The Founding Fathers ensured that this was the case in the structure of the American government when they wisely arranged the different branches of government in a systems hierarchy of constraint. The House of Representatives is elected every two years, Presidents every four years, the Senate every six years (on staggered terms) and the Supreme Court is appointed for life. The intent was to create a stable system of checks and balances that could handle only modest change and would not be subject to sudden radical movements. For similar reasons, James Madison favoured representative democracy and rule by experts over direct democracy and rule by faction. There are analogous, if less engineered, hierarchies of constraint in dual-house – elected and appointed – parliamentary systems. The role of the ‘upper’ house is to reconsider and modify the occasionally impulsive actions coming to it from below.

From a systems perspective, when British Prime Minister David Cameron agreed to a referendum on whether to remain with or leave the European Union, he was risking that a small, fast system might escape the constraints of representative democracy and the sovereignty of Parliament. It has escaped, and the result is crisis and chaos. Some say it is the end of the Post-World War II political dispensation. Perhaps, but it is also an opportunity for both Britain and the EU.

The Waning Narrative of the European Union

Three years ago I gave a presentation to the International Forum on the Future of Europe in Vilnius, Lithuania. In it, I suggested that the problem with the EU was that it had lost its narrative. I used an ecological perspective to show how the EU had been born in the aftermath of the Second European Thirty Year War (1914-1945) as a passionate movement to avoid further conflict among the nations of Europe. After initial success, greatly aided by the rebuilding of Europe’s shattered infrastructure, it became a series of increasingly ambitious economic and political projects. In that process, however, like all successful institutions, it became much larger, more calculative, rule-driven and bureaucratic. The stories told by expert economists and bureaucrats are rarely compelling and, as the original narrative waned, means became ends-in-themselves.

Economic attachments are fragile. We may work for money, but we live for the story. An ecological perspective suggested that any “buy-in” would be temporary at best and that the resulting tepid commitment would fluctuate with the EU’s economic fortunes. This is particularly the case if economic gains are spread unevenly and significant segments of the population feel left out and ignored. The result was widespread Euroscepticism that, as Nigel Farage, then the leader of Britain’s United Kingdom Independence Party (UKIP) proclaimed, was all about national identity.  The Brexit Referendum became a contest between technicians favouring the status quo and populists promising a return of a Little England narrative. The story won: it usually does.

With Crisis Comes Opportunity 

“Never let a good crisis go to waste” is an aphorism often attributed to Winston Churchill but never sourced. The idea probably comes from Chinese Taoist philosophy and its use of natural analogies to understand stability and change. Crisis plays a pivotal role in the renewal of ecosystems. Wind and fire, flood and pestilence clear away old growth in mature forests and open up patches, where there is equal access to water and light. Here young organisms, fueled by nutrients from a recycled past, can flourish and renew the system.

In Britain, it seems likely that the old political party arrangements no longer reflect the new divisions in the electorate. The Conservatives are badly split, and left-wing Labour Party has been called a “walking ghost”. It performed poorly in the referendum, with many of its members ignoring its call to “Remain”. There is now a contest for its leadership. So the Brexit crisis may act as a catalyst for the reform and reconfiguration of Britain’s political parties, something that would be extraordinarily difficult to do in regular times.  By the time this new configuration has gone to the polls for a new mandate it is possible that the whole Brexit concept will be so completely muddled that a crisis-induced, reformed EU may accept some version of Bremain.

In the EU, it is time for its leaders to reflect upon the entire project. Those with direct experience of World War II are nearly gone and with their passing, the founding narratives of the EU become second-hand memories. The administrative integration of the EU’s members needs to be slowed and even rolled back, a direction to which Angela Merkel seems sympathetic. The creation of the Euro was a bold but premature move, freezing the system when it still needed significant wiggle room. Attention should be on strengthening European identity through new narratives and the creation of compelling experiences that build and maintain them. You can only fight old stories with new narratives. It will not be easy. The late historian Tony Judt stated the challenge well in his paradoxical thesis that Europe has been able to rebuild itself politically and economically only by forgetting the past, but that it can define itself morally and culturally only by remembering it. Perhaps it is time to start the process again with the generations born since 1945.

Management Lessons from the Brexit Moment

What can managers learn from the Brexit moment? Stability is a relative matter, and nature teaches us that great stability is often achieved at the cost of a system’s resilience. The resulting structures are hard but brittle. Authoritarian organizations are like this. Resilient systems need to flex and flow, not by trashing hierarchy – that is a recipe for chaos – but by minimizing the number of levels and designing the constraints to ensure that there is discretionary space at every level in which to act and to innovate. The Toyota Production System (TPS) comes to mind. Toyota is a highly bureaucratic organization, but the TPS creates spaces in which everyone at every level can act to take advantage of opportunities that appear only at that level of granularity. The military equivalent is auftragstaktik, so-called “mission command”. It is a form of directed opportunism that encourages initiative in all ranks. Unfortunately, it is not a one-time affair but a fundamental philosophy that has to be faithfully followed. As organizations grow in scale, enabling hierarchies of constraint continually threaten to morph into coercive hierarchies of control, closing out the spaces for discretion and judgement and stifling entrepreneurship and innovation.

The bottom line is that with crisis comes opportunity and, as Charles de Gaulle remarked of the French Army in 1942, “Nothing lasts unless it is incessantly renewed…”

About the author:

David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

1. That it was constitutionally incapable of self-criticism
2. Its terminology confuses rather than educates
3. It rarely rises above common sense
4. It is faddish and bedeviled by contradictions

They declared management theory “guilty” on all charges in various degrees, and went on to identify the root cause of the problem as an “…intellectual confusion at the heart of management theory; it has become not so much a coherent discipline as a battleground between two radically opposed philosophies. Management theorists usually belong to one of two rival schools. Each of which is inspired by a different philosophy of nature; and management practice has oscillated wildly between these two positions.” They went on to identify the two schools as scientific management on the one hand and humanistic management on the other, concluding that “This, in essence, is the debate between ‘hard’ and ‘soft’ management.”

Management Is The Battleground: Judgment or Technique?

It’s time to identify this intellectual confusion as not just being in the discipline of management but in the human subjects in their organizational context. It’s time to recognize that our fundamentally divided nature is the essence of our humanity and that it is their integration, the practical weaving together of irreconcilable opposites, the ‘hard’ and the ‘soft’, that is the very warp and woof of our existence.

In management these tensions are familiar; means and ends, quantity and quality, exploitation and exploration, calculation and judgment, individual and group, performance and learning, detachment and immersion, mechanical and organic and so on and on. All these strains come together in the debate over the extent to which management is a hard, technical-based practice or a softer, judgment-based practice.

The proponents of technical-based practice believe that the essentials can be conveyed by means of explicit rules, formal technical procedures and general abstract principles, which are then “applied”. They contend that it is the program or technique that produces the change. Judgment-based practitioners, on the other hand, emphasize the practical, situated judgment of the practitioner. They maintain that it is the person, the one who “cares”, who produces the results.  It would seem obvious that management is a mixture of both the technical and the practical and the “right” mix varies from situation to situation. Nevertheless, ever since the end of World War II, the Anglo-American emphasis has been on management as a hard, technical-based practice with universal application. In its aspiration to create a science of management it has championed what Peter Drucker called a “Cartesian world-view”. The Cartesian world-view is a single-minded one that denies our intrinsic double nature. In management, we know it as, “If you can’t measure it, you can’t manage it”, a comment often wrongly attributed to Drucker. Managers are seen as detached observers and rational actors making rational choices. It has stressed means over ends, encouraged efficiency over creativity, and short-term performance over sustainability. And, like all approaches that treat the long run as a series of short terms, it has worked, but with declining effectiveness.

The Scale of the Crisis

Now, after seventy years of economic prosperity on a scale unparalleled in history, all the long-neglected ‘soft’ halves of the management dualities seem to be returning with a vengeance. The obsession with means at the expense of ends has resulted in a profound loss of purpose and meaning. The pursuit of efficiency and the inattention to creativity has abetted a secular decline in productivity and produced a lack of engagement on the part of employees. Most seriously, the preoccupation with short-term performance has led to a disregard for sustainability.  This time, there is a real fear that new digital technology will not bail us out as industrial technologies have in the past.

The problem is a serious one, akin to institutions that, pleading poverty, have allowed their social, political and physical infrastructures to run into the ground. Eventually, the long-deferred bills come due and significant issues and the efforts needed to address them can no longer be avoided.

In management, our challenge is to revitalize management’s long-neglected ethical and philosophical roots. Peter Drucker had hoped that a process perspective embracing purpose, growth and development would replace the Cartesian world-view. Unfortunately, he may have underestimated the resilience of a self-sealing framework that believes that science has made philosophy irrelevant and is intolerant of alternative perspectives. Despite the clichéd mantra of the need to think “out of the box”, the taken-for-granted assumptions out of which the large Cartesian box is constructed remain largely unexamined. There is philosophical ferment on the fringes of management but little sign of change in the core.

We need a larger, enhanced worldview that recognizes the importance of context, history, and narrative in the practice of management. The Cartesian world-view is not  “wrong”, but neither is it universally applicable.  As a result, it has been misused and over-applied.

Embracing Contradictions

As Micklethwait and Wooldridge suggest, we don’t need theories that contradict each other but we do need theories that embrace contradictions. We need to do the hard work to recover a practical wisdom that will acknowledge our dialogical nature and recover the creative “both…and” tension between the ‘hard’ and the ‘soft’. We need a more critical stance toward our theories, accepting as the Greek philosophers contended many centuries ago, there are many ways of knowing, but no certain knowledge of anything. There is no such thing as a detached, objective observer – no view from outside of space and time – not even in the natural sciences, let alone the human disciplines. Systems scientist West Churchman made this point well, “Instead of the silly and empty claim that an observation is objective if it resides in the brain of an unbiased observer, one should say that an observation is objective if it is the creation of many inquirers with many different points of view.” In management objectivity is not a position; it is an achievement. It is the view from everywhere.

Managers who act only as detached observers cannot produce objectivity in this sense. The creation of a view from everywhere demands that managers are immersed participants. And the difference between detached observers and immersed participants is empathy, one of the key ingredients of what we call judgment. This is the capacity, in Isaiah Berlin’s words, “…for integrating a vast amalgam of constantly changing, multicoloured, evanescent, perpetually overlapping data, too many, too swift, too intermingled to be caught and pinned down and labeled like so many individual butterflies. To integrate in this sense is to see the data (those identified by scientific knowledge as well as direct perception) as elements in a single pattern, with their implications, to see them as symptoms of past and future possibilities, to see them pragmatically – that is in terms of what you or others can or will do to them, and what they can or will do to others or to you…. Above all this is an acute sense of what fits with what, what leads to what; how things seem to vary to different observers, what the effect of such experience upon them may be; what the result is likely to be in a concrete situation of the interplay of human beings and interpersonal forces…”

How do we develop such capacities in individuals? For those who view management as a technical-based practice, there is little need for judgment. The solution is a capacity for logical thought and calculation produced by ‘education’, where education is seen as the conveyance of technical skills, rules, and principles. It is a finite, instrumental activity with a beginning and an end. A judgment-based practice, on the other hand, views the development of the whole person as critical. Hence the German concept of Bildung, a process of growth and development in which a person learns the ways of the world and comes to terms with the need for both self-fulfillment and the social roles they must play. There is no direct English equivalent of Bildung, another reflection, perhaps, of how Cartesian and instrumental our world-view has become. Bildung is intrinsically valuable, a process of cultivation, a journey without beginning or end in which people are stretched to their limits to realize their potential. Bildung is the journey; education marks the stations along the way. Of course, we need them both, but we have to get the priorities right.

Perhaps future Drucker Forums can show us the way…

About the author:

David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

For basic illustrations one can turn to nature. Ecosystems like temperate forests offer an example that may be paradigmatic; the innovative process begins in an open patch, where there is equal access to sun and rain and space for small-scale experimentation. We call the pioneers that come into this patch “weeds” – fast-moving organisms with simple structures, suited to exploring every nook and cranny. Funded by the local seed-bank and augmented by resources that drift in from afar, everything grows rapidly with little competition. Over time however, as the patch becomes crowded and competition for resources increases, larger organisms will start to gain a foothold; these “shrubs” may not be as agile as the weeds they replace but they have a capacity to harvest resources more efficiently. With deeper roots and longer stems they can get to the water and sun first. As they flourish they shade their rivals. The forest starts to grow up as the economies of scale begin to exert their effects on the system. Eventually large hierarchies – tall trees – will take over the patch. They are very efficient in their use of resources but their dense canopy will block the sun and their deep roots will hog the water, allowing little to grow beneath them. The system is now impressively large but it is a mature monoculture with apparently little capacity to renew itself.

Ecological renewal takes place via nature’s forces of destruction: wind, fire, flood and pestilence. These processes continually test the system, break down the decadent growth, recycle its components and open up the opportunity spaces into which pioneers can come. The cycle is now ready to repeat itself – think of a Moebius strip with long processes of growth on the “front” (left to right) S-curve and rapid processes of destruction on the “back” (right to left) reverse S-curve. Such a system maintains what seems to be a steady state through constant change: or, as the French say, plus ça change, plus c’est la même chose (the more things change, the more they stay the same).

So much for the illustration, but do we observe similar dynamics in human systems? I think that we do, once we have made adjustments for the fact that we are dealing with human beings rather than trees. From an ecological perspective human enterprises are conceived in passion, born in communities of trust, grow through the application of reason and mature in power. Here, like a forest of mature trees, they tend to get stuck, which sets them up for crisis and destruction, but with the possibility of renewal. From this perspective both capitalism and democracy are best viewed as ecosystems of ecosystems that allow societies to retain their identity while constantly recycling and restructuring their elements. One would expect them too to traverse a Moebius-like path as they go through the complex process.

The work of Neo-Schumpeterian economist Carlota Perez highlights the front S-curve of the Moebius strip as it applies to technological innovation. She has identified five technological revolutions since the 18^th Century (see diagram).

Each curve features an early installation phase with radical innovations funded by capital made idle by the exhaustion of the previous cycle. New technologies irrupt into the social system, disrupting industries and creating all kinds of new tensions. These technologies make some skills obsolete and others valuable. Typically the installation phase ends in a “Gilded Age” financial bubble, as speculation (and the building of infrastructure) runs ahead of the capacity of the new innovations to deliver sustainable returns. What follows is an interregnum (Turning Point), a period of adjustment as the new technologies begin to penetrate every aspect of society. During this turn the focus of finance turns from speculation to financing developments in the real economy, from a laissez-faire attitude to a more directed effort to harness technology for the betterment of society. In the past this has lead to “Golden Ages”.

Perez suggests that we are currently in the transition between the installation and deployments phases of the Information and Telecommunications revolution that began in the USA in the early 1970s. She adds that a successful transition will not happen by itself – a set of policies is needed to tilt the playing field firmly away from the casino economy to the real economy and promote its conversion to a Green Economy. This will be the 21^st Century counterpart to the urban reconstruction and suburbanization that followed in the aftermath of World War II. The policies will be complex mixes of sticks, carrots and education.

In Landmarks of Tomorrow (1959) Peter Drucker described the Western world’s fundamental habit of thought as “Cartesian”. This is our tendency to approach the world as detached, objective observers. We see reality as consisting of enduring objects “out there”. This is not a neutral perspective; it comes with a deep bias that regards what is stable as “good” and what is changeable as “bad”. A Cartesian view of reality isn’t wrong: it has been hugely successful when applied to the physical world and making social systems more efficient. But it isn’t adequate to deal with innovation and the tangle of tensions and uncertainties in the complex challenges we now face. It asks the wrong questions and its view of causation is too simple. An ecological/systems perspective poses different issues. It asks us to consider the relative rates of destruction and creation in society and the scales of the new technologies compared with those they are replacing. It sensitizes us to the environments – the “open patches” – that nurture entrepreneurship and to the institutional arrangements that can deter it. We become aware of the tax and fiscal climate – the policies that spur certain dynamics and curb others – and the development processes that cycle and recycle the system’s resources.

Once we can see enterprises and institutions as movements rather than just structures, our minds turn from mainstream economics, with its equilibrium assumptions, to a reconsideration of alternative economic canons of disequilibrium – Schumpeter, Boulding, Minsky and others. We begin to see social science, not as the application of theory to practice, but as a form of practical wisdom – the disciplining of reflections arising from experience. It becomes clear that managing an organization can never be a purely rational, Cartesian exercise. Much is context-dependent and we have to understand the genealogies of social institutions, their norms and their values and their dynamics of power and dominance. We need a new sensitivity to our language and the mental models embedded in the images and metaphors we use. As systems scientist Ross Ashby pointed out many years ago, we require mental models as least as complex as the phenomena we are trying to understand and influence. Once we have this facility to play with many different perspectives in many fields, perhaps we will have a truly entrepreneurial society.

About the author:

David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

The preliminary events began with a CEO Roundtable on the afternoon of Wednesday November 6. The opening ‘provocation’ was supplied by Tom Davenport and Julia Kirby’s June 2015 Harvard Business Review article “Beyond Automation”. In it they address the threat that artificial intelligence in the form of smart machines is encroaching on knowledge work to such an extent that it will lead to widespread unemployment. In the past machines took over work that was dangerous, dirty and dull. Now they seem to be taking over decision-making roles. Does it mean automation and the replacement of humans or is there scope for augmentation of human cognitive powers by machines? Should we be worried? The Davenport/Kirby shorthand answer, “Yes-No-Yes”, captured the both uncertainty of our questions about the future and the equivocality of the ‘answers’.

In the two days that followed the executive roundtable speakers and participants alike struggled to understand these questions and to come to grips with Peter Drucker’s acute observation that the major questions regarding technology are a not technical but human. The result was an exhilarating roller-coaster ride with unsettling plunges and thrilling loops that deposited all the riders safely at the end, but with their brains lightly fried. What follows is some of the highlights from the conference.

Tensions and Dilemmas

Tensions and dilemmas were everywhere at the forum. Are we dealing with a technology issue or a mindset issue, technical or moral? Or both? Are there limits to the ability of machine to make decisions? Should there be? How about limits on humans? What if a smart machine had overruled Lufthansa’s suicidal pilot? What distinguishes the zealots from the Luddites; West Coast optimism from East Coast pessimism? Is it a generation gap? Who will be affected and in what way? In the short-term or the long run? How do we distinguish hype from reality? What should who do about what? What’s the game plan? How do you manage? How do you lead? What’s our theory of change?

The conference participants, like the speakers, were a mix of tech-friendlies and tech-skeptics, with a full spectrum between the extremes. A sharper division was that between the values and concerns of small entrepreneurial firms and those of large established organizations, both commercial and governmental. Most of the academics and consultants present seemed more attentive to the latter group, who are presumably their natural clients.

Above and Below the Algorithm

One of the more interesting comments on the role of digital technology came from transportation entrepreneur Robin Chase, who pointed out that major innovations like Airbnb and Uber are aimed at either slicing up or aggregating existing spare capacity in society’s physical assets. This is why they neither own nor produce anything. The assets (housing and automobiles, roads and infrastructure) exist already. They may be disrupting the hospitality and taxi businesses around the world, but at the society level, despite all the talk of a ‘sharing economy’, they are primarily efficiency innovations that will reduce more jobs than they create. This may explain the pervasive ambivalence toward such technologies that create short-term benefits for individuals (albeit through what some describe as insecure, contingent jobs) but may spawn longer run problems for communities. Those who work “above” the algorithm (a tiny minority) may be fine; those who work “below” it will struggle.

Would a Thinking Machine do the Haka?

What does it mean to be human? New Zealander Kevin Roberts, Executive Chairman of Saatchi & Saatchi, captured its essence in a video-laced presentation to illustrate the ‘unreasonable power of ideas’. Rational thinking leads to conclusions but it takes emotion to get action and to generate ‘loyalty beyond reason’. With the 2015 World Cup of Rugby still fresh in fans’ memories, his video of the ultimately victorious All Blacks using their Haka war cry to intimidate their opponents was a compelling example of how humans deal with challenges in a ‘Super-VUCA’ world that is vibrant, unreal, crazy and astounding. It was a very welcome break from the pervasive rationalism that dismisses such human phenomena as ‘biases’ to be countered and eliminated. Would a thinking machine do the Haka? Why?

A Second Silent Spring?

Sherry Turkle, Director of the MIT Initiative on Technology and Self, addressed the growing movement among the digerati of people who would “rather text than talk”. She argued that communications technology makes us forget what we know about life. The result may be a second ‘silent spring’, an ‘assault on empathy’, that makes us less able to appreciate the situation of another person and to ‘give voice to the other’. John Hagel, Co-Chairman of Deloitte Consulting’s Center for the Edge, agreed, saying that technology brings out the worst in us and he stressed the power of narrative, the incomplete story that calls to its listeners to take action and see how it ends.

The Mindset Problem – It’s Bigger than Thinking

Peter Drucker once wrote that “The most important thing in communication is to hear what isn’t being said.” What wasn’t being discussed at the Drucker Forum was the either role of or limits to reason in management, organizations and work, both descriptively and normatively. Ever since the European Enlightenment there has been a struggle between Adam Smith’s “sociology of virtue” and the French “ideology of reason”. Smith contended that the essence of humanity was both a concern for justice driven by empathy and a preoccupation with self-interest enabled by reason. The French philosophes, however insisted on the primacy of reason. There is no doubt where Peter Drucker stood on this issue: he saw humans as living in a world of existential tensions, strung between their concern for others and their preoccupation with themselves. It is a world of “both…and”, not either/or, that offers continual opportunities for creativity and innovation. American management, on the other hand, theorists and practitioners alike, has tended to prefer the ideology of reason and the cult of efficiency that often accompanies it.

Several speakers at the Forum remarked that the CEOs of many large companies pursue efficiency to the exclusion of anything else. This approach places them firmly on the side of the machines and the use of digital technology to replace rather than to support people. Here is a symptom of the ‘mindset’ problem, but its root causes remain to be explored. One suspects that they lie much deeper than many imagine and that their exploration will have a huge impact on how we act and think. Fortunately this means that there is plenty material for future meetings that will do well to match the intensity and excitement of the 2015 Drucker Forum.

About the author:

David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

To students of management Pope Francis is a fascinating study in leadership and organizational change. From his surprise election as an outsider, the first Jesuit and non-European Pope in history, to his well-publicized efforts to shake up an aging institution by revisiting its mission and purpose, he exemplifies the behavior of a charismatic, transformational leader. His many actions to distance himself from the trappings of power that he believes separate him from the reality of the situation on the ground have been well documented. Now he has written a powerful, brilliantly-crafted papal letter (encyclical) on the environment, arguing that if the mission of the Catholic Church is “to serve the poor”, then degradation of the planet is the primary obstacle to this effort, because the poor suffer more than anyone else from the unintended consequences of headlong economic growth.

The encyclical is an astonishing document, written by a high-context, non-linear thinker, who takes a systemic, process view of organizations, institutions and the planet as a whole; “We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental. Strategies for a solution demand an integrated approach to combating poverty, restoring dignity to the excluded, and at the same time protecting nature.”

Although Catholic dogma is ever-present, the real topic is our modern, technocratic culture and the dynamics that sustain it. The problem suggests the Pope, is that our scientific and technological progress has outstripped our social and moral development: “… we still lack the culture needed to confront this crisis. We lack leadership capable of striking out on new paths and meeting the needs of the present with concern for all and without prejudice towards coming generations.”

The Pope acknowledges that, while overly literal interpretations of the Bible may have been used to justify the unilateral exploitation of the planet’s resources, the true problem lies deeper than that; “The basic problem goes even deeper: it is the way that humanity has taken up technology and its development according to an undifferentiated and one-dimensional paradigm (his emphasis). This paradigm exalts the concept of a subject who, using logical and rational procedures, progressively approaches and gains control over an external object. This subject makes every effort to establish the scientific and experimental method, which in itself is already a technique of possession, mastery and transformation. It is as if the subject were to find itself in the presence of something formless, completely open to manipulation.” The true motive behind the use of this paradigm, suggests Pope Francis, is neither profit nor the well-being of society, but power.

Our One-Dimensional Paradigm

How do we reconcile the enduring human needs for purpose, meaning, fulfillment, dignity, caring for others and community with technologies that pervade and disrupt many aspects of our lives? This is the central question for the 7^th Global Drucker Forum. The forum’s launch document asks whether the problem is with our current management model and the technocratic, rationalistic mindset that often accompanies it.

The encyclical suggests that this may indeed be the root cause of our malaise. While the encyclical does not address the assumptions that underpin management directly, the Pope makes several business-related comments: “To stop investing in people, in order to gain greater short-term financial gain, is bad business for society,” and “Purchasing is always a moral – and not simply an economic – act.” He also lends his support to the criticism of the shareholder value movement, “The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved.” Clearly Pope Francis has heard of “externalities” and the problems that plague measures of prosperity such as GNP.

It is also clear that the “undifferentiated and one-dimensional paradigm” that Pope Francis refers to is what is usually described as “modernism”. It was on the basis of such assumptions that the business schools of America were reformed in the late 1950s. In a bid to make management a social science, methods from the natural sciences were applied directly to human organizations. The search was on for facts within a value-free discipline. Under the influence of mainstream economics, individuals were seen as rational egoists maximizing their own utility and, as detached “objective” observers, using others as instruments for this purpose. Thus, from the encyclical’s perspective, management based on modernist principles and the instrumental rationality it embraces is manipulative to its core.

What Is To Be Done?

Pope Francis realizes that what he is calling for is a major transformation, a change in habits and the adoption of sound virtues; “There can be no renewal of our relationship with nature without a renewal of humanity itself…. We urgently need a humanism capable of bringing together the different fields of knowledge, including economics, in the service of a more integral and integrating vision. Today, the analysis of environmental problems cannot be separated from the analysis of human, family, work-related and urban contexts, nor from how individuals relate to themselves, which leads in turn to how they relate to others and to the environment.”

His call is for new dialogues, on the role of faith and the role of reason, and among the different sciences, so that they do not become enclosed in their own language. All this is in the service of what he calls an “integral ecology”, a new synthesis of faith and reason, and based on a new relationship between humans and nature. From this perspective, the 7^th Global Drucker Forum can be seen as an important station on our journey.

About the author:

David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

Ever since the reform of the American business schools in the late 1950s, however, the perceived importance of history to management has dwindled. It seems that innovation has replaced tradition and history itself is often viewed, at best, as nice rather than necessary. In his prescient book, Technopoly: The Surrender of Culture to Technology, cultural critic and media theorist Neil Postman identified the work of Frederick Taylor, the pioneer of scientific management, as embodying all the key assumptions of the modern age:

• The primary, perhaps only, goal of labor is efficiency;
• technical calculation is in all respects superior to human judgment;
• subjectivity is an obstacle to clear thinking;
• what cannot be measured either does not exist or is of no value;
• affairs of citizens are best guided and conducted by experts;
• technique of any kind can do our thinking for us

Postman suggests that these are the core tenets of an ahistorical totalitarian technocracy that he calls “technopoly”.

Losing the Plot

Up until the 18th century, discovery, invention and technological change in the West took place within the grand narrative of the Bible, which acted as the moral center of gravity. It supplied the ends to which technology was the means. With the coming of the European Enlightenment and the emergence of science, the scriptures began to be replaced by a narrative of Progress. Instead of looking to the past as a guide we turned to the future as a goal. With progress often expressed in material terms, quality slowly morphed into quantity and the means to our progress started to become ends in themselves.

Today there is growing concern that we in the West are losing our sense of purpose and meaning at many different levels of society. With growth in real incomes restricted to a tiny fraction of the population, the consolation of increased material consumption is no longer available. In America, the home of Progress, people are starting to look back and talk about the “golden era” of economic growth in the 1950s and 1960s. As the American Dream fades, some are wondering what their children and grandchildren are going to do. They are searching for a new narrative, a new center of gravity that answers the existential questions: Who are we? Why do we matter? What’s our mission?

The answer can’t be “More!”

Back to the Future

Historian Daniel Boorstin’s favorite aphorism was “Trying to plan for the future without a sense for the past is like trying to plant cut flowers”.  We need the past to understand the roots of our condition; where we have been and where we are now. Only then will we gain a glimmering of where we are going, where we ought to go and what we should do about it.

At the enterprise level history can help managers in at least three ways:

1. To understand how effective strategies usually arise from competencies (virtuous habits acquired over time from many different sources) and are mediated by technologies of various kinds. This is the essence of organizational learning.
2. To discover and discipline potentially helpful analogies drawn between past events in other organizations and situations to current predicaments. This is the essence of what we mean by “learning from the experience of others.”
3. To understand the dynamics of cause and effect in complex systems and to think about both individual and systemic risk. By alerting us to important signals and patterns, a study of history can help us pay better attention to what’s happening right here, right now. 
This is how we learn from our own experience.

In the business schools, history, like ethics, should not be taught as a separate option but as an integral part of every subject. There should be no economics without the history (and ethics) of economics, no technology without the history (and ethics) of technology, no marketing without the history (and ethics) of marketing. These and other subjects are not and cannot be “value-free”. Couple that with a mandatory course on comparative religion and the role of narrative in the creation of human identity and we would be well on our way back into what I think of as the “Drucker Space”. This is the zone where effective practitioners dwell, between continuity and change, tradition and innovation, judgement and calculation, fact and faith.

Currently, however, many organizations struggle to get into this space, especially those companies caught between the anvil of shareholder value and the hammer of digital technology. In late 2014, The New Republic (TNR), an American magazine concerned with politics and the arts, celebrated its centenary. Two years earlier it had been bought by one of the founders of Facebook, who had begun trying to transform it into a “digital media company”. The change was driven by technology and the publication’s history and mission received short shrift. At the TNR centenary dinner Leon Wieseltier, cultural editor for thirty-two years, articulated the challenge: “We are not only disruptors and incubators and accelerators. We are also stewards and guardians and trustees. The questions that we must ask ourselves, and that our historians and our children will ask of us, are these: How will what we create compare with what we inherited? Will we add to our tradition or will we subtract from it? Will we enrich it or will we deplete it?”

If Peter Drucker were alive today, I am sure that he would add “Amen” to that.

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David K. Hurst is a management author, educator, and consultant. His latest book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012).

Perhaps Jeb Bush should have started closer to home with his brother, George W. who, with the No Child Left Behind legislation, embraced an evidence-based learning model. This required regular, standardized testing with teachers’ performance assessments based on the results. Many educationists see it as the antithesis of child-centered learning. The battle between the two perspectives continues to this day.

Christensen’s advice, “to share each other’s slides” works only within a shared interpretive framework (philosophy, worldview). It doesn’t work when there are two or more incommensurable frameworks. That was the gorilla in the room at this year’s Drucker Forum; the conference was dominated by the Anglo-Saxon management canon, particularly as it applies to public companies. One of the key components of that canon is the separation of means from ends and an instrumental focus on “what works”. It sees management as a technical practice, akin to engineering, that involves the application of principles and rules. According to this perspective, all you have to do to change practice is to change the principles and rules. Even if philosophy matters, in such an environment it is undiscussable.

Why is this so? A major obstacle is that many American management academics believe that the advance of science and the development of the scientific method have eliminated the need for philosophy. For them it’s a material world, made of matter and the only true knowledge is scientific knowledge. Disagreements are “just semantics” and, if we could only get our language standardized, all would be well. This is a positivist philosophy in which the facts “speak for themselves” and the manager is seen as a clear-eyed, rational actor in a knowable world. Positivists are not interested in using any slides that suggest this is not the case.

A Different World View

There is a completely different (largely European) philosophical tradition that contends that we have evolved to create worlds of significance, made not of matter but of “what matters”. Facts don’t speak for themselves – they have to be selected and interpreted and that brings identity, values, purpose and power into the picture. Conceptually management academics have to take on board Herbert Simon’s concept of bounded rationality, radical (Knightian) uncertainty and the emerging evidence that we are not rational in a logical sense but in an eco-logical way. Contexts matter, history matters, stories matter. And there are good reasons why they do.

This is a pragmatic philosophy of “both…and” that recognizes managers sometimes need data and calculation, at other times they need judgement and experience and they always

need power (but of different kinds). Everything depends on the type of uncertainty that their organizations are facing and to know that takes judgement. Thus professional, situated judgement (and the values it entails) are central to management. Managers are only occasionally detached, objective observers; they are mostly passionate, immersed participants. But it’s “both…and”, not “either/or”: knowing when to “use the other guys’ slides” and when not to. Only when we can embrace and articulate this “post-rational” view of management will we be able to make real progress.

A Pragmatic Philosophy

We need a new interpretive framework to legitimize this fundamentally “eco-logical” perspective on management. This philosophy will have much in common with American pragmatism. Neopragmatist Richard Rorty has put it well: “Pragmatism, by contrast [with positivism], does not erect Science as an idol to fill the space once held by God. It views science as one genre of literature – or, put the other way around, literature and the arts as inquiries, on the same footing as scientific inquiries. Thus it sees ethics as neither more “relative” or “subjective” than scientific theory, nor as needing to be made “scientific”. Physics is a way of trying to cope with various bits of the universe; ethics is a matter of trying to cope with other bits. Mathematics helps physics do its job; literature and the arts helps ethics do its. Some of these inquiries come up with propositions, some with narratives, some with paintings. The question of what proposition to assert, which pictures to look at, what narratives to listen to and comment on and retell, are all questions about what will help us get what we want (or about what we should want.)” (The Consequences of Pragmatism p. xliii)

This post-rational, post-modern framework is one of hope rather than gloom. From this perspective the goal of inquiry is not truth but action: “…to bring consensus on the ends to be achieved and the means used to achieve those ends.” It challenges us to come up with imaginative alternatives to our current beliefs. Imagination and experimentation allow us to create new practices and concepts. Principles don’t drive practice; principles are extracted from practices. That’s why the “whats” (principles) are generic, while the “hows” (practices) are specific. All of which brings us back to management as a practice that can both create and conserve, a calling with both moral and technical strands inextricably entangled with each other. This is where it was, is and always should be.

Surely Peter Drucker would agree!

http://www.druckerforum.org

http://www.forbes.com/sites/stevedenning/2014/11/18/clayton-christensen-how-management-can-advance/

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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.

Humans engage with their world in two reciprocal ways: firstly as passionate participants and secondly as detached observers. As managers we cycle between these modes constantly. It’s the mark of a great manager to be able to judge, in a complex situation, when and how to use each of them.

Detached observation requires a certain maturity. Consider that we are born into the world immersed in context. We are embodied organisms, fine-tuned by evolution to garner cues to action from our surroundings. We pay attention when we see a face and smile when we are smiled at. We learn to walk and talk without explicit instruction. From about the age of seven onward, however, we develop the capacity for perspective-taking. We learn to distance ourselves from the world and to swap our roles as involved participants for positions as distant observers.

The full blog post can be found at: http://blogs.hbr.org/cs/2013/05/the_mongrel_discipline_of_mana.html