Five hundred years ago an unknown friar in an unknown German town laid a complaint against his employer. The friar was Martin Luther, the town Wittenberg. His employer was the Catholic Church, and the burden of his complaints – 95 of them – was twofold. First, to be permitted to buy your way to heaven – as the church offered through the sale of indulgences – was wrong: a scam on the poor to make the rich richer, which sounds familiar today.

The second was that the route to heaven was not through what you did, which after all was laid down by the organization, but through what you were. He called this “justification by faith”. I call it “recovering our basic individual humanity”. It’s a message that still rings loud and clear today.

Great change takes time – but one man achieved it. Luther triggered the reformation of the Christian Churches, leading to the enlightenment and eventually the separation of church and state, free thinking, the French and American revolutions, and the release of individual initiative. Centuries of subsequent inventions, creativity and economic growth have provided humanity (or most of it) with greater prosperity, longer life and better health than ever before.

From company to corporation

We should be grateful for that. But there was a hidden snag. One of the great social inventions of the 19th century was the fusion of the joint-stock and limited-liability company forms, first in Britain and then around the world. By allowing company ownership to be separated from management, it enabled the rich to take great risks without staking their entire wealth. Thus, was fueled the industrial revolution and the subsequent surge in prosperity. It also created the company and then the corporation, which have provided so many of us in the last century with our normal way of life and work.

I started my working life in one of those companies 60 years ago. It was the Shell company of Singapore, part of Royal Dutch Shell. It was small – a group of companions, all of whom I knew, both what they did and who they were – the good, the bad, who could be trusted and who to be avoided.

When I returned to the UK, I found that Shell in London was a corporation, not a company. On the door of my shared office was a brass plate stamped with the department title – MKR/35 – with slots for two name cards beneath it. This, I realised, was what it meant to be a temporary role occupant in a corporation. With the role came a three-page ‘role description’, which bore no name. One day I noticed the name cards on the door had gone. Now I wasn’t a name at all, just a number. This didn’t sound very human to me, nor to my wife, and I left.

Later I noted that any interaction with a corporate body turned me into an ID and a password. Latterly, with face recognition technology, a face was added. Was this humanity breaking in at last? Alas: my face is just another form of data to be fed into the great digital data processing thing that is the organization. Initially I consoled myself by reflecting that there were surely things about me that couldn’t be digitized: vision, dreams, hope, trust and empathy, commitment – all the things that make me different, life worth living and work worth doing. But that was to reckon without Abraham Maslow’s law of the instrument. Maslow famously said that if your favourite tool was a hammer everything you see would become a nail to be hit with it. Following Maslow, my worry is that if we are so hung up on, and excited by, the digital possibilities, we will in fact digitize everything. That would make our organisations no more than a prison for the human soul. We must be careful that our humanity is not swamped by the digital revolution.

Needed: a business reformation

I used to think that the answer might be a charter for humanity to be used as a guide to organization. But what we really need is a business reformation. We need to rethink how organizations, particularly businesses, are actually run, why they are run, and what their purpose and role are in society. We need to figure out how to keep human values intact inside the corporation. And if that seems ambitious, consider the achievement of Luther – one man on his own.

And not just Luther. In 1970 Milton Friedman took it on himself to announce that the only purpose of a business was to make a profit. That’s how we arrived at shareholder value (a phrase previously unknown), followed by agency theory, the idea of a corporation as a nexus of contracts, and stock options, eventually legalized by Congress. And now, a swamp of buyback shares, trillions of dollars going into the private equities of some of the senior managers. This too was a revolution – an unwelcome one, but a revolution nonetheless..

So where do we find another leader? One who will lead our reformation? Well, let me follow another Martin Luther and have a dream. Couldn’t the modern Wittenberg be the Drucker Forum? And the Luther of our time be Peter Drucker? With his words from the grave magnified … by all of us. And exemplified by putting our words into practice. If people criticize, we have to be bold, like Luther, and say: here I stand, I can do no other, because this is the right way to behave. So don’t ask for leaders. It’s up to us to start small fires in the darkness, until they spread and the whole world is alight with a better vision of what we could do with our businesses. If not us, then who? if not now, then when?

This article was first published on Linkedin.

Photo by: Handy

We must not let the demands of economic man/woman dominate our fuller humanity.  AI must be our servant rather than our master, economics the basis of a good life for all but not its purpose.

In the past century the organisation, the company (literally a gathering of companions) at its best, recognised this.  It offered security and personal development in return for commitment.  My own company, Shell, was paternalistic almost to a fault.  In those days the social contract was clear – companies looked for customers, employed workers to satisfy those customers and thus became customers themselves.  My job, a la Drucker, was to create more customers, subject always to a requirement to earn a given return on capital in order to invest in the company’s future and pay a reasonable rent to the shareholders for the use of their money.

That was then, profit was the result not the purpose.

Agency theory, shareholder value, stock options and bonuses heralded a new world in which workers became costs not assets, whatever was said by their chairmen.  Since then Coase’s idea that firms are needed to keep transaction costs down has been disrupted by technology, leading to the fragmentation of the company, turning it into a network of economic contracts in which individuals are valued only for the added value they contribute. It is, as Rick Wartzman says in his new book, The End of Loyalty, but it is also the end of the company as an alternative home where you could, to a degree, be your full self.

The new and growing world of self-employment, gig work, small enterprises, subcontracting and part-time work suits many.  Some small businesses are like families while many independent professionals and craftspeople  have relished the freedom and survived any economic hazards at the beginning.  Lucky are we whose work is both what we do and who we are. Yet for many others the freedom is illusory, the humanity is absent, the unmet need to belong to something, anything, is painful.  Half of our populations feel they are missing out – hence the populism and the anger.  Those wanting to leave the future in the hands of GAFA (Google, Amazon, Facebook, Apple) and NATU (Netflix, Airbnb, Tesla, Uber) should think again.  These new data-led organizations have many devoted followers but produce little tangible wealth and themselves employ few people.  They cannot be the answer.

So the problems are clear and becoming ever more urgent.  So are some of the questions that need to be answered which include:

Can the new technologies enliven and enrich our humanity, in health, education and better living?

Could organizations deploy the new technologies to structure themselves around more human-scale clusters in which individuals had the space to flourish?

Can we redefine progress, both individually and nationally, to be more than economic?  Will experiences and relationships come to be more valued than riches?  May we finally see the End of Economic Man that Peter Drucker first envisaged in 1939?

Will the social role of business expand to include some responsibility for the education and support for the ‘precariat’ workforce that surrounds them?  If not will governments take it on?

How will we define good work, a good organization and a good life?

Who will lead the way to a new understanding of what it means to be a manager in this new world?  Can the Drucker Forum be one source of the creative imagination that we will need?

About the author:

Charles Handy is a social philosopher and writer. He’s been an oil executive, an economist, and professor at London Business School in his long and distinguished career. His new book is The Second Curve: Thoughts on Reinventing Society. He will make the closing address at this year’s Forum.

intriguing because it suggests that the revolution is as much about issues of morality, identity and meaning as it is about technology and what the new infosphere can do, both for us and to us.

The infosphere is an exciting prospect, one that offers a myriad of new prospects for wealth and work creation, most of them as yet undiscovered.  The alluring idea of better lives for all is not inconceivable.  But there are few unmixed blessings in this world and we need to have a care lest we lose some of the best of ourselves in this new era.  Shakespeare had it right when he had Hamlet extoll our humanity; “what a piece of work is man”.

The new technologies would like to reclassify that piece of work as a bundle of data, be they words, numbers or images.  That way he or she can be more easily managed by the systems of the infosphere.  The computer on the help line may call me by my first name but that is just one more piece of data, not me as I know myself with all my likes, prejudices, fears and hopes. The algorithmic society, with its programmes and routines, will take the stress out of life but also much of its meaning, if we let it.

Consciousness has not been coded, cannot be made into data.  Nor can beauty, truth and goodness; the traditional virtues.  Try to turn them into data and you destroy them.  You know them when you see them but cannot measure them nor define them.  Love and trust, loyalty and judgement, the essentials of all relationships in private life and in organizations are also immune to sensible quantification.  What cannot be measured will then not count, indeed may in time be thought not to exist.  We will be no more than that bundle of data, trundling through life, pushed and pulled this way and that.  Could the algorithmic society reduce us to that?  Yes, if we let it, seduced by its ease.

We are already immersed in many of the programmes of the algorithmic society.  Much of it we never see because it is embedded in the things around us, easing but also controlling our lives. There lies the rub, or one rub.  ‘We are being sedated by software’ said the President of Britain’s Cartographic Society, worried that the young would no longer be able to read a map, relying instead on the GPS and their satnav.  Soon we won’t need to know how to read, cook, drive a car or remember anything – as long as we know our ID and password and even these will be called up by putting your eyeball to a monitor.

Unfortunately not all the data is what it seems to be; facts safely lodged somewhere.  Much of it is evanescent, rainbow like, there for a while then fading away.  When a website is updated what was there before is gone, forever.  Google recommends that we print out any special photographs lest they disappear or we are unable to retrieve them a few years later.  Any secrets on those floppy discs will remain secrets forever once we have lost the means to access them.  We may need our memories after all, and printed documents and real books.

The algorithmic organization, too, is already here, in parts.  In theory, the more work that can be routinized and programmed in advance, the more efficient the organization will be.  But efficiency is not the same as effectiveness.  Doing things well is not the same as doing the right things, as Peter Drucker used to emphasise.  The latter requires judgement, vision and often courage, things that cannot be programmed.  Even the best software cannot deal with the unexpected or the unusual.  We all have experienced the frustration of the computerized help line that has not anticipated our particular problem and sends us round in endless circles searching for an answer.  Efficiency gets rid of choice wherever it can.  Organizations tend to like that.  So, it seems, do we.

Already Amazon and its ilk tell us what we would like to read, wear, eat and watch.  It is all too easy to go along with their suggestions. There was one store that was able to identify from a woman’s shopping basket when she was pregnant and would helpfully send her suggestions for some suitable maternity wear.  That was fine until they sent the suggestions to a teenage girl whose mother was unaware of her pregnancy and not amused.  A world awash with data allows little chance of privacy.  Your mobile phone, even when turned off, can tell others where you are and whom you have been calling or texting.  New television sets can record your conversation and send it away.  Fibre optic cables underground can detect any movements without our knowledge. When all our private habits can be observed, analysed and dissected we will have no secrets, even from ourselves.  Who are we when others know us better than we do?  The ever-present danger is the power that this gives to organizations, including the ones for whom we work.  Is our world going to be out of our control, and who will control the controllers?  That is the challenge faced by those who foresee a so-called singularity when computers start to think for themselves.

So where does this leave us?  Rejoicing in the wonders of the infosphere and exploring its potential, I hope, using it but not enslaved by it, remembering our humanness, our specialness, all that cannot be reduced to data.  We must remain the masters of our creations, not their slaves.

About the author:

Charles Handy is a social philosopher and writer. He’s been an oil executive, an economist, and professor at London Business School in his long and distinguished career. His new book is The Second Curve: Thoughts on Reinventing Society