1406862988_1402178585_article5_march_april06__1_ (1)

8/19/2019 1406862988_1402178585_Article5_March_April06__1_ (1)

1/3

Checkpoint Contents

Accounting, Audit & Corporate Finance Library

Editorial Materials

Cost Management

Cost Management [formerly Journal of Cost Management]

Archive

Mar/April 2006

A TRIBUTE TO PETER DRUCKER

A TRIBUTE TO PETER DRUCKER

TO PETER DRUCKER:

THANK S FOR THE INSIGHT

by PETER LENHARDT

In “A Tribute to Peter Drucker,” (Wall Street Journal, 11/15/2005), Steve Forbes asked, “What made Peter

Drucker ℓ the most influential management guru of the modern era?”

Here's my take on answering that question, but I'm going to narrow it down to, “What made Peter Drucker my

most influential management guru?” That's right, even though I didn't know him personally, I felt like he was

my own personal consultant. He mesmerized me the first time I heard him speak in person. After his speech, I

bought a copy of his then-current book, The New Realities. He was hanging around and signing copies of the

books, so of course I stood in line and had him sign mine. In that book, I discovered what became my

professional mantra. On page 209 of the paperback version of The New Realities (I know because the page is

dog-eared and highlighted, and the book's binding is creased along that page so that it lays flat) is this

Drucker gem:

“Information is data endowed with relevance and purpose.”

One simple statement—yet it embodies much of what management accounting professionals strive to obtain.

As management accounting professionals, we seek information to make better decisions than we otherwise

might. In our search for “better information,” we keep current on best practices and we try to become better

business advisors and we put in the latest information technology. But we, the management accounting

professionals, still seem to lose our way in spite of our best efforts. Peter Drucker's insight quoted above

helps me stay on course.

Those eight words are simple, powerful, and dead-on. As Paul Sharman explained so well in the

November/December 2005 issue of Cost Management, the management accountant's role is to “inform

managers about what decisions they should make to facilitate best business performance.” How do we do

that? To “inform” means we need information. And we gather information by collecting data. But not just any

Page 1 of 3Checkpoint | Document

4/24/2014https://checkpoint.riag.com/app/view/toolItem?usid=2557ddi2078a4&feature=ttoc&lastCp...


2/3

data, or it becomes useless. Rather, we need to decide the “purpose” which then leads us to the “relevant.”

Only then does the data become information. Absent relevance and purpose, we just end up with a lot of

data.

So, thank you Peter Drucker for your advice. Thanks for the insight. I'm sure every one of your fans has a

favorite Drucker quote. And no doubt you will forever remain the personal consultant to all of us.

THE WISDOM OF PETER DRUCKER

by WILLIAM F. CHRISTOPHER

My first acquaintance with Peter Drucker was in reading his book, The Practice of Management, shortly after

it was published in 1954. At that t ime I was director of Marketing in General Electric's Chemical Development

Department, commercializing new GE discoveries. Two concepts from that book have been a central part of

my work over the last 50 years:

1. The purpose of a business is to create customers. So we define our business in terms of the customer.Key questions: Who is the customer? What does the customer buy? What is value to the customer?

What will the customer need/want in the years ahead?

2. The same key performance areas determine success for all companies. Quoting from The Practice of

Management:

“To emphasize only profit, for instance, misdirects managers to the point where they may

endanger the survival of the business.”“Objectives are needed in every area where

performance and results directly and vitally affect the survival and prosperity of the business. ℓ

(These areas) decide what it means concretely to manage the business. They spell out what

results the business must aim at and what is needed to work effectively toward these

targets.”“At first sight it might seem that different businesses would have entirely different key

areas—so different to make impossible any general theory. It is indeed true that different key

areas require different emphasis in different businesses—and different emphasis at different

stages of the development of each business. But the areas are the same, whatever the

business, whatever the economic conditions, whatever the business's size or stage of

growth.”“There are eight areas in which objectives of performance and results have to be set:

market standing, innovation, productivity, physical and financial resources, profitability; manager

performance and development; worker performance and attitude; public responsibility.”

Throughout my career I have studied the methods and the technologies in Drucker's key performance areas,

and communicated what I learned to people I have worked with in changing and improving their business

operations. I use all eight areas, but now state a few of them differently and combine two of them, to be more

understandable in today's world:

1. Creating and Keeping Customers, for “market standing,” to state specifically the company purpose.

2. Innovation.

3. Quality/Productivity, for “productivity.” When best defined, productivity and quality are the same.


4/24/2014https://checkpoint.riag.com/app/view/toolItem?usid=2557ddi2078a4&feature=ttoc&lastCp...


3/3

4. Physical and Financial Resources.

5. Profitability.

6. Organization Development. Includes both “manager performance and development” and “worker

performance and attitude.”

7. Public and Environmental Responsibility, for “public responsibility.”

My only personal contact with Peter was in 1991 when he contributed two chapters to my Handbook for

Productivity Measurement and Improvement. We never met personally, but we had communications by fax

and mail, and several phone discussions. What surprised me in our contacts was the immediacy in the way

he works. When I requested something from him, it came immediately. If I called him for a decision, I got it

immediately. He answered his phone. He placed his calls. Nothing pending for Peter. No in-box; no out-box.

Everything in real time.

In rereading from The Practice of Management before writing this note of gratitude, I again experience the

wise counsel of Peter Drucker. That book, published 51 years ago, offers more management wisdom for

today and tomorrow than can be found in any of today's management bestsellers by other authors. I nowhave additional Drucker books in my library, all reinforcing and adding to what I learned from The Practice of

Management.

For 50 years I have studied and learned the most useful technologies and methods in all of Peter Drucker's

key performance areas, and the performance measures helpful in achieving desired objectives. I have taken

what I have learned into more than 100 businesses in 16 countries. I've seen management people open their

minds to this learning, recognize that the purpose of their business is to create customers, and improve

performance in the key performance areas where their companies were weak. The result: strengthened

company capability and morale, and improved company profitability.

It all started with Peter Drucker's book. Thank you, Peter.

END OF DOCUMENT -

© 2014 Thomson Reuters/Tax & Accounting. All Rights Reserved.


4/24/2014https://checkpoint riag com/app/view/toolItem?usid=2557ddi2078a4&feature=ttoc&lastCp

1406862988_1402178585_article5_march_april06__1_ (1)

Documents