Saturday, December 03, 2005

Peter Drucker

There is something paradoxical about Drucker's career and influence. He was an acute thinker and often prescient. He was a prophet showered with honors. Yet there was a Cassandra element in his pronouncements as well.

For instance, in 1954 he wrote in The Practice of Management:

It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance- especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers "value," is decisive- it determines what a business is, what it produces and whether it prospers.


Because it is its purpose to create a customer, any business enterprise has two- and only two- basic functions: marketing and innovation.

A half century later, few corporations have internalized this crucial point. We still spend an inordinate amount of time on the expense side, and never come to grips with the central questions of creating customer value.

In fact, marketing is still treated as something less than a core function. A recent article in the Sloan Management Review concluded:

In many companies, there has been a marked fall-off in the influence, stature and significance of the corporate marketing department. Today, marketing is often less of a corporate function and more a diaspora of skills and capabilities spread across the organization.

The Decline and Dispersion of Marketing Competence
Frederick E. Webster Jr., Alan J. Malter and Shankar Ganesan

Similarly, Drucker was a voice in the wilderness during the Internet bubble. He understood that most dot-coms were not businesses in a real sense and said so forcefully. Yet the business press continued to laud these dot bombs even as they praised Drucker and published his articles.

Steve Sailer pointed to another inconvenient observation the guru made:

But the immigrants have a mismatch of skills: They are qualified for yesterday's jobs, which are the kinds of jobs that are going away.

This is manifestly true and yet it rarely is discussed in the great immigration non-debate.

Photon Courier has several good posts on Drucker.

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