What Peter Drucker Knew About 2020

What Drucker
Here is an excerpt from an article written by Rick Wartzman for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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When PwC released its annual survey of corporate chief executives for 2014, it was immediately obvious that change is on leaders’ brains: “As CEOs plan their strategies to take advantage of transformational shifts,” the consultancy reported, “they are also assessing their current capabilities – and finding that everything is fair game for reinvention.”

It’s no wonder why.

“Every few hundred years throughout Western history, a sharp transformation has occurred,” Peter Drucker observed in a 1992 essay for Harvard Business Review. “In a matter of decades, society altogether rearranges itself – its worldview, its basic values, its social and political structures, its arts, its key institutions. Fifty years later a new world exists. And the people born into that world cannot even imagine the world in which their grandparents lived and into which their own parents were born. Our age is such a period of transformation.”

For Drucker, the newest new world was marked, above all, by one dominant factor: “the shift to a knowledge society.”

Indeed, Drucker had been anticipating this monumental leap – to an age when people would generate value with their minds more than with their muscle – since at least 1959, when in Landmarks of Tomorrow he first described the rise of “knowledge work.” Three decades later, Drucker had become convinced that knowledge was a more crucial economic resource than land, labor, or financial assets, leading to what he called a “post-capitalist society.” And shortly thereafter (and not long before he died in 2005), Drucker declared that increasing the productivity of knowledge workers was “the most important contribution management needs to make in the 21st century.”

Sadly, judging from the way most of our institutions are run, we are still struggling to catch up with the reality Drucker foresaw. How should managers alter their approaches to fit the times? Here are [the first two of] six aspects of running an enterprise that should now be front-and-center:

Figure out what information is needed. “It is information,” Drucker wrote, “that enables knowledge workers to do their job.” This is especially true for executives. The trouble is, even in a hyper-connected world where endless amounts of data are literally at our fingertips, many rely on the producers of the data – the bean counters, the sales force, the IT department – to serve up the numbers they believe are most relevant.

And these folks don’t necessarily have a clue. A 2014 McKinsey & Co. survey found, for example, that fewer than 20% of IT professionals say they are effective at targeting where they can add the most value inside their organizations. “An adequate information system,” Drucker wrote, must lead executives “to ask the right questions, not just feed them the information they expect. That presupposes first that executives know what information they need.”

Actively prune what is past its prime. Virtually every executive is eager to see his or her organization innovate. Through our work at the Drucker Institute, however, it is clear that most are reluctant to take the necessary first step toward creating the new: continually winding down those products, services, programs, and procedures that are no longer making a real contribution. “Every organization will have to learn to innovate” on a constant basis, Drucker wrote. “And then, of course, one comes back to abandonment, and the process starts all over. Unless this is done, the knowledge-based organization will very soon find itself obsolescent, losing performance capacity and with it the ability to attract and hold the skilled and knowledgeable people on whom its performance depends.”

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Here is a direct link to the complete article.

Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University. Author or editor of five books, he is currently writing one about how the social contract between employer and employee in America has changed since the end of World War II. You can follow him on Twitter @RWartzman.

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