Lessons From Peter Drucker

Why leadership is a marketing job

William Cohen, Ph.D.
Posted: 04/30/2013

Knowledge workers cannot be ordered around or "managed" but should instead be seen as partners in the organization. That’s why leadership is a marketing job, according to columnist William F. Cohen. Here’s what that means.

Peter F. Drucker spent the better part of his 96 years unraveling the secrets of management. He did this to such a degree that he became recognized as the "Father of Modern Management."

But you can’t talk about Drucker’s spectacular success as a management guru and fortune teller without noting that his first big public prediction was a bust. And by the way, he did not want to be known as anybody’s "guru." In any case, his first big prediction was published shortly before the stock market crash which preceded the Great Depression in 1929. In a public newspaper column Drucker predicted a rosy future and a bull market.

He ate crow a few weeks later when, with another article on the stock market he wrote for the Frankfurter General-Anzeiger entitled "Panic on the New York Stock Exchange." That must have been difficult for him and it was the last time he attempted to predict the stock market. It may also have been the root of his well-known dictum that "the best way to predict the future is to create it," something he couldn’t much do with the stock market but felt that he was able to help managers accomplish elsewhere.

As the cover story for Bloomberg Businessweek written shortly after his death recorded, "He was always able to discern trends -- sometimes 20 years or more before they were visible to anyone else." However his reputation was based on far more than his abilities as a fortune teller.

Shortly after his death business journalist John Byrne attempted to access Drucker’s contributions and strived to explain "why Drucker’s ideas still matter." Byrne’s list of Drucker’s major accomplishments included:

  1. Introducing the idea of decentralization, a concept that became basic to every large organization in the world. This was an idea he thought up 70 years ago
  2. In the 1950s Drucker became the first to assert that workers should be treated on the asset side of the ledger, and not listed as liabilities. It was one of the main conclusions of his 1946 book, Concept of the Corporation which departed radically from the previous focus on efficiency resulting from technology to reduce worker cost.
  3. Drucker completed the decade by expounding the revolutionary idea that since there was no business without a customer, the purpose of a business was not profit at all, but to create a customer. Profit was simply a necessary element to accomplish this.
  4. It was Drucker who wrote about the contribution of knowledge workers, and in fact he invented the term, long before anyone knew or understood how knowledge would be of importance above other inputs.

Of course there was more, but you get the general idea. His contributions were massive. However, for a long time he seemed to acknowledge the importance of one major concept of management, but other than that he even ignored the concept completely. That was leadership.

Drucker Avoided Leadership . . . at First

In his first book devoted entirely to management Drucker wrote: "Leadership is of upmost importance. Indeed there is no substitute for it." However, in the same book and only a few short sentences later, he concluded that "Leadership cannot be taught or learned."

Almost thirty years later in Management: Tasks, Responsibilities, Practices he wrote: "There is no substitute for leadership. But management cannot create leaders."

He essentially ignored leadership as a separate topic and it wasn’t until another fifteen years that Drucker put "leadership" prominently in an article title, and then he refused to give much advice about it, saying only that everything on the topic had already been worked out by the ancients. In fact he had said in class when I was his student that the first systematic book on leadership was written by Xenophon 2000 years earlier, and that it was still the best.

However, beginning in the 1990s he began to write seriously about leadership despite his earlier discouraging remarks. He seemed to realize that much of what he had been writing about for the previous fifty years really was all about leadership, even though he avoided saying so in a title or referring to it in the body of what he wrote.

Drucker’s Unexpected Suggestion for a Leadership Model

After he began to turn his genius to the subject, Drucker’s ideas began to crystalize. Early on he realized that the basic elements of all business were but two: marketing and innovation. Then fifty years later he wrote that good leadership was essentially marketing. He actually called leadership a "marketing job."

Unfortunately, many leadership scholars and practitioners have never heard of this. Those that have assume Drucker meant manipulation and trickery. While selling and persuasion is certainly part of what he meant, the basic notion that "leadership is essentially a marketing job" has nothing to do with anything negative. It is based on Drucker’s view that knowledge workers are partners in an organization. As partners, they cannot be simply ordered around or "managed." They must be led – and this includes persuasion, but also strategic thinking, planning, segmentation, differentiation and many other marketing elements which pertain equally to leadership.

Drucker’s contention can have far-reaching consequences of learning, as well as the teaching and practice of leadership. In fact, an important corollary which Drucker introduced only a few short years before his death was that if one wanted a short guide to leadership, this could be expressed very succinctly in how to treat subordinates. "You must treat them as if they were all volunteers," he said. "Because in today’s world, they are."

One can argue whether freedom of mobility exists so perfectly, especially during a challenging economic situation and job market. However, there is no doubt that subordinate treatment of this kind is probably the best leadership advice, and it was probably always true.

It was certainly known and described by Xenophon, that ancient Grecian general of whose writing on leadership Drucker admired. In The Education of Cyrus the Great, Cyrus the Great’s father taught leadership to the teenage Cyrus. Here’s an example from one English translation. Cyrus’ father was speaking to the future Cyrus the Great: " ‘Tell me how best to get a man to do something that must be done,’ he asked the young man.

‘Father, I think the best way is to reward the man who complies and to punish the man who would refuse.’"

Clearly the old carrot and stick approach, easily recognizable, even in ancient times. Was this what Drucker was recommending? Hardly.

"’Well now, that might work in many situations,’ responded Cyrus’ father, ‘but it might not if the danger were such that neither the potential reward nor the potential punishment would serve as much of an incentive or if you were absent and could not observe. There is a much better way.’"

Cyrus could barely contain himself. What way was more effective than the reward or punishment?

"’Simply take care of those you lead better even than they would or could take care of themselves. Always put their needs before your own.’"

Sound familiar? It may have been around for two thousand years, but that’s what they’re calling Servant Leadership today.

Xenophon was the first of many generals to recommend this approach to combat leadership right on up to today. Many were surprised when General Fogleman, a former Air force Chief of Staff and the honored speaker of the night refused the invitation to enter the serving line at its head, and instead asked that all others be served first. And taking care of customers in this way is marketing 101.

Can you learn something about leadership by reading up on marketing? Peter Drucker certainly thought so.

But what do you think? Join the discuss by leaving a comment below.

William Cohen, Ph.D.
Posted: 04/30/2013


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