Peter Drucker's Definition of Management + Its Purpose

This article is an excerpt from the Shortform book guide to "The Essential Drucker" by Peter Drucker. Shortform has the world's best summaries and analyses of books you should be reading.

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How does Peter Drucker define management? How do you define your company’s mission?

In The Essential Drucker by Peter Drucker, management is defined as the practice of enabling groups of people with different knowledge, skills, and backgrounds to work together toward a common goal. This goal is often the company’s mission that either you or a higher-up is responsible for creating.

Keep reading to learn more about the responsibilities of managers in an organization.

What Is Management?

The first thing you need to know is Peter Drucker’s management definition, its purpose, and its scope. More than any other part of an organization, management is directly responsible for whether the organization’s efforts produce its desired results. Drucker writes that managers, both at the highest level and all the way down, do this by articulating an enterprise’s mission, spelling out its objectives, and developing its people’s strengths to maximize their individual contributions.

Though political, military, and religious leaders have existed for thousands of years, Drucker traces the start of modern “management” to the period of industrialization beginning in the late 1800s. Before then, workers were largely unskilled and relied on a taskmaster’s orders—a much more authoritarian system than what we think of as management today. With the growth of subject-specific expertise and a workforce of laborers with a variety of skills, a new specialty emerged—that of coordinating large groups of people to work toward a unified purpose. Today, people who make management decisions comprise more than a third of the workforce. For this reason, learning management skills is now a requirement in nearly every line of work.

(Shortform note: Drucker expresses a linear view of the development of management as a profession over time, but in Reinventing Organizations, Frederic Laloux describes the changing role of management as a series of exponential paradigm shifts across human history, from the authoritarian structures of the past to contemporary corporate power structures. These new organizational paradigms replace many aspects of the older managerial models while encapsulating and massively building on their strengths. Beyond that, Laloux suggests that in emerging and future organizations, “managers” as we know them will no longer exist, with their duties and managerial skills distributed throughout the organization.)

Defining the Mission and Objectives

Though management is usually discussed in business terms, its practices are central to any organization, and managers’ first duty is to spell out their organization’s mission. That mission will determine every aspect of how the business functions internally and how it interacts with the external world. We’ll describe Drucker’s views on how an organization’s mission should be defined, why managers must communicate it clearly to employees, how a business relates its mission to the market, and the concrete goals management has to set to put the organization’s mission into action.

Drucker says that even in the business world, turning a profit is never the overriding mission. Rather, making money is merely the yardstick by which a business can measure its success. The mission of an organization is based on the results it hopes to achieve outside itself. For a law firm, that mission might be to successfully litigate on behalf of its clients. For a public library, the mission might be to grow readership in its local community. For a toothpaste company, the mission might be to help people take better care of their teeth.

Drucker writes that defining the mission of an organization is vital because at some point every person within it is going to make decisions that affect the whole enterprise, from the organization’s founder to the person who cleans the floors. Therefore, everyone has to have the same understanding of the group’s shared purpose, who the organization’s customers are, and by what external measures its success can be judged. When management can clearly articulate that purpose, it guides decision-making at all levels of the business and sets the direction for future innovation.

Peter Drucker’s Definition of Management + Its Purpose