Posted by Last January, a group of leading management thinkers gathered in Switzerland to “see what can be done to . . . energize organizations in ways that make them better for the organizations themselves, better for the people doing the work, better for those for whom the work is being done and better for society as a whole.”
Next April, a group called Conscious Capitalism expects to draw some 1,500 people to San Francisco to explore how companies can “adopt a higher purpose that transcends profit maximization.”
And in between, hundreds will convene in Vienna on November 15 and 16 for the fourth Global Peter Drucker Forum, which will examine how business can become, as Unilever Chief Executive Paul Polman (one of the forum speakers) puts it, “a force for good.”
As Iāve watched these events come together-and heard similar notions about rethinking capitalism from David Cooperrider (Business as an Agent of World Benefit), Michael Porter (Shared Value), Dov Seidman (HOW) and others-Iāve felt buoyed by each of their visions.
And Iām sure that Peter Drucker would have felt good about them, too. He believed, after all, that the best corporations “define an organizational purpose that goes beyond next-quarter financial results and goes beyond maximization of shareholder wealth.”
Still, deep down, I have to admit that Iām struggling to understand the import of it all: Does this flurry of activity add up to more than a bunch of scattered conferences and white papers? Are we actually witnessing the beginnings of a social movement?
On one level, it is tempting to say yes. Indeed, it seems only natural that there would be a vigorous backlash to the myopic, financially focused mindset that triggered the financial crisis and Great Recession.
But thereās another part of me that remains skeptical. How can this disparate array of conferences and articles coalesce into a single force? If this is a genuine movement, where is itās center? What will spur coordinated, collective action-what de Tocqueville called the “knowledge of how to combine”?
“The unique event of Rachel Carsonās book Silent Spring . . . changed the attitude of a whole civilization toward the environment,” Drucker noted in Management: Tasks, Responsibilities, Practices. Whereās our Silent Spring for fixing capitalism?
Social movements build in stages, and it is possible, of course, that we are early in the evolution of-what does one even call it?-the Purpose-Over-Profits Movement.
Yet it is also possible that what so many of us feel passionate about wonāt amount to much in the end, that all of our teeth-gnashing over short-term-itis and corporate irresponsibility will prove ineffective, much like the protests against globalization that took place in the late 1990s. “So far, these protests have no focus,”Ā Drucker remarkedĀ inĀ Managing in the Next Society. “They are protests against āthe system,ā whatever that means.”
We should have no illusions that “maximizing shareholder value” itself became a movement-a key part of “the most successful intellectual movement” in law and economics circles in the past 30 years, in the words of Johns Hopkins Universityās Steven Teles.
Countering it will take a movement of our own. How-and even if-we successfully nurture one remains to be seen.
AUTHOR:
Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University and a columnist for Forbes.com. He is the author of What Would Drucker Do Now?Ā (which is a collection of his columns) and two books of narrative history: Obscene in the Extreme: The Burning and Banning of John Steinbeck’s The Grapes of Wrath and (with Mark Arax) The King of California: J.G. Boswell and the Making of a Secret American History.
Rick,
Great piece! I think what’s different now, and what is cause for confident optimism, is that there is an intellectually coherent alternative to shareholder capitalism, that also happens to be more profitable than shareholder capitalism. Although there are many factors driving this movement forward, it’s the economics that will ensure its success. As a result, it’s now not a question of whether: it’s a question of when.
Rick,
Excellent and thought-provoking blog! I remain encouraged that what our gathering focused on in Stoos, Switzerland is rapidly evolving. I believe that an alternative management paradigm is much further along than we realize, even if it seems to be hidden in plain sight. Companies such as W.L. Gore and Associates, who never went public as a strategy to avoid Wall Street expectations, or Google, who on the day they went public declared that they would never hold Wall Street analysts conference calls because they manage for the long term, are examples of how to manage companies very differently. Wikipedia, Linux, and other open-source platforms are examples of how large enterprises can succeed by focusing on creating customer value as the primary mission. These early adopters are the true heart and soul of this movement and harbingers of things soon to come. I agree with Steve Denning: It’s not a question of whether; it’s a question of when.
The difference to previous Ā«We are against itĀ» movements is that there are attractive and realistic alternatives offered. There is a wealth of concepts how to do business better, and – thatās the key – they have shown how to outperform the old ones. Itās not about preferences to do things differently, itās about getting better results.
Managers should simply ask themselves:
Compared to what we do today
– Is there any more effective way to create value?
– Are there more efficient ways to deal with change and the complexity of todayās world?
– Are there more productive ways to manage knowledge work (in contrast to manual routine work)?
There is research, books and case studies about each of these topics. Those who reflect about the mismatch between what we know and what we actually do just wonder:
Why is change not coming faster?
Social movements are not built around techniques and results; they are built around passions and beliefs. That is why the communities of trust and practice that lie in the roots of capitalism were built around communities of faith. They were typically egalitarian communities that rebelled against the status quo and the establishment.
Take the Quakers of the 17th Century, for example; they rejected the Old Testament and most of the New except the Sermon on the Mount and the Book of John. They opted to tell the truth all the time, refused to swear oaths of allegiance to the Crown or pay tithes to the Established Church. They changed the names of the days of the week and the months of the year, rejecting their pagan names.
What does a 21st Century community of faith look like? What do they believe and what do they reject? What distinctive language do they use? How do they set themselves apart from everyone else? What discipline do they require of their members?
The most obvious example in America is the Mormons and their distinctive behaviours. Like the Quakers they believe in learning through doing and they inculcate virtuous habits into their members while they are young. They are over-represented in both politics and business. Unfortunately they are hierarchical and reactionary rather than egalitarian and radical – upholders of American values circa 1950. It’s difficult to see great novelty in social innovation coming out of that community…
What will it take to produce communities of faith, trust and practice? I think that Jo Freeman has it right – crisis is the catalyst. It may even be necessary, but it is not a sufficient condition. What are the sufficient conditions? We need to look to the “edges” and “open patches” of society. What is happening in the social turmoil in Greece? Is it possible that the cradle of Western civilization can hold new infants?
Forgive me for being late to this discussion, but I have only just become aware of the Drucker blogs through the brilliant Vlatka Hlupic. I have been writing on this subject for 15 years, published my own efforts at the ‘Silent Spring’ for management, with disappointing results, and been frustrated by the slowness of progress. One issue that I have become aware of lies within the world of management itself. I was originally in the world of social work, where campaigning is part of the ethic. My experience of management academics and the personnel-related professions is that campaigning is seen as unnatural, almost distasteful. The ethic is not rocking the boat. Frequently, I have been part of initiatives to highlight the appalling waste and wrong-headedness of ‘maximizing shareholder value’ but there is a feverish last-minute effort to tone down the findings, for fear of upsetting finance officers and the business schools. So there is opposition to short-termism, but not to the principal cause of short-termism, which is a belief in reductive, mechanistic human societies and ‘zero sum’ economics. Yes, there is very good evidence for enlightened, humane management. But the wider world of management is not based on evidence. Evidence scarcely gets a look-in. The challenge is therefore winning hearts and minds. This requires a cultural change for those who ‘get it’ as well as for those who don’t.