In November 2018, the world\u2019s leading management conference\u2014the Global Peter Drucker Forum\u2014will debate a profound question: \u201cmanagement\u2014the human dimension.\u201d A cast of eminent thinkers and executives will consider nothing less than the possibility of \u201ca business reformation\u201d\u2014 something analogous to Martin Luther\u2019s call of 1517 for the Roman Catholic Church to abandon the sale of indulgences.<\/p>\n
The Drucker Forum invites us \u201cto rethink how organizations, businesses, are actually run, why they are run, and what their purpose and role are in society.\u201d<\/p>\n
The Three Responsibilities of Management <\/strong><\/p>\n In responding to this call, a good starting point is Peter Drucker\u2019s 1954 classic book, Management<\/a>, which formulated three responsibilities of management:<\/p>\n \u201cManagement,\u201d wrote Drucker, \u201cis what tradition used to call a liberal art\u2026 Managers draw on all the knowledge and insights of the humanities and the social sciences\u2026 But they have to focus this knowledge on effectiveness and results.\u201d<\/p>\n 1.\u00a0\u00a0\u00a0\u00a0The Organization\u2019s Performance<\/strong><\/p>\n The most important of management\u2019s responsibilities, said Drucker, is assuring the performance of the institution for which managers work. This is where the human aspect of management has been most seriously sacrificed to the financial.<\/p>\n Drucker repeatedly insisted that \u201cthere is only one valid purpose of a corporation, to create a customer.\u201d In Management<\/a> (1954), Management: Tasks, Responsibilities, Practices<\/a> (1973) and Innovation and Entrepreneurship<\/a> (1985) Drucker set aside any flabby platitudes about satisfying all<\/em> stakeholders or pursuing some preachy purpose with a capital “P”.<\/a><\/p>\n Yet beginning in the late 20th Century, many public corporations espoused the opposite goal\u2014maximizing shareholder value as reflected in the stock price, a notion that even Jack Welch has called \u201cthe dumbest idea in the world<\/a>.\u201d In pursuing profit ahead of people, public corporations succeeded in massively destroying long-term profit and shareholder value<\/a>.<\/p>\n Today, the fast-changing marketplace has underlined the validity of Drucker\u2019s dictum. As a result, some firms have reinstated human beings\u2014customers\u2014as the central focus of the firm. Paradoxically\u2014and happily\u2014this shift in focus from money to people has also ended up in making a great deal more money for the company and its shareholders. The five largest firms on the planet (by market capitalization)\u2014Amazon, Apple, Facebook, Google Microsoft\u2014 have succeeded precisely because they have created more customers than any other firms<\/a>.<\/p>\n 2.\u00a0\u00a0\u00a0\u00a0Making Work Productive <\/strong><\/p>\n \u201cThe second task of management,\u201d Drucker said, \u201cis to make work productive and the worker achieving.\u201d In the 20th Century, people doing work were treated as \u201chuman resources\u201d i.e. things to be mined. Towards the end of the century, work and workers were often no more than collateral damage in the rush to maximize shareholder value. Gains in productivity were skimmed off the top for shareholders<\/a>, including the firms’ executives.<\/p>\n As firms became steadily less productive in real terms, as documented by Deloitte\u2019s Center for the Edge<\/a>, only a resort to financial engineering, share buybacks, acquisitions offshoring, kept up a pretense of Potemkin prosperity<\/a>. Meanwhile the rich got richer while median salaries stagnated.<\/p>\n This dynamic is now also changing dramatically. As firms find that their future increasingly depends on a capability to meet customer demands through continuous innovation<\/a>, this means winning the battle for scarce top talent.<\/p>\n Acquiring, nurturing, rewarding and retaining top talent becomes necessary for success. Generating stimulating, meaningful workplaces becomes a central management preoccupation. Here again, the human dimension is already emerging triumphant in top firms in the private sector<\/a>, even as the overall education system, including business schools, lag woefully behind in generating the competencies required.<\/p>\n 3.\u00a0\u00a0\u00a0\u00a0Managing Social Impacts And Social Responsibilities<\/strong><\/p>\n \u201cThe third task of management,\u201d Drucker taught us, \u201cis managing the \u201ctwo different types of social impact\u2026<\/p>\n This is an area to which the new digital giants urgently need to pay more attention. For instance, the alleged misuse of Facebook\u2019s<\/a> private data, Google\u2019s<\/a> alleged use of its market power to suppress competition, and Uber\u2019s<\/a> breaches of local regulations, are serious issues. If the firms themselves don\u2019t rectify any transgressions that have occurred, regulators must step in.<\/p>\n Maintaining Balance<\/strong><\/p>\n Yet balance is also key. In managing negative social impact, regulators\u2014and the Drucker Forum\u2014must avoid throwing out the baby with the bathwater. They need to recognize that the new digital giants have gotten so large so fast because they have met real social and economic needs that vast numbers of people see as important. The challenge is to manage any negative social impacts while recognizing the real value that these firms are creating for real human beings.<\/p>\n Steve Denning\u2019s latest book is The Age of Agile<\/em> (2018).<\/p>\n This article first appeared in Forbes.com at <\/em>https:\/\/www.forbes.com\/sites\/stevedenning\/2018\/04\/01\/can-the-drucker-forum-establish-the-human-dimension-of-management\/<\/em><\/a> and is reproduced here in a condensed form with permission, all rights reserved.<\/em><\/p>\n This article is one in a series related to the <\/em><\/strong>10th Global Peter Drucker Forum<\/em><\/strong><\/a>, with the theme <\/em><\/strong>management. the human dimension<\/em><\/strong><\/a>, taking place on November 29 & 30, 2018 in Vienna, Austria #GPDF18<\/em><\/strong><\/p>\n\n
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