Peter Drucker’s classic McKinsey Quarterly article, “The manager and the moron”

Here is a brief excerpt from an article by Peter Drucker (1909-2005) that appeared in the McKinsey Quarterly in the December 1967 issue. According to Drucker, the computer is a moron. And the stupider the tool, the brighter the master must be. In this Quarterly archive article, he explains how “the dumbest tool we have ever had” will compel managers to think through their actions. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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As all of us know, during the last 20 years the free world has had the greatest, most sustained economic advance in history. Most of us believe that this has been a time not merely of forward movement, but of vast economic change.

The facts and figures, however, do not support this impression. They show, instead, that our era has actually been a time of unprecedented non-change. It has been largely a period of linear forward movement along old trend lines, of adding new stories to an old building according to the old architectural design.

Imagine an economist in 1913, just before World War I, taking the economic trend lines of what were then already the advanced countries, and projecting each of them ahead to 1966. He would have hit it on the nose for Japan, Western Europe, and the United States, in fact for every one of the developed nations with one important exception—the Soviet Union, which is significantly below where it would have come out on our economist’s projection. The reason for this, as all of us know, was that the Russians imposed a political straitjacket on agriculture and froze farm technology just at the worst possible moment, when the technological revolution in farming was getting under way. Worse, they froze the agricultural population. By making it possible for anybody who stayed on the farm to be fed, no matter how poorly, they removed the economic pressure that elsewhere in the world has pushed the farmer off the farm, brought about fantastic productivity jumps in agriculture, and provided labor for the expansion of industry.

Suppose, again, that our economist, having made his projections in 1913, fell into a 50 years’ sleep. When he woke up, he would have found the industrial geography of the world virtually unchanged. Every country that is today an industrially advanced nation was well past the takeoff point in 1913. Not a single new one has joined the club, unless you count satellite economies like Canada, Australia, South Africa, and Mexico. Brazil, which has a long and distinguished history as a country of the future, may join the club tomorrow, but it isn’t quite there yet.

Compared to this linear movement, the 50 years before 1913 present the greatest imaginable contrast. During those five decades the industrial map of the world had been changing as rapidly as the physical map of the world changed in the fifteenth and the early sixteenth centuries—the Age of Discovery. Right after the Civil War, the United States and Germany emerged as economically advanced countries and rapidly overtook the old champion, Great Britain. A quarter of a century later Russia and Japan emerged, along with the western part of Austria-Hungary—the present Czechoslovakia and Austria, with Northern Italy. In short, the 50 years before 1913 were a period of very rapid shifts in economic power relationships.

Since World War I, however, such changes have been absent. This explains why economists of today are so concerned with economic development. Before 1913, it was taken for granted, but since then we’ve apparently gone sterile. And we don’t know how to start it up.

Perhaps the greatest shock to our Rip Van Winkle economist, however, would be the fact that, with the exception of the plastics industry, the main engines of growth in the past 50 years were already mature or rapidly maturing industries, based on well-known technologies, back in 1913.

The dynamos of growth

Our most rapidly advancing industry in the last 20 years of expansion has been agriculture. The productivity of farming has been increasing twice as fast as the productivity of manufacturing in all the developed countries except Russia. Yet the average farmer of today in the United States is not farming in a much more advanced way than the top farmer of 1913. Hybrid seed is about the only new development of any consequence.

And the next dynamo has been the steel industry. World steel capacity has expanded fivefold since 1913. Yet 99 percent of all steel capacity in existence today is built on a technology that was considered antiquated—and Lord knows was antiquated—in 1913.

Our third engine of growth has been the automotive industry. Yet in 1913 Henry Ford was already producing and selling 183,000 Model T’s, and a year later the figure had climbed to 261,000—more cars than the Soviet Union has ever produced in a single year. Even the Ford Motor Company of 1913 would be a major producer in today’s free-world automotive industry.

Much the same is true of the electrical apparatus industry. Neither Westinghouse, nor GE, nor Siemens was exactly unknown in 1913. They were blue chips. And this is also true of the organic chemical industry.

Plastics is the only industry based on new technology that is economically important today in terms of contribution to gross national product, employment, and so on. As far as the economic statistician is concerned, other industries hardly exist as yet. The airplane began to have an economic impact when the jets came. But the real impact will come with the big freight jets, which will make every airstrip in the world a deep-water port. In a few years, they may make the ocean-going freighter, man’s oldest efficient transportation, look roughly the way the railroads began to look around 1950. This will be one of the greatest changes in transportation we’ve ever had. But it is still ahead of us.

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Here is a direct link to the complete article.

To learn more about Drucker’s life and legacy, please click here.

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