unimagined futures

Developing a work approach that is adequate to the challenges ahead
a world moving toward new and different futureS

Management

This is a working draft. It is also an attention directing tool.

This topic will bubble to the top of my to do list following my conceptual resource wip

Management and Economic Development: "Management creates economic and social development. Economic and social development is the result of management. It can be said, without too much oversimplification, that there are no "underdeveloped countries." There are only "undermanaged" ones.

This means that management is the prime mover and that development is a consequence. All our experience in economic development proves this. Wherever we have only capital, we have not achieved development. In the few cases where we have been able to generate management energies, we have generated rapid development. Development, in other words, is a matter of human energies rather than of economic wealth. And the generation and direction of human energies is the task of management." Feb 20 The Daily Drucker

Management is a (the) most special word—a most special positive concept. In essence it is not a bunch of techniques, tips, or tricks layered on current organizations.

Does the idea of bad management decisions make sense? How could it be management and be bad?

Does the assertion that someone managed to bankrupt an organization seem right? What could we call the steering mechanism that led to the bankruptcy?

We can think of management, mis-management, and non-management. The term mis-management is still troubling. Maybe it should be replaced with organizational suicide or severe injury. What about all the people claiming to be management consultants and pushing management fads?

Background: The organizational experience that exists in society (starting around the late 1800s) is predominately "product" or "service driven"—inside-out thinking. Somebody has an idea that they sell—hard. The attempt is to convince the outside world that their lives are going to be better from this product or service. (A one point in our not too distant history this was selling into a vacuum which has subsequently been filled—actually overfilled). Improvements in this idea may be attempted. Competition sets in. There's a shake-out. Facilities are closed. Jobs and money are lost. At some point the product or service becomes obsolete. During these phases the "do more, better" mentality may set in.

When this product/service approach is examined at a point in time—1920, 1950, etc.—the vulnerability of product/service driven organizations is obvious. Do we consumers really want to trade our lives for just a better version of yesterday's product's and services. In all this where is the outside-in thinking?

All of these inside-out organizations have people with the title of manager, but having a title doesn't make one a manager. Also being a most excellent manager at one point in time doesn't necessarily make one a manager forever—it constantly has to be re-earned.

Many people will point to financial results as proof of management performance. However examining the current track record of a 1960s, 1970s, or 1980s list of organizations with great track records reveals the flaw in the financial results reasoning.

Many people think management is primarily about controlling subordinates in a "business." Examining the table of contents of Peter Drucker's Management: Tasks, Responsibilities, Practices reveals a much broader scope. It would be possible to calculate a ratio of any specific topic to the total management radar scope. The previous link refers to the 1975 version. An updated scope could be developed by exploring subsequent writings.

Many people have the notion that overall performance is the sum of the performances of the parts of an organization. Does a group of excellent performing musicians equal an orchestra with a reputation for excellence? What if few people want to hear this orchestra or what they play?

With this background I hope I've created the willingness to take a fresh look at the idea of management.

The following quotes can be found in Management, Revised Edition and Post-Capitalist Society by Peter Drucker

Rarely in human history has any institution emerged as quickly as management or had as great an impact so fast. In less than 150 years, management has transformed the social and economic fabric of the world's developed countries. It has created a global economy and set new rules for countries that would participate in that economy as equals. And it has itself been transformed. Few executives are aware of the tremendous impact management has had. Indeed, a good many are like M. Jourdain, the character in Le Bourgeois Gentilhomme, the Molière play, who did not know that he spoke prose. They barely realize that they practice—or mispractice—management. As a result, they are ill-prepared for the tremendous challenges that now confront them. The truly important problems managers face do not come from technology or politics. They do not originate outside management and enterprise. They are problems caused by the very success of management itself.

To be sure, the fundamental task of management remains the same: to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change. But the very meaning of this task has changed, if only because the performance of management has converted the workforce from one composed largely of unskilled laborers to one of highly educated knowledge workers.

Management And Entrepreneurship

One important advance in the discipline and in the practice of management is that both now embrace entrepreneurship and innovation. A sham fight these days pits "management" against "entrepreneurship" as adversaries, if not as mutually exclusive. That's like saying that the fingering hand and the bow hand of the violinist are "adversaries" or "mutually exclusive." Both are always needed and at the same time. And both have to be coordinated and work together. Any existing organization, whether a business, a church, a labor union, or a hospital, goes down fast if it does not innovate. Conversely, any new organization, whether a business, a church, a labor union, or a hospital, collapses if it does not manage. Not to innovate is the single largest reason for the decline of existing organizations. Not to know how to manage is the single largest reason for the failure of new ventures. See Innovation and Entrepreneurship (the book) and Entrepreneurs and Innovation (the article).

Management As The Agent Of Transformation

On the threshold of World War I, a few thinkers were just becoming aware of management's existence. But few people, even in the most advanced countries, had anything to do with "management." Now the largest single group in the labor force, more than one-third of the total, are people whom the U.S. Bureau of the Census calls "managerial and professional." Management has been the main agent of this transformation.

Management explains why, for the first time in human history, we can employ large numbers of knowledgeable, skilled people in productive work. No earlier society could do this. Indeed, no earlier society could support more than a handful of such people. Until quite recently, no one knew how to put people with different skills and knowledge together to achieve common goals.

Eighteenth-century China was the envy of contemporary Western intellectuals because it supplied more jobs for educated people than did all of Europe—some 20,000 per year. Today the United States, with about the same population China then had, graduates more than one million college students a year, few of whom have the slightest difficulty finding well-paid employment. Management enables us to employ them.

Knowledge, especially advanced knowledge, is always specialized. By itself it produces nothing. Yet a modern business, and not only the largest ones, may employ up to 10,000 highly knowledgeable people who represent up to sixty different knowledge areas. Engineers of all sorts, designers, marketing experts, economists, statisticians, psychologists, planners, accountants, human resources people—all working together in a joint venture. None would be effective without the managed enterprise.

There is no point in asking which came first: the educational explosion of the last hundred years or the management that put this knowledge to productive use. Modern management and modern enterprise could not exist without the knowledge base that developed societies have built. But equally it is management, and management alone, that makes effective all this knowledge and these knowledgeable people. The emergence of management has converted knowledge from social ornament and luxury into the true capital of any economy.

The Management Revolution from Post-Capitalist Society

Supplying knowledge to find out how existing knowledge can best be applied to produce results is, in effect, what we mean by management. But knowledge is now also being applied systematically and purposefully to define what new knowledge is needed, whether it is feasible, and what has to be done to make knowledge effective. It is being applied, in other words, to systematic innovation.

Most people when they hear the word "management" still hear "business management."

But we soon learned that management is needed in all modern organizations. In fact, we soon learned that it is needed even more in organizations that are not businesses, whether not-for-profit but non-governmental organizations (what in this book I propose we call the "social sector") or government agencies.

These organizations need management the most precisely because they lack the discipline of the "bottom line" under which business operates. That management is not confined to business was recognized first in the United States. But it is now becoming accepted in every developed country.

We now know that management is a generic function of all organizations, whatever their specific mission. It is the generic organ of the knowledge society.

Management has been around for a very long time. I am often asked whom I consider the best or the greatest executive. My answer is always: "The man who conceived, designed, and built the first Egyptian Pyramid more than four thousand years ago—and it still stands." But management as a specific kind of work was not seen until after World War I—and then by just a handful of people. Management as a discipline only emerged after World War II. As late as 1950, when the World Bank began to lend money for economic development, the word "management" was not even in its vocabulary.

With this powerful expansion of management came a growing understanding of what management really means. When I first began to study management, during and immediately after World War II, a manager was defined as "someone who is responsible for the work of subordinates." A manager in other words was a "boss," and management was rank and power. This is probably still the definition a good many people have in mind when they speak of "managers" and "management."

But by the early 1950s, the definition of a manager had already changed to one who "is responsible for the performance of people." Today, we know that that is also too narrow a definition. The right definition of a manager is one who "is responsible for the application and performance of knowledge."

This change means that we now see knowledge as the essential resource. Land, labor, and capital are important chiefly as restraints. Without them, even knowledge cannot produce; with out them, even management cannot perform. But where there is effective management, that is, application of knowledge to knowledge, we can always obtain the other resources.

That knowledge has become the resource, rather than a resource, is what makes our society "post-capitalist." This fact changes—fundamentally—the structure of society. It creates new social and economic dynamics. It creates new politics.

Organization As A Distinct Species

As I said earlier, most people—and practically everybody outside the United States—still think of "business management" when they hear "management," and do not yet realize that management is a generic function pertaining to all organizations alike. (As pointed out in my Managing the Non-Profit Organization (1990), a good many people in the nonprofit sector still see churches as churches, hospitals as hospitals, community services as community services, rather than realizing that they all belong to the same family, the non-profits, and the same species, the organization.) Only the emergence of management since World War II has made us perceive that organization is something distinct and discrete. It is neither "community" nor "society" nor "class" nor "family," the modern integrators which social scientists understand; But it is also not "clan" or "tribe" or "kinship group," nor any of the other integrators of traditional society known and studied by anthropologists, ethnographers, and sociologists. Organization is something new and distinct. But what is it? See chapter 2, "The Society of Organizations" in Post-Capitalist Society.

Organization As A Destabilizer

One implication: every organization of today has to build into its very structure the management of change.

It has to build in organized abandonment of everything it does. It has to learn to ask every few years of every process, every product, every procedure, every policy: "If we did not do this already, would we go into it now, knowing what we now know?" And if the answer is no, the organization has to ask: "And what do we do now?" It has to do something, not just make another study. Increasingly, organizations will have to plan abandonment rather than try to prolong the life of a successful policy, practice, or product—something which so far only a few large Japanese companies have faced up to. (On this, see Chapter 24, "The New Japanese Business Strategies," in Managing for the Future (1992).

But the ability to create the new also has to be built into the organization. Specifically, each organization has to build into its very fabric three systematic practices. First, each organization requires continuing improvement of everything it does—the process the Japanese call Kaizen. Every artist throughout history has practiced Kaizen, that is, organized, continuous self-improvement. But only the Japanese so far (perhaps because of their Zen tradition) have embodied it in the daily life and work of their business organizations—although not yet into their singularly change-resistant universities. The aim of Kaizen is to improve each product or service so that it becomes a truly different product or service in two or three years' time.

Every organization will secondly have to learn to exploit, that is, to develop new applications from its own successes. Again, Japanese businesses have done the best job in this so far, as witness the way in which the Japanese consumer electronics manufacturer has developed one new product after the other out of the same American invention, the tape recorder. But building on their successes is also one of the strengths of the American "pastoral" churches, whose fast growth is beginning to offset the steady decline of both the traditional "Social Christianity" and the traditional fundamentalist churches.

Every organization, third, will have to learn how to innovate and to learn that innovation can and should be organized as a systematic process. See Innovation and Entrepreneurship (the book)

Then of course one comes back to abandonment and the whole process starts all over again.

Unless these tasks are systematically carried out, the knowledge-based, post-capitalist organization will very soon find itself obsolescent. It soon will lose performance capacity, and with it the ability to attract and to hold the knowledge specialists on whom it depends.

There is a further implication: post-capitalist society has to be decentralized. Its organizations must be able to make fast decisions, based on closeness to performance, closeness to the market, closeness to technology, closeness to the changes in society, environment, and demographics, all of which must be seen and utilized as opportunities for innovation.

Organizations in the post-capitalist society thus constantly upset, disorganize, and destabilize the community. They must change the demand for skills and knowledges. Just when every technical university is geared up to teach physics, geneticists are what we need. Just when the banks have organized credit analysis, they need investment people. Companies on which local communities depend for employment close their factories, or replace grizzled model makers who have spent years learning their craft with twenty-five-year-old "whiz kids" who know computer simulation. Hospitals move the delivery of babies into a freestanding "birthing center" when the knowledge base and technology of obstetrics change. We must be ready to close down a hospital completely when changes in medical practice and technology make a center with fewer than two hundred beds uneconomical and incapable of giving first-rate care. Similarly, for the school or the college to discharge its social function, we must be able to close down a school or a college—no matter how deeply rooted in the local community and how much loved by it—if changes in demographics, technology, or knowledge make a different size or a different philosophy a prerequisite of good performance.

But every one of such changes upsets the community, disrupts it, deprives it of continuity. Every one is perceived as "unfair." Every one destabilizes.

Modern organization creates yet another tension for the community. It has to operate in a community. Its members live in that community, speak its language, send their children to its schools, vote in it, pay taxes to it. They have to feel at home in it—their results are in the community. Yet the organization cannot submerge itself in the community or subordinate itself to that community. Its "culture" has to transcend community.

What Is Management?

But what is management? Is it a bag of techniques and tricks? A bundle of analytical tools like those taught in business schools? These are important, to be sure, just as a thermometer and anatomy are important to the physician. But the evolution and history of management—its successes as well as its problems—teach that management is, above all else, a very few, essential principles. To be specific: see chapter 2 of Management, Revised Edition by Peter Drucker … To have a solid fundamental foundation for making future directed organizational decisions one should digest the material starting with Peter Drucker's Legacy by Jim Collins (Good to Great) (at the very beginning of the book) through the end of chapter seven in Management, Revised Edition. Knowledge workers need to digest the chapters in Part X.

Knowledge Work As A System

Productivity of the knowledge worker will almost always require that the work itself be restructured and be made part of a system.

One example is servicing expensive equipment, such as huge and expensive earth-moving machines. Traditionally, this had been seen as distinct and separate from the job of making and selling the machines. But when the U.S. Caterpillar Company, the world's largest producer of such equipment, asked, "What are we getting paid for?" the answer was, "We are not getting paid for machinery. We are getting paid for what the machinery does at the customer's place of business. That means keeping the equipment running, since even one hour during which the equipment is out of operation may cost the customer far more than the equipment itself" In other words, the answer to "What is our business?" was "Service." This then led to a total restructuring of operations all the way back to the factory, so that the customer can be guaranteed continuing operations and immediate repairs or replacements. And the service representative, usually a technologist, has become the true "decision maker."

The same principle is demonstrated in another, seemingly very different, example. A group of about twenty-five orthopedic surgeons in a midwestern U.S. city have organized themselves as a "system" to produce the highest-quality work: by using optimally the limited and expensive resources of operating and recovery rooms; by using optimally the supporting knowledge of people such as anesthesiologists or surgical nurses; by building continuous learning and continuous innovation into the work of the entire group and of its every member; and finally, by minimizing costs. Each of the surgeons retains full control of his or her practice He or she is fully responsible for obtaining and treating the individual patient. Traditionally, surgeons schedule surgeries early in the morning. Hence, operating rooms and recovery rooms are standing empty most of the time. The group now schedules the use of operating and recovery rooms for the entire group so that this scarce and extremely expensive resource is used ten hours a day. The group, as a group, decides on the standardization of tools and equipment so as to obtain the highest quality at the lowest cost. Finally, the group has also built quality control into its system. Every three months, three different surgeons are designated to scrutinize every operation done by each of the members—the diagnosis, the surgery, the after-treatment. They then sit down with the individual surgeons and discuss their performance. They suggest where there is need for improvement. But they may also recommend that a certain surgeon be asked to leave the group, as his or her work is not satisfactory. And each year the quality standards that these supervising committees apply are discussed with the whole group and are raised, and often substantially. As a result, this group now does almost four times as much work as it did before. It has cut the costs by 50 percent, half of it by cutting back on the waste of operating and recovery rooms, half by standardizing tools and equipment. And in such measurable areas as success rates in knee replacements or shoulder replacements, or in recovery after sports injuries, it has greatly improved its results.

What to do about knowledge-worker productivity is thus largely known. So is how to do it.

So what's the next step? It seems to me that an informed ambition diagnosis in needed along with interest profile that forms the basis of a work approach. Also see Managing Oneself.

List of topics in this Folder

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