During a visit last week to the place of Peter Drucker\u2019s birth, I suddenly remembered a note that he had written shortly before his death.<\/p>\n
<\/p>\n
I had come to Vienna to participate in the Fourth Global Peter Drucker Forum<\/a>, which attracted hundreds of executives, scholars and students to contemplate what, in the aftermath of the global financial crisis and Great Recession, a better form of capitalism might look like. Much of the discussion on \u201cCapitalism 2.0\u201d centered, sensibly, on finding alternatives to maximizing shareholder value<\/a>.<\/p>\n <\/p>\n But other important threads also ran through the proceedings, including the way that information technology is reshaping all sorts of organizations. It was this particular theme that prompted me to flash on-and laugh about-a brief missive that Drucker sent<\/a> to a friend in April 2005. \u201cPardon my ignorance,\u201d he wrote, \u201cbut how do you get people to look at the Internet?\u201d<\/p>\n <\/p>\n The funny part is, as unfamiliar as the then-95-year-old was with exactly how folks maneuvered online, he had spent much of his life exploring and explaining a world that was becoming increasingly dominated by an unending stream of data and knowledge. \u201cThe impact of cheap, reliable, fast and universally available information will easily be as great as was the impact of electricity,\u201d Drucker declared in his 1968 book The Age of Discontinuity<\/em>.<\/p>\n <\/p>\n Drucker may have been behind in grasping some of the details of technology, but he was incredibly far ahead in discerning the broader contours that most executives are just beginning to see, as evidenced by three insights from the forum:<\/p>\n <\/p>\n 1. <\/strong>Most companies are still stuck in a pre-knowledge-era mindset.<\/strong><\/p>\n <\/p>\n \u201cWhen economists talk of \u2018capital\u2019 they rarely include \u2018knowledge,\u2019\u201d Drucker wrote in his path-breaking 1959 book Landmarks of Tomorrow<\/em>. \u201cYet this is the only real capital today.\u201d As consultant and author Tammy Erickson made clear at the event, most organizations are, more than five decades later, still coming to terms with this reality.<\/p>\n <\/p>\n \u201cWe are moving out of a century in which the key resource that distinguished one\u2019s business was capital-\u2018those who had money made money,\u2019\u201d Erickson told the audience. \u201cToday we live in a world in which the biggest challenge facing any company and every business leader is to mobilize intelligence.\u201d That, she explained, is the way to offer the customized products and services that consumers now demand; respond quickly to outside changes \u201cthrough insights gained from faint signals\u201d; innovate; and \u201charness the smallest units of knowledge, creating value from bits that in the past would have been ignored or discarded.\u201d<\/p>\n <\/p>\n 2.<\/strong> Getting information to flow seamlessly between parts of the organization, as well as between its walls and the outside universe, remains daunting.<\/strong><\/p>\n <\/p>\n \u201cHow do you prepare leaders to cooperate and coordinate across complex boundaries?\u201d London Business School\u2019s Lynda Gratton asked at the close of her presentation. She noted that while some companies, such as <\/a>IBM<\/a>\u00a0and Infosys, have designed sophisticated platforms to enhance the ability of their people to collaborate easily and often, this continues to be a weak spot for many. In fact, the ability to transcend organizational boundaries is one of four risks (along with the successful application of open innovation, the effective use of social media and intergenerational cohesion) that Gratton\u2019s research has shown corporate leaders are most concerned about these days.<\/p>\n <\/p>\n Drucker worried about this, too. He called for executives to bring \u201cthe meaningful outside\u201d into their organizations. Internally, meanwhile, \u201call the managers in a plant will have to know and understand the entire process, just as the destroyer commander had to know and understand the tactical command of the entire flotilla,\u201d Drucker wrote in Managing for the Future<\/em>, published in 1992. They will \u201chave to think and act as team members, mindful of the performance of the whole. Above all, they will have to ask: \u2018What do the people running the other modules need to know about the characteristics, the capacity, the plans and the performance of my unit? And what, in turn, do we in my module need to know about theirs?\u2019\u201d<\/p>\n <\/p>\n 3. Don\u2019t underestimate what can be done when people have vital information in their hands.<\/strong><\/p>\n <\/p>\n \u201cWhoever has the information has the power,\u201d Drucker wrote in his 2002 book Managing in the Next Society<\/em>. \u201cPower is thus shifting to the customer.\u201d<\/p>\n <\/p>\n In the U.S., at least, Best Buy has become the poster child<\/a> for this dramatic transformation. But to really comprehend how far-reaching its effects can be, we should all be looking toward China, where 530 million people are now connected to the Internet and half of those use social media every day.<\/p>\n <\/p>\n John Quelch, of the China Europe International Business School, told Drucker forum attendees how one blogger last year put a dent in Siemens\u2019s reputation after the company failed to respond adequately to complaints about refrigerators with a faulty door. The blogger, Luo Yonghao, <\/strong>and friends sledgehammered several of the products in front of the company\u2019s offices in Beijing-all of it caught on video. <\/strong>Their efforts went viral, and Siemens wound up apologizing<\/a>. At the same time, other Chinese have self-organized online to form purchasing groups with enough leverage to force down the price of, say, the new Toyota Yaris they each want to buy.<\/p>\n <\/p>\n \u201cIn the absence of strong legal and consumer protection systems, social media protect the interests of ordinary people, facilitate competitive pricing through e-commerce and enable emerging as well as established brands to thrive,\u201d Quelch remarked.<\/p>\n <\/p>\n Whether this consumer power can stretch into citizen power is an open question. Drucker, though, wouldn\u2019t have been surprised if it does. E-commerce is \u201cprofoundly changing economies, markets and industry structures,\u201d he wrote in The Atlantic<\/em> in 1999. \u201cBut the impact may be even greater on societies and politics and . . . on the way we see the world and ourselves in it.\u201d<\/p>\n <\/p>\n For hundreds of millions of Chinese, the information revolution may truly live up to its name.<\/p>\n <\/p>\n AUTHOR:<\/strong> <\/p>\n <\/p>\n
\nRick Wartzman is the executive director of the\u00a0Drucker Institute<\/a>\u00a0at Claremont Graduate University and a columnist for Forbes.com<\/em><\/a>. He is the author of\u00a0What Would Drucker Do Now?<\/em>\u00a0(which is a collection of his columns) and two books of narrative history:\u00a0Obscene in the Extreme: The Burning and Banning of John Steinbeck\u2019s The Grapes of Wrath<\/em>\u00a0and (with Mark Arax)\u00a0The King of California: J.G. Boswell and the Making of a Secret American History<\/em>.<\/p>\n
\n