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Peter F. Drucker and the Society of the Future

3d Waage entscheidung zwischen Liebe und Vernunft

This is a report on a Round Table discussion at the 2019 Global Peter Drucker Forum. Click here for the LinkedIn version which has hyperlinks

Panelists:

Chair: Richard Brem, Senior Advisor, Peter Drucker Society of Europe,

Peter Paschek, Management Consultant,

Timo Meynhardt, Professor for Business Psychology and Leadership, HHL Leipzig Graduate School of Management,

Verena Ringler, Curator, Erste Foundation

Aaron Barcant, Independent Researcher, Karl Polanyi Institute of Political Economy

The round table began with Richard Brem introducing the panelists and each of them summarizing why Peter Drucker’s work and vision mattered to them.

Drucker’s Vision

Drucker always argued that one’s worldview mattered to one’s understanding of one’s role and contribution in society and one’s ability to manage oneself and others. American philosopher Thomas Sowell, describes a vision as a ‘pre-analytic, cognitive act’ that helps simplify an overwhelmingly complex reality. Think of it as a walking stick that helps you travel over rugged terrain, giving you support when you need it and allowing you to probe the way ahead. A social vision gives us a sense of how the world works, of the nature of humankind, of causation and how social change happens.

As panelist Peter Paschek pointed out, Drucker described himself as a ‘conservative Christian anarchist’. While accepting the necessity of governance and government, he saw power and the yearning for power as the central problem of society, with that of managerial power and its legitimacy a particular concern. The political philosopher he admired most was Wilhelm von Humboldt, the pioneer of the modern research university, who found balance and harmony while managing the tension between continuity and change. Drucker was concerned with this balance at several levels, especially those of society and community. It was this interest that allowed him to see management as a social function, an organ of society that is responsible for the performance of institutions and gives the individual both status and function. Panelist Timo Meynhardt said that Drucker’s depth of thought and his emphasis on values – his practical wisdom – was his distinctive strength, making him a ‘companion in the darkness’.

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True But Useless: Why So Much Management Advice Sucks (and what to do about it).

Why does so much management advice sound reasonable but turn out to be of little value? Most readers will know what I mean. Take the following guidance on how companies can ‘accelerate their agile transformation’:

  1. Create a C-suite with an agile mindset
  2. Hire and develop the right mix of talent
  3. Foster an agile-friendly culture and organizational structure

What’s not to like? Well that’s the problem. The first test of any management advice is to ask, “Is the opposite also true?” If not, then the statement is a simple truism like each of those above. Clearly one wouldn’t want a C-suite with an anti-agile mindset nor a firm with the wrong mix of talent and so on.

Nevertheless, some truisms bear restating because they emphasize items of particular importance that should be priorities – necessary conditions, without which change efforts may fail. So we should look at this advice more closely. The problem is that each of the three sentences is a linguistic trick. It starts with a verb, which makes it sound like an action, but it’s really an achievement, a desirable outcome. This is why one can’t disagree with them. They are abstract ‘what-to-achieves’ that sound like ‘dos’ and whose abstraction makes them seem generic to all organizations. They are synonyms for success, outputs masquerading as inputs. To be truly helpful these generic ‘whats’ will have to be turned into specific ‘hows’ – how to ‘create a C-suite with an agile mindset’ in thisorganization, in our situation, with these people, right here, right now. And that’s where things get difficult. There are no facts about the future and every organization is different: history and context matter. Priorities will differ and what works in one situation may not work in another. And in the end it will likely turn out that the cluster of attitudes we call an ‘agile mindset’, like so many other ‘success factors’, is itself an emergent property, a consequence of a successful change effort, not its cause.

Organizations as Actors

Many management writers (especially consultants) gloss over these problems by writing about corporations as if they were rational decision-makers, actors in their own right, with clear goals and identifiable preferences for outcomes. Companies are said to have ‘found ways to infuse a higher-purpose calling into their culture’, they ‘leverage their core capabilities to enter new growth markets’ and ‘unleash the creative abilities of their people’.  Personifying corporations as actors in their own right may be a useful for headlines but it’s unhelpful when we are trying to understand cause-and-effect in complex systems. When The New York Times publishes a report that “Boeing Fired Its Leader” its journalists are using writers’ shorthand to report the outcome of a complex process, not to describe the decision of a lone actor.

Sometimes these corporate actors are represented as mechanically applying external rules or ‘principles’. Now change simply becomes a matter of swapping out the old principles for new ones and all will be well. Calling abstract features of successful agile organizations ‘laws’ or ‘principles’ and even ‘imperatives’ makes them sound like critical inputs but they are really outputs, usually the results of virtuous habits that have been developed over long periods of time. American Supreme Court Justice, Oliver Wendell Holmes once wrote, “The life of the law has not been logic, it has been experience”. Civil and criminal laws embody the experience of a society; most of us obey them because we are raised to do so in a law-abiding community, not because we read about the laws and ‘apply’ them. Management laws and principles are really desirable outcomes, abstract goals perhaps, but reducing them to rules and treating corporations as actors makes their achievement seem a whole lot easier; the critical management task of enabling people within the organization to work together cooperatively simply disappears. Indeed, the very definition of an ‘agile mindset’ might be when an enterprise begins to act as if it were a coherent whole, with what some have called a “shared consciousness” (See General Stanley McChrystal’s Team of Teams: New Rules of Engagement in a Complex World).

Decision-making as Conscious and Deliberate

Another way that management writers make ‘implementation’ sound easier is to imply that all decision-making in organizations either is or should be conscious and deliberate. The role of our unconscious minds as well as habits and competencies acquired over time and from hard experience are slighted in favour of premeditated choices and strategies.  This downplays the fact that when we are talking about change in an established organization, we need to understand its history and its existing technologies, habits and competencies. We need to appreciate how they help or hinder what we are trying to do and think about what is involved in changing them. This, in turn, widens our focus from just what we should start doing to what we should also stop doing.

For example, in my experience, one of the biggest obstacles to trust and cooperation in established organizations is the yoking together of the annual budgeting process and the performance management system. Many readers will be familiar with the ritual torture of preparing budgets that are linked to individual compensation. The corporate head office tries to push the numbers as high as possible, arguing for ‘stretch’ goals, while operating managers try to get them as low as possible, theoretically to maximize their income but often just to make organizational life bearable. The resulting bad-tempered, adversarial process and the accompanying zero-sum game-playing perpetuates top-down, command-and-control management cultures. It wastes a prodigious amount of time and prolongs destructive competition within the organization, damaging trust and cooperation.  One of the first things to do is to separate financial forecasting from performance management and make the latter retrospective, dependent on a comparison between our actuals and those of the competition or against what was available in the marketplace.

Similar problems exist with other tyrannical relics of the Industrial Era like manipulative Management by Objectives (MBO) schemes, mechanically applied Balanced Scorecards (BSC), and cults of RONA (Return on Net Assets). These usually focus on short-term individual performance at the expense of the long run and team learning. They typically distinguish strategy formulation from implementation, precluding the emergence of novelty. At the same time, they trail behind them constellations of oppressive Key Performance Indicators (KPIs) that breed like rabbits. Peter Drucker never said or wrote anything like “If you can’t measure it, you can’t manage it.” He argued that there were many important results in organizations that were tangible but nonmeasurable – like their ability to attract and hold able people. Most importantly, it was these nonmeasurable events that dealt with the future, whereas measurements are always about the past.

This is the first part of a much longer article published on LinkedIn

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The Engineer and The Gardener: Management Science Versus Complexity Science

 

 

Map of the Complexity Sciences (Brian Castellani)

Management Science

The concept of management as a science has its origins in the aftermath of World War II. During that conflict the use of analytical disciplines drawn from operations research proved enormously useful in decision-making. After the war the hope was that the business use of operations research would form the basis for a science of management that used rational, evidence-based techniques and analytical methods to inform and improve decisions of all kinds.

The result was what I think of as a “Cartesian” theory of management that assumed that:

  • Decision-making is the essence of management
  • Decision-making is (or should be) a conscious, logical, fact-based process that depends on certain premises (rules or principles)
  • Corporations think and make decisions just like persons do: if you can change the rules or principles they use, you can change the decisions they make

Managers are portrayed as a detached, objective observers in search of “facts” and using deductive logic to predict and control the performance of organizations. They achieve this via the making of decisions and the issuing of crisp, actionable instructions accompanied by the appropriate rewards and sanctions. It is highly numerate view, with the mantra that “If it can’t be measured it can’t be managed” and even “If it can’t be measured it doesn’t exist.” Thought precedes action and the highest form of thought is conscious, deliberative, instrumental ‘scientific rationality’. Thus, management is a technical practice, like engineering, that demands the application of context-free principles in the efficient pursuit of goals that are often given externally. Deviations from this normative practice are the results of a host of human cognitive biases that stand in the way of managers achieving the gold standard of deliberative rationality.

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Wading Through the Swamp – the Radical Power of Ecosystems-as-Processes

The respected management scholar, Donald Schön, began his 1987 book, The Education of the Reflective Practitioneras follows: “In the varied topography of professional practice, there is a high, hard ground overlooking a swamp. On the high ground, management problems lend themselves to solution through the application of research-based theory and technique. In the swampy lowland, messy confusing problems defy technical solution. The irony of this situation is that the problems of the high ground tend to be relatively unimportant to individuals or society at large, however great their technical interest might be, while in the swamp lie the issues of greatest human concern. The practitioner must choose. Shall he remain on the high ground where he can solve relatively unimportant problems according to prevailing standards of rigor, or shall he descend into the swamp of important problems and non-rigorous inquiry?”

Unfortunately, the concept of a business ecosystem has been largely captured by the high-ground dwellers in mainstream Anglo-American management. If you want to control something, treat it as an object and don’t allow it to move until ‘motivated’. With mainstream management’s emphasis on prediction and control, this is what has happened to business ecosystems. They are treated as static structures, waiting to be mapped, measured and set in motion, that is, designed by architects in lofty perches outside the system. This view of ecosystems-as-structures has mechanical appeal but little power. Missing from it are the dynamics of natural ecosystems and their capacity for generative metaphors and insights into the tensions between stability and change, the importance of scale and the workings of nonlinear causality.

Some key concepts from treating ecosystems as processes are:

  • emergence, the discovery of novelty and the conditions that promote it,
  • ecological succession as economies of scale assert themselves,
  • attractors, especially rigidity and failure traps in which organizations can get stuck
  • adaptive cycles and the roles of crisis and destruction in ecological renewal
  • ecological versus engineering resilience and the dynamics of sustainability
  • fitness and fitness landscapes in tension with conventional notions of goals, strategy and performance
  • the power of acting one’s way into better ways of thinking and leadership as an emergent event
  • the fundamental tension between continuity and change that confronts every reflective practitioner

Schön’s book was published over thirty years ago but his question remains relevant.  Current counterparts to his topographical metaphors are the concepts of complicated and complex challenges. Complicated tasks, like putting a man on the moon and returning him to earth are risky, ‘high-ground’ problems that yield to engineering-technical approaches. Complex dilemmas, on the other hand, thrive in the swampy lowlands of uncertainty. How to raise thischild? How to create an enterprise in my situation? How to enable innovation in thisorganization with thesepeople, right hereright now? These messy, confusing questions require an ecological-adaptive approach tailored to each unique situation. The ‘what-to-dos’ may be generic, but the ‘how-to-dos’ are specific. History, context and narrative make every organization different.

In short, we have yet to exorcise from mainstream Anglo-American management the ghostly remnants of a positivist commitment to a values-free, analytic, explanatory, instrumental ‘Cartesian’ science of quantities, with its search for general laws. This can be achieved only by embracing and containing it within a values-laden, holistic, interpretive, existential ‘Goethean’ quest for meaning.

Surely Peter Drucker would approve!

About the Author:

David K. Hurst is a management speaker, writer and educator. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012)

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

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Lead Like A Gardener: The Movie

This is the video of my short plenary presentation at the 10th Annual Global Peter Drucker Forum held in Vienna on November 28 and 19 in Vienna. For all the video from the conference see: Global Peter Drucker Forum 2018 Video

Click here for my Medium article, Lead Like a Gardener! 

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BREXIT: A Study in Complexity

British politics is in a real mess. Mired in the Brexit debate, its current predicament is best captured in the poetry of the Victorian writer Matthew Arnold; “Wandering between two worlds, the one dead, the other powerless to be born.” The British public, Remainers and Leavers alike, seems to be thoroughly sick of the whole topic and just want it to end. But it won’t. The UK and its parliament are caught in a social/systems trap.

This predicament can be visualized using the ecocycle, which is an ecological/complexity perspective on how complex adaptive systems function:

Slide1

Enterprises, economic, social and political, are conceived in passion, born in communities of trust, grow through the application of reason and mature in power. As successful systems mature, however, they become over-invested in the structures and processes that perpetuate their success and suppress any disruptive threats. They get stuck in a success or power trap, which sets them up for crisis and destruction but with the possibility of renewal. This is where the Brexit process is at the moment, spinning in a spiral of crisis and confusion (between stages 4 and 5 in the diagram). Both Theresa May and Jeremy Corbyn are trying to preserve the current power structure by getting back to stage 3 (Conservation) but Brexit has altered the political landscape and their efforts to do so are just keeping the system in the trap. The country needs to go forward but no one knows how.

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The Engineer and The Gardener: the Central Tension in 21st Century Management

Hurstcomplexitygraphiccomp

“Warm hearts allied with cool heads seek a middle way between the extremes of abstract theory and personal impulse”                                         Stephen Toulmin, Return to Reason

In Masters of Management (2011) Adrian Wooldridge (Bagehot columnist for The Economist and frequent Drucker Forum participant) identified four defects in management theory:

  1. That it was constitutionally incapable of self-criticism
  2. Its terminology confuses rather than educates
  3. It rarely rises above common sense
  4. It is faddish and bedeviled by contradictions

After declaring management theory “guilty” on all charges in various degrees, he identified the root problem as an “intellectual confusion at the heart of management theory; it has become… a battleground between two radically opposed philosophies. Management theorists usually belong to one of two rival schools. Each of which is inspired by a different philosophy of nature; and management practice has oscillated wildly between these two positions.” He went on to identify the two schools as scientific managementon the one hand and humanistic managementon the other, concluding that, “This, in essence, is the debate between ‘hard’ and ‘soft’ management.”

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The Ecology of a Social Movement: The Quakers and Social Reform – Public Talk RSA London December 7 2018

williams-view-of-coalbrookdale iron bridge

The Iron Bridge at Coalbrookdale

On Friday December 7 2018 I will be at the RSA’s Rawthmell’s Café 8 John Adam Street, London, speaking on the Ecology of a Social Movement, using the Quakers of the First Industrial Revolution as my example. They were an astonishing community of commercial and social entrepreneurs who had an influence out of all proportion to their small numbers. They featured in my book, Crisis & Renewal (1995/2002) and I have blogged about them before.

In this multi-media presentation I will outline an ecological model of change and use it to explore the Quakers experience, their origins in the turmoil of the English Civil War, their rise to commercial and social prominence in the 18thand early 19thCenturies and their subsequent decline.

The event will be held on The Steps, the mini amphitheatre that is part of the new Rawthmell’s Café at the RSA. I will look forward to seeing you there!

 

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Lead Like a Gardener! – Agile and Design Thinking Will Become Management Fads Unless We Expand Our Concept of Management

Master Gardeners Tilling the Soil

Master Gardeners Tilling the Soil

This blog is a shortened version of a full-length article Lead Like a Gardener that appeared in Medium earlier this week.

Management is notoriously faddish. Managers can reflect on a long line of management innovations that attracted huge attention, were widely adopted and then gradually dropped as management attention wandered to shinier tools.

Is Agile Different?

Management writer Steve Denning argued in a recent Forbes column that Agile is different from all the others. All of his claims have merit but I think that they are largely irrelevant to whether Agile becomes a fad or not. The determining factor is the mainstream Anglo-American management mindset. This dominant ‘Cartesian’ view of management is that it is a technical practice, like engineering, with the same relationship to economics that engineering has to physics. It appeals to an individualistic ‘CEO’ theory of mind. This is the folk theory that we have only one conscious mind and that the manager is a detached, knowing actor/agent in a knowable world, rationally calculating (predominantly) his options and issuing crisp, actionable instructions. Accordingly to this Cartesian view all management innovations are seen as instruments – tools and techniques – to be wielded by such rational actors.  This view is closely associated with scientific materialism, the philosophical belief in a universe of matter and that physical reality, accessed by the natural sciences, is all that exists.

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Management Needs to Return to Reason

balance-stones

Zen Stones

‘The arts of life…turn out to possess their own special methods and techniques…Bad judgement here consists not in failing to apply the methods of natural science, but, on the contrary, in over-applying them’.
Isaiah Berlin, Political Judgement

Ever since the European Enlightenment reason has been regarded as the hallmark of our humanity. The French philosophes argued that it was the power of abstract thought that separated us from animals. Only reason promised a certainty that could free us from the tyranny of tradition, dogmatic faith and arbitrary rule.

Reason and rationality

There was, however, not a single Enlightenment. While the French took Descartes as their model and focused on the supremacy of his rational method, the English and Scottish Enlightenments emphasized its limits. For the British the essence of human nature was a moral sense of right and wrong and a natural empathy for others. For them reason meant reasonableness, not rationality. These different perspectives have led to radically different understandings of change in social systems, exemplified by the clash between the conservative Edmund Burke and the radical Thomas Paine and their differing views on the French Revolution. Burke saw it as an unmitigated disaster, a destruction of community and tradition that heralded the age of ‘economists and calculators’. Paine, on the other hand, cheered it to the echo.

American politicians have never quite figured out which branch of the Enlightenment they belong to. Jefferson and Hamilton took opposite sides and, despite his conservative views, even Ronald Reagan was fond of quoting Paine’s aphorism that ‘We have it in our power to make the world over again’. The divisions continue to this day. Conservatives, like Burke, are aghast at the thought of intellectuals trying to design and build what can only be grown, while the followers of Paine espouse progressive agendas to make the world anew.

American management, in contrast with politics, has never been in much philosophical doubt. One can track the roots of this confidence back to the 19th century influence of French thinking in the United States Military Academy at West Point, the nursery of so many early management pioneers. When the business schools were reformed in the late 1950s, Anglo-American philosophy was in a tight, analytic orbit. Academics aspired to make management a science in the mould of economics. Scientific rationality was seen as the only true knowledge and the scientific method as the only valid form of inquiry. Thus management was deemed to be a technical practice involving the application of theory. Organizational change was viewed as a rational, top-down, outside-in process, a perspective that reached its peak in the re-engineering craze of the 1990s. Even today, to be told that one is ‘rational’ is taken as a compliment and deviations from scientific rationality are described as ‘flaws’ and ‘biases’.

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