Book Review The Definitive Drucker by E H Edersheim

The
Definitive
Drucker
“The story of Peter Drucker is the
story of Management itself.”
New York Times
Book Review
Submission by
MaheshShinde
Date : 15th
Feb 2014

“The Definitive Drucker” book review by Mahesh Shinde EPM HRM 10
th
Batch. Page 2 of 15
Challenges for Tomorrow’s Executive –
Final Advice from the Father of Modern Management
“ Management has mostly to do with people not techniques and procedure.
Their engagement is what matters.”
“ The purpose of a Business is to Create and Server a Customer ”
“ The Assumption on which most Businesses are being run today; do not fit the reality.”

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Batch. Page 3 of 15
Table of Content
1. About Peter Drucker
2. About The Author - Elizabeth Edersheim
3. Chapter Narratives ‘Biography of Peter Drucker’s Ideas rather than of his Life
a. FOREWORD by AG Lafley, Chairman, Proctor & Gamble
b. INTRODUCTION
c. ONE | Doing Business in the Lego World
d. TWO | The Customer: Joined at the Hip
e. THREE | Innovation and Abandonment
f. FOUR | Collaboration and Orchestration
g. FIVE | People and Knowledge
h. SIX | Decision Making
i. SEVEN | The Twenty-First-Century CEO
4. The Final WORD

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Batch. Page 4 of 15
About Peter Drucker
“The Warren Buffet of Management Gurus”
Peter Ferdinand Drucker (November 19, 1909 – November 11, 2005)
was an Austrian-born American management consultant, educator, and
author, whose writings contributed to the philosophical and practical
foundations of the modern business corporation. He was also a leader
in the development of management education, and he invented the
concept known as Management by Objectives.
Drucker's books – 39 in all and scholarly and popular articles explored how humans are organized
across the business, government, and nonprofit sectors of society. He is one of the best-known
and most widely influential thinkers and writers on the subject of management theory and
practice. His writings have predicted many of the major developments of the late twentieth
century, including privatization and decentralization; the rise of Japan to economic world power;
the decisive importance of marketing; and the emergence of the information society with its
necessity of lifelong learning. In 1959, Drucker coined the term “knowledge worker" and later in
his life considered knowledge worker’s productivity to be the next frontier of management.
He counseled Chiefs of GM, FORD, GE & World Bank and many more. Over 75 years he worked
with great leaders and liberated them. Winston Churchill went so far as to say that the amazing
thing about P.F. Drucker was his ability to start our minds along a stimulating line of thought.
He inspired many; which includes the likes of Akio Morita founder of Sony, Andy Grove founder
of Intel, Bill Gates of Microsoft and Jack Welch of GE
http://en.wikipedia.org/wiki/Peter_Drucker
“Peter Drucker is the Father of Management… I regard it as a compliment
when some people call me the Father of Marketing. I tell them that if this
is the case, then Peter Drucker is the Grand Father of Marketing”
Philip Kotler – Kellogg Business School.
“Father of Marketing “

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Batch. Page 5 of 15
About The Author - Elizabeth Edersheim
Was Partner at Mckinsey and author of McKinsey’s Marvin Bower
Elizabeth Haas Edersheim is a strategic consultant who works both with
Fortune 500 companies and private equity investors. Prior to founding
her own firm, New York Consulting Partners, Edersheim was one of the
first female partners at McKinsey & Company.
Her previous book, McKinsey’s Marvin Bower, illustrates the business
life and ideals of the founder of McKinsey, her mentor, who was a close
friend and peer of Dr. Drucker. Aside from her numerous publications, Dr.
Haas Edersheim has provided expert testimony to the U. S. Congress on Industrial Networking
and Industrial Manufacturing policy.
She holds a Ph.D. in Operations Research and Industrial Engineering from the Massachusetts
Institute of Technology.

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Batch. Page 6 of 15
FOREWORD
AG Lafley, Chairman, Proctor & Gamble
Seldom one mentions foreword in a book review but here it becomes essential ; simply since the
content and it’s learnings outcome is equivalent if not more than what one gets by reading a
major management book, many a times.
AG Lafley introduces briefly the moments of his encounter with Peter Drucker interlacing it with
the learnings, the application and the influence of the same at P&G and on himself.
5 Golden Rules learnt from Peter Drucker
1. Importance of Serving Consumers
“The purpose of a business is to create and serve a customer.”
2. Insistence on the Practice of Management
“Plans are only good intentions unless they immediately degenerate into hard work’”
“Belief in the power of strategic ideas and making clear choices”
“Execution is the only strategy customer and competitors ever see.”
3. Reducing Complexity to Simplicity
“Management is doing things right; leadership is doing the right things.”
“The only way to manage change is to create it”
“The Marketer is Consumer’s representative”
4. Focus on the responsibility of leaders. “The CEO,”
“CEO is the link between the inside, where there are only costs, and the outside, which
is where the results are.”
5. Humanity
“Management is about human beings,”
Peter Drucker helped many see what he described as “Visible, but not yet seen.”

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Batch. Page 7 of 15
Introduction
This chapter describes the DNA of the thought process with which the author - Elizabeth
Edersheim- approached the book. The Page on Drucker Philosophy is stand out special- covers
Drucker’s perspective; On Money – On Management – On Knowledge – On Individual; highlights
that Strategy being more important than Ownership and signs off stating Management is
Leadership.
“HELD on to Yesterday” is the key behavior singled out as the root cause because of which
since 2000, management at 18 different public companies destroyed MORE than 50 billion USD
in share value. Doing Business the way they always had – and didn’t know how to free their
organizations to embrace tomorrow proved fatal. 21
st
Century Management faces a fundamental
challenge of interpreting the size and scope of OPPURTUNITY. Appropriately highlights that “The
assumptions built into business today are not accurate.”
Time to wake-up and smell the coffee as goes an old age saying. Seldom one comes across such
profound impact literature on business management.
Moving further the Author underlines her focus to capture not just the knowledgebase of
Drucker’s 39 books but also the meaning of 7 decades of discovery, insight, ideas and most
significantly the essence of the man Peter Drucker. The book captures experience based on
interviews of over 50 clients, student and colleagues who had experienced Drucker’s work.
“His most endearing gift to future generations is that he taught so many others how to ask the
right questions. He liberated many by forcing them to think.” Definitive Drucker definitely forces
every business person to think hard of the assumptions built into their business.
We also see 2 fundamentally challenging ideologies being put forth to Modern Managements
1. About People Management
Today the corporation needs the (Knowledge workers) more than they need the corporation
2. About Leadership
Most leadership fails because they go by what they want, rather than what needs to be done.
Peter Drucker’s insights and ideas, as incisive as ever, have much to offer the 21
st
century –
modern organizations seeking to liberate itself ; in fast moving borderless world – to create
Tomorrow. To free yourself from constraints; to think creatively, and to act.

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Batch. Page 8 of 15
ONE | Doing Business in the Lego World
“The assumptions on which most businesses are being run no longer fit reality.”
In this chapter we experience the Demystification of Silent revolution and its impact, the
approach to embrace the Future of Business in 21
st
century, the primacy of knowledge – the
knowledgebase economy build up, the Lego World way of doing Business ;its need ; its Power ,
its Dynamics and its scope , the emergence of new solution space – selling experiences, the deep
impact and implication for Business Managers in modern days and focus on new age business
strategy leading eventually to one of the most defining statement “ Business isn’t just Business.
It’s the economic engine of Democracy”
The core focus of this part of the book is on two areas
1 Understanding the Silent Revolution.—The Disruption
2 Doing Business the Lego way – The Connection
The 2 areas are complementary.
The breakdown of silent revolution leading to new approach in doing business has primarily
occurred in a big way on the following fronts
 Speed of Information flow
 Geographic reach of companies/businesses and customer explosion
 Demographic changes
 Customers control over companies
 Boundary Walls of companies and businesses.
In the twenty-first century, businesses exist in a Lego world. Companies are built out of Legos:
People Legos, Product Legos, Idea Legos, and Real Estate Legos. And these aren’t just ordinary
Legos; they pass through walls and geographic boundaries, and they are transparent. Everything
is visible to everyone all the time. Collaboration and Integration are the fundamental aspects of
Global businesses.
The otherwise staid world of business in today’s context has been turned upside down –
Disintegrated to be reintegrated to create more value and deliver better customer experience.
Understanding the Silent revolution and Doing Business the Lego way are 2 specific attributes of
Businesses – rather every Global Businesses which wasn’t the case before. Two global businesses
exemplifying lego style approach of doing business are Amazon and DELL. The chapter crafts the
lego approach with simplicity of these 2 global businesses.
The silent revolution and the lego world is built around human assets. It’s all about knowledge,
information, and collaborative connections and partnerships-the powerful new tools driving our
future. With so much interdependence amongst various businesses it’s critical to understand in
the 21
st
century something that Peter Drucker loved to say:
“There are no longer competitors, just better solutions.”

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Batch. Page 9 of 15
TWO | The Customer: Joined at the Hip
“An enterprise’s purpose begins on the outside; with the customer.”
“It is the prospect of providing a customer with value that gives the corporation purpose, and
it is the satisfaction of the customer’s requirement that gives it results”.
Well the theme of this chapter is best defined by this very Drucker’s statement. His conviction
that the customer is at the center of it all; shaped his thought from very start. This chapter
primarily sheds light on; as to “what customer focus is all about in the silent revolution”
The chapter begins with reference to Drucker crediting Alfred Sloan Chief Executive of GM for his
unique understanding of the customers in bringing huge success to GM. There after moves to
explain how to be connected with your customer -INSIDE THE CUSTOMER- MEDITRONICS
approach- lesson for all businesses in Medicine science from a leader with annual revenue of 11b
USD. Essential outcome of the case is that, even if you’re an engineering corporation
understanding your customer is as vital as the Process, the Engineering Science and your R&D.
Questions for creating Framework of Connecting with your Customer
 WHO is Your Customer?
 WHAT does the customer consider value?
 WHAT are your results with customer?
 DOES your customer strategy work well with your business strategy
Questions as WHO should be included in your definition of the customer? And WHO is not your
customer? Sends Business Manager in deep reflection & introspection mode to argue and come
out clear with its Definition of WHO IS MY CUSTOMER actually and DO I really know them.
For a Medical equipment company the answer whether its equipments have to be Doctor
focused or end user focused is pivotal to its overall business existence.
The next 2 Questions are probably the most difficult to articulate in the form of an answer
1. How does you customer’s perception of value align with your own?
2. How do connectivity and relationship influence value?
The answers will directly show its impact on market share, pricing and differentiation in market
place.
A unique proposition argued in this chapter is Bundling. A very different approach to
understanding and meeting customer needs is in bundling capabilities, product and services to
meet those needs. The master bundler is of course Bill gates with its Windows Operating System.
Next a very interesting matrix for investigating customer strategy reflecting level of
integration and scope of offering has been introduced. Defines where a business decides to
play defines on customer service engagement. This Outside- In approach can be translated into
meaningful differentiated value for its customer.
In a world where the customer has become a key controlling force, the importance and knowing
and working with your customer has never been greater. Results happen customer by
customer.

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Batch. Page 10 of 15
THREE | Innovation and Abandonment
“The best way to predict the future is to create it.”
“Tomorrow is an Opportunity” – the most important measure of a company is its ability to
anticipate and invest in tomorrow’s opportunity. Seed thought for Innovation. As Drucker stated
conventional view of innovation focused solely on product development and brand extension but
to truly innovate; businesses need to radically change customer’s experience and expectations.
To substantiate Drucker’s Principle on Innovation in this chapter we can experience the Starbucks
business story. It’s a must read for one to understand what innovation means and how it impacts
customer experience and expectation and creates differentiator in customer mind and allows the
business to command value for its offering . It just didn’t offer a better cup of coffee; it made it
easy to relax with a comfortable, “stay as long as you like” setting. Starbucks did much more than
simply crush, boil and filter a sack of coffee beans; it changed expectations. One should note but
that much of Starbucks innovation has to do with marketing, not the product. “If you don’t
understand innovation, you don’t understand business.” So if that’s the case with you then
you as a business manager are sure to struggle and may be you’ll exit eventually. The narration in
this chapter further captures the Apple story which is classic Product innovation example. The
iPod totally changed customer’s expectation of quality music on the move vis-à-vis what a
walkman could offer. 20 songs on a CD was no comparison to 1500 songs on an iPod.
Innovation is about shaking loose from yesterday’s world so that we gain the freedom to create
tomorrow. Drucker once explained, “There’s [probably] nothing more expensive, nothing more
difficult, than to keep a corpse from stinking!” Most corporations waste time, energy and
precious resources on keeping their corpses-their old products- from stinking. Signifying
Abandonment – to let go the old; you cannot manage everything in business; you always have a
cap on the resources available to you; don’t you?
The narration moves on to illustrate how to balance abandonment and innovation. You do get
your regular dose of Drucker questions again here about Innovation and Abandonment. Makes
you reflect on the way ahead and helps you chose the right actionable.
The very critical piece of this chapter; are the pages on OPPURTUNITIES. The 7 key sources for
Opportunity are again a MUST READ for an entrepreneur.
The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
This narration provides you a very simple framework using which each one of us will have an
identification tool for spotting opportunity. Continuously seeking opportunity; converting them
into value for customer and strategically allocating resources is the way an entrepreneur creates
wealth. Validate this perspective in context of Apple; where would Apple be ranked? Had it not
seeked the opportunity to innovate on devices for entertainment and utility beyond conventional
Personal Computer. Reflection here can be an eye opener for you.

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FOUR | Collaboration and Orchestration
“Often the most profitable way to organize is to disintegrate and to partner”
Collaboration and Orchestration: Modern Age of Co-Creation.
“To give your customers what they need, you must follow two rules: first, you must do only what
you do best, that is, play to your strengths; and second, to meet the full range of customer needs
beyond your strongest capabilities, you must collaborate with other players, sometimes even
those whom you consider competitors, who can complement your strengths with what they do
best.”.
This is how the fundamental aspect of Collaboration and Orchestration; gets driven into the Lego
World of doing Business. This is also the fundamental in delivering maximum value “Bundle” to
your global customers maintaining efficiency and effectiveness.
The narration of this chapter truly integrates the content experienced so far in the previous
chapters. The Silent revolution; doing Business in the Lego world , customer centricity, Innovation
and abandonment all find fit once you embrace collaboration and orchestration to meet your
customers demand optimally; creating value not just for your customer but also for the
corporation.
After detailing Collaboration, you get your customary questions on collaboration and
orchestration. Forcing one to think and reflect. In this chapter you have examples of DELL and ITC
to reflect upon and envision CO-Creation.
The narration on Front Room and Back Room is fundamental to you knowing what Business you
are in; if not know or not clear you will struggle. Front Room defines your strength; activity most
important for you to do – Something that stirs your passion and shows off excellence. Incase of
Apple it would be Product Design and R&D- Innovation and then Marketing. Everything else can
be outsourced to partner i.e. its back room- something its customer does not see it doing.
As the narration in the chapter moves ahead highlighting details of maintaining effective
communication and measuring results in Lego world of doing Business while using collaboration
and orchestration partners ; it brings the focus on the need of Agile decision making.
As an ultimate statement for Business purpose “Imagine yourself bringing together the best
capabilities from across the globe to cost effectively and efficiently deliver maximum value to
every customer across the globe.

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FIVE | People and Knowledge
“Management is about human beings. Its task is to make people capable of joint
performance, to make their strengths effective and their weaknesses irrelevant.”
People First - employees and customer, as well as shareholders and stakeholders; is what was
always stressed by Peter Drucker. The narration in this chapter focuses right in the beginning on
ALCOA and how it vested in people. An Amazing story of the firm, lead by Drucker’s former
student Paul O’Neill.
Peter believed and evangelized - “Management is primarily about human beings,” that a
company is really its people, specifically their knowledge, capabilities, and relationship. In the
same breath Drucker shares a highly contentious truth -The old idea about employee loyalty and
retention no longer applies.
The narration further moves to explain the requirements and expectation of modern day
employee “the knowledge worker”. While they expect to be well compensated for their work,
they also insist on greater degree autonomy, self management, and respect. They respond better
to the standards of excellence associated with their expertise rather than to the discipline
imposed by traditional management practices. As part of narratives we also get briefs on another
category of modern day employee termed as Service Worker.
Investing in people and knowledge: Five Drucker questions; highlights the need to have a
structured mechanism to mature the workers be it Knowledge worker or service worker; in
respective work areas. Another interesting aspect shared is identification of right people for your
organization- the Question set is simple and real- ready to be put to use.
One of the greatest insight shared by Peter Drucker on people is the cost of wrong hire - “The
only thing that requires even more time than putting the right people into a job is unmaking a
wrong people decision”. Organizations stretch wrong people hire decision for way too long
period; isn’t it? A lesson better learnt faster and implemented for better of the corporation.
What is the Task? What knowledge and working style will help an individual WIN? Get
appropriately explained. Subsequent portion of the chapter further raises questions like is there a
clear mission and direction that builds commitment and priorities? – “Every enterprise and team
requires simple, clear and unifying objectives.”
Are you playing to People strength rather than managing around their problems? An eye opener
for many managers; to extract better contribution from individual talent. Being in knowledge
based economy the chapter poses question on knowledge centricity of the corporation. Is
Knowledge and access to knowledge built into your way of doing business? What is your strategy
for investing in people and knowledge?
Practices and Approach on knowledge and people at Mckinsey, Wal-Mart, Edward Jones and
Google are narrated to deepen the readers understanding in this area of People and Knowledge.

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SIX | Decision Making:
“A decision is a judgment – a choice between two courses of action neither
of which is probably more nearly right than the other.”
Drucker always stood for management effectiveness – setting priorities, managing time, and
making effective decisions.
“A decision is a judgment. It is a choice between alternatives. It is rarely a choice between right
and wrong. It is often a choice between two courses of action neither of which is probably more
nearly right than the other.”
Peter Drucker next set of statements highlights the biggest challenge of modern day managers-
effective decision making. Today’s manager faces a fast moving barrage of apparent knowledge,
some relevant and reliable, some not. Because events shift so quickly, a decision can be obsolete
before it even gets put into action. So ironically, in the information age; in the age of knowledge
workers, intuition and judgment play an even greater role in effective decision making and well
placed strategic bets than ever before. There is no substitute for fact based decision making and
no excuse for managing from the gut.
Management has a stark challenge: It must create a climate with the best chance that everyone in
the organization is making the right decisions about the right issues at the right time. The
narrative as customary states Drucker’s Questions on Decision making – the most striking one is;
is the organization willing to commit to the decision once it is made?
Successful decision-making begins with the recognition that making good decisions is one of
management’s most critical responsibilities. Although the quality of your decision does not
depend on the amount of time you spend arriving at it, it does require that decision making be a
priority and a commitment to spending the time needed. These statements are lifelines to build
the right environment and culture of decision making.
What’s the real Issue? What specification must the solution meet? Have you fully considered the
entire range of alternatives? Have you gained commitment and capacity of the implementers? Do
you have mechanisms to provide tracking and feedback? Are some key questions in building an
effective decision making culture within an organization?
At the end of it the most time consuming step is not making the decision but putting it in to
effect.
The TOYOTA story how it gets it’s EDGE; is essentially embedded into its Decision Making process
as much as it’s connected to its manufacturing agility. WHY 5 times. The Toyota story around this
concept of WHY 5 times makes this chapter far more interesting. It’s a simple concept and results;
effective.
In effective Decision making process never ask who was right only ask what is right.

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SEVEN | The Twenty First Century CEO
“CEOs have work of their own. It is work only CEOs can do, but also work which CEOs
must do…Each knowledge worker must think and behave like a chief executive officer.”
As a company, someone must be in charge- that’s why we have a CEO. This chapter’s narrative is
on ROLE of CEO; which as remarked by Procter & Gamble’s CEO A.G. Lafley, “is Peter’s unfinished
chapter.” Peter believed that the CEO role was the next area of management research.
CEOs as more important than ever; provide leadership – strategic leadership, moral leadership –
and balance. The CEO has to live the purpose, the values, and the principles of the organization.
Good or bad, the CEO sets the tone for an organization, its mission and culture, and its actions
and results during his or her tenure.
To distill into one word Peter Drucker’s thought on what makes a truly great CEO It would be
courage. You need primarily courage to take Big Decisions.
The narrative explains 3 key characteristics unique to a CEO
1. Broad field of Vision
2. Thumbprint on the organization’s character and personality
3. Influence on people-individually and collectively
The narrative that the CEO links the inside – the organization-with the outside-economy, market,
customers, collaborators, technology, media, public opinion etc.
“Inside there is only COST. Outside there are results”
Is Most defining statement about the role of a CEO.

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The Final WORD
The Definitive Drucker captures Peter Drucker’s visionary management concepts, applies them to
the key business risks and opportunities of the 21
st
Century, and imparts Drucker’s views on
current business practices, economic changes, and trends-many of which he first predicted
decades ago.
Drucker’s insights are divided into five main themes that the modern organizations need to, as
Drucker would say, Create tomorrow:
 Connecting with Customers
 Innovation and abandoning
 Developing lasting collaborations
 Attracting and growing knowledge workers
 Establishing disciplined decision making
Drucker’s penetrating questions helped business, corporate, and political leaders throughout the
20
th
century to see their work in a new perspective. Edersheim’s extensive interviews that include
Jim Collins, Jack Welch, Michael Hammer, and A.G. Lafley, offer compelling commentary on
Drucker’s vast influence.
Delivering keen analysis and revealing insights into business, The Definitive Drucker is a
celebration of this extraordinary man and his life’s work, as well as a unique opportunity to learn
Drucker’s final lessons on how to strategize, compete, and triumph for the long term.

Book Review The Definitive Drucker by E H Edersheim

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