Excerpts from The Drucker Lectures

Excerpts from the The Drucker Lectures by Rick Wartzman, referencing various writings and engagements by Peter F. Drucker.

1. First Quote: Focuses on enabling employee performance by removing obstacles and then holding them accountable.

2. Second Quote: Discusses the shift from capital to knowledge as the primary driver of productivity.

3. Third Quote: Highlights the rising expectations of the new workforce for rational management, utilizing their skills, and taking on responsibility.

Meanwhile, the few retail chains in the last few years that have shown outstanding success-the Gap and so on-all follow the same procedure. They go to salespeople and say,"What should we expect from you?" And then,"What do you need by way of information?" And also:"What impediments do we create?" Most organizations make it difficult for people to perform. And so it is important in managing knowledge people-and not just knowledge people-that we go to them every nine months and say, "What do we do in this organization and in this department, and do I do as your boss, that helps you do the job you are paid for? And what do we do that hampers you?" And then it's your job to get rid of as many of the impediments as you can.

When you enable people to perform, you can demand performance. And so put as much of the responsibility on people, and keep it on them. And say, "Well it's no better than you did two years ago. Haven't you learned anything?" And then you will not have much trouble, especially if you accept responsibility for enabling people to do the work they are already paid for.

Peter Drucker, Knowledge Lecture III

So let me say we will need much less money. When you look at the new industries-software compared with an integrated steel mill-they are not capital intensive. This is not to say that money will be unimportant. But it will mean that you can't base control on the ability to marshal capital for productivity. Instead, it will be based on an ability to marshal the scarce critical resource of knowledge.

Peter Drucker, Knowledge Lecture IV

At the same time, the more important development, perhaps, is that the composition of the labor force is changing. In this country now about half of the young people coming into the labor force have gone to school beyond high school. They have learned very much. But even more, they have changed expectations.

First, they expect management to be rational. They expect management to behave the way they have been told management behaves. Now you and I, particularly the older ones of us in this group, know that this is sheer delusion. But they expect that there is a way to make decisions—and it’s more than just saying, “Do this because I tell you so.” That there is some thinking ahead, that there is some rhyme or reason behind what management does. They expect it, and by golly, they’re going to get it. Because don’t forget, they’re going to survive us. They expect that what they have learned will be put to use. They expect to make a contribution and to earn their keep. All the things that we have preached to them, they have swallowed. That may be very stupid of them, but young people do believe what parents and teachers tell them. And we have told them to expect rationality from management. We have told them to expect challenge. We have told them to expect responsibility. And they expect it. Above all, we will have to learn to put these tremendous energies to work. I am frankly not yet seeing any place where this is even practicable. But I think we owe it to ourselves to do so.

Excerpt from a lecture delivered at Claremont Graduate School (currently known as Claremont Graduate University) in 1974.

Disadvantage of the Sedentary

From a 1995 interview with Computerworld Information Technology Awards Program with Steve Jobs.

• An answer to the question, “.. Do you think it will ever be possible for a new major start-up company to develop if they're going to focus on major applications or software? Will there ever be another?” by Steve Jobs.

I think yes. Intellectually one might sometimes say in despair no, but I think yes. And the reason is because human minds settle into fixed ways of looking at the world and that's always been true and it's probably always going to be true.

I've always felt that death is the greatest invention of life. I'm sure that life evolved without death at first and found that without death, life didn't work very well because it didn't make room for the young, who didn't know how the world was fifty years ago, who didn't know how the world was twenty years ago. But who saw it as it is today, without any preconceptions, and saw and dreamed how it could be based on that. They were not satisfied based on the accomplishment of the last thirty years. But who were dissatisfied because the current state didn't live up to their ideals. Without death there would be very little progress.

One of the things that happen in organizations as well as with people is that they settle into ways of looking at the world and become satisfied with those and the world changes and keeps evolving and new potential arises but these people who are settled in don't see it. That's what gives start-up companies their greatest advantage. [That is] The sedentary point of view of large companies.

And, In addition to that, large companies do not have very efficient communication paths from the people closest to some of these changes at the bottom of the company to the top of the company which are the people making the big decisions. There may be people at lower levels of the company that see these changes coming but by the time the word ripples up to the highest levels where they can do something about it, sometimes ten years passes. Even in the case where part of the company does the right thing at the lower levels, usually the upper levels screw it up somehow. I mean IBM and the personal computer business is a good example of that.

I think as long as humans don't solve this human nature trait of sort of settling into a world view after a while, there will always be opportunity for young companies as well as young people to innovate. As it should be.

Elements of the Decision Process

From The Effective Executive (ch. The Elements of Decision-Making) by Peter F. Drucker. This excerpt describes the four different types of problems, and how to identify and deal with each.

These are the elements of the effective decision process. The first question the effective decision maker asks is, "is this a generic situation, or an exception? is this something that underlies a great many occurrences? or is the occurrence a unique event that needs to be dealt with as such?”. The generic always has to be answered through a rule, a principle. The exceptional can only be handled as such and as it comes. Strictly speaking, one might distinguish between four - rather than between two - types of occurrences. 

1. There is first the truly generic, which the individual occurrence is only a symptom. Most of the problems that come up in the executives work are of this nature. Inventory decisions in a business, for example, are not decisions, they are adaptations; The problem is generic.  This is even more likely to occur in events within production. Typically, a product control and engineering will handle hundreds of problems within the course of a month. Yet whenever these are analyzed, the great majority prove to be just symptoms; that is, manifestations of underlying basic situations. The individual process engineer or production engineer who works in one part of the plant usually can't see this. He might have a few problems every month with the couplings or the pipes that carry steam or hot liquids, but only when the total work load of the group over several months is analyzed, does the generic problem appear. Then one sees that temperature or pressure has become too great for the existing equipment, and that the couplings, holding different lines together, need to be redesigned for greater loads. Until this is done, process control will spend a tremendous amount of time fixing leaks without ever getting control of the situation.

2. Then there is the problem which while a unique event for the individual institution, is actually generic. The company that receives an offer to merge with another, larger one, will never receive such an offer again if it accepts. This is a non-recurrant situation as far as the individual company, its board of directors, and its management is concerned. But it is of course a generic situation which occurs all the time. To think through wether you should accept or reject the offer requires some general rules. For these however, one has to look to the experience of others. 

3. Next, there is the truly exceptional. The truly unique event. The power failure that plunged into darkness the whole of northeast America from the Saint Laurence to Washington in 1965 was according to the first explanations, a truly exceptional situation. So was the thalidomide tragedy which lead to the birth of so many deformed babies in the early 60s. The probability of these events we were told, was one in ten million, or one in one hundred million. 

4. Such concatenation of malfunctions is unlikely to ever occur again, as it is unlikely for instance,  for the chair on which I sit, to disintegrate into its constituent atoms. Truly unique events are rare, however. Whenever one appears one has to ask, "is this a true exception, or only the first manifestation of a new genus”? and this, the early manifestations of a new generic problem, is the fourth and last category of events with which the decision process deals. 

We now know for instance that both the northeastern power failure and the thalidomide tragedy were only the first occurances of what, under conditions of modern power technology or of modern pharmacology are likely to become fairly frequent malfunctions unless generic solutions are found. All events but the truly unique require a generic solution. They require a rule, a policy, a principle. Once the right principle has been developed, all manifestations of the same generic function can be handled pragmatically. That is, by adaptation of the rule to the concrete circumstances of the case. Truly unique events, however, must be treated individually. One can’t develop rules for the exceptional. The effective decision maker spends time to determine with which of these four situations he’s dealing. He knows he’ll make the wrong decision if he classifies the situation wrongly. By far the most common mistake is to treat a generic situation as if it were a series of unique events. That is, to be pragmatic when one lacks the generic understanding and principle. This inevitably leads to frustration and futility.

Why do we work so hard?

From “Why do we work so hard” by Ryan Avent for 1843magazine

But that is not quite how it is. The problem is not that overworked professionals are all miserable. The problem is that they are not.

…

Work was a means to an end; it was something you did to earn the money to pay for the important things in life. This was the advice I was given as a university student, struggling to figure out what career to pursue in order to have the best chance at an important, meaningful job. I think my parents were rather baffled by my determination to find satisfaction in my professional life. Life was what happened outside work. Life, in our house, was a week’s holiday at the beach or Pop standing on the sidelines at our baseball games. It was my parents at church, in the pew or volunteering in some way or another. It was having kids who gave you grandkids. Work merely provided more people to whom to show pictures of the grandkids.

This generation of workers, on the early side of the baby boom, is marching off to retirement now. There are things to do in those sunset years. But the hours will surely stretch out and become hard to fill. As I sit with my friend it dawns on us that retirement sounds awful. Why would we stop working?

Here is the alternative to the treadmill thesis. As professional life has evolved over the past generation, it has become much more pleasant. Software and information technology have eliminated much of the drudgery of the workplace. The duller sorts of labour have gone, performed by people in offshore service-centres or by machines. Offices in the rich world’s capitals are packed not with drones filing paperwork or adding up numbers but with clever people working collaboratively.

…

And I begin to understand the nature of the trouble I’m having communicating to my parents precisely why what I’m doing appeals to me. They are asking about a job. I am thinking about identity, community, purpose — the things that provide meaning and motivation. I am talking about my life.

The Goal of Sailboat Design

From Thinking in Systems — A Primer by Donella H. Meadows on the folly of over-specialization.

Once upon a time people raised sail boats not for millions of dollars or for national glory, but just for the fun of it. They raced the boats they already had for normal purposes. Boats that were designed for fishing, or transporting goods, or sailing around on weekends. It was quickly observed that races are more interesting if the competitors are roughly equal in speed and manoeuvrability.

So rules evolved, which defined various classes of boats by length and sail area and other parameters, and which restricted races to competitors of the same class. Soon, boats were being designed not for normal sailing, but for winning races within the categories defined by the rules. They squeeze the last possible burst of speed out of a square inch of sail, or the lightest possible load out of a standard sized rotor. These boats were strange looking and strange handling; not at all the sort of boat you’d want to take out fishing or for a Sunday sail.

As the races became more serious, the rules became stricter, and the boat designs more bizarre. Now racing sail boats are extremely fast, highly responsive and nearly un-sea-worthy. They need athletic and expert crews to manage them. No one would think of using an America’s Cup yacht for any purpose other than racing within the rules. The boats are so optimized around the present rules that they had lost all resilience. Any change to the rules would render them useless.

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Commentary by Majed

Systems tend to produce the strict outcomes they were designed (wether intentionally or not) to perform. It’s worth looking at the outcomes of educational institutions; the type of people they produce, to understand more about the core task the institution is designed for.

Take a university, for example, that produces hoards of engineers to maintain human capital flow into a hierarchical “big” corporation. The core task of the university, is to do just that. It is not, to the dismay of many, to produce entrepreneurs or critical thinkers to challenge the status quo. If the latter is produced — by chance or individual effort  that is— , it cannot be attributed to the institution, but rather it is a failure on the institution’s part in performing the task at hand.

This begs the question: if universities were systematically designed — that is, all assets and resources were allocated towards the fulfillment of the task - to produce the next generation of forward thinkers, in what ways would these institutions be different than the current ones?