would refuse.’”

Ah, the old carrot and stick approach, there it was, even in ancient times. This is what Drucker was recommending? Not quite.

“’Well now, that might work in many situations,’ responded Cyrus’ father, ‘but it might not if the danger were such that neither the potential reward nor the potential punishment would serve as much of an incentive or if you were absent and could not observe. There is a much better way.’”

Cyrus could barely contain himself. What way was more effective than the carrot or stick?

“’Simply take care of those you lead better even than they would or could take care of themselves. Always put their needs before your own.’”

Sound familiar? It may have been around for two thousand years, but that’s what they’re calling Servant Leadership today.

Xenophon was the first of many generals to recommend this approach to combat leadership right on up to today. And taking care of customers in this way is marketing 101.

Am I recommending that students and practitioners of leadership consult a marketing textbook to exploit Drucker’s amazing insight? Why not?

William A. Cohen, PhD, is the President of the Institute of Leader Arts as well as the California Institute of Advanced Management. As he mentioned in his guest piece, he was the first graduate from the PhD program Drucker developed and taught for practicing executives at Claremont Graduate University. He has taught in the graduate schools of California State University Los Angeles, University of Southern California and Claremont Graduate University

Cohen is also the author of three books on Peter F. Drucker, the latest one being “Drucker on Marketing: Lessons from the World’s Most Influential Business Thinker”.