The Importance of Management

Peter Drucker always insisted that a precondition of a free and functioning society was a set of performing organizations and institutions capable of effectively fulfilling their missions. The alternative was chaos and revolution that inexorably led to tyranny. This was why he singled out management as so important for society, not just of business.

Covid continues to stress-test management to its limits. But some conclusions are already clear.

One welcome surprise is the resilience of business. The remarkable thing overall is not that some companies have perished in sectors such as hospitality and travel that have effectively been cancelled; As the economic statistics demonstrate, it is that so many are still alive and kicking – a testament to entrepreneurial optimism, managerial adaptability and will to survive.

Leadership quality has amplified success and failure alike.

On the negative side it became clear that most governments could not live up to the challenge of crisis-management - being caught in botched, vacillating or panicky decision-making and flawed execution. The media did their part of spreading the negatives only as opposed to communicating balanced information.

For the public sector, it became apparent how things become worse as you move up the hierarchy – from the municipal, to ministerial level and to the political sphere with the ultimate failures at the European Union level where the bureaucratic mindset and a lack of managerial competencies caused significant damage to the European citizens.

Conversely, we should take positive lessons from public-private partnerships such the development of a vaccine, crowned by a once-in-a-century success story that underlined the power of cooperation to leverage existing strengths. Equally mass vaccination programs attest to the wisdom of drafting in expert implementation and logistics experience to complement health sector competence.

No country has got it all right, however. There is much still to learn, particularly in global cooperation to vaccinate the populations of poorer countries.

So what has gone wrong?

In two words, governance and decision-making.

Governance is about having the people at the table who are best placed to help make balanced decisions – including important stakeholders and those with experience of making rapid decisions with incomplete information, whatever their background.

Covid has clearly exposed the limits of top-down, centralized and bureaucratic management in dealing with complex, multi-faceted issues of organizations and society.

Likewise doctrinaire orthodoxies that showed strongly in the medical field tried to thwart new ideas and approaches to management based on observation, experimentation and continuous learning.

Artificial Intelligence and algorithmic decision-making are of less help here than people capable of critical thinking and able to integrate diverging points of view.

As we tried to show in an earlier Harvard Business Review article, different types of problems require different modes of thinking–a scientific approach cannot address complex social issues, for example. If political leaders understood this they would have refrained from hollow-sounding calls to “follow the science” in situations where science can only be part of the answer and where the ability to synthesize across domains is their key responsibility.

Likewise, risk and uncertainty are an inherent part of modern life and cannot be managed by mere obedience to inflexible dogmas such as the precautionary principle. ‘What works’ in practice should be the mantra, even if it doesn’t in theory–a principle that is sometimes hard to accept for those brought up in a strict Cartesian spirit.

Faced with these circumstances, Drucker would surely have judged that the best monument to Covid would be to seize the opportunity now offered to tackle deep-seated fundamental problems.

The goal would not be a revolutionary ‘reset’ based on a vision of some ideal digital future, but rather a program of accelerated evolution to create an institutional framework capable of satisfying 21st century human and societal needs–starting with those of a young generation that has been deeply disadvantaged by the crisis and is badly in need of a vision and a purpose for a future that currently seems to offer them only shrunken life chances.

The starting point might be Charles Handy’s ringing call at the 2018 Drucker Forum for a renewal of management in the spirit of Lutheran reformation. That
chimes perfectly with Drucker’s concept of management as a ‘liberal art’ in which the art was to use judgement and insight to be alert to emerging reality and ask the right questions; and then to bring to bear all the necessary tools, including technology, to make appropriate human decisions on the way forward.

In that way, he believed in the vision of an ‘entrepreneurial society’ in which the capacity to self-renew was widely shared by individuals, institutions and society, and innovation and entrepreneurship had become part of the social and economic DNA.

It would be based on, and devoted to, the liberation of what Drucker considered the most important natural resource on the planet: human potential. Never has that vision seemed more urgent – and as attainable – as it is today.

To showcase Drucker’s continuing relevance and influence, a unique Day of Drucker will in be held on June 30, 2021. See the program and speakers here.