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Updated Feb 21, 2023

The Management Theory of Peter Drucker: Key Terms

Understanding Peter Drucker and his work

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Chad Brooks, Managing Editor & Expert on Business Ownership
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Peter Drucker is world-renowned for his innovative thinking in the ways of business management.

His work turned management theory into a serious discipline among sociologists and he participated in nearly every aspect of management theory development. The practice of business ethics and morals was at the top of the list of the many elements of business management Drucker found important. This guide will introduce you to aspects of Drucker’s theories and the organizational results of his life’s work.


MBO stands for Management by Objectives, a phrase coined by Peter Drucker in his book “The Practice of Management,” published in 1954. MBO measures the performance of employees as compared to typical standards for the job. The belief is that, if employees help determine those standards, they will be more likely to fulfill them.

SMART Method

Drucker’s SMART Method is a means of checking to make sure an objective is valid. Managers carried out this verification by using the SMART acronym to make sure the objective is specific, measurable, achievable, realistic and time-related.

Knowledge worker

“Knowledge worker” is one of the many terms coined by Drucker within his management theories. By the measure of today’s society, a knowledge worker is equivalent to the executive of a company.


Drucker was a believer in decentralization of management. He saw that many leaders try to take on everything in a demonstration of power or a means of maintaining control, under the assumption that only they can accomplish a task correctly. Drucker believed that managers should delegate tasks in order to empower employees.

School of Management

Peter Drucker came on as staff at Claremont Graduate University in California in 1971, when he began constructing one of the nation’s first executive MBA programs for working professionals. In honor of his work, the university named its management school after him in 1987. Later, his Japanese friend and businessman received the same honor, resulting in the Peter F. Drucker and Masatoshi Ito Graduate School of Management.
Claremont Graduate University’s School of Management.

Drucker Institute

More than 100 followers of Drucker’s management theories tried to determine his legacy following his death in 2005. Thus began The Drucker Institute.

author image
Chad Brooks, Managing Editor & Expert on Business Ownership
Chad Brooks is the author of "How to Start a Home-Based App Development Business," drawing from over a decade of experience to mentor aspiring entrepreneurs in launching, scaling, and sustaining profitable ventures. With a focused dedication to entrepreneurship, he shares his passion for equipping small business owners with effective communication tools, such as unified communications systems, video conferencing solutions and conference call services. A graduate of Indiana University with a degree in journalism, Brooks has become a respected figure in the business landscape. His insightful contributions have been featured in publications like Huffington Post, CNBC, Fox Business, and Laptop Mag. Continuously staying abreast of evolving trends, Brooks collaborates closely with B2B firms, offering strategic counsel to navigate the dynamic terrain of modern business technology in an increasingly digital era.
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