A THRIVING HUMAN
ECONOMY REQUIRES
HIGHER
PERFORMING
INSTITUTIONS
RICHARD STRAUB
Peter Ferdinand Drucker, born in 1909, is often referred to as the father of
modern management, which is true as far as it goes. As a consultant, educator,
e autore, Drucker wielded enormous influence on almost all who followed
him. He was the first to think of management as a teachable discipline, and his
writings anticipated many developments of recent decades, including the
emergence of the information economy and the rise of the knowledge worker—
a term he coined.
Less often remembered, Tuttavia, È
Drucker’s insistence that management was
never his first and primary concern. In
fatto, he said that concern derived from,
and was decisively influenced by, his early
work in political studies. Drucker, who
came of age in Vienna in the turbulent
atmosphere of the 1930s, had urgent
political reasons
Quello
humanity and effective organizational
performance are interlinked. From the
evidence gathered with his own eyes, it was
clear to Drucker that humanity without
performance was futile, an open door to
populists who promised strong leadership
and said they would “make the trains run
on time.” On the other hand, Drucker
performance without
argued
for believing
Quello
soulless
humanity leads to a different kind of
technocracy or
tyranny, UN
technological solutionism. He maintained
that high-performing institutions and the
management
their
performance were, Perciò, both an
essential part of a functioning democracy
and a bulwark against its enemies.
assured
Quello
Drucker wrote time after time that
achieving results is a manager’s litmus test
and his or her “first social responsibility.
Unless [the organization] discharges its
performance responsibility,
it cannot
discharge anything else. A bankrupt
business is not a desirable employer and is
unlikely to be a good neighbor in a
community.”1 Yet, since Drucker viewed
management as a liberal art—“‘liberal’
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because it deals with the fundamentals of
knowledge, self-knowledge, wisdom, E
leadership; ‘art’ because it deals with
practice and application”2—as well as a
form of social and economic technology
that had individual dignity and thriving at
its heart, real performance could only
society both more
mean making
productive and more humane at the same
time. Jim Collins made that point in 2021,
when he opened a day of study on
Drucker’s work.
È,
unfortunately,
Driven by the ideology of shareholder
primacy, of which the phrase is as good a
definition as any, performance without
humanity
now
ensconced in the economy’s driver’s seat.
As academic scholar Gerald Davis has
described, we are living through a radical
reorganization of the economy, driven in
large part by digital technologies. As
software eats more and more of the world,
so do markets: first for capital (a.k.a.
for
financialization),
supply
distribution
(“Nikefication”),
(Amazon),
labor
(“Uberization”).3
Maintaining
E
performance
these
conditions is hard and beset with constant
tension. At the moment, despite past
economic growth and remarkable progress
in some areas of science and technology—
witness the fast-track development of new
linked
vaccines and
in harmony
Poi
Poi
humanity
indirectly
finally,
E,
IL
In
emergence of Zoom as a corporate
superpower—the West seems to have
drifted into an era of political, cultural, E
social decline. Institutional enfeeblement
is evident in the public authorities’ flawed
handling of the COVID-19 crisis, Quale
has set back education by perhaps decades,
sacrificed the youngest generation to
expediency, and violated human dignity in
multiple ways, most notably in the
shameful treatment of the elderly in care
homes, many of whom were, in effect, left
to die alone and unaided.
Fanned by social media, the resulting
disruption has been magnified by more
recent external crises, especially the war in
Ukraine, for which a just-in-time, tightly
coupled world was as ill prepared as it was
for the pandemic. Feeding off each other
in unpredictable ways, these crises have
generated rolling supply-chain chaos that
has spread from toilet paper to baby
formula, from shipping containers to
microchips. They are now disrupting the
supply of essentials such as food and
energy. Together with the rise of inflation
to levels not seen for 40 years, the upheaval
is compounding
long-term systemic
concerns with the need for full-blown
short-term
crisis
emergency
management. In short, it is a perfect storm.
It is one that invests Drucker’s emphasis on
performance with a new and unexpected
urgency.
E
ABOUT THE AUTHOR
Richard Straub is Founder and President of the Global Peter Drucker Forum and the Vienna
Center for Management Innovation, whose joint aim is the continuous improvement of management
practice to the benefit of both business and society.
© 2023 Richard Straub
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Richard Straub
TECHNOCRACY UNBOUND?
In
E
digital
One set of proposed remedies for this
management tornado can be
loosely
labeled technocracy. Technocratic visions
of the world abound. They range from the
World Economic Forum’s theme of a
“reset” toward a brave new world, as if
humans could be rebooted like computers,
A
the Silicon Valley vision of a
transhumanist future in which all society’s
needs and problems can be solved by
networking
advances
technologies if only the entrepreneurial
spirit is freed of pesky bureaucracy and
regulation. Drucker
Joseph
Schumpeter might have sympathized with
the idea of reining in the regulatory state
to focus on its core regalian responsibilities
and of trusting an entrepreneurial private
sector to find solutions that no public-
sector organization would ever come up
con; the nudge from Elon Musk’s Space-X
that stung a reluctant NASA into joining a
new age of space exploration and
innovation is telling in this respect. Che cosa
is the likelihood that any state venture
would come up with an interactive app
that enables any visitor with a smartphone
to navigate their way around a strange city,
guided by spoken directions from a
reassuring human voice? Anyone still
nursing such illusions might cast their
mind back to the ill-fated EU-backed
attempt to develop the search engine
Quaero to compete with Google and
Yahoo.
Yet
IL
FAANGS—if Facebook and Netflix still
qualify for inclusion in the acronym—also
display the darker side of the technological
coin, where size and surveillance have
come together to form an insidious hidden
threat to human wellbeing.4 And here is
where robust state action is not only
justified but urgently required—not to
attempt entrepreneurial ventures of its own
but to create a consistent framework of
their creativity,
for all
for maintaining
protection for democratic rights, ad esempio
free speech, privacy, and freedom from
harassment and abuse. States are also
IL
responsible
mechanisms that keep capitalism ticking—
such as keeping competitive markets free
of domination by overmighty single
players. Current institutional failings are
well illustrated by today’s dismal state of
play in this respect.
FINDING OUR WAY BACK TO
A HUMAN-CENTERED
SOCIETY AND A HUMAN
ECONOMY
So how do we find our way back to a
human-centered society and a human
economy? The tightknit ecosystem that has
grown up in support of shareholder
capitalism, that embraces business schools,
consultancies, governance codes, E,
above all, asset managers, means that it will
take a brave and determined manager or
company to take a different line. Few
leaders have the confidence to put their
heads above the parapet. At the other
extreme, meek surrender to a minority of
woke activists is not a constructive way to
address controversial issues in a balanced,
practical, E
ideologically neutral
maniera.
Since BlackRock’s Larry Fink urged
CEOs to adopt a sense of purpose in his
much-debated 2018 letter to investee firms,
the role of business and how it relates to
state and society has been the subject of
much discussion. While Drucker was firm
in his belief that business owed society a
deep obligation to deliver value, let’s be
clear about one thing: he put economic
viability, a human-oriented approach, E
responsibility to the
local or global
community the business belonged to—in
that order—atop his list of priorities.
Considering the preservation of long-term
capacity to create value management’s
its
primary
responsibility
Tutto
A
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A Thriving Human Economy Requires Higher Performing Institutions
constituents, he did not see stakeholder
capitalism, as such, as the answer. Infatti,
he believed that burdening businesses with
tasks that diverted them from their core
responsibility was a mistake that inflicted
much harm on society.
Of course, public policy should be
based on a realistic view of what business
can and should look like in the future, E
companies need to operate on a level
playing field. But there are limits to what
regulation alone can be expected to
accomplish. Intelligent regulation should
be limited to setting broad objectives and
incentives, leaving the job of devising
methods and measures appropriate to the
context to those who are doing the work.
Intelligent
for
regulation
improvement, not for reaching fixed
targets or activity levels—a characteristic
of management 1.0 that saps initiative and
for
value creation. The same goes
favor of
international
change
sustainability
abatement, which can easily get bogged
down in bureaucracy and box-ticking.
In
clima
initiatives
aims
E
ORGANIZING FOR
UNCERTAINTY
More than anything, the reassertion of
humanity in a technological age requires
management to step up to the historic
social and economic responsibilities that
Drucker defined for them. Paradoxically,
although it is small comfort to those who
have directly suffered their consequences,
COVID-19 and the war in Ukraine have
done us a favor, albeit a grisly one, in that
they both starkly reveal the nature and
extent of the challenges we face and at the
same time indicate a possible avenue
forward. As economic historian Carla
Perez has shown, great technological leaps
always provoke uncomfortable social
disruptions; real progress for the wider
society only occurs when technological
by
are
breakthroughs
followed
complementary socio-institutional ones—
and that includes management. If ever
there was a moment for just such an
institutional renewal, it is now. As Perez
put it in a recent speech, “It is precisely
because the situation is so dire and the
urgency so blatant that there can be hope.”
We only have to look around to be
aware that we are living in times of radical
uncertainty. The problem is that we are still
trying to navigate these times using the
tools and technologies of the past:
hierarchical organization, command and
controllo, fixed strategies, detailed planning,
and intrusive performance management,
all of which are devoted to the task of
minimizing uncertainty and making the
future as predictable as possible. And even
though we should know by now that it is
impossible to extrapolate the future from
data from the past, we continue to
outsource responsibility to AI and rely on
automated decision-making to see us
through. Invece, we should accept, as real
scientists have
Quello
uncertainty isn’t a bug—something we
could avoid if we could only perfect our
management routines—but a feature, a fact
of life. Dealing with uncertainty is what
high-performing management in the 21st
century is all about. It defines it.
always done,
Organizing
and managing
for
uncertainty are as different from the
industrial age models we are used to as a
digital platform like Uber is from General
Motors. The models of the future will
accept change as the norm. They will be
focused on resilience and robustness rather
than efficiency, and they will be loose,
agile, outward-looking, opportunistic, E
entrepreneurial, able
to shuffle and
repurpose resources at the drop of a hat,
proficient at innovation, and organized for
doing projects. It goes without saying that
such organizations will require a different
kind of leadership, pure, one that privileges
ingenuity, collaboration, trust, and the
ability to react swiftly to unexpected events
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Richard Straub
over the traditional attributes of charisma
and confidence.
A UNIQUE OPPORTUNITY
FOR MANAGEMENT
RENEWAL
Such an organizational profile would have
smacked of science fiction even a few years
ago. That it is now suddenly thinkable is
again the result of the inflection point
brought about by COVID-19 and the
Ukraine war. As Lynda Gratton notes in
her new book, one effect of the ensuing
disruption has been
to “unfreeze”
previously fixed corporate routines and
open up long-untested processes and
assumptions to challenge.5 Ironically, Questo
has performed an essential but often
neglected exercise that Drucker termed
abandonment,
Quello
managers consciously carry it out every
few years to stave off organizational
entropy.
recommending
the consequences of
It would be easy, and tempting, A
categorize
IL
corporate unfreezing as a management
revolution but, keen as he was that
managers should stop doing things that
had outlived their usefulness (“There is
surely nothing quite so useless as doing
with great efficiency what should not be
done at all.”6), Drucker was insistent that,
in its proper meaning, revolution is a stark
admission of institutional and, Perciò,
the worst
management
possible way to self-renew, as it invariably
leads to bloody chaos and the opposite of
any original Utopian intentions. Invece,
his mantra was “continuity and change.”
Così, to satisfy its twin economic and
social goals, the fluid, shape-shifting, post-
COVID organization, one equipped to
embrace uncertainty and capitalize on the
capabilities of advancing
technology
through global collaboration, should be
anchored in the unchanging human values
of freedom, self-determination, ethics, E
failure, E
spirituality—in
an
organization capable of providing meaning
beyond immediate utility.
other words,
book
Innovation
to provide
The bottom line is that, in order to
thrive, the human economy of today or
tomorrow needs well-managed institutions
and organizations
IL
grounding for a functioning society. Questo
is what Drucker meant when he described
management as a “constitutive organ” of
that society. Of necessity, as Drucker also
insisted in the concluding chapter of his
important
E
Entrepreneurship,
it must also be an
entrepreneurial society.7 The technologies
that are increasingly used for manipulation
and bureaucratic control could serve
equally well to build a more open,
sustainable, inclusive, and democratic
economy that crowdsources its solutions
from the creativity and engagement of the
many, rather than relying on remote
central control by the few. It would be at
ease with change and imbued with the
human focus and scale that can underpin
and legitimize change for the many. It
would resist the lure of technological
solutionism and have at its heart the
principle of digital humanism—that is, an
unshakeable focus on making machines
more human-literate rather than the other
way round.
SU
Quello
pressure
requirement
Technology and crisis are reshaping
the world before our eyes, heaping
IL
unprecedented
È
performance
management’s first responsibility. With so
many elements in play, we today have a
unique opportunity, and an obligation, A
question our most important institutional
assumptions—particularly
those con-
cerning the role of the state versus the
private sector and of technology versus the
human being—as a basis for renewing
management itself. In the spirit of Drucker,
this would mean finally leaving behind the
misguided postwar attempts by the Ford
turn
and Carnegie
foundations
A
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A Thriving Human Economy Requires Higher Performing Institutions
management into a hard science and to
recognize it instead as a considerably
broader social endeavor—a worthy, even
noble mission to create value for society
through disciplined and
systematic
business approaches while remaining
solidly grounded in the humanities and
social sciences that give it meaning and
purpose.8 Future generations will not
forgive us if we fail this test. Nor, we can be
sure, would Peter Drucker.
1 Drucker, P. (1985/1973-74). Management:
Tasks, responsibilities, practices. Harper and
Row, 343.
2 Drucker, P. (1988). The new realities.
Heinemann, 223.
3 Davis, G. F. (2022). Taming corporate power
in the 21st century. Cambridge University
Press.
https://www.cambridge.org/core/elements/a
bs/taming-corporate-power-in-the-21st-
century/6C0F884F7F99A3B3D168E8F52E2
30991
4 FAANG is an acronym for five of the best-
performing tech-centric stocks of the past
decade: Facebook (now Meta Platforms),
Amazon, Apple, Netflix, and Google (now
Alphabet).
5 Gratton, l. (2022). Reimagining work.
Penguin Business.
6 Drucker, P. (1963). Managing for business
effectiveness. Harvard Business Review,
(May-June), 53-60.
7 Drucker, P. (1985). Innovation and
entrepreneurship. Butterworth-Heinemann.
8 Gordon, R. A., & Howell, J. E. (1959). IL
Gordon-Howell report: Higher education for
business. Columbia University Press;
Pierson, F. C. et al. (1959). The education of
American businessmen: A study of
university-college programs in business
administration. The Pierson Report.
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