It may be that we are living a defining moment for the future of capitalism and for humanity. For the last 200 years entrepreneurial prowess enabled by financial capital has powered a long surge of economic growth. Over the major innovation cycles, the capitalist system has been resilient enough to absorb the effects of the crashes caused by pure speculation and turn them to its advantage. Production capital took the lead over financial capital and real value over paper value, as Carolta Perez has so brilliantly demonstrated.

Fast forward to today, and the picture is not so happy. Financial capital is in the driving seat. Eight years on, the world is tentatively emerging from a financial crisis that almost broke the global economy. Even though we are back to a semblance of stability, a range of unresolved issues – sky-high government debt, a still-fragile financial system, stagnant productivity, increasing levels of inequality, latent currency crises, slowing growth in emerging markets, high volatility in stock and commodity markets and geo-political instability and extremism – preclude any easy return to sustained economic growth.

There are certainly many causes for concern. A striking features of today’s fragile world situation is the inability to channel an abundance of cheap financial capital into productive use by companies, economies and states. Some prominent economists predict a new period of secular stagnation as the last great phase of innovation-fuelled growth (as they see it) dries up. With attention fixed on the obsessive search for the next high-tech “unicorn”, vital investment is lacking in “Main Street” companies that could fuel precious growth and employment.

Most large companies seem to have lost the taste for entrepreneurship, their CEOs preferring to focus on using technology to maximize profit from existing businesses. They are too often governed by the interests of shareholders who regard corporations as speculative investment opportunities rather than human communities for which true owners would feel ties of responsibility and commitment. And while capital markets celebrate short-term results over long-term corporate development, governments seem to have only one response to the urgent new challenges of our time: overregulation, resulting in crippling micromanagement and microregulation of domains that are evolving at breakneck speed, frequently aggravating the problems the regulations attempted to resolve. It is questionable, for example, whether many thousands of pages of regulations have enhanced the banks’ ability to carry out their core mission of funding the real economy of goods and services for real human beings.

The entrepreneurial society

Between discredited financial capitalism on one side and ever more burdensome state bureaucracies on the other, can we revive a lost but deeply-rooted human capability – the capability to take ownership of the problems we face, and to accept responsibility for creating our own solutions – that is, create the basis for a properly entrepreneurial society?

Drucker called this a turning point in human history. What we need, he said, was not just an entrepreneurial economy but an “entrepreneurial society in which innovation and entrepreneurship are normal, steady, and continuous”. He saw innovation and entrepreneurship as a life-sustaining activity pervading organizations, the economy and society.

In terms of management, the advent of the entrepreneurial society means above all replacing the rigidities of industrial-age mind-sets, with their command-and-control, top-down orientation. What indications are there that this is happening?

Despite powerful headwinds, green shoots are visible. Agile methods and Scrum are creating space for individuals to self-organize and work in iterative processes; by bringing customer development closer to the marketplace and enabling rapid learning from failure the lean start-up movement has great potential to increase the success rate of new ventures. New business models and value propositions are developed by global teams using web-based tools and communication methods. Design thinking is entering the mainstream as large organizations learn to proceed by prototyping and iteration. Start-up factories, incubation hubs, living laboratories and hotspots for innovation are springing up in cities around the world. Large corporations are devoting serious attention to becoming “ambidextrous”, combining robust exploitation capabilities for existing businesses with new exploration-driven business engines inside and outside their organization. And above all, new generations are legitimizing entrepreneurship and innovation with the enthusiasm and drive of youth.

Managing the transition

Yet start-ups and large corporations can only be part of the story of entrepreneurial reinvention. Making the shift from small to medium-sized business and generating more fast-growing “gazelles” remain major entrepreneurial challenges. Germany has shown the way, its “Mittelstand” encompassing numbers of world leaders or “hidden champions” in highly specialised fields, as demonstrated by Hermann Simon. This entrepreneurial success story has not happened overnight. Many family-owned Mittlestand businesses are exemplars of stewardship in its truest sense, demonstrating long-term commitment to a business and to the employees who are its heart and brain. Are there lessons here for giant corporations and the stock markets they trade on?

While digital technology creates extraordinary opportunities, it also disrupts existing economic, social and physical infrastructures in ways and in time-spans that make the social consequences hard to absorb. Drucker observed long ago that each social problem is a business opportunity in disguise. Social entrepreneurship and social innovation must play their part here. Not all solutions in this field will generate the financial flows to make market-based responses viable. But besides innovative public private partnerships, digital technology could yet enable the emergence of a “sharing economy” for acts of citizenship and mutual support and exchange that is worthy of that name. Together with state agencies combining in a new “Entrepreneurial State”, such institutions may knit together a flexible social web to provide security for the most needy.

The emerging world has embraced the notion that only entrepreneurship can lay the foundations for decent lives and a good society – important, because the challenges are daunting. By 2050 two billion young adults will enter the global workforce. These are the genuine challenges of the world, beside which many of the luxury problems that politicians, trade unions and advocacy groups tussle over in the West pale into insignificance.

For sure, transition into a new settlement that is not yet fully formed is painful and frightening. But it can be shaped by society’s responsible groups, among which management, as Drucker always reminded us, is a leader. Our vision: a new age of innovation and entrepreneurship that brings to bear the energy, the creativity and the “wisdom of the crowds” in a new way – as the practical wisdom of engaged, motivated and ethical individuals; open and critical minds who connect in the real and virtual worlds to understand and solve human problems in novel ways. Entrepreneurship leads us back to the essence of being human – the ability to create something that may not been seen even imagined before. No algorithm can do this. Entrepreneurs, entrepreneurial managers and a new entrepreneurial mind-set may represent our secular opportunity to make the difference between secular stagnation and secular prosperity – as such, a true defining moment for the 21st century.

About the author:

Dr. Richard Straub is founder and president of the Peter Drucker Society Europe and a member of the EFMD Executive Management team.

Over the last 250 years, a series of radical scientific and engineering advances has triggered an accelerating rise in living standards that even the two deadliest wars in history have failed to halt. The digital revolution propelled by Moore’s law is the latest and most far-reaching in this line of transforming “general purpose technologies.” It carries the tantalising promise to augment the power of the human brain in the same way that steam, the internal combustion engine and electricity augmented human brawn.

But as stunning as humankind’s technological achievements have been, they are only half the story. All are part of and embedded in a larger social reality. The advent of the modern organization and the practice of management constitutes a “social technology” that has been equally transformative.

But what happens as we continue down this path? If previous revolutions wrought dramatic changes in the human condition—including urbanisation, mass literacy, large-scale employment and generalised healthcare – exponentially accelerating technology cycles threaten to upend much of the socio-economic infrastructure that has taken root over the past two centuries. Tumbling transaction costs alter the economics of organisation and, at a stroke, invalidate old business models while enabling unimagined newer ones. New giants like Amazon, Google, Apple and Facebook, along with emerging ones such as Uber and Airbnb, are borne by waves of “winner takes all” network effects. These trends will leave no aspect of working and private life unaffected. A foretaste of what is to come is the rapid progress of automation not only in manufacturing and services but also increasingly in knowledge jobs.

Directing the path and force of these revolutions has been management, with its embrace of scientific rationality and engineering prowess, and with key assumptions about the behaviour of economic man and the efficiency of bureaucratic organizations as its hallmarks.

Yet it is clear today that this industrial-age mindset stands in the way of fully realising the promise of the digital revolution. Those modes of thinking have hardened into a straitjacket constraining human energy and creativity in organizations. Meanwhile, “heroic” management actions such as cutting jobs and investment as a response to currency fluctuations and their accounting impact on EPS are applauded by stock markets despite the damage to the longer-term value creating capacity of the enterprise. Too often share buy-backs are preferred to investment in innovation, entrepreneurship and value creation. Internal innovation tends to be obsessively targeted toward cost-cutting instead of finding new ways to delight customers, and enable employees and partners.

This is the end-point of an implacable logic held together by measurement, formulas and algorithms—the 20th century model. There is just one problem: The most important future-oriented indicators have gone missing in action. These would be indicators that gauge the levels of social capital and trust within the organization and of society, and the ability to unleash human creativity and engagement. Objectives such as these are rather afterthoughts for interesting discussions on company programs that may be scrapped if next quarter’s EPS is under threat.

Indeed, here is the great downside of industrial-age philosophy: the downgrading of the human being to a resource that can be sacrificed to short-term interests of shareholders and those who are supposed to exercise the stewardship of what Peter Drucker called the constitutive elements of modern society—our organizations and institutions. Corporations benefit from great privileges conferred on them by society, including their legal status. The reciprocal duty of care to society is therefore not a charitable option but a fundamental obligation of management.

The digital revolution—the “mother of all technology developments”—marks a fork in the road. As the Future of Life Institute starkly sums it up: ‘Technology has given life the opportunity to flourish like never before… or self-destruct’. One way can spring us from the industrial-age management practices and mindsets that currently hold so many companies back. The other reinforces the mechanistic logic of existing organizations by hard-wiring them in ever-accumulating data and software routines.

There are ample signs around us of the limits of rational logic and algorithmic determinism—and always, of the precious, unique capacities of human beings. Howard Gardner has shown that the analytical intelligence is just one in seven. What is most important happens where there is no replicable logic or algorithm. Rather, it occurs where human judgment, intuition, creativity, empathy and values are consciously brought into play. It is the domain of entrepreneurial thinking and innovation, of strategy setting, of collaboration and trust—qualities that cannot be replaced by whatever Singularity-seeking AI-creature the engineers in Silicon Valley might come up with.

Never in human history has there been a better opportunity to create a new world of prosperity for all. As the ultimate general purpose technology that pervades all aspects of life, digital technology has the potential to unleash a “new Golden Age,” in Carlotta Perez’s description—one that could dwarf the achievements of the steam, electrical and fossil fuel revolutions. However, this golden outcome depends on the choices of those called on to allocate resources on behalf of society and the economy. As Drucker put it: “Managers are society’s major leadership group…… They command the resources of society.” Will these leaders choose to put the “creative” back in the process of creative destruction by privileging entrepreneurial investment in customer- and market-creating innovation over short-term profits? Will they use big data, analytics and complexity sciences in ways that leverage rather than replace human judgement and values, taking them as what they are: tools and instruments to help us navigate a complex world?

To do so will require a new synthesis of the prevalent technocratic logic in politics, economics and management with a deep understanding of the human condition—nothing less than a reframing of management along the lines traced by Drucker and others, combining the best of art and science, imagination and logic, in a bold and distinctive liberal art for the 21st century.

It is perhaps ironic that in a moment of technology-driven information and knowledge explosion we should be feeling our way back to something that has been largely forgotten in the frenzy of accelerating change and instant gratification: genuine wisdom. Yet it is such wisdom—which can only come from human beings and not from machines—that we need in order to make the decisions that will create a better future for all.

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Dr. Richard Straub is founder and president of the Peter Drucker Society Europe, a member of the EFMD Executive Management team and the Secretary General of the European Learning Industy Group.

March 24, 2015

Short Bio:

In his 32 years with IBM Dr. Richard Straub has held key international executive functions such as Deputy General Manager for PC Europe and Global Chief Learning Officer. Since . 2006 he has started a new career working with non-profit organizations – as part time executive and as social entrepreneur. He is currently executive committee member at the European Foundation for Management Development (EFMD) and Secretary General of the European Learning Industry Group (ELIG). In addition he retained a strategic advisory role for the IBM Global Education Industry.

As a social entrepreneur he founded in 2008 the Peter Drucker Society of Austria and in 2010 the Peter Drucker Society Europe. He is the president of both. The Peter Drucker Society has as its mission to be a catalyst for the improvement of Management as a vital role in modern society.
As the crystallizing yearly event the Drucker Society organizes the Global Peter Drucker Forum in Vienna — the 6th edition will be held in November 2014.

Technology Centric World View

When it comes to the discussion of our digital future the world-view of the European Commission is too much centred on technology and does not take sufficiently into account the human factor. Europe could differentiate itself in the international debate and in the strategies it develops by linking to the European humanistic tradition. In the face of exponential digital technologies the human factor is fundamental: the ability of human beings using these technologies to make informed choices and judgements, avoiding to follow blindly recommendations coming from analytics tools based on big data. Applying common sense and cross-discipline knowledge will be vital. Hence, liberal arts education will be more important than ever and Europe has a great tradition and strength in this field. This does not discount the fact that e-skills and STEM education will be of extreme importance. But the point is that we need more than highly specialized technocrats, namely accomplished and better educated human beings who can see the broader context, if we want to apply these technologies in an informed and responsible way.

Mass collaboration

Mass collaboration seems to be a bit of a fashionable term these days. Effective collaboration needs a small and committed core team. Real collaboration does not happen on a massive scale. This has always been the case and will not change. What is changing is the ability to access experts and knowledge outside the core team in real time. This can increase the effectiveness of the team and should result in better outcomes. Open platforms, social media and collaboration tools can be perfect levers to enhance the team performance. Yet we should not underestimate the importance of physical proximity to achieve breakthrough results in the field of innovation and entrepreneurship including in the social sphere.  There are good reasons why it is physical places where collaborative ecosystems for innovation thrive; think of  Silicon Valley or Haifa.

Black Swans in the making

Peter Drucker has often remarked that we cannot predict the future, but we can see the future that has already arrived – if we try hard and step out of our preconceived notions of what we believe it should be. There is increasing evidence that the open internet shows tendencies to disintegrate into smaller entities – at a geographic level and in terms of the deeper layers it comprises. Autocratic regimes have the tendency to control the content that citizen can access, and recently even democratic nations such as Brazil, Germany and France discuss the building of their own protected space. They have been scared by the Snowden revelations and by the collusion between large social media players and the US Government to provide access to personal user data.  If these trends persist, the days of the global, open and free internet may be counted. If we take this scenario into account it is also clear that we must think through as to what the consequences would be and how they can be managed. There is also a question of whether the open internet can be saved by establishing some regulation and moving beyond the open jungle paradigm. We have learned over long periods that defending free markets does not mean no framework and no regulation. The same should be true for the Internet.

The web-layers under the surface web (the latter is the virtual space that we know) should also be evaluated. The dark web and deep web (however we may call these layers) seem to be much larger than the surface web and has become the place for unbridled criminal and terrorist “collaboration”. See recent NZZ Article about the “End of the Internet” http://www.nzz.ch/nzzas/nzz-am-sonntag/das-ende-des-internets-1.18239023.

Use of personal data that are under control of a few dominating US based players becomes an issue for 21st century Democracy

This point is related to the previous as it may drive the need for state-controlled internets. A new type of market dominance has emerged during the last 10 years or so, i.e. market dominance in ownership and control over personal data of hundred millions of users. These data represent an inestimable value for media and advertising. Market dominance in this field has a different connotation than market dominance in traditional industries. This type of markets are not being covered by the existing antitrust laws and competition rules , and the current data and privacy protection laws seem to be totally inefficient to deal with these new phenomena.

However, due to the winner-takes-it-all situations, the market and the personal data which are held by social media players are concentrated in a few big server farms and they are being used in ways that are not transparent to the users. The recent publications about the new algorithmic prisons and the profiling that already happens in the US at a large scale give an avant-gout of what is in store – see the excellent article by Bill Davidow on the Atlantic blog http://www.theatlantic.com/technology/archive/2014/02/welcome-to-algorithmic-prison/283985/

Traditional policy generating approaches seem to be far too slow – hence the internet age will require a transformation of how policies are being built to protect individuals and to re-establish transparency.

The huge opportunity for the future – leveraging digital technology to make Europe a leading entrepreneurial region in the world and to create meaningful work for the young generation

While the first and second industrial revolutions levelled off after an initial steep increase in growth, the digital technology revolution is on an exponential development since the invention of the microprocessor. There has been no precedent in history for this type of continued exponential increase in technology performance. Hence, automation is progressing in all sectors of society. The world runs increasingly on SW. A new generation of robots will eliminate even more factory and services jobs.

In the social sphere a shift from an employee society towards an entrepreneurial society is in the making (another example for the future that has already arrived but is not seen by most). This development has huge policy implications for the European Union. The entrepreneurial society does not replace the employee society but it complements and extends it. It can be taken for granted that traditional employment contracts will not take the place in the future that they had in the last century. Since there will be less full time jobs offered by existing organizations the new challenge will be to create one’s own job. Self-employment, portfolio work (as coined by Charles Handy some 30 years ago) and entrepreneurship is becoming the new normal.

Our western societies are full of barriers for those who want to create their own work portfolio or enterprise. Everything seems to be geared toward traditional employment. We are far from the empowered individual as touted by so many policy papers. However, there are huge new opportunities provided by digital technology to accelerate this move towards an entrepreneurial society as an answer to the structural issues for traditional employment. Capacity building for the entrepreneurial society should  be enabled and enhanced by MOOCs, social media (communities), new funding schemes (e.g. Crowd-sourcing), new open innovation methods (living labs, co-creation platforms) etc. Innovation and entrepreneurial ecosystems can be built more effectively with support of digital technology.

Many large organizations and institutions have developed Kafkaesque characteristics during the last 30-40 years. Employees increasingly feel to be held in straight jackets under high pressure for short-term results. Hence many large organizations have become worse during the past decades as to leveraging the motivation, creativity and innovativeness of their employees. Engagement levels are at a historic low (see the recent Gallup survey http://www.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx).

Yet, if an increasing number of knowledge workers (or rather knowledge-entrepreneurs) will operate outside these constraining settings as a self-employed workforce their capability to use and develop their knowledge capital and their own creative potential will inevitably grow. This might become a Black Swan in the positive sense i.e. increasing the creative potential in modern societies by magnitudes. However, in order to make this happen it needs to become a central policy focus – not an addendum to all measures that are based on conventional wisdom. It requires a fundamental reorientation of policies. It means brushing aside the numerous obstacles that hold back the entrepreneurial dynamics in Europe by penalizing self-employed and entrepreneurial activities, be it on the tax and social security side, be it with financing and support for R&D, be it by an education system that does not value sufficiently the managerial and entrepreneurial roles as key pillars of our society. Policy makers are called upon to move from administrators and regulators (focussing on limiting and constraining economic activities) to enablers and innovators, who understand the wider context and who venture into new territories to create adequate policies to accompany major social trends.

Dr. Richard Straub

President Peter Drucker Society Europe

http://www.druckerforum.org/

Twitter

@GDruckerForum

@rstraub46

February 25, 2013

The agency theory (as conceived by Jensen and Mecking) that spawned the shareholder value model conveys the illusion of a scientific type of approach; it provides a fact based analytical model to make rational investment decisions into corporations with clear indicators providing the basis for current and future performance assessment. It has a built-in logic that seems compelling to the financial services community and to the investors. As Roger Martin would call it: it has progressed from a heuristics approach to an algorithm based model. However, it has become increasingly clear that the approach that has exclusively financial indicators at its core is only reflecting a fraction of the corporate reality. In reality there are multiple factors beyond financial indicators that determine the long term survival and success of corporations. What is worse – the prevailing shareholder value theory had major unintended consequences i.e. a corrupting effect on Boards and their management with obscene and self-serving remuneration schemes. It led into behaviours that are clearly conflicting with the long term prosperity of the enterprise.

Bemoaning the shareholder value philosophy is legitimate but by no means sufficient. We need a similar unifying intellectual foundation like the one that was produced by Jensen and Meckling in their article The Theory of the Firm: Managerial Behavior, Agency Cost and Ownership Structure. The alternatives that have been bee broadly discussed during the past years appeal to the ethical standards and good intentions of business leaders but have no convincing model which the asset management and investment community might embrace at a large scale – such as the HBR article on Shared Value by Porter and Kramer which is a laudable effort but falls short of providing a compelling model that has a chance to replace the current paradigm. The same is true for the Triple Bottom Line approach – there is no doubt which bottom line gets priority when push comes to shove.

Sumantra Goshal has been working on a landmark article but sadly passed away before he had finished it. It has been finalized by others and published but it is unfortunate that he could not put the final touches and additional thoughts he may have had on his mind into his article Bad Management Theories Are Destroying Good Management Practices. Interestingly though, Michael C. Jensen, one of the authors of the article that changed world of business since 1976 (see above) has published an academic paper in 2001, which regrettably is much less cited that the now infamous Theory of the Firm paper. It is remarkable though that Meckling calls in it for an “enlightened value maximization that would utilize much of stakeholder theory, but accepts maximization of the long run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders (cited from Paul Bernett, Four Ways to Save Capitalism). Maybe this is something to revisit by the research community of Business Schools and by those Economists with a keen interest in what is actually happing in real life, ready to move beyond abstract concepts, formula and aggregates.

On the other hand the sustainability movement has been too much focussing on the pure environmental perspective, which obviously represents key framework conditions for senior management but cannot be seen as a primary purpose of the business. From the Druckerian perspective the creation of a sustainable business based on value creation and the focus on human capital clearly comes first.

There is urgency for a cross-discipline approach as the current situation reflects a resounding failure of management and economic research to deal with the most burning issues of our time and to present viable solutions. What is needed is systemic perspective, not just soliciting and urging the mangers and executives to do good, but finding way of a profound dialogue with investors, asset managers, the financial services community and policy makers. Mangers are in way at the bottom of a chain of command and influence – they cannot implement fundamental changes without the endorsement of their boards and investors.

Hence there is more to do that pointing to corporate management as the culprits of the current unsatisfactory situation. Top economists and top management thinkers should stick their heads together and come up with another grand theory – this time hopefully one that contributes to a paradigm shift that demonstrates the economic benefits of a longer term perspective as a compelling case that even the number crunchers cannot ignore. Such a longer term perspective should create positive outcomes in the fields of investment, innovation and talent development. It should change the behaviour of investors who would take on more of a stewardship role comparable to “real” owners for the business as opposed to placing short term financial bets with strong speculative traits and with little consideration of the long term viability of the business. We have reached a tipping point where we cannot avoid thinking hard about the future. Enlightened self-interest means that businesses assume their role of being the engines of innovation, growth and prosperity. They are at the core of value creation that ultimately provides the glue for functioning societies.

Vienna and Paris, February 7

Note: Moving beyond excessive short-termism will be a theme at the 2014 Global Peter Drucker Forum on Novemer 13 and 14 in Vienna. See http://www.druckerforum.org/

It is with quite some emotion that I am addressing you – almost by the day 5 years ago we began something which we hoped would become a journey – exactly in this place. Today I can confirm that the Global Peter Drucker Forum has become a centre of gravity and a recognized platform to bring together the greatest management thinkers and practitioners to exchange their thoughts and to provide their input for shaping the future. In today’s complex and unpredictable world the importance of how we take decisions, how we make the right strategic choices, how we shape organizations to achieve desired results, how we manage and mitigate risks has become more important than ever. Peter Drucker has shown the utmost importance of sound management of the institutions of our society be it economic or non- economic in his first important work The End of Economic Man and The Future of Industrial Man. Peter Drucker came to the conclusion that the very survival of society depends on the performance, the competence, the earnestness and the values of their mangers.

During the last years bad management and flawed or rather no values have almost precipitated us into a global catastrophe of unseen dimensions. Today we seem to have forgotten how fragile our situation has become. The party seems to go on – and greed and self-serving behaviours are still dominating big business and politics. Inequalities in our societies are growing. Youth unemployment in Europe has reached a peak.  Not a good basis for creating a functioning society as Peter Drucker called it.

Despite some gloomy thoughts that anybody might easily get when looking at today’s situation there are bright spots – that give reasons for hope. Most importantly they lie in the younger generations who take a different look at the world as they yearn for meaning and purpose. To spend ones life with the sole objective to make a lot of money may not considered enough by coming generations. We are happy to have a significant group of the new generations joining – more than 30 winners of the Drucker challenge contest. The new generation will have it in their hands to shape the future. However, as Einstein put it: “We can’t solve problems by using the same kind of thinking we used when we created them. This is the challenge for the new generations. We had a purpose when we positioned the thme for the Drucker Challenge contest at the intersection of business, science and the arts.

Ladies and Gentlemen, in the coming two days we would like to take you on a journey that should contribute to better equip you to cope with the new challenges and to help to find your answers. I emphasize YOUR answers – because there are no ready-made recipes. When Drucker asked after a day of intensive discussion in a consultation mode with senior executives: tell me what you will do differently next Monday, he did not mean that he had given them any recipe to change things on Monday, but he meant that he had given them insights and clues to think through from a new perspective the problems and issues they are facing. Don’t expect ready made answers; rather expect input to ask better questions.

The Drucker Forum has now reached the point where we seem to be increasingly heard and perceived as a force contributing to shape the future of management. But we would not have got there if we had not the support of great partners and sponsors. We are a non-profit organization but as Drucker already has pointed out – even as such we need a business model to fund our activities and to invest into the future. We are grateful and thank them. However, I may say that our sponsors receive value for their sponsorship from us as well as we gain global recognition.

Lastly, we would not be here today wouldn’t we have had the unconditional support from the the Drucker Institute in Claremont and the Drucker Family. The Drucker Institute – here represented by its executive director Rick Wartzman – provided us with the opportunity to organize this annual Forum as the Global Peter Drucker Forum – there is no other Forum who has authority to do this. However, most gratifying for us is to have received the endorsement and trust of the Drucker Family – first and formost from Doris Drucker who turned 102 years in June.

With this I wish us all a successful and beneficial Forum where I hope you can draw value for the future for your role as a manager, an entrepreneur. an executive and as a human being. Thank you.

 
What started as a small creek, invisible to most has become a powerful torrent. This is not just wishful thinking  –  the 2012 IBM CEO survey conducted with more than 1 700 business leaders in 64 countries contains compelling evidence: only 4 percent of the CEO  plan to do everything in-house. Two thirds of the CEOs plan to partner extensively. More than half of them are making substantive changes to enable their organizations to work with external collaborators. In the field of business model innovation it is particularly apparent that outper-forming companies are those who embrace partnering and open innovation approaches.

 
Hence open innovation with co-creation is imposing itself as much more than just another management tool. Maybe it is an element of a paradigm change  with profound implications for company organisations and their culture. Open, collaborative innovation and co-creation does not come easy  –  it requires overcoming old engrained mind-sets and attitudes. This is also why CEOs are seeking collaboration as the number one trait in their employee as a critical element of creating a more open and collaborative culture. The fundamental shift that needs to occur is also well expressed by Venkat Ramaswami and Francis Gouillart, authors of  The Power of Co-Creation  when they say: Ultimately, co-creation is about putting the human experience at the centre of the enterprise’s design. The time has come for a democratic approach, in which individuals are invited to influence the future of enterprises in partnership with management…

 
Yet, much work needs to be done to better understand the “how”. This is where policy makers have a key role to play, by allocating resources not only to traditional R&D but to the exploration and enhancement of new value creation approaches. This should happen in the Knowledge Triangle –  Education, Research and Business must co-create it. Ultimately it will be a prepare the ground to accelerate innovation and to drive growth and jobs in Europe.

 
Richard Straub is President of the Peter Drucker Society Europe and Vice Chair of the Open Innovation Strategy and Policy Group. A European Union initiated Conference “Open Innovation 2.0” will further explore the potential of this powerful approach to Innovation.

 
When Peter Drucker uttered these words to a group of IBM executives, new complexities were tripping up the world. It was 1955.

 
In the more than half a century since, of course, the level of complexity has only increased across all of our institutions – political, economic and social. Indeed, as we move further into the 21st century, the complexity curve seems to be growing exponentially. The notion of achieving neatly laid-out objectives through systematic planning has become increasingly questionable. More and more, managers feel overwhelmed by the speed of change and the degree of uncertainty in their environment.

 
All of this makes the theme for the fifth annual Global Peter Drucker Forum – set to be held in Vienna on November 14 and 15, 2013–particular timely. This year, we will gather under the banner “Managing Complexity.”

 
Trying to master complexity is – well, quite complex. While the interconnectedness of the world brings about tremendous benefits such as ubiquitous access to knowledge and borderless communication, it also generates unprecedented risks. Complex global systems – financial markets, energy grids, supply chains that span continents-are by their nature fragile. And thus management failures can have catastrophic consequences, as we have repeatedly witnessed during the past decade.

 
“In any system as complex as the economy of a developed country,” Drucker warned in The New Realities, “the statistically insignificant events, the events at the margin, are likely to be the decisive events. . . By definition they can be neither anticipated nor prevented. They cannot always be identified even after they have had their impact.”

 
Yet most managers still seem to be anchored in command-and-control and cause-and-effect thinking patterns. Organizations continue to be understood as machines (complicated but predictable) rather than as organisms (highly complex, adaptive systems with limited predictability). Meanwhile, linear approaches to problem solving often have the opposite effect of what is intended.

 
How should managers cope with an increasingly complex environment? What does complexity mean for management practice in the 21st century?

 
Do we have to adjust our current management approaches or are we talking about something bigger – that is, fundamental changes or even a new paradigm?

 
What can managers learn from complexity sciences without falling into simplistic analogies between natural systems and social systems? Can we calculate our way out of complexity?

 
What are good practices pointing in the direction of new, more adequate management methods and tools? Are approaches such as design thinking, Agile Software Development and “Antifragility” some of the keys to a better future?

 
What are the consequences of complexity for the management of risks in business and society? Can we simplify complexity as many of us would wish?

 
Since analytic methods alone cannot provide the answers to complex, human systems, what can we learn from the arts and humanities?

 
As we begin to gear up for this year’s Drucker Forum, you are invited to provide your perspectives on these or other questions related to complexity. (They will be published on this blog after review by a small editorial team.) Please join the conversation either by commenting or by sending proposed blog posts to the following address contact[at]druckersociety.eu.