Management theory of Peter Drucker 

by Team Businesspedia

Peter Drucker developed many ideas, concepts, and principles on management theory throughout his career. One of his many insights was, “Management is doing things right; leadership is doing the right things.

Peter Drucker’s Management By Objectives

MBO stands for Management By Objectives, a phrase coined by Peter Drucker in his book “The Practice Of Management,” published in 1954. MBO measures the performance of employees as compared to typical standards for the job. The belief is that, if employees help determine those standards, they will be more likely to fulfil them.

Smart method

Drucker’s smart method is a means of checking to make sure an objective is valid. managers carried out this verification by using the smart acronym to make sure the objective is specific, measurable, achievable, realistic and time-related. 

Knowledge worker

“Knowledge worker” is one of the many terms coined by Drucker within his management theories. by the measure of today’s society, a knowledge worker is equivalent to the executive of a company


Drucker was a believer in decentralization of management. He saw that many leaders try to take on everything in a demonstration of power or a means of maintaining control, under the assumption that only they can accomplish a task correctly. Drucker believed that managers should delegate tasks in order to empower employees.

Hierarchy of Goals

Hierarchy of Goals: Management by Objective
Hierarchy of Goals: Management by Objective

Peter Drucker’s Five Question

1. What is your mission? Why does your organization exist in the first place? What are you trying to accomplish for your customers?
2. Who are your customers? Describe the person you wish to satisfy with your actions.
3. What does your customer value? What is it that you do especially well that you are uniquely suited to provide to your customers? How can you exceed the standards set by your competition?
4. What results are you trying to accomplish? How do you measure success?
5. What is your plan? How do you go about satisfying your customers and getting the results that are most important?

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