Management in Peter Drucker’s 95 Years

Management is an ancient empirical science. He always had excellent practitioners and numerous prophets. Some are founding names of which the more recent generations hardly heard, like the French Henry Fayol, the German Walther Rathenau, the Japanese Shibusawa, or the Americans Mary Parker Follet and HLGantt.

Of others, they would probably hear bad news – like Frederic Winslow Taylor (transformed into “demon” with the epithet of “Taylorism”) or Alfred Sloan, the force of nature that shaped the modern capitalist business group.

But only in the second half of the 20th century did management become an assimilable doctrine for ordinary mortals, something that could be learned and taught. Many academics and consultants associate his name with this “overcrowding.” But the man who started this revolution is 95 years old today.

He was christened ” Dr.Management, ” a term he refused to acknowledge. In addition, he always warned that we should not approach these ideas as “recipes” – but as tools to adapt according to the context. Incolda and Cesa want to pay tribute to the father of Management, remembering his work in this synthesis.

A historical event

A landmark event The revolution started by Drucker in the 1940s may seem almost accidental – he is so modest as to reject the nickname of the guru of management gurus. And he confesses that the bestseller of The Concept of The Corporation – the book he wrote in 1946 based on the General Motors study – was, even for himself, a surprise that showed that “there was enormous interest in management.”.

The reason for this “popular” interest is understandable if we go back to the time. The pilots of the corporate world – such as Alfred Sloan, the man who changed the face of the management and organization of large companies, with his experience at General Motors since 1923 – approached management as the gift of a prince and, naturally, they liked it. to make the matter a private preserve. 

Now, the flow of people who came from professions related to engineering and financial institutions and who were suddenly “pushed” into executive positions, without having any background in the matter, would create that potential market.

Drucker, with the trilogy of books that he published in the 1940s and 1950s – The Concept of The Corporation (1946), The New Society (1951), and The Practice of Management (1954) – showed, at a stroke, three things: that There was, in fact, a historically emerging new profession (the manager or the “executive” as Chester Barnard called it in 1938), which would become a new social segment in the post-war period; that a new type of ascending organizational structure had been born (the corporation) and that the possibility arose of learning to govern companies and organizations, of transferring the management know-how of about half a dozen captains of industry and prophets, to a wider audience.

“The emergence of management as a distinct, fundamental and leading institution is an essential phenomenon in social history. Rarely – if anything like this ever happened – did a new basic institution, a new leading group, emerge as rapidly as has happened to management since the dawn of this (20th) century, ”wrote Drucker on the first page of the first chapter of The Practice of Management.

 

Drucker did not “invent” the discipline of management – he peremptorily rejected that claim by some apologetic commentators. He sensed a social movement and dedicated himself to systematizing what the previous prophets and practitioners had been producing. After this founding introit, the management movie of the second half of the 20th century can begin.

Exiles & Heretics

The first two major post-war management movements are curiously led by people who either were not to the liking of the bosses of the time or who were only heard in “exile”, well away from America and Europe, where the reader would least expect, in Japan!

The Quality movement launched by the works of W. Edwards Deming and Joseph Juran in the 1950s would only be ‘heard’ among the Japanese and completely forgotten by Westerners (who only discovered Deming in 1982 when he wrote Out of the Crisis, already They swear when he published Planning for Quality in 1985).

It all started in the distant Empire of the Rising Sun (out of a humiliating defeat) when Ichiro Ishikawa, first president of the Federation of Japanese Economic Organizations and the Union of Japanese Scientists and Engineers, invited an obscure statistician (to collaborate in 1947 at the 1951 Japanese Census Organization), named W. Edwards Deming, to give a lecture at the Tokyo Industrialists Club in July 1950.

Deming went beyond the traditional “engineering” view of quality control – brought to Japan immediately in the postwar period by a group of American engineers heavily influenced by Walter Shewhart’s statistical approach. If quality is indeed to occur in practice it has to be led by management – this was Deming’s main message to his audience in Tokyo.

The Japanese would create a Prize – Deming Application Prize – whose first winner was, in 1951, Koji Kobayashi. On the other hand, those years would see the rise of the heretics of the so-called stream of human relations – of the “humanization” of the workplace and a new type of relations with workers.

They acted many times in the field of almost secrecy, without divulging their “experiences” of creating the “socio-technical factories” (the reader will be surprised to learn that the first took place in Procter & Gamble).

The movement began to attract outside attention when The Human Side of Enterprise, written by Douglas McGregor in 1960, woke up a wave of readers and when Fredrick Herzberg’s 1968 article in the Harvard Business Review – “How People Are Motivated employees became the most requested until today.

McGregor invented an allegory around the opposition between what he called “theory X” and “theory Y” – that is, in the first case (“X”) we would have the realm of authority and command and control versus the innate mediocrity of the “performers”; at the other extreme (“Y”), it was necessary to unleash the determination and competence of all, because “the typical human is not an innate lazy person” and it is not true that with the stick and the carrot people work effectively – this it comes from motivation, from commitment.

Despite the simplicity of this division – which the author himself always rejected – the idea had had some practical experimentation: McGregor had collaborated with the design of the Procter & Gamble factories, in Georgia (in the United States), which would become in a high performance hit.

Marketing is not a matter of cosmetics

The sales were traditionally made up with the typical tricks that transformed the art of selling into almost charlatanism. Until a Harvard Business School, professor and consultant took an air of seriousness on the subject. A famous article in the Harvard Business Review of July – August 1960 had the controversial title ” Myopia in Marketing “.

The article was signed by Theodore Levitt, who was christened the “father” of Marketing when it became a respected discipline.

Drucker did not “invent” the discipline of management, he peremptorily rejected that claim by some apologetic commentators.

The article in question belongs to a select group of academic papers that transformed, in fact, the conception of the world of the practice in the companies. In that article, Levitt makes a distinction between sales and marketing tasks. He argued that the central concern of companies should 

be to satisfy customers and not produce goods and “fit” them with tricks.

He sensed a social movement and dedicated himself to systematizing what the previous prophets and practitioners had been producing.

This marketing emergency came after the rebirth of brands (Marlboro, in the late 1950s, became a case study.) Levitt’s pioneering work led to a slow realization that investing in this area was creating something ” immaterial ”(we would say today) in the heads of the concrete people who make up the markets.

The other human pillar of this discipline was Philip Kotler. To him, we owe expressions such as “segmentation”, “positioning” and “target definition”. It reinforced Levitt’s convictions and gave us this pearl of definition: Marketing is not cosmetics to sell what you have, but the art of creating value for the customer. With Marketing Management in 1967, the author kicked off more than 25 of his books to date.

Strategy and Paradigm

The 1960s would also witness the triumph of strategy – as the “queen” discipline of management. An economic historian, Alfred Chandler, in 1962, wrote Strategy and Structure putting strategy at the top of the agenda and clearly saying that it should “lead.”

Decisions about the structure of the organizations would then be inferred following the strategy. Igor Ansoff published, five years later, Corporate Strategy, and launched the fashion of strategic planning (which would give the Shell group the reputation of having anticipated the oil crisis of the 70s).

Ansoff was vice-president of Lockheed and believed that he had discovered a “practical model for making strategic decisions in a company.” He separated operational management from strategic management.

Kenichi Ohmae, an unknown Japanese, who received his doctorate in nuclear energy from MIT, would write The Mind of the Strategist in Tokyo in 1975 (Westerners would only discover it in 1982, with the translation of the book). The thesis of the McKinsey consultant in Tokyo was that the secret of the Japanese did not lie in large strategic planning staff in the companies – the key was a talented strategist who was guided by a strategic triangle: the company, the customers, and the competition.

Peter Drucker, for his part, was among the first to anticipate the “great historical bill” of the 70s (abandonment of the gold standard, oil crisis, exhaustion of the industrial growth model, “take off” of the personal computer). In The Age of Discontinuity (1969) he spoke of the emergence of the “knowledge worker” and its impact on the economy and society.

It was precisely in these years that the idea of ​​a “paradigm shift” and beginning to “think the unthinkable” spread with futurists such as Herman Kahn, the Toffler couple (with the first book, The Clash of the Future), Willis Harman, and Oliver Markley (Changing Images of Man), Jay Forrester and the Meadows couple (who wrote the famous story Limits to Growth), and with sociologists harbingers of “post-industrial society” such as Daniel Bell and Alain Touraine.

The competitiveness

At the beginning of the 1980s, the strategy was at the top again with the work of a Harvard Business School academic, Michael Porter, who would create the concept of “competitive advantage”, who would win the business discourse, and, later, the politician. His 1980 book Competitive Strategy became a “bible.”

Drucker, who rarely refers to living authors, regards his work as an example of solid academic management research.

To Porter, we owe the model of the five competitive forces – the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry between competitors – and the concept of generic strategies…

With the latter, Porter opened three doors for the orientation of a company: compete for differentiation, lead by cost, or focus. Who chooses well, is successful. “Trying to get in the middle leaves the company in a very poor strategic position,” wrote the Harvard Professor.

Japanese and Excellence

But, almost in the dark, new geo-economic protagonists began to give letters. Suddenly, at the beginning of the 1980s, the West discovered with surprise what they would baptize as “Japanese management” (it was also around that time that the success of the quality movement in some Japanese industries became known).

In June 1980, a television program on NBC (North American network) raised the controversy: “If Japan succeeds, why can’t we?” What Deming was involved in.

The books on this “model” of gradual “incremental” innovation occurred in 1981 – by the pen of William Ouchi (who coined the famous title Theory Z, a notion inspired by McGregor’s final works before his death in 1964, and which subtitled ‘The Japanese Challenge’) and with The Art of Japanese Management, by Richard Pascale and Anthony Athos.

The American counterattack on this dazzling by Japan was swift.

With some ingenuity and lack of rigor in scientific research, McKinsey consultants Tom Peters and Robert Waterman produced a reportage-type report showing that there were successful companies in America.

In a literary coup, by pure chance, they produced the best-selling management book – In Pursuit of Excellence, published in 1982. Management was finally reaching the masses. Starting the “boom” in management literature.

Tom Peters, still today, remembers that moment: “The book was a turning point that marked the end of one era and the beginning of another. The search for ‘excellence’ was a revolutionary message in its time, “he recently confessed to Fast Company magazine, on the occasion of the upcoming 20th anniversary of the book’s publication.

Also, in this period, the idea of ​​”company culture” was born with the book by a social psychologist, Edgar H. Schein, Organizational Culture and Leadership, in 1985. He was the one who wrote: “The company is an economic vehicle invented by the society. Businesses have no divine right to survive. But value systems and philosophies survive. People carry them with them.

Later he would make an X-ray of the various management cultures in a clash within organizations and that have difficulties in coexisting – that of the pilots, that of the engineers, and that of the executives. Success comes from “aligning” them and promoting “cross-cultural dialogue between them,” recommends Schein.

The guru industry

The publishing success of Tom Peters and Bob Waterman’s book paved the way for a veritable industry – of “best sellers” and gurus, among academics, consultants with field experience, and mere dilettantes.

The early part of the 1990s saw a whirlwind of “best sellers,” many of them pioneeringly launched in the American magazine Harvard Business Review and later transformed into true mass consulting businesses – as happened with the reengineering invented by Michael Hammer, a computer science professor at MIT, in 1990.

The original article in the Harvard Business Review was titled “Reingineering Work: Don’t Automate, Obliterate,” a radical cry against the heritage of the Industrial Revolution, to be reinforced with a book. “While the Industrial Revolution focused on individual tasks, the reengineering revolution focused on the entire process, focusing on the work of each person,” Hammer explained simply to his disciples.

Meanwhile, re-engineering would be a victim of the context of “downsizing” in many sectors, in the first half of the 90s, and would be “filtered” definitively. His birth at the end of the pre-Web era did not allow him to “ride” the later boom.

The 1990s would witness the multiplication of management tools – specifically the distinctive core competencies of a company, theorized by Gary Hamel and CK Prahalad in an initial article in 1990 in the Harvard Business Review (“The Core Competence of the Corporation ”), the rebirth of“ organizational learning ”with the work of Peter Senge (The Fifth Discipline: Art and Practice of the Learning Organization) and the natural“ extension ”to the Public Administration of the wave of changes, with the launch of the “reinvention of government” movement, based on the title of a book published by Ted Gaebler and David Osborne in 1991.

In particular, the article by Hamel and Prahalad – “The Core Competencies of the Corporation” – was widely reported in the business media.

The term became mandatory and led to a change of perspective – from the traditional approach to the businesses in which the company historically engaged (and the business units it created) to the identification of the distinctive and differentiating competencies that it acquired. This change in analysis founded the movement of alienation and “outsourcing” of everything that did not fit with the core competencies and motivated the search for new business opportunities based on the portfolio of identified competencies.

The first half of the decade witnessed a silent revolution, with a clear effort to break an entrenched tradition: management has to leave once and for all the traditional molds inherited from Taylor (the task, 1911), from Fayol (functional silos, 1916), by Max Weber (the bureaucracy, years 10-20 of the 20th century) and Alfred Sloan (the multidivisional organization, 1923-25).

1990 would bring Michael Porter back to the stage with the publication of a very ambitious work of scholarly research – The Competitive Advantage of Nations. The macro-economic and geo-economic vision that it presents made many governments hire the consulting services of the Harvard professor and develop a business to create indicators of competitiveness »of the countries.

For the manager, entrepreneur, and person in charge of public policies, Porter massified a very useful operational concept with empirical support – that of an industrial “cluster” identifiable geographically and territorially. But recently, Porter “extended” the notion to the field of innovation in “Innovation: Location Matters”, published in the Sloan 

Management Review (Summer 2001 issue), where he reaffirms: “Our research reveals the high degree of influence of the local environment in the success of an innovation activity ”.

The Knowledge Society

Drucker, once again, would set the tone for the time – in The Post-Capitalist Society, published in 1993, he would elaborately explain the emerging economy, the knowledge economy, its protagonist (the knowledge worker), and the implications for organizations.

The idea of ​​the “knowledge worker” is old in Drucker – if by “old” we accept that he discovered this character in the 1950s. This social group is today 30% of the workforce and it will be 40% in 2020, according to a study done by Drucker and published this year by The Economist (dated 3/11/2001).

The very concept of the knowledge society has taken root in the last decade. When asked about the concept, Drucker replied without much ado: “It is a simple concept. In a capitalist system, capital is the critical production resource, and it is totally separate from, and even in opposition to, labor. In the society towards which we are rapidly heading, the key resource is knowledge. It cannot be bought with money or created with investment capital. Knowledge resides in the person, in the knowledge worker.

And, even more controversial, he would say: «Capital will become redundant, that is, it is about to cease to be a ‘resource’. Capital is important as a factor of production, but it is no longer a controlling factor.

In this golden period of the mid-1990s, management was increasingly “invaded” by historical and sociological analysis and also by philosophy. Charles Handy, an Irishman living in England, known as “the European Drucker,” publishes several thought-provoking works, including The Age of Paradox. Executives are beginning to be confronted with the need to have a different conception of the world – it is not enough to know how to “use” management “tools”.

The interregnum of the New Economy

With the explosion of the massification of the Internet and the transformation of the World Wide Web into an easily accessible tool for ordinary mortals (with the creation of browsers) and a business platform, the management doctrine was progressively “surrounded” by the new realities.

Managers suddenly stopped reading academic gurus and management consultants with the same voracity and turned to the new “best sellers” that painted a new business dynamic.

A Canadian consultant coined the term “digital economy” with a work of the same title published in 1996 – Don Tapscott’s The Digital Economy: Promise and Peril in the Age of Networked Intelligence. A journalist for Wired magazine (at that time the most cultured), Kevin Kelly, publishes New Rules for the New Economy in 1998, where the economic laws valid throughout the century were reversed.

The new terms popularized by this “New Economy” literature began to invade business discourse and to influence, to some extent, management practice: intangible, network, “soft,” reversal of price formation, obsolescence, and so on.

Concepts that had emerged in a pre-Web context, such as knowledge management and intellectual capital, gain positions and permeate new platforms and tools.

The NASDAQ crash in early 2000, and the reversal in the psychological climate of dot-coms, put an end to this interregnum.

With the beginning of a new century, the pure and simple management wants to return to the footlights.

 The first academic to throw a stone at the theoretical edifice of the New Economy was Michael Porter. 

The Harvard academic, in an article published in March 2001 in the Harvard Business Review, accuses the New Economy (of the 1990s) of having generated an artificial cost model and a shareholder-subsidized business utopia and investors and not fueled by the profits made. “The pioneers of the Internet violated almost all the precepts of good strategy,” concluded Porter.

We still have to heal ourselves from that infantile ailment of the New Digital Economy.

The phenomenon of globalization

But a crucial new debate appears on stage for managers and entrepreneurs. More important than the domestic border is the international – global one, the most daring will say, in a century in which the term “globalization” is omnipresent.

But will companies have to “internationalize” following a step-by-step approach (from the domestic market to the export market and then to multinationalization), necessarily slow (involving decades of learning and experimentation) and tending to “clone” their culture, or should they think “globally” from the start and accelerate that positioning?

Influenced by the work of Yves Doz, from INSEAD, he has just published a book co-authored with a Portuguese, José Santos, and with Peter Williamson, suggestively titled From Global to Metanational.

The notion arises from the empirical study of cases among which the Finnish Nokia and Linux stand out. This led to the current academic research in that Nordic country is one of the strongest in this area. Above all, he studied the “genetic will to be global” and the cosmopolitanism of the entrepreneurs and managers who lead these “start-ups”.

Source:  The weekly Expresso and other magazines.