While Peter Drucker is thought by many to be the inventor of management itself, it’s abundantly clear that the entrepreneur was a leader in every way. It’s true, Drucker is widely regarded as the “Father of Modern Management.” His philosophy and his thought process were so influential that they even transcended the world of business.

But what exactly was Drucker best known for?

Aside from writing several best-selling books on management, the talented Austrian was also responsible for coining many of the most common leadership strategies, terms and ideas. For example, Peter was the first leader to state that employees should be treated as assets to a business as opposed to liabilities. While this is now part of common thought, it was incredibly unique during the 1950s. In fact, this is a mindset that most leaders might’ve considered a sign of weakness at the time.

As part of this theory, Drucker also became a famous advocate for creating a more collaborative and flexible workplace, while emphasizing the importance of distributing power across the board.

Let’s look at five rules for successful entrepreneurs and startup founders according to Peter Drucker:

1. Creating Leaders and Asking the Right Questions

While most theory or practice tends to fade away over the years, Peter Drucker created a management theory that is just as relevant as it was back in the 1950s. Unlike his contemporaries, Drucker believed that companies should establish harmony in the workplace and create leaders instead of managers.

More specifically, he stated that these individuals should take a decentralized approach to management and place great importance on ‘SMART’ goal-setting. SMART goals are specific, measurable, attainable relevant, and time-based. When you’re setting your goals, you should remember that people who set attainable goals and have a regular reporting process in mind are 40% more likely to achieve their goals. Likewise, those who write their goals down are 20% more likely to achieve these goals.

In many ways, startups and entrepreneurs can learn from this strategy by focusing on working smarter as opposed to just working harder. Also, it’s important to remember that success should be measured by results and not always how those results were achieved.

Takeaway — Management might be about doing things right but leadership is all about doing the right things. How can you help employees or colleagues get things right? What can you do to contribute to the process? Where can you help the company improve? These are the questions that should be asked.

2. Delegating Power to Motivate Others

As already mentioned, Drucker was an advocate for decentralization, and he wanted employees to feel empowered and valued by management. As a rule, this often involved setting specific tasks and creating a level playing field so that managers and subordinates could work toward a common goal.

Now, that’s not to say these managers had no authority but rather to highlight the way in which this approach could encourage employees to interact. What’s more, these employees were also much more likely to share ideas and take responsibility for whatever actions they might take in the workplace.

As a startup founder or entrepreneur, you should know that workers will feel confident and motivated if you treat them as equals. For this reason, communication is essential. Moreover, the way in which you communicate should tell these subordinates that their opinion and input matter to the company.

Takeaway – Delegating power is more likely to motivate members in the startup. Improving communication in this way is also sure to produce better ideas and constructive solutions when necessary.

3. Hire Problem Solvers and Innovators

Peter Drucker refers to these individuals as knowledge workers. Simply put, these employees handle or use important data and this most often pertains to analysts or engineers. Either way, these workers offer incredible value to a startup or entrepreneur by helping them think creatively and solve problems.

In fact, Drucker correctly predicted that blue-collar workers would account for less and less of the workforce as time went on. If you take a look at the digital world of today, this is certainly true. Most of the highest-paid individuals in any industry are qualified data analysts and engineers.

If you need further reasons to hire such professionals, these employees tend to be confident and creative. These qualities can create a much more innovative atmosphere in the startup. 

Takeaway – Hire skilled individuals who will think creatively and help inspire the rest of the team.

4. Creating Structure and Setting Shared Goals

‘Management by objectives’ (MBO) is another concept from Peter Drucker that helped businesses create a more efficient structure. As part of the process, the team in an organization is given shared goals. Tasks are then delegated to members of these teams according to skills and abilities.

Here are the five steps of MBO:

  • Review Team Goals
  • Set Specific Objectives
  • Monitor Ongoing Progress
  • Evaluate Individual and Team Performance
  • Reward Members for Worl

As for how startups and entrepreneurs might implement the process, it’s important to bring the team together and explain the overall objective. At this point, individuals from different departments can set their goals and ensure that these always abide by the SMART goals.

According to Drucker, this system is all about principles and focusing on one item at a time. Moreover, it’s important to identify patterns. It’s also important to ensure that you take action so problems do not happen again.  In other words, you will likely encounter problems. Even so, recurring problems are a management flaw that needs to be eradicated right away.

Takeaway – ‘Management by objectives’ can create a structure for a startup founder or entrepreneur. Shared goals are a powerful way to make progress and alleviate problems in the future.

5. Encourage Employees to Collaborate

Most companies have a tendency to pit employees against one another whereas Drucker insists that startups should always try to foster a collaborative environment. For this reason, it’s important to urge employees to share ideas and seek assistance from other team members whenever needed.

Every aspect of Drucker’s theory seems to revolve around this need for collaboration. For example, he also said that the most important part of communication is ‘hearing what isn’t said.’ Collaboration is the only way to get beyond this obstacle.

Either way, collaborations lead to better relationships, increased motivation and better ideas. The opportunity to work closely with colleagues is also sure to foster a team-orientated environment.

Takeaway – Foster collaboration and avoid pitting employees against each other.

Final Thoughts

It’s true, Peter Drucker was a leader in thought and incredibly accurate in terms of what does and does not work in modern management. It’s also true that most management-related theory from that time is now outdated. Be that as it may, the above rules are certainly still relevant for the startups and entrepreneurs of today.

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