Peter Drucker: unsolved puzzle or completed picture?

Peter Drucker: unsolved puzzle or completed picture?

Article Type: Guest editorial From: Management Decision, Volume 48, Issue 4

About the Guest EditorDavid Lamond is Professor and Executive Dean, Faculty of Business and Law at Victoria University in Melbourne, Australia. He earned his PhD in managerial psychology at Macquarie University. His research addresses topics including the history of management thought, personality and managerial style, and human resource management in China. He is also Editor-in-Chief of Journal of Management History. david.lamond@vu.edu.au

On 19 November 2009, the centenary of Peter Drucker’s birth, the first Global Peter F. Drucker Forum, with the theme “Managing the future”, was held in Vienna, the city of Drucker’s birth. In addition to invited papers from such luminaries as C.K. Prahalad, Philip Kotler and Charles Handy, a series of sessions was devoted to a refereed stream of papers. The papers in this special issue are those considered to be the best of the refereed papers presented at the Forum, and form an important reference collection of insights informed by and about Peter Drucker, as well as those provided by the great man himself. It is also designed to be a companion volume to a special issue of Journal of Management History (Vol. 15 No. 4), devoted to Drucker and launched at the Forum.

The title of this Guest Editorial is informed by apparently contrasting views of commentators on Drucker, expressed 25 years apart, as “unsolved puzzle” (Kanter, 1985), “genius” (Prahalad, 2009), “uber-guru” (Wooldridge, 2009) and “the grandfather of modern marketing” (Kotler, 2009). The collection of papers here, and the ideas they represent, suggest a reality somewhere in between – more puzzle solver than puzzle but, to the extent that we are charged with creating and managing the future, the picture remains unfinished. It begins with a fascinating insight into Drucker’s earliest days at school and a claim that the principles applied to his learning experience then are still relevant today.

Much has been written about the inspiration that Drucker has provided, and continues to provide, to others, but what of those who inspired Drucker? One such person was Drucker’s one-time schoolmistress, Eugenie Schwarzwald. Taking advantage of information from recent research projects undertaken by the Austrian National Library, the Ludwig Boltzmann Institute for the History and Theory of Biography, and the Volkshochschule Hietzing, Eschenbach is able to provide us with a detailed account of Schwarzwald and her schools, and to draw parallels between her approach to teaching and leadership and Drucker’s (1967) approach to management in general and the management of knowledge workers in particular (cf. Drucker, 1959, 1999a, 1999b).

Bemoaning what he saw as the commodification of higher education at the time, then Vice Chancellor of Thames Valley University, Mike Fitzgerald (1996), called for higher education institutions to embrace a model of active learning where students are “required and enabled to take responsibility for their own learning [and their] teachers become inspirers and leaders, rather than gatekeepers and constrainers”. Given the observations contained in Eschenbach’s examination, Fitzgerald (1996) might well have been calling for a return to the principles of learning practiced by Schwarzwald and experienced by Drucker.

Harris (2005) points out that Drucker’s analysis “was always informed by history, as befit a man who was born when the Hapsburgs still had an empire and Vienna was brimming with some of the most gifted thinkers and achievers in Europe”. With this in mind, Drucker would have appreciated Wallman’s examination of his (Drucker’s) approach to organisational processes used to manage relationships, by way of a case study of Eli Terry. Terry was a nineteenth-century American clockmaker who introduced the concept of a free trial and progressive part payments, as well as the extension of credit to sales agents, to increase the sales and distribution of his clocks. Wallman uses this example of innovation to argue that the challenge today is for management to understand how such transactional innovations, both between organisations and customers and within organisations themselves, can be used to create a leadership position in the future.

One action that could contribute to the necessary understanding to which Wallman alerts us is the surfacing of the organisation’s “theory of the business” (the assumptions about why the business exists, its strengths and weaknesses, the opportunities and challenges that it faces), which Drucker (1994) argues every organisation has. Using the IBM and GM case material developed by Drucker (1994), in combination with exemplars of the extensive literature on organisational and strategic planning, Daly and Walsh demonstrate the extent to which theories of the business can sustain or even endanger organisations. They argue that, by making the organisation’s theory of the business explicit, and testing the attendant assumptions as part of the planning process, strategic decisions about the organisation and its business can be improved. In light of Drucker’s (1994) IBM and GM case studies being the only developed case studies of the theory of the business, Daly and Walsh call for further research to be undertaken on this concept.

Every organisation may well have a theory of the business, but are those theories sufficient in an era when the environment within which those organisations are embedded is becoming less predictable and more turbulent? Lane and Down argue that existing models of management, appropriate where there is a high level of agreement and predictability of outcome, may be less so in a changing and changeable context. They proffer a combination of the notion of management as a social enterprise and the insights of complexity theory as a basis for enabling competing and even conflicting objectives to be explored and the resultant agreed outcomes achieved.

I have noted in other places (Lamond, 2007, 2008) the increasing attention being paid to the idea of corporate social responsibility on both sides of the Atlantic, as companies are seeking to integrate social and environmental concerns in their business operations. Nonetheless, while terms like “managerial ethics”, “business ethics”, and “corporate social responsibility”, roll easily off the tongue, we still have neither a dominant paradigm, nor a body of coherent empirical findings to support such a conceptual framework (Lee, 2008; see also Carroll, 2004, p. 115). It was within this milieu that Drucker (1981) engaged the debate about business ethics and, on the basis that it attempts to define for business a series of “special cases” rather than an ethics of individual behaviour that applies to everyone, he characterised business ethics as casuistry.

Hoffman and Moore (1982, p. 293) immediately accused Drucker of “a profound misunderstanding of the nature, scope and purpose of business ethics”, and there has been consistent criticism of Drucker in this vein since then. In a more careful, holistic examination of Drucker’s work, Bardy and Rubens maintain that Drucker’s appreciation of business ethics, far from being ill-informed, is more comprehensive and multifaceted than his critics acknowledge. By way of explication for the responses to Drucker, Bardy and Rubens explore the so-called “transatlantic divide” in what is considered ethical/unethical, and, in turn, how those differences influence the how of management practice (cf. van Herpen, 2004, for an interesting post 9/11 analysis of the divide more generally, especially in relation to what van Herpen describes as the transatlantic attitude, value, and religion gaps).

Reflecting on Drucker’s well known appreciation of Zen philosophy and Japanese art, as he (Handy) showed a projection of a Zen painting of an old man with a stick, Charles Handy (2009) observed that a man with knowledge but not wisdom is like a blind man who takes a lantern to find his way in the dark. Perhaps not so well known, is Drucker’s interest in, appreciation of, and ongoing guidance for China, through the Peter F. Drucker Academy, established in 2005, with its mission “To make available to China’s knowledge workers the study and practice of Drucker’s legacy” (see www.pfda.com.cn/enaboutus.asp?simid=History#). The next three papers in this Special Issue are focussed on China and, in the first of these, Kriz points to the challenge of rekindling China’s innovative spirit.

Kriz’s wide ranging examination of innovation in China, past, present and future, goes beyond assessment of the economic horsepower behind China’s more recent transformation to consider whether China’s creative dynamic can be given a free rein within the context of its command economy. Indeed, Kriz argues that the key to rekindling China’s innovative spirit is a function of the state’s ability to balance the institution of government on the one hand, with the needs of a burgeoning creative class on the other. With this in mind, he goes on to identify some of the areas where Drucker’s “knowledge workers” need institutional support.

The second article in this “subset” is focussed on the Hong Kong Special Administrative Region (HKSAR) of China, and involves the public sector there, but has wider lessons for organisations trying to understand how best to diffuse technological innovations and usage amongst their employees. Noting Drucker’s broad interpretation of “management”, in his discussion of Drucker as uber-guru, Wooldridge highlighted Drucker’s belief that it [management] is just as important in government and the not-for-profit sector as it is in business. On the other hand, in The Age of Discontinuity (Drucker, 1992, p. 229), Drucker’s appraisal of the managerial capabilities of the public sector is less than flattering: “Government is a poor manager […] It has no choice but to be ‘bureaucratic’”. Leung and Adams take this observation and the accompanying analysis as a starting point to suggest that, especially in this new era of knowledge work, Drucker’s analysis of “government” does not fully take account of the heterogeneity of people who work in the sector. In this Leung and Adams reflect the views of Guy and Hitchcock (2000, p. 30) that:

If apples were oranges, Peter F. Drucker’s ideas on management would apply as well to government as they do to business. But apples are not oranges, and government is not business. Drucker’s trenchant analysis of management principles and human behavior contain much that informs managers of public and nonprofit agencies […] [but] it lacks the comprehensive applicability to public management that it offers to business.

Leung and Adams then report on the results of a questionnaire/interview based survey of government employees in Hong Kong. Their findings show that, while the government employees as a whole are indeed reluctant to change their IT usage, more refined analysis reveals greater heterogeneity than the overall results suggest. In particular, they find that younger and more educated staff are more willing to change than their older, less educated counterparts. Leung and Adams maintain that, as well as demonstrating Drucker’s mistaken characterisation, this heterogeneity has important implications for implementing and managing change and highlights the need for more research on the nature of these large, bureaucratic organisations.

Describing it at the same time as the biggest challenge facing management, Drucker (1999a) once argued that the most important contribution of management in the twenty-first century will be to increase knowledge worker productivity. This presumes, as Drucker (1999a) did, that we fully appreciate the range of dynamics that underpin knowledge worker productivity. In this third of the China papers, Wu and Huang report on the findings of their research exploring the links between human capital (knowledge, skills, and abilities possessed and used by individuals), organisation capital (institutionalised knowledge in databases, patents, systems and so on) and social capital (knowledge embedded in and used by individuals’ networks of interrelationships) and their respective impacts on knowledge productivity with more than 100 companies in the biotechnology and pharmaceutical industries in Taiwan. The results of their study show significant positive relationships between the amount of human, organisational and social capital in organisations and the levels of knowledge productivity in them. Indeed, they also showed that greater the amount of social capital in organizations, the stronger the influence of human capital on knowledge productivity.

Given the importance of knowledge worker productivity, the article by Nair and Vohra exploring factors associated with work alienation of knowledge workers is a valuable addition to this issue. Nair and Vohra collected data from a sample of more than 1,100 knowledge workers across six businesses of varying sizes in the IT industry in India to test the impact of structural elements, work characteristics, and the quality of work relationships on the experience of work alienation. They found that around one in five of the knowledge workers in their sample was alienated from work, and that the strongest predictors of alienation were characteristics of the work itself (lack of meaningful work, inability of work to allow for self-expression) and the poor quality of work relationships. The latter finding is particularly important when we take into account the influence of social capital on knowledge productivity.

As he spoke about what he saw as some of the limitations of our dominant methodological preferences in his presentation at the Drucker Conference, C.K. Prahalad (2009) made the observation that he had never seen a regression analysis lead to the next practice. Wu and Huang’s findings may not produce the next practice, but they do provide evidence of the critical roles that each of human, organisational and social capital play in explaining knowledge productivity. Similarly, Nair and Vohra’s analysis provide useful information for organisations looking to reconnect their knowledge workers with the business.

As noted earlier, the theme of the Drucker forum in Vienna was “Managing the future”, and so it is appropriate that the last two articles in this Special Issue are focused on the future. The article by Bang, Cleeman and Bramming explores how changing economic conditions have their corollary in changes to how businesses create value, and what that means for the productivity of those creators of value. They use Drucker’s insights on the move from land, capital and physical labour to information and knowledge as the primary units of wealth production in developed economies as their point of departure. Their concern is that not enough attention has been paid to the social challenges presented by this move, and they seek to address this lack of attention by introducing the ideas of Hardt and Negri, and Lazzarato regarding how the changing conditions have transformed the knowledge workers themselves and not just the objects of their work.

The final paper in this special issue, by Maciariello and Linkletter, starts with the observation that when Drucker was asked which book he believed was his best work, his typical response was “My next one”, and then proceeds to speculate on what Drucker’s next book might have been about if he were still with us. The title of that book, Maciariello and Linkletter suggest, would be Federalism and Management as a Liberal Art, as they draw extensively on Drucker’s works over 60 years, both to demonstrate how Drucker used the philosophy of federalism to shape his management theories, and then proffer suggestions for the application of federalist principles to the management of the complexity that faces contemporary organisations. The extent of the insights provided into Drucker’s thinking in this regard is perhaps unsurprising when it is noted that the first of the two authors, Joseph Maciariello, was a faculty colleague of Drucker’s and co-wrote Drucker’s (2005) The Daily Drucker. The article also forms a natural “book end” with Linkletter and Maciariello (2009), which, as the first article in the Journal of Management History Special Issue, examined the influence of the ideas of Søren Kierkegaard, Friedrich Julius Stahl, Alfred Sloan, and Joseph Schumpeter on Drucker’s concept of a moral society of modern institutions.

And so the question is asked again – Drucker: unsolved puzzle or completed picture? In my introduction, I had proposed that the collection of articles constituting this Special Issue point to Drucker as more puzzle solver than puzzle but that, in true Druckerian fashion, the picture that is the future remains unfinished, and is for us to continue to construct. I hope that readers will see this compilation as a valuable starting place in guiding the construction and management of that future. In closing, I take this opportunity to thank the contributors and reviewers for this issue. I also thank Richard Straub, President of the Drucker Society of Austria, without whose vision and commitment the 1st Global Peter F Drucker Forum would not have become a reality. John Peters, Chief Executive of Emerald Group Publishing and Editor of Management Decision, has my gratitude for providing the resources of Emerald to support the reviewing processes for the conference itself and then for the subsequent revision and publishing actions (special thanks for the excellent work of Helen Evans, Ruth Young and Sarah Roughley!).

David Lamond