Where is management heading? Reflections from the Global Drucker Forum 2014.
by Xavier Marcet

The Global Drucker Forum of Vienna has become a major international convention for management and covers some of the main references of global management meetings. Held in memory of Peter Drucker it pays tribute to his inspiration. The alliance of the Forum with the Harvard Business Review guarantees global impact. Also, there was presence of prominent personalities from The Financial Times, The Economist and the BBC. Drucker defined modern management from a very humanistic perspective which continues to inspire the event in an extraordinary way, bringing together the best in the world to discuss the future of management with the ability to make changes. These notes on the contents of the Global Drucker Forum were drafted with the help of the final “remarks” by Rick Wartzman, director of the Drucker Institute and of Richard Straub, the President of the European Peter Drucker Society, the body, soul and main force behind the Forum. These are the seven highlights that I took away.

 

1. Creating value beyond short-termism. The challenge for companies is to create value from innovation beyond short-termism. As wisely said by Clayton Christensen, to bet on innovations that create markets you can see a return in five to ten years, but when betting on efficiency innovations, you can see a return within months. But what generates wealth is innovation that creates markets and jobs, whereas innovation efficiency often entails major social complications and a loss of jobs. The first and most difficult thing for managers to bet on is long-term innovations (that, according to Drucker, is not simply the sum of short terms, said Rick Wartzman) that create strategic value, the second is to do nothing, and the third and easier option, is to go for short-termism. In this framework there were key issues taken on board by Roger Martin on democratic capitalism and social inequalities. Martin said that so far the company has benefited more by trading with those who create value. The reflection on how to create value for the company and for society in a world marked by innovation is fundamental.

 

2. Kill bureaucracy. The second major highlight of the conference was about the nature of organizations today. Here, Gary Hamel was emphatic and forceful. Current bureaucracies are not able to achieve “change as fast as change itself”, which is vital to remain creatively competitive in the economy. Hamel’s hope is that senior managers encourage a shift to distributed leadership in the company but he was very pessimistic, (rather than manage without managers, we need everyone to be manager, with a clear nod to holacracy). Hamel’s evaluation is that the leadership of by? a few is overrated and that the real disaster is that committed employees are a tiny minority, (13% on average in USA, a major catastrophe!), food for thought. Management, which was born 150 years ago, complains that this is a radical update.

 

3. Unleash the full potential of individuals, (which I wrote about recently) the contributions of Dov Seidman and Herminia Ibarra were very interesting. Overall, Wartzman argued that there was a consensus that little thought is paid to people who were in organizations and that the effort to keep them committed was essential, but especially for innovation and change. With a 64% average in USA of employees who are slightly committed to their businesses and 23% actively uncommitted, there is much to improve. Here the changes in the style of inspirational leadership (which converts threats to opportunities and helps each person better themselves said Vineet Nayar) gives purpose to companies that think beyond profit and become the key to change. We need to unlock the potential of people that go far beyond sophisticated machines (“Machines can do the next thing right, but it takes a human to do the next right thing” said Seidman). First people in a company were asked for their hands, then they were asked for their brains, it’s time to ask for their hearts and this would change everything, insisted Seidman. Management requires a “human-centric paradigm” argues Straub.

 

4. The Tsunami of innovation. With this qualifying term Richard Straub presented his opening speech of the Forum. And innovation was constantly present in the event. Especially important was the contribution from Rita Gunther McGrath. She warned that innovation can not be episodic in companies and stated that the problem is not having ideas, the problem is how to develop them and how to speed them up. For this we need real entrepreneurs upfront in companies (and not bureaucrats, says Hamel, or financial engineers, says Straub!). Flexibility was also a fundamental factor, doing things faster than others provides significant opportunities and advantages remarked McGrath.

 

Innovation in the creative economy is central, no one disputes that. Denning, always masterful in his columns in Forbes and in his final narration of the Forum, reminded us that for the established creative economy, what matters is not the Internet (which is not the answer but that has overrun everything); the answer is how to radically transform businesses in innovation factories and how they can completely satisfy their customers.

 

5. The future is social, not created, it is co-created. Ahead of his time, Alfons Cornella says this future has been on our doorstep for years. The contribution by Merchant in this sense was interesting based on his own experience of being introduced into the market with products worth US $18 billion. Equally interesting was the insistence on the need to systematize both unlearning and learning itself, in reference to the use of consumers and the general practices of management.

 

 

6. Management is managing complexity. We are already living in complexity and besides that, Big Data has arrived! The Drucker Forum conference, 2013 was devoted to managing complexity and this approach has been present in many of the speakers. The combination of rising inequality (Martin), the victory of capital over labor, the absolute overflow of information, the outbreak of multiple traditional business models, the impossibility of continuing in the bureaucratic and hierarchical management model which does not involve people, the need for innovation as a major lever for new values, all this requires new practices, new tools and above all, great skill in synthesis. Currently, there is complexity without strong synthesis, there is no strategy, there is only paralysis by analysis.

 

7. Business as an ethical journey. Drucker said ” a healthy business cannot exist in a sick society.” The relationship between business and society becomes a central issue. No longer is it the social responsibility of the willful, nor is it just the “Shared Value” (which the Forum was dedicated to two years ago) it is all about social innovation. It is about companies that know by creating long-term value as a way of being in society and that while driving their businesses, they can solve major societal challenges. Business with purpose and authentic social commitment. Economic results and social results. This challenge forms the main part of the great transformation that the Drucker Forum has focused on.

 

When it is over, the only important thing is the big question asked by Drucker, “what do we do with all of this on Monday?”

 

Xavier Marcet, founder and President of the Barcelona Drucker Society

 

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A blog following the Global Peter Drucker Forum 2014. An opportunity to share experiences and learn from one another in the context of The Great Transformation.