It's probably not surprising that some of management icon Peter Drucker's most prominent followers include Jack Welch, the former CEO of GE (NYSE:GE), and Andy Grove, the former CEO of Intel (NASDAQ:INTC).
Drucker, who died Nov. 11 at the age of 95, was the father of modern management. From the late 1930s until 2004, he penned 35 books. He also wrote thousands of articles for such publications as Fortune and the Wall Street Journal.
Like any good investor, Drucker was a tire-kicker -- sometimes literally. In the 1940s, management at General Motors (NYSE:GM) invited Drucker to study its inner workings. The result was Drucker's masterpiece, Concept of the Corporation.
His main thesis was that workers were no longer interchangeable units of production. Instead, they needed to have some level of independence, which Drucker deemed critical for a company's growth. He saw employees as "knowledge workers." It was a revolutionary concept for his era -- one that GM ignored, interestingly enough.
Drucker was a financial journalist early in his career, and in a famous September 1929 piece, he predicted that the bull market would continue apace. We all know how that turned out. As a result of this blunder, he swore off future predictions regarding the stock market.
Nonetheless, Drucker believed that companies can achieve greatness by pursuing strong management principles. As it pertains to us Fools, that means long-term shareholder value.
It won't surprise loyal Fools that The Motley Fool co-founder Tom Gardner is a Drucker fan. "The brilliant business analyst and writer Peter Drucker has made me a lot of money over the years," Tom said. "The 95-year-old dedicated his professional life to an engaging and exhaustive exploration of how organizations succeed and stumble. His insights double as a blueprint to market-beating investing."
Barbara Bund, a senior lecturer at MIT Sloan School of Management, has a new book coming out, The Outside-In Corporation, in which she covers Drucker extensively. "Peter Drucker made crystal clear in The Practice of Management (1954) that business success and even the very definition of a business are determined by customers," she said. "So, Drucker's key lesson for investors is to look for companies that really do base their strategies on marketing -- seeing the whole business from the customer's point of view, the outside in. Achieving and maintaining an outside-in perspective is, Drucker tells us, the path to success."
Fool contributor Tom Taulli does not own shares mentioned in this article.
