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The Management Theory of Peter Drucker

By Sammi Caramela
Business.com / Managing / Last Modified: February 27, 2018
Image credit: GaudiLab/Shutterstock

Peter Drucker, also known as the Father of Modern Management Theory, coined terms and strategies that are still used today.

Peter Drucker, also known as the Father of Modern Management Theory, coined leadership terms and strategies that are still used today. He advocated for a more flexible, collaborative workplace, and the delegation of power across the board.

According to Drucker, "management is doing things right; leadership is doing the right things." Unlike many early management theorists, Drucker thought that subordinates should have the opportunity to take risks, learn and grow in the workplace.

Drucker's management theory embodies many modern concepts, including:


Drucker was focused on decentralizing management in the workplace. He wanted all employees to feel valued and empowered, like their work and voice mattered. He believed in assigning tasks that inspire workers, and bringing supervisors and their subordinates together to achieve common, company goals.

Knowledge work

Knowledge workers are those whose jobs require handling or using information, such as engineers or analysts. Drucker placed high value on workers who solved problems and thought creatively. He wanted to cultivate a culture of employees who could provide insight and ideas.

Drucker also correctly forecasted a decrease in blue-collar workers: Today, there is an increasing number of knowledge workers in the business world.

Management by objectives

Drucker conceptualized "Management by Objectives" (MBO), a process that encourages employees of all levels to work together. Each worker has an equal say, sharing their own insight and opinions to reach common ground. From there, teams establish shared goals and delegate tasks according to skillsets and interests.

There are five steps of MBO:

  1. Review goals
  2. Set objectives
  3. Monitor progress
  4. Evaluate performance
  5. Reward employees


In his MBO practice, Drucker used S.M.A.R.T., a process coined by George T. Doran, that increases efficiency in work-related tasks. The acronym calls for each objective to be:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-Oriented

Learn more about Peter Drucker on the Drucker Institute's website.

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