“Warm hearts allied with cool heads seek a middle way between the extremes of abstract theory and personal impulse”

Stephen Toulmin, Return to Reason

In Masters of Management (2011) Adrian Wooldridge (Bagehot columnist for The Economist and frequent Drucker Forum participant) identified four defects in management theory:

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

After declaring management theory “guilty” on all charges in various degrees, he identified the root problem as an “intellectual confusion at the heart of management theory; it has become… 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.” He 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.”

It’s Not a Bug, It’s a Feature

It’s time to recognize our fundamentally divided nature as the essence of our humanity and that it is the practical weaving together of irreconcilable opposites that is the very warp and woof of our existence as human beings. It is not a bug but a feature of our success as a species and our ability to grapple with uncertainty by cooperating in groups much larger than the extended family. Managers and leaders must integrate this diversity. That takes art, craft, a little science, powerful metaphors and compelling stories, lots of stories.

The Engineer and the Gardener

Over the last sixty years the focus of Anglo-American management has been on means rather than ends. Many regard management as applied economics. The stress on efficiency has been very successful, at least according to the metrics it values. This engineering-technical approach, however, tends to view organizations as machines and people as instruments. The spotlight on utility and stability has led to an inability to address identity, purpose, innovation and change, especially in large-scale organizations. To do that requires an organic, ecological-adaptive approach – the earth-caked hands and patient habits of a gardener. Through this lens organizations are organisms and people are ends-in-themselves. The resulting tensions go with the job of being a manager and a leader.

Complicated and Complex Challenges

The engineering approach is not wrong. It works well in the natural sciences, but erratically in management. Complexity science tells us why. Project Apollo NASA’s program to put a man on the moon was a technically-complicated challenge. The cause-and-effect relationships were stable and understandable to engineers. On the other hand, raising children, starting new businesses or innovating in existing ones are complex challenges. The ‘components’ have minds of their own and causality has to be continually discovered and rediscovered. Complex challenges cannot be reduced to merely complicated ones, so managers are always grappling with an unknown compound of the two. When uncertainty rules ‘gardeners’ are needed.

The Individual and The Community

The engineering-technical approach to management emphasizes the role of the individual and neglects that of community, especially the role of the community in producing, not just individuals, but human beings. It privileges ‘I’ over ‘we’. There is much we can learn from the African concept of ubuntu, often translated as ‘I am because you are’. What makes us human is our connectedness with each other and the empathy that flows from that. The standard Zulu greeting is sawubona – “I see you.” The response is sikhona – “I am here.” Humanity is a quality we owe to each other. It follows then that management is always both a moral and a technical practice.

Masculine and Feminine

There is widening discussion in management about the meager representation of women at the top of business. It’s time to recognize the systemic roots of this issue in the Anglo-American management’s mono-logical mindset and heroic, ‘make-it-happen’ ethos that crowds out everything else. Engineering sounds hard, tough, masculine and predictable. Gardening has a very different feel. Gardeners care, they nurture, they tend. They realize that young enterprises and emergent strategies have to be cultivated and grown not designed and built. They understand the ecology of the situation, discerning the possibilities in this organization, right here, right now. They have to select and plant, water and fertilize, train and prune – and sometimes uproot and transplant. It’s a subtle, indirect approach, always embedded in complexity and calling on multiple perspectives to ‘help it happen’.

A Single Mind with Two Brains

After this litany of tensions and dilemmas the good news is that we humans have evolved to handle paradox. Our single mind consists of two brains, two ways of being in the world that are in creative tension with one another. One way is concerned with the familiar, the other with the novel, the one with what’s predictable, the other with what’s possible, the one with what is fixed, static, decontextualized and explicit, the other with the variable, dynamic, embedded and implicit. The mind is a loom that continually weaves a fabric of meaning, where the whole is greater than the sum of its parts.

East and West

Gardeners and engineers, yin and yang; the Taoist polarities capture well the weaving dynamic of management. Evolution uses a dual model, with a creative dynamic between female and male, as its default for its key mission – the production, care and development of the next generation. Gender is not destiny, but both roles must be played. Why would it be any different for creating sustainable organizations and societies? As managers we need a dual-systems view; a ‘dialectic of polarity’ as Drucker called it, between the existential and the instrumental, complex and complicated. This will take a social movement, a community of practice and some gardeners who also know how to be engineers. And have the judgment to know when.

About the Author:

David Hurst is a speaker, writer and management educator. He is the author of “The New Ecology of Leadership”.

This article is one in a series related to the 10th Global Peter Drucker Forum, with the theme management. the human dimension, taking place on November 29 & 30, 2018 in Vienna, Austria #GPDF18

This article first appeared on LinkedIn Pulse

‘The arts of life…turn out to possess their own special methods and techniques…Bad judgement here consists not in failing to apply the methods of natural science, but, on the contrary, in over-applying them’.

Isaiah Berlin, Political Judgement

Ever since the European Enlightenment reason has been regarded as the hallmark of our humanity. The French philosophes argued that it was the power of abstract thought that separated us from animals. Only reason promised a certainty that could free us from the tyranny of tradition, dogmatic faith and arbitrary rule.

Reason and rationality

There was, however, not a single Enlightenment. While the French took Descartes as their model and focused on the supremacy of his rational method, the English and Scottish Enlightenments emphasized its limits. For the British the essence of human nature was a moral sense of right and wrong and a natural empathy for others. For them reason meant reasonableness, not rationality. These different perspectives have led to radically different understandings of change in social systems, exemplified by the clash between the conservative Edmund Burke and the radical Thomas Paine and their differing views on the French Revolution.  Burke saw it as an unmitigated disaster, a destruction of community and tradition that heralded the age of ‘economists and calculators’. Paine, on the other hand, cheered it to the echo.

American politicians have never quite figured out which branch of the Enlightenment they belong to. Jefferson and Hamilton took opposite sides and, despite his conservative views, even Ronald Reagan was fond of quoting Paine’s aphorism that ‘We have it in our power to make the world over again’.  The divisions continue to this day. Conservatives, like Burke, are aghast at the thought of intellectuals trying to design and build what can only be grown, while the followers of Paine espouse progressive agendas to make the world anew.

American management, in contrast with politics, has never been in much philosophical doubt. One can track the roots of this confidence back to the 19th century influence of French thinking in the United States Military Academy at West Point, the nursery of so many early management pioneers. When the business schools were reformed in the late 1950s, Anglo-American philosophy was in a tight, analytic orbit. Academics aspired to make management a science in the mould of economics. Scientific rationality was seen as the only true knowledge and the scientific method as the only valid form of inquiry. Thus management was deemed to be a technical practice involving the application of theory. Organizational change was viewed as a rational, top-down, outside-in process, a perspective that reached its peak in the re-engineering craze of the 1990s. Even today, to be told that one is ‘rational’ is taken as a compliment and deviations from scientific rationality are described as ‘flaws’ and ‘biases’.

Evolution is smarter than we are

If scientific rationality is such a superior way to approach the world. why haven’t we evolved to be rational in this sense? In opposition to the ‘flaws and biases’ view there is that of cognitive scientists like Hugo Mercier and Dan Sperber. They contend that reason did not emerge to enable individuals to reach better decisions; it developed to allow individuals to rationalize decisions that had they already made through largely unconscious processes. While at the individual level this results in the well-known ‘confirmation bias’, at the level of the group it is adaptive. Groups make much better decisions when they are exposed to passionate individuals making evidence-based arguments for widely differing course of action. What is rational for individuals may be irrational for society and vice versa. And the unit of evolutionary survival is the population, not the individual.

Return to reason

In management the age of ‘economists and calculators’ has been in full swing for decades and the advent of big data and AI promises only to extend it. But if machine algorithms can be better scientists than we are, then the dominant Cartesian rationalist philosophy is in trouble. To restore the human dimension to management we need to move away from narrow, scientific rationality (contra Steven Pinker) to a broader concept of reason. This will require a pragmatic philosophy that acknowledges our need to answer both existential and instrumental questions:

• Identity: Who are we and why do we matter?
• Utility: What do we/I want and how do we/I get it?

Machines can’t follow us there; they may process information, but they don’t make meaning.

This will not be easy. It requires us to see the arts and the humanities as analogical modes of inquiry, just as valid as the analytical mode of science. Here there is no Cartesian ‘I’ to change ‘my’ mindset. It takes compelling immersive experiences a.k.a. ‘life’ to appreciate the power of the arts and social movements to shape our identities, our ways of being. This is, of course, the genius of evolution; it does not rely on one generation to renew itself indefinitely. It depends on new generations with different genetic and cultural backgrounds and experiences to build in Burkean fashion on what has gone before them. Otherwise we could all switch to asexual reproduction and live forever as clones, but frankly that doesn’t sound like much fun.…

This article is one in a series related to the 10th Global Peter Drucker Forum, with the theme management. the human dimension, taking place on November 29 & 30, 2018 in Vienna, Austria #GPDF18

This article was first published on Linkedin.

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• Sigmund Freud (1856-1939) claimed that it was the ‘will to pleasure’
• Alfred Adler (1870-1937) argued that it was the ‘will to power’
• Viktor Frankl (1905-1997) contended that it was the ‘will to meaning’

All of them have a kernel of truth, for it’s difficult to imagine humans flourishing without each of these incommensurable components, although the mix would be different for every person. Perhaps they are stages in life. When one is young it’s mostly about pleasure; in adulthood our focus is on power and control and in old age we become makers of meaning. But we are always concerned with all three.

One suspects that Peter Drucker would have supported Frankl’s emphasis on our quest for meaning. Frankl wrote that meaning could be found in three contexts that were close to Drucker’s own experience:

• Through significant work and achievement
• Through relationships, love and caring
• Though suffering and courage in times of adversity

Once again, all three are surely necessary for a meaningful life. Frankl stressed the importance of the individual sense of responsibility that has to emerge from these experiences, the responsibility to accept the different tasks that life sets for every one of us and to find answers to the problems that we face. Echoing Nietzsche, he writes, “He (who) knows the ‘why’ for his existence, … will be able to bear almost any ‘how’”, which reminds one of Drucker’s thoughts on the primary responsibility of leaders to continually articulate the mission and purpose of their organizations.

Ways and Means

Anglo-American management has long been preoccupied with ways and means, rather than purposes and ends. In the mid-20^th Century, with a gospel of progress an instrumental, technological approach emerged. As sociologist Philip Selznick suggested, management academics were concerned that they be seen as scientists rather than moralists; “…they say given your ends, whatever they may be, the study of administration will help you achieve them. We offer you tools.” The emphasis has been on human individuals as mono-logical, rational actors making rational choices in the pursuit of selfish ends. The focus on exchange and consumption, with money taken as the universal solvent, has resulted in a view of life and living that is closer to Freud’s (with Adler as a sub-text) than Frankl’s. The answer is always ‘more’. As management scholar James March has remarked, we have been preoccupied with ‘plumbing’ rather than ‘poetry’, with the logic of consequences, what the economists call utility, to the neglect of the many logics of identity. For despite the economists’ emphasis on rationality, the evidence is that most human decision-making is an attempt to answer three questions, both individually and collectively:

1. What kind of situation is this?
2. What kind of person am I?
3. What does a person like me do in a situation like this?

We are rather better rationalizers than reasoners, rarely able to make rational choices in prospect, but adept at retrospectively rationalizing the decisions we do make and defending them. Our so-called cognitive biases are not a flaw but a reflection of the kind of situations we faced as we evolved as a species. For we evolved to make fast ‘good-enough’ decisions under pressure of time and conditions of uncertainty. Often there was little agreement on the nature of the problem and little certainty as to its solution. The unit of survival was always the community, not the individual and our make-up reflects the emphasis that evolution placed on agility and cooperation within groups, rather than competition. Cooperation was enhanced when we knew that people would play roles that reflected their identity rather than their self-interest. We trust people who are honest by character and conviction, rather than only by calculation and choice.

What Do People Like Us Do in a Situation Like This?

Pablo Picasso once opined that computers were useless because they only gave answers. They give answers to ‘complicated’ problems, where the range of possible outcomes is clear and their probabilities can be calculated. Management action can be direct and outcomes and risks measured. Unfortunately many of the problems that organizations face are ‘wicked’ – complex rather than complicated. There are multiple stakeholders with different imperatives and the puzzle changes its form as one grapples with it.  Uncertainty reigns, with the range of outcomes unknowable and their probabilities incalculable.

Prosperity and inclusive growth are wicked problems. So what do people like us (managers) do in situations like this? I believe that we have to act and think more like gardeners and less like engineers; prosperity has to be cultivated, it cannot be manufactured.  As English economist, John Kay points out in his fine book, Obliquity, in such contexts decision-making cannot proceed by defining objectives, analyzing them into goals and breaking them down into actions. Friedrich Hayek labeled the belief that one could construct what should be inherited or learned as ‘the fatal conceit’ and showed how those who had attempted it had done massive damage to the complex systems they tried to build.

Thus we cannot create either prosperity or inclusive growth directly, we can only work obliquely and create the conditions for them to happen.  We can select and plant and tend, never forgetting the vast natural system on which everything depends. In complex human systems this includes the institutional taproots of our societies; the family, the primary school and communities of faith. Here the understanding of how things happen is captured in sense-making narratives, unique to every organization, not predictive chains of logic based on general principles. It’s all about the growth and development of organisms whose trajectories are path-dependent and inimitable. In a well-known 2010 article in the Harvard Business Review, Clay Christensen wrote, “Management is the most noble of professions if practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team.” It is this noble practice that should be front and center in Vienna this November.

About the author:

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

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).