An insider's story of how Peter Drucker founded management consulting.
Peter F. Drucker is known universally as "The Father of Modern Management." He might also be called the "Father of Management Consulting." Forty years ago Drucker predicted nearly every major change in business that has occurred since.
He coined the term "knowledge worker" and predicted that these workers would dominant the workplace of the future. He invented management by objectives and showed executives how to approach problems with their ignorance and questions rather than relying on their knowledge and experience. In the process he became the most quoted management consultant in the world despite not being associated with any consulting firm or even having a partner or secretary. Drucker even answered his own phone.
Jack Welch, Legendary CEO of General Electric, said that it was Drucker's consultation with him shortly after Welch became CEO of GE which led to the company's worth increasing by billions of dollars and the foundation of Jack Welch's huge success whereby GE went from a market value of $14 billion to more than $410 billion, making it the most valuable and largest company in the world.
But how did Peter Drucker, this poor immigrant and refugee from Hitler's Germany and Austria rise to such incredible heights? I learned his secret in class on late one afternoon while his doctoral student at what was then Claremont Graduate School, now the Peter F. Drucker and Masatoshi Graduate School of Management in Claremont, Calif.
I usually sat right up front, but being late, all the front row seats were taken. I nodded to Peter and found somewhere to sit at the back of the classroom. As usually the class was filled with Drucker's students, mostly MBAs, but also the nine new PhD students including myself who had just been admitted to the program. At that precise moment, I heard one of my classmates ask, "So, Dr. Drucker," how did you happen to become a management consultant."
By then I had learned that Peter didn't seem to care for titles. He liked to be called "Peter." My impression was that he especially didn't like the title "doctor." I don't know why that was. In addition to his many honorary doctorates, he had an earned doctorate in International Law from the University of Frankfurt. He told us that he had selected law because it was the easiest doctorate to obtain. Whether this was true or not, I still don't know. Peter didn't tell jokes, but he did have a sense of humor and could make somewhat outlandish statements which could be quite humorous. It was equally unclear whether or not Peter thought too highly of management consultants, since he never described himself as a management consultant, although of course he was reputed to be the world's preeminent consultant in the management field. In any case, I eased into the empty classroom seat I had located and listened closely to hear what kind of response this impudent question would elicit.
There are a lot of books published on management consulting today. However, this was not always so. In the 1970's management consulting was just becoming more popular in the business community and there was a great deal of interest in the subject. There was a considerable mystique about what a management consultant did and how a management consultant operated. Peter had consulted for some of the largest corporations in the world, including General Motors. His project with General Motors, actually a study, was the basis of his book, Concept of the Corporation, a book which helped to establish him as the foremost thinker in the field of management. So whatever Peter was lecturing on that led to this question, which I had missed because I was late that afternoon, the question was probably honestly, if somewhat brashly, asked by my classmate.
Peter's Surprising Answer
There was no rebuke from Peter. He answered right to the point and with no side commentary regarding my classmate's brazenness in asking the question. He said that his experience with management consulting started just prior to the U.S. entry into World War II. With a doctoral degree, he was mobilized for the war effort in a civilian capacity and ordered to report to a certain army colonel. Peter was told that he was to serve as a "management consultant." Drucker told us that he had no idea what a management consultant was. He checked a dictionary, but the term couldn't be found. He said he went to the library and the bookstore. "Today," he told us, "you will find shelves of titles about management. In those days, there was almost nothing. The few books available didn't include the term, much less explain it." He asked several friends but had no better luck. They didn't know what a management consultant was either.
On the appointed time and date Drucker proceeded to the colonel's office, wondering all the way exactly what he was getting in to. A receptionist asked him to wait and an unsmiling sergeant came to escort him to the colonel. This must have been a little intimidating for a young immigrant who not too many years earlier had fled from the military dictatorship of Nazi Germany with almost all party members in one sort of uniform or another.
Peter was led into the office by yet another stern-faced assistant. The colonel glanced at Peter's orders and invited him to be seated. He asked Peter to tell him about himself. He questioned Drucker at some length about his background and education. But though they seemed to talk on and on, Drucker did not learn what the colonel's office was responsible for, nor was he given any understanding as to what he would be doing for the colonel as a "management consultant." It seemed as if they were talking round and round to no purpose.
Drucker was more than a little uncomfortable in dealing with the colonel. He hoped that he would soon get to the point and explain exactly what kind of work he would be involved in for the war effort. He was growing increasingly frustrated. Finally, Drucker could stand it no longer. "Please sir, can you tell me what a management consultant does?" he asked respectfully.
Drucker told the class that the colonel glared at him for what seemed like a long time and then responded: "Young man, don't be impertinent." "By which," Drucker told us, "I knew that he didn't know what a management consultant did either."
Drucker knew that someone who did know what was expected of a management consultant had made this assignment. Having lived in England and read Arthur Conan Doyle's Sherlock Holmes, Drucker knew what a "consulting detective" did. With that knowledge and the insight that the colonel did not know anything about management consulting, Drucker asked direct questions about the colonel's responsibilities and problems. Peter then laid out some options about what should be done and the work, he, Drucker should do. The colonel was interested and clearly relieved. He accepted Peter's proposals in their entirety. This proved to be Drucker's first successful consulting engagement.
So, Peter Drucker was not only "the father of modern management;" one could make a case for him being the father of modern management consulting as well. Of course, the Harvard Business School awards this title to HBS graduate Marvin Bower, famed director of McKinsey & Company from 1950 to 1967 and a partner of the firm until 1992. Interestingly, the cubicle right next to Marvin Bower's when Bower worked for the government during World War II was occupied by ... Peter Drucker.
William A. Cohen is President of the Institute of Leader Arts (www.stuffofheroes.com). In 1979 he became Peter Drucker's first executive PhD graduate and continued a relationship with him lasting over three decades. Cohen is also a retired Major General from the U.S. Air Force Reserve and the author of a number of books on leadership. His latest book is A Class with Drucker: The Lost Lessons of the World's Greatest Management Teacher (AMACOM, 2008).