Peter Drucker’s 5 Characteristics of an Organizational Change Leader

Amid times of sweeping organizational change, good leaders understand that a major part of their job is to manage this change while still maintaining their organization’s mission and purpose.

Peter Drucker (1909-2005), often known as “the father of management thinking,” noted that the late 20th-century global economy was built on profound and permanent changes over the status quo that had been obtained in previous centuries. Drucker came up with the term “change agents” to describe individuals and organizations that consistently get out in front of change by proactively leading instead of simply reacting. 

Drucker, born in Vienna during the waning days of the Austro-Hungarian Empire, came of age during a time of accelerated change on multiple fronts: economic, societal, political, and cultural. After working in journalism in Germany in the early 1930s, he escaped to the United Kingdom as the Nazis took power. He soon settled in the United States, where he taught at New York University and, for the three decades preceding his death, at Claremont Graduate University in California.

His early book Concept of the Corporation distilled his research into the nature of corporations as social institutions, based on his study of General Motors. He went on to write numerous books on management, business, entrepreneurship, and the evolving characteristics of industrial society in the modern age. During his lifetime, Drucker greatly influenced other thinkers and practitioners in business and management, and he achieved worldwide renown for the originality, incisiveness, and practical utility of his ideas and analyses.

As Drucker saw it, for an organization to survive, it must become a change leader. 

Today, the Drucker School of Management, the business school of Claremont Graduate University, continues to instruct new generations of leaders in his philosophy. Here is how the school has summarized Drucker’s five key attributes that define a change leader:

1. They question, seek information, and communicate

A change leader asks questions, digs deeper for accurate information, and assembles data to yield meaningful patterns and actionable intelligence. Change leaders cross organizational and conceptual boundaries, searching out useful information and strategies wherever they may be found. They also leverage the data-driven insights they gather as evidence for tracing likely paths the future could take.

Peter Drucker, as someone who primarily considered himself a “social ecologist,” posited a view of a change leader as someone who is an excellent listener and communicator. Change leaders are particularly adept at observing and analyzing their environments and in practicing the art of active listening when interacting with others. They look not only for what has been explicitly articulated but also for what isn’t being said. 

Drucker also offered five central questions that change-agent managers must ask about their organizations. They are:

  1. What is the organizational mission?
  2. Who are the organization’s customers?
  3. What is important to these customers?
  4. What results has the organization achieved?
  5. What is the organization’s plan?

2. They focus on marketing and innovation

According to Drucker, a change leader views all insights through the lens of marketing and innovation, the two main functions he identified as being central to any business. 

This focus means that change leaders have built up a broad and deep understanding of exactly who their primary customers are and what these customers value most. Using this understanding, a change leader filters out the noise to hone in on the essentials of how to solve customers’ problems better and how to offer even greater value to customers.

Drucker recommended that an executive also needs to understand how to balance the need for leading change with the need to maintain an adequate level of continuity. He believed that an appropriate measurement for achieving this balance was to devote about 10 percent to 20 percent of time and resources to strategizing for the future. 

3. They emphasize boldness, strategy, and calculated risk

Drucker also believed that part of a change leader’s job is to use a bold approach where needed, putting calculated bets on the best available strategic options. In other words, a change leader knows when and how to show moral courage and take a chance.

Drucker once elaborated on this idea by saying that whenever a business becomes successful, there is a leader behind it who acted bravely and decisively. In his assessment, a risk-avoidant leader and one who embraces risk make about the same number of major mistakes in any given year anyway. So, the risk-taker ultimately comes out ahead simply through the value of action over inaction.

4. They are constantly moving forward

A true change leader knows when to move on from traditional ways of doing things, even as they continue to look for opportunities to improve an organization in the future. It may sound simple, but Drucker’s insight is quite profound. To achieve new success, a change leader needs to first stop doing something old that is no longer effective. 

Drucker noted the common tendency of humans in organizations to remain committed to outmoded policies and procedures, things that once may have worked and been successful, but have either outlived their usefulness or been shown as less effective than previously believed. 

5. They practice good management 

Despite their full embrace of innovation, strategy, and decisiveness, change leaders are also at their core skillful managers. Their ability to orchestrate the delicate balance between continuity and change plays out across three spheres: the business of the organization itself, the work of their fellow leaders, and the efforts of front-line employees. 

Again, “balance” is a key word for understanding Drucker’s perspective. An exceptional manager/change leader understands how to recalibrate the organization’s operations and responses according to the changes being imposed upon it from outside while also seizing opportune moments to shape the future in line with organizational goals.

This requires the ability to grasp the significance of trends happening at the moment, as well as the capacity to see beyond what may be the present moment’s chaos to identify new possibilities for positive change and growth. 

How Major Philanthropic Gifts Build a Better World

Philanthropy in one form or another has been a signal feature of human civilization from the beginning. By about 2,000 BCE in China, families assisted senior adults, widows, and orphans with financial donations. 

In ancient times, those of Jewish faith contributed one-tenth of their income to help community members in need. The English word “tithe” means “one-tenth,” and giving away a portion of one’s income, time, or goods for the greater health of the community continues as a central practice in world religions. While Judaism, Christianity, Islam, Sikhism, Hinduism, Buddhism, and other traditions each have their individual outlooks on the practice, the high regard for acts of charity is universal in sacred texts. 

Modern Philanthropy

Fast-forward to the modern world, where many of today’s top philanthropists and foundations either explicitly or implicitly center their giving on universal ethical principles that value human beings’ responsibility for one another. A number of experts point to the 1990s as a “golden age” of philanthropic giving, when a booming economy fueled a corresponding boom in philanthropy.

Individuals who had been wildly successful in business brought their strategic insights to the world of giving, creating lasting and transformational legacies through foundations and projects designed to strengthen public health, education, and other major social goods. Among them were Microsoft co-founder Bill Gates, whose charitable contributions since 1994 total well over $50 billion. 

The 90s were also an era in which “activist” philanthropists and institutions stepped into the spotlight as advocates and public educators on a wide range of issues important to them. Gates offers another excellent example here. 

Activist Philanthropy

Bill and Melinda Gates joined Berkshire Hathaway CEO and super-investor Warren Buffett in establishing the “Giving Pledge” in 2010. Since that time, an increasing number of other billionaires have committed themselves to giving away all or most of their wealth to worthy causes during their lifetimes. A January 19, 2021, Forbes magazine piece listed its editors’ choices for the 25 “most philanthropic billionaires.” Bill and Melinda Gates, Warren Buffett, MacKenzie Scott, and Charles Feeney were among this group. 

Scott, for example, has begun putting her share of ex-husband Jeff Bezos’ Amazon fortune to good use. Over only her first year of strategic giving, she contributed some $1.7 billion to more than 100 boots-on-the-ground organizations working toward social, racial, and economic justice. Her total 2020 charitable contributions surpassed the $4 billion mark, and were targeted to organizations working to end poverty and food insecurity in local communities. 

And Charles Feeney, co-founder of the Duty Free Shoppers retail empire and known as the “James Bond of Philanthropy,” whose “Giving While Living” idea influenced Buffett and the Gates in creating their Giving Pledge. In September 2020, Forbes profiled Feeney as a billionaire who is now “officially broke.” After giving away all but $2 million of his wealth, his Atlantic Philanthropies organization has contributed more than $8 billion to educational institutions and foundations, almost completely without fanfare.

Feeney has focused much of his efforts on improving the healthcare system in Vietnam. His gifts have enabled the once-struggling country to build out its schools, libraries, and medical infrastructure, including running successful public education campaigns to discourage smoking. One of his initiatives led Vietnam to pass life-saving legislation requiring motorcyclists to wear helmets.

Pandemic Philanthropy

In the first year of the COVID-19 pandemic, the Gates’ foundation was at the forefront of funding the world’s response, contributing some $450 million to that effort alone. And Gates himself has demonstrated his chops as a spokesman for the value of public health projects, educating the public on the need for effective vaccines through interviews throughout popular media. 

Gates and other major donors have used their philanthropy to tackle the COVID-19 crisis in a number of specific ways, funding large-scale research and development projects focused on testing and vaccines, as well as rapid response through community-based organizations and long-term programs to combat the inequities that the pandemic has laid bare. 

According to Candid, the charity-and-grant-tracking organization formed from the merger of the venerable GuideStar and Foundation Center, the sheer size of recent donations from major philanthropists over recent years is nothing short of astonishing. In the single month of May 2020, Candid’s team noted, global philanthropic funding surpassed $10 billion. 

During the pandemic, something else became apparent: major donations were being processed and disbursed at previously unimaginable speeds, and with fewer stipulations attached, in order to get the dollars working immediately in communities where they were so desperately needed to combat the effects of the pandemic.

Biomedical Philanthropy

The rapid response of the medical community to COVID-19 lies on the foundations of the wealth of biomedical research of the 20th and 21st centuries—research funded in no small part by philanthropy. Over the last few decades, philanthropic individuals and organizations have paid to offer training and professional development to promising early-career biomedical scientists, supported partnerships between various companies and organizations in order to advance product development, facilitated collaboration, developed public education efforts, and served as a voice for patient-centered practices. 

While federal dollars typically support early-stage, exploratory research projects, private philanthropy often comes in at the point of supporting initiatives to build the repositories of hard data that make labs and their projects more competitive for further federal funding. In addition, philanthropic funders, being more flexible than government sources, are particularly well-positioned to get much-needed capital to projects that may be both high-risk and high-reward in terms of social payoff over the long-term.

The Impact of Philanthropic Vision

Driven forward by thousands of years of human generosity, the philanthropic community continues to serve as a force in building and growing societies—and creating a better life for the people within them.  

Corporate Social Responsibility – The Development of a Higher Commitment

The concept of corporate social responsibility—a model by which a business strives to make itself accountable not only to its stakeholders but to society, humanity, and future generations—first crystallized in the 1970s. But large companies were charting this path of corporate good citizenship starting at the end of the 19th century. Corporate social responsibility, or CSR, has produced tangible, positive effects that have been felt for generations.

CSR offers advantages to society and to each company that practices it, though what it looks like varies from one company and one industry to another. In purely bottom-line terms, a company that engages in thoughtful, well-placed philanthropic and volunteer work enhances its brand and positive name recognition, lifts employee morale, and creates closer ties between employees and their corporate leadership. 

CSR for businesses of all sizes

In this era of economic crisis and reconfiguration in which many small- and medium-sized businesses are struggling to maintain their equilibrium, they, like large corporations, can be successful practitioners of CSR. 

The most well-known types of CSR large companies engage in are those that build environmental sustainability into their logistics, ensure fair labor practices and ethical sourcing of materials, and direct investments into environmentally and socially responsible ventures. While smaller businesses can also achieve these macro-goals, their most accessible type of CSR typically involves sponsorship of charitable events and cash or in-kind contributions to local nonprofit organizations.

Learning to contribute to the common good

Contemporary CSR programs derive from the corporate philanthropy first practiced by Andrew Carnegie at the turn of the 20th century. Carnegie was the Scottish-American “robber baron” who made his fortune in the steel industry and donated over $90 million to fund public libraries, museums, hospitals, schools, and colleges all over North America. In “The Gospel of Wealth,” an article he wrote in 1889, he notes that anyone who “dies rich, dies disgraced.”

Among Carnegie’s contemporaries, oil titan John D. Rockefeller likewise gave large sums away to fund programs that would benefit all of humanity. One of his lesser-known but influential projects was the Rockefeller Sanitary Commission for the Elimination of the Hookworm Disease. In 1910 about 40 percent of people in the American South were infected with hookworm, an intestinal parasite that can cause severe disease. Rockefeller’s commission, established at a time when there were few large-scale government programs dedicated to health care, was not only responsible for a dramatic reduction in the prevalence of the disease, but it ushered in a new standard for public health practices.

Frederick Goff, a prominent Cleveland banker, created the Cleveland Foundation in 1914. The idea behind it was to pool contributions from many donors to respond more effectively to the collective needs of the community, rather than to serve as a monument to the philanthropy of a single individual. Goff’s idea became the first real community foundation in the country. 

In 1953, economist and college president Howard Bowen published the book Social Responsibilities for the Businessman. Bowen’s development of the concept of corporations’ inherent duties to the societies of which they are a part later earned him credit as the “father of CSR.” 

Bowen’s work laid the foundation for CSR as we know it today. In 1971 the Committee for Economic Development specifically named the concept of the “social contract” that exists between the corporate world and the greater humanitarian good. The committee was originally formed in 1942 as a nonprofit research and policy organization promoting the interests of both business and the American people. Today, it emphasizes the idea that business operates only through the consent of the public and is therefore obligated to serve the public interest.

The “three responsibilities” of business, as outlined by the committee, involve job creation and overall economic growth, fair and honest dealings with customers and employees, and an engagement with the life and welfare of the broader community that supports the business. Over the past 50 years, these basic concepts have been expounded by many scholars and thinkers. 

Today’s big picture

More recent examples of companies and founders with a strong sense of social responsibility include Johnson & Johnson, Starbucks, and Microsoft. 

Johnson & Johnson’s founder, Robert Wood Johnson, pushed his company to put the public’s needs first through the corporate motto he established in 1943. The company has gone on to become a leader in environmentally sound production and operational practices, as well as in supporting public health through initiatives such as facilitating safe drinking water supplies in under-resourced communities all over the world. Most recently, Johnson & Johnson eschewed typical rules of corporate rivalry by partnering with competitor Merck to produce a highly effective one-dose vaccine for COVID-19.

Meanwhile, Starbucks maintains a longstanding dedication to sustainable practices that support local communities. In one of its recent Global Social Impact Reports, the company notes that it has achieved its goals of sourcing 99 percent of its coffee from ethical sources, supporting a worldwide partnership that empowers local farmers, establishing green building standards across its locations, and providing staff with an innovative higher-education access program. 

As for Microsoft, founder Bill Gates and his wife, Melinda, have become industry role models for their philanthropy, specifically in the area of global public health. The Bill & Melinda Gates Foundation supports efforts to eradicate polio, control malaria, and treat HIV, as well as fund the research, development, and equitable distribution of vaccines to fight a spectrum of other diseases, including COVID-19.