It is high time to rethink our parameters for dealing with the pandemic. What we need are leaders with judgment and common sense.

We are currently seeing an alarming new twist in the Covid narrative: while at the start of the pandemic the aim was to prevent our healthcare systems from collapsing, the goal now seems to be to stop anyone at all becoming ill. But the situation today is in no way comparable to that of spring. It is true that in much of Europe infections are again on the rise. Yet on the whole rising case numbers are having little effect on hospital bed occupancy or even on intensive care units. We are in a new phase of the pandemic, not a repeat of the first one. For now the collapse of our health systems is not imminent, nor, according to experts, is one anticipated.

Drucker Forum 2020

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
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The reasons for this are multifactorial: on the one hand, a growing proportion of those affected in the new wave consists of the young, who mainly present with mild symptoms; on the other, better therapies are becoming available to treat more severe cases. Last but not least, it is being suggested in some quarters that as the virus becomes more infectious, it is also weakening in potency.   

Meanwhile, the collapse that we are actually suffering is that of the economy. According to OECD forecasts, Europe can expect to feel the greatest blow to its prosperity since the second world war, in which the first wave with its lockdown is set to leave much deeper traces (France and the UK more than -11%, Germany -6.8%, Austria -6.2%) than the second, which in turn may be morphing into something more like a “permanent wave”. This means that even if the health crisis were to worsen again, it would have to be weighed against the social and economic consequences. For one thing has become clear: even if a vaccine is forthcoming, it will not magic the problems away at a stroke. 

What we need from leadership today is clear thinking, sound judgment and common sense. That means being able to take the best insights from different kinds of expertise and blend them into decisions that are balanced and above all pragmatic, as Roger Martin, Julia Kirby and I outline in our HBR article on the approaches leaders should bring to different types of problem. Those who focus on counting infections while turning a blind eye to actual hospital admissions and deaths, let alone the enormous collateral damage currently being inflicted on the economy and society as a whole, are committing errors of thinking that do society a grave disservice. “If your only tool is a hammer, every problem looks like a nail”. The authorship of this quote is disputed, but no one can doubt that in the current situation it hits the nail squarely on the head. It is high time to bring a different set of tools to the task of dealing with the pandemic.

About the Author:
Richard Straub is Founder and President of the Global Peter Drucker Forum. The 2020 Forum will take place on October 29 & 30 in the Vienna Hofburg Palace with the general theme: Leadership Everywhere – A Fresh Perspective on Management.

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
#DruckerForum

Crisis always shifts people’s attention abruptly to the quality of their leaders. We are seeing this now, as the appalling spread of the COVID-19 virus and the alarming collapse of economicactivity worldwide have people in all quarters looking to leaders for guidance—and often being left far from reassured by what they see.

Why do people give so much more attention to their anointed leaders in such moments? Leadership pundits usually explain that when they are panicked, people grasp for certain things: a model of resolute confidence to calm their nerves, a clear thinker to outline the right course of action, a decisive actor who wastes no time dithering. All this is true.

Drucker Forum 2020

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
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But what many students of leadership miss is that people also know that any crisis is a time of uncertainty and ambiguity, when big changes are afoot. They suspect that rules will change, priorities be reordered, and that some of those who used to be up will find themselves down. And they want leaders who can be trusted to protect their interests, not advance a pet agenda of the leader’s own or their cronies. They want leadership focused on practical solutions – not motivated by ideology, let alone political considerations.

The fact that so many leaders in these past weeks have come up short on all these requirements underscores that our institutions must focus more on improving how they are led – just as they have, over the past century, concentrated on how efficiently they are managed. The two functions are not synonymous. In any enterprise, good management means seeing that work is done in the best way to achieve an organization’s objectives. But figuring out what those objectives should be and orchestrating the capacity for collective performance with the right players in place is the province of leadership. As the classic expression goes, management is doing things right—leadership is doing the right things.

Figuring out the right things to do has always been difficult because it involves judgment and strategic vision. It also requires trade-offs. But the challenge has become much greater given the modern world’s unprecedented level of connectivity and interdependence, and hence complexity. Across the past 200 years, we have seen the formation of a vast, man-made network of organizations and institutions. Equally, the notion of being stewards of our natural ecology, our environment, has made its way to the top of the agenda of companies, public sector bodies and governments during the last decades. However, we have terribly ignored the challenges that the new man-made environment of myriads of interconnected companies, consumers, investors, public sector institutions, governments and NGOs poses. They are all part of a web that Peter Drucker called the new Social Ecology. Just like natural ecosystems, our social ecology needs care, maintenance and diligent stewardship.

In this perspective, while just-in-time globalized supply chains can justly be celebrated as a great advance in management practice, the resulting dramatic increase in vulnerability must be part of the leadership equation. In the same way, the globally integrated virtual enterprise with its company rolesand functions distributed across the globe can be hailed as a great organization innovation that frees us from the constraints of time and space. Yet, again in a leadership perspective, the organizational gain has to be weighed against the social impact of large-scale displacement of jobs and the damage done to trust in corporate leadership both internally and in society at large. Managing investment portfolios through artificial intelligence and automated algorithmic trading processes that amplify shocks to the system and accelerate downward spirals is another example of the culpable abdication of leadership responsibility to digital systems – whatever their benefits in terms of productivity and efficiency.

At the same time, governments and public sector bodies seeking to impose sweeping restructuring on whole sectors, such as the automotive industry in Europe, should be forcefully reminded of the huge costs of such top-down transformations in terms of social burden and destruction of economic value. They lose sight of the fact that the social ecology is made up of evolutionary systems that cannot be transformed by government fiat without creating unintended consequences that may be more damaging than the ill they are intended to cure. The German “Energiewende”, and the stifling regulatory micromanagement that has become the norm are examples of this failure of leadership vision. Responsible leadership needs to embrace both the preservation of the natural environment and the need to keep modern society functioning by nurturing the social ecology of existing value-creating organizations and institutions.

If all this sounds like an overdramatic wakeup call, I make no apology. The Covid-19 shock hits us at a time when our economic, social and political fabric are already significantly stretched. As The Economist’s Adrian Wooldridge reminded us at the 10th Global Peter Drucker Forum in 2018, we are living an acute crisis of leadership. This crisis is massively amplified today by the latest developments. In the midst of the financial crash in 2008, Rahm Emanuel, then chief of staff to President Obama, made a memorable observation to an interviewer: “You never want a serious crisis to go to waste.” His meaningwas that, because people are unusually compliant when rattled, leaders would be foolish not to use the license granted to them to execute real change. The phrase is often repeated as the quintessential cynical response to a situation that can be exploited to push what would, in normal times, be an unpalatable agenda. Yet odd as it may sound, even today’s unprecedented crisis is a real opportunity for leaders to rethink their outdated assumptions.

In terms of the leadership agenda, the first essential is clearly to mobilize the leaders of all organizations to live up to their responsibilities – initially in the fire-fighting phase that we are currently traversing. The more power leaders wield, the more they must remember the crucial importance of their role in serving a bigger cause and strengthening trust with their communities and society as a whole. We think here particularly of those who have most benefited from the long stock- market boom: investors who largely remain hidden behind anonymous trading systems, and selfdealing boards/executives at Dow Jones corporations who have made propping up share prices with massive stock buybacks a standard practice, thereby collaborating, deliberately or not, in the inflation of the larger stockmarket bubble that has just burst.

This fortunate minority need to remember that they are not investing in shares but in real people, for whose livelihoods, and lives, they bear a responsibility. To just run away is not an acceptable response, either ethically or economically. As leaders and stewards, they are called on to take a longterm perspective and demonstrate this by their actions. Warren Buffet should be considered a role model in this respect. Secondly, surmounting this crisis in the coming months will require us to reassess the importance of leadership for the remainder of the 21st century. It can only be based on fundamental human values, with human dignity at the center, deep understanding of reality, constant openness to learning from that reality, and a profoundly pragmatic mindset that finally demands us to shed the ideological blinkers that we have inherited from the last two centuries.

Charles Handy had it absolutely right. Things need management. People need leadership – and it is dangerous to get it the other way round. Our society needs leadership to imaginesolutions without which – make no mistake – our social cohesion is at risk. To this end, the high calling for leadership in the 21st century is nothing less than to unchain the potential of human ingenuity, creativity and eagerness to engage, and thus make fully effective the most important resource on the planet. We need nothing less. Richard Straub is Founder and President of the Global Peter Drucker Forum. The 2020 Forum will take place on October 29 & 30 in the Vienna Hofburg Palace with the general theme: Leadership Everywhere – A Fresh Perspective on Management.

About the Author:

Richard Straub is Founder and President of the Global Peter Drucker Forum. The 2020 Forum will take place on October 29 & 30 in the Vienna Hofburg Palace with the general theme: Leadership Everywhere – A Fresh Perspective on Management.

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
#DruckerForum

“People need leadership. Things need management.It is dangerous to get it the other way round.”– Charles HandyPeter Drucker, whose life spanned the twentieth century, labeled that time as the era of organizations and institutions. Ob-serving the dramatic rise of complex large-scale enterprises, he saw them as the new backbone of society and economy. As a consequence, he recognized the growing role of managers as fundamental to making these new legal, economic, social, and ultimately human constructs work. He also saw that when hospitals, education institutions, government bodies, and companies don’t perform, society at large does not function. Thus, he stressed the role of management as essential not only in business but in society. In this sense, management is a “social technology”—a robust set of tools to make human endeavor more productive.

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This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
#DruckerForum

Achieving efficiencies of scale was the dominating theme of twentieth-century capitalism—pursued across the board by both the public and private sectors. The power of scalable organizational structures and work processes became evident in ways horrifying and inspiring. The model showed its ugly face in two world wars, as the machinery of conflict extended to weapons of mass destruction and industrialized genocide. On the other hand, its enormous positive power became clear in the postwar period, as the new economic and social system dramatically boosted human prosperity, albeit not in equal distribution around the globe. The twentieth-century model of efficiency management was indeed extremely successful and brought unprecedented progress.

Today we face a new critical point in the course of human progress. While our intellectual, social, and moral capabilities have evolved only slowly and incrementally over the millennia, our technical capabilities have grown exponentially. AI, robotics, machine learning, genetic engineering, and other breathtaking developments now challenge us with unpreceden-ted questions and fill us with new anxieties. Meanwhile, our increasingly global perspective forces us to confront planeta-ry-scale threats, from overpopulation to huge disparities in life chances on different continents, to climate change, to the culture clashes that come with globalization and mass migration.

This is a century in which the metaphor of the “perfect storm”—a swirl of powerful elements colliding to produce unfore-seeable effects—is constantly invoked. Traditional management is overwhelmed and often disoriented by the interplay of challenges. As the Economist’s Adrian Wooldridge warned at last year’s Drucker Forum in Vienna, to focus too tightly on management techniques in such times is to commit a monumental failure of leadership. The two are not synonymous, as Drucker knew. He famously summed up the difference by noting that management is doing things right, but leadership is doing the right things. The worst mistake is to manage in excellent and efficient ways what shouldn’t be done at all. The work of leadership is to determine the direction an organization should take, and make the difficult decisions that require judgment and tradeoffs. Leaders, who emphasize purpose and values, are less about the “how” of the organization than the “why.”

The technological progress we have made puts the emphasis even more strongly on this leadership imperative. The challenges of the twenty-first century cannot be tackled from a technical perspective, just as they cannot be met with compliance checklists, certifications, and ever more specific regulations. They require the deeper, wider, and more holistic world view that visionary leaders can provide. There is no shortcut to cross-disciplinary knowledge, judgment, capabilities, and ultimately wisdom. No machine will ever be able to take this over.

In the current transition to a new world that is emerging—but that we shape ourselves—we should certainly draw wisdom from the great thinkers and mentors of the past. We are lucky in Vienna that quite a number of these giants were connected to this place and its cultural and economic tradition. Schumpeter shaped our understanding of a vibrant capitalism, based on entrepreneurship and innovation; Hayek made the case for freedom and for the power of competitive markets; Popper sharpened our view what an open society actually means and where its limits are; and Polanyi showed the dangers of unbridled markets and the need for continued role of the state to create a just society. Drucker, we might say, brought these strands together and taught the world how to translate good intention into actual performance—again, not only by doing things right but by doing the right things.

These great thinkers cannot provide us with specific answers in a world that is characterized by exponential change. If we want specific answers for dealing with it, we will have to find them ourselves—but they can provide us with enormous inspiration and depth. We can stand on their shoulders to see further, and discover ways to shape tomorrow’s society. Their voices remind us to return to reason and to avoid falling back into tribal fights, entrenched ideological positions, and the shallow simplifications of populist agendas on all extremes of the political spectrum.

The rise of large-scale organizations has dramatically increased the need for management and leadership, and both must grow in terms of quantity and quality. Even as we take care to distinguish leadership and management, we must recognize that they are not disconnected. While great leaders focus more on the question of what things must be done, they also understand how much effort is required to “do things well”—to establish the conditions and marshal the resources to make an organization’s work productive. Yet we should also recognize that the scarce resource in the twenty-first century will be leadership, not management talent.

It all comes back to the special qualities of human beings. If the twentieth century was called the century of management, the twenty-first century should be proclaimed the century of leadership. We need more capable leaders to open up the wide area of human ingenuity and creativity, and to unlock more human potential—the most crucial “natural resource” on the planet.

About the Author:

Richard Straub is Founder and President of the Global Peter Drucker Forum. The 2020 Forum will take place on October 29 & 30 in the Vienna Hofburg Palace with the general theme: Leadership Everywhere – A Fresh Perspective on Management.

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
#DruckerForum

Ten years of the Global Peter Drucker Forum: Richard Straub, founder and president, on visions for a better society – and a new paradigm for management

This November we are proud to celebrate the first decade of the Global Peter Drucker Forum. It all began in 2009 – the year that Peter Drucker would have turned 100. At that first congress, we had the special honor of welcoming Peter’s widow Doris to Vienna. We had the benefit of her wise advice until 2014, when she died at the age of 104. Her wish at the time has been has been both our legacy and our mission: “Do not make the Drucker Forum a Peter Drucker Museum,” she told us. “But stand on his shoulders and look to the future.”

Rediscovering our humanity

Standing on Drucker’s shoulders to look to the future: no small undertaking, but one we have done our best to fulfil over the last nine years as leading management thinkers and practitioners have used the Forum to debate Peter Drucker’s core ideas and values and how to apply them to our increasingly unpredictable world. It is fitting that in this anniversary year, as the Drucker Forum unfolds in the imposing surroundings of the Vienna Hofburg, we are breaking all records: not only in terms of attendance – we expect one thousand participants – but also in terms of events and networking opportunities for the young generation of managers now coming through.

Combating fear

The Forum’s central concerns have always been the social role of management and the foregrounding of humanity in the economy. Today, at a time when the latter is all too often marginalised by the pressure of economic constraints and the dynamics of the digital revolution, the prevailing feeling is fear. There is concern that even in most knowledge-based work we may be disposable, replaceable by “smart” technology. Is the logic of the technocrats and the algorithms really our destiny? To what extent can management play a role in humanising the future and reasserting the values of relationship, community, emotion and creativity? Not without reason, Peter Drucker described management as a liberal art – one of the humanities.

Note that we are not talking here about a touchy-feely “feel-good society”. We unambiguously need strong companies and institutions that do what they were created for – with and for people. Peter Drucker reminded us that free enterprise cannot be justified as good for business: “It can only be justified as good for society.” This means contributing to a functioning society though innovation and the creation of value. Their performance is put to the test by daily competition in the marketplace.

What kind of organizations and institutions do we need today and in the future, and what qualities will leaders need to guide them? How can the social technology of management develop a new synthesis between the quest for efficiency and the freeing up of human creativity?

The Drucker Forum: at the center of change

Of course, there are no patent remedies here either. Every organization has to chart its own way into the future. Yet breakthrough ideas and inspiration will be essential as we seek to initiate profound changes in management and leadership. We hope that the Drucker Forum will be a source of this inspiration. That will help to ensure the community that benefits from this platform for change will also grow and thrive. In today’s complex world, good intentions and engineered solutions are not enough to achieve sustainable transformation. Peter Drucker never wanted to know what managers thought of his lectures. He just asked, “Tell me what you’re going to do on Monday that’s different”

Change must come from a need: from the desire for vision, meaning and purpose. Our mission is to be at the center of these changes. Our deep aim is to attract an ever-growing group of dedicated thinkers and practitioners to join the common endeavor – the foundation for which has been laid by the first decade of the Drucker Forum.

Selected highlights from the Forum’s first 10 years

First Forum highlights (2009) https://www.youtube.com/watch?v=QXHue14I3D4&feature=youtu.be

C.K. Prahalad opening keynote (2009) https://www.youtube.com/watch?v=F68w6sQ-kSU&feature=youtu.be

Clayton Christensen on data from hell (2016) https://www.youtube.com/watch?v=lxecAi5-FBw&t=11m3s

Carlota Perez on the responsibility of the state (2017) https://www.youtube.com/watch?v=TuVenQcdHX8&feature=youtu.be

Charles Handy final presentation (2017) https://www.youtube.com/watch?v=Tg88zIgeE2o&feature=youtu.be

About the Author:

Richard Straub is the president of the Global Peter Drucker Forum

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 posted on LinkedIn Pulse

What does it take to cause something big about a community to change — something that no one individually has much power over, even something as big as a prevailing mindset? We know what it takes: a social movement. And social movements aren’t only the domain of community organizers and college students. Business people can set them in motion, too, as we are seeing right now.

Currently gaining force is a movement to focus for-profit enterprises more on the essential work of enriching societies — that is, benefiting not only those humans who are their owners as publicly traded companies but also those who work in them and who stand to benefit from more purpose-driven innovation. Like any social movement, this one has started with many people starting small fires. Look around and you will see them:

• Individual CEOs and their boards deliberately deciding to take a stand. Note, for example, the spirited defense by Paul Polman of Unilever of his long-term, sustainable business philosophy in the wake of a takeover attempt. Note the far-reaching production changes Jean-Dominique Senard has made at Michelin to empower and engage workers. In China look at the unique organization of entrepreneurial cells Zhang Ruimin has created at Haier, and in France look at Vinci Group’s success, under Xavier Huillard, with a radically decentralized model designed to foster entrepreneurial creativity in its three thousand constituent companies. See also Rick Goings’s commitment at Tupperware Brands to increasing women’s economic empowerment in emerging economies as well as mature ones.
• Networks and communities spreading new norms and new forms of capitalism. From the Coalition for Inclusive Capitalism to the Conscious Capitalism organization, groups are forming with a mission (in the words of the latter) to “inspire, educate and empower companies to elevate humanity through business.” Some are designing new governance forms for enterprises, such as B-corps and cooperatives. Note especially the brave, innovative management reflected in social enterprises such as the Sampark Foundation, where Vineet Nayar, former CEO of HCL Technologies, is on a mission to inspire kids in rural India to learn how to think and invent like frugal innovators.
• Management thinkers framing the greatest challenges of our time as human ones. Witness the shift that is taking place in the global conversation about artificial intelligence and other advanced digital technologies. Increasingly there is an insistence that these powerful forces must leverage human creativity, not marginalize it. Smart machines can help us find answers more quickly, but cannot frame the questions to address. We must use these technologies to unleash human potential — undoubtedly the most underused resource on the planet — and bring greater purpose, meaning, and values to work.

All these sparks of activity are generating heat and light. But how can the many small flames be fanned into a blazing fire? One key is for all these fire-starters to recognize that they are part of a bigger movement, not just individually acting on their own values but collectively working to change expectations and behaviors. Often this happens when people who would otherwise sit on the sidelines perceive a real threat in not acting, and are galvanized to join the movement.

This is part of why Larry Fink’s open letter to CEOs, sent on the occasion of his investment company BlackRock’s 30th anniversary, has generated such acclaim. In it, he points to the growing threat posed by activist investors who push for short-term share-boosting tactics without regard for firms’ long-term viability. Management teams set themselves up for these assaults, he claims, when they fail to articulate compelling long-term strategies — visions of the future informed by “a sense of purpose.” Purpose, moreover, means for him social purpose. ‘The public expectations of your company have never been greater,” Fink writes. “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Of course, the ideas that corporations must earn their “license to operate” and serve stakeholders that go far beyond shareholders are not new. But, as Judy Samuelsen puts it, “When the head of BlackRock, the largest investor in the world, says that companies must produce not only profits, but contributions to society, it sends a powerful message.” It kindles new interest and fans existing flames.

Management educators and researchers can add their own fuel to the fire, if they will step up to it. Lately our formal institutions of management education have been outstripped by thinkers outside the academy in coming up with new frameworks and methods. Much of the welcome recent innovation in management practice has come from the fringes — new communities and groups developing approaches such as the agile (or Scrum) movement, design thinking, lean-startup methodologies and beyond-budgeting approaches, among others.

But as Harvard’s Clay Christensen has noted, management thinking lacks common language and foundational theories; it badly needs a durable base for researchers and practice to build on and progress forward. This can be the major contribution of universities, along with a broad commitment to teaching management as a liberal art — a way of thinking outlined by Peter Drucker. The core tension for management hasn’t changed since Drucker wrote his first books: to establish a systematic approach for achieving collective performance in organizations without killing the entrepreneurial, creative and community-creating human center. In recent years the balance between the two poles has increasingly tilted towards the technocratic and financial-logic-driven side.

Is it possible for a social movement to achieve a different capitalism, with a human face? No one has all the levers to change organizations and society over night. But collectively we have all we need to do this over time. The great management theorist and storyteller Charles Handy expressed this well in Vienna last fall, at his closing address to the 2017 Global Peter Drucker Forum. He urged managers to be inspired by their enterprises’ power to make a difference. “Let us just spark small fires in the darkness,” he said, “until they spread and the world is alight.”

About the Author:

Richard Straub founded the nonprofit Peter Drucker Society Europe after a 32-year career at IBM. He is on the executive committee of the European Foundation for Management Development, is Secretary General of the European Learning Industry Group, and serves the IBM Global Education practice in a strategic advisory role.

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 in the Harvard Business Review

Photo by Tim Ellis/Getty Images

Richard Straub worked for IBM for much of his life. He is now director of the Drucker Forum. He tells Peter Day how the Forum began, and how Professor Drucker’s ideas maintain their relevance in a much-changed business world.

Some, for example, are inspired by Thomas Piketty, who seems to have singlehandedly set a new agenda for economics research. This group focuses on reducing the disturbing inequalities in individuals’ incomes and wealth.

Others, like the Legatum Institute, think of prosperity less in financial terms and more as overall well-being, and focus on measuring and growing all its components in societies around the world.

A third group takes a more managerial approach; and that’s the one we want to focus on here. When Eric Beinhocker and Nick Hanauer took on the topic, they put it this way: “Prosperity in a society is the accumulation of solutions to human problems.” By emphasizing solutions as the engine of growth, Beinhocker and Hanauer wanted to cast capitalism as a force for prosperity (as the system that churns out the most constant stream of superior ones). But their way of thinking about prosperity also offers direction for any managers who want to work harder to make the world better off: your mission is to imagine, develop, and launch more life-improving solutions, especially the kinds of goods and services that improve ordinary people’s lives. Businesses have a variety of social responsibilities, but the essential one—and the main reason that private enterprise is given license to operate—is to innovate.

We’d like to add a wrinkle to Beinhocker and Hanauer’s argument. If we’re thinking about prosperity in broad terms, then we should also recognize it isn’t just the solutions themselves that improve quality of life – it’s also engagement in the act of solving. Participating in the satisfying work of innovating enriches lives by endowing them with purpose, dignity, and the sheer joy of making progress in challenging endeavors. Imaginative problem-solving is part of human nature. Participating in it is essential to the good life – and no elite minority should have a monopoly on that.

So this raises the question: How do we enable more people to get involved in solving problems? Every person is capable of creative thought and action. Great managers know how to tap that superabundant resource, and they recognize that pooling creative energy usually accelerates progress. Many minds make lighter work.

But for this to happen broadly, more organizations need to recognize that their innovation mandate is not just to design new products and services, but also to redesign how work gets done.  The digital age gives us a tremendous opportunity to do that – but also comes with its own challenges and risks. How businesses continue to develop and deploy information and communications technologies will profoundly affect whether prosperity is inclusive or exclusive. At their best, today’s increasingly capable machines enable and empower people to collaborate more effectively, and they make learning from experience scalable. Collaborative platforms allow people to combine their measurements and observations of large-scale phenomena (such as water quality), while advances in machine learning, artificial intelligence, and sheer computational power extend the powers of human intellect just as earlier technologies amplified human strength.

But at their worst, smart machines have the potential to marginalize human contributions, automating cognitive work and leaving society with, as Bill Davidow and Michael Malone vividly phrased it, “hordes of citizens of zero economic value.” The situation creates huge responsibilities for politicians, educators, executives, and others to manage the transition and the hardships that may come with it.

We find ourselves, therefore, at an important crossroads. The technologies our species is developing might either hold the keys to unlocking human potential — or to locking it up more tightly than ever. Indeed, they could even transform what we think of as human potential, given the startling new combinations of technological and human capabilities being devised. (No need to wait for Elon Musk’s Neuralink. As DARPA’s Arati Prabhakar has described, the merging of humans and machines is happening now. )

Clay Christensen likes to remind innovators of the importance of remembering the essential “job to be done” by their offerings – what is it that customers “hire” your product or service to do for them? In that spirit, what is the “job to be done” by the practice of management itself? What is the job that society needs to get done that it turns to competent managers to do? Increasingly, that job is not only to produce better goods and services more efficiently, but to organize individuals to collaborate and create together in unprecedented ways.  The business leaders who get that job done will be those who make the most of human potential, and manage to make prosperity inclusive.

This post is the first in a series leading up to the 2017 Global Drucker Forum in Vienna, Austria – the theme of which is Growth and Inclusive Prosperity.

Originally posted on https://hbr.org/, 3 April 2017.

About the authors:

Richard Straub founded the nonprofit Peter Drucker Society Europe after a 32-year career at IBM. He is on the executive committee of the European Foundation for Management Development, is Secretary General of the European Learning Industry Group, and serves the IBM Global Education practice in a strategic advisory role.

Julia Kirby is a senior editor at Harvard University Press and longtime contributor to HBR‘s pages. Her newest book (May 2016) is Only Humans Need Apply: Winners and Losers in the Age of Smart Machines, with Tom Davenport. Follow her on Twitter @JuliaKirby.

It may be that we are living a defining moment for the future of capitalism and for humanity. For the last 200 years entrepreneurial prowess enabled by financial capital has powered a long surge of economic growth. Over the major innovation cycles, the capitalist system has been resilient enough to absorb the effects of the crashes caused by pure speculation and turn them to its advantage. Production capital took the lead over financial capital and real value over paper value, as Carolta Perez has so brilliantly demonstrated.

Fast forward to today, and the picture is not so happy. Financial capital is in the driving seat. Eight years on, the world is tentatively emerging from a financial crisis that almost broke the global economy. Even though we are back to a semblance of stability, a range of unresolved issues – sky-high government debt, a still-fragile financial system, stagnant productivity, increasing levels of inequality, latent currency crises, slowing growth in emerging markets, high volatility in stock and commodity markets and geo-political instability and extremism – preclude any easy return to sustained economic growth.

There are certainly many causes for concern. A striking features of today’s fragile world situation is the inability to channel an abundance of cheap financial capital into productive use by companies, economies and states. Some prominent economists predict a new period of secular stagnation as the last great phase of innovation-fuelled growth (as they see it) dries up. With attention fixed on the obsessive search for the next high-tech “unicorn”, vital investment is lacking in “Main Street” companies that could fuel precious growth and employment.

Most large companies seem to have lost the taste for entrepreneurship, their CEOs preferring to focus on using technology to maximize profit from existing businesses. They are too often governed by the interests of shareholders who regard corporations as speculative investment opportunities rather than human communities for which true owners would feel ties of responsibility and commitment. And while capital markets celebrate short-term results over long-term corporate development, governments seem to have only one response to the urgent new challenges of our time: overregulation, resulting in crippling micromanagement and microregulation of domains that are evolving at breakneck speed, frequently aggravating the problems the regulations attempted to resolve. It is questionable, for example, whether many thousands of pages of regulations have enhanced the banks’ ability to carry out their core mission of funding the real economy of goods and services for real human beings.

The entrepreneurial society

Between discredited financial capitalism on one side and ever more burdensome state bureaucracies on the other, can we revive a lost but deeply-rooted human capability – the capability to take ownership of the problems we face, and to accept responsibility for creating our own solutions – that is, create the basis for a properly entrepreneurial society?

Drucker called this a turning point in human history. What we need, he said, was not just an entrepreneurial economy but an “entrepreneurial society in which innovation and entrepreneurship are normal, steady, and continuous”. He saw innovation and entrepreneurship as a life-sustaining activity pervading organizations, the economy and society.

In terms of management, the advent of the entrepreneurial society means above all replacing the rigidities of industrial-age mind-sets, with their command-and-control, top-down orientation. What indications are there that this is happening?

Despite powerful headwinds, green shoots are visible. Agile methods and Scrum are creating space for individuals to self-organize and work in iterative processes; by bringing customer development closer to the marketplace and enabling rapid learning from failure the lean start-up movement has great potential to increase the success rate of new ventures. New business models and value propositions are developed by global teams using web-based tools and communication methods. Design thinking is entering the mainstream as large organizations learn to proceed by prototyping and iteration. Start-up factories, incubation hubs, living laboratories and hotspots for innovation are springing up in cities around the world. Large corporations are devoting serious attention to becoming “ambidextrous”, combining robust exploitation capabilities for existing businesses with new exploration-driven business engines inside and outside their organization. And above all, new generations are legitimizing entrepreneurship and innovation with the enthusiasm and drive of youth.

Managing the transition

Yet start-ups and large corporations can only be part of the story of entrepreneurial reinvention. Making the shift from small to medium-sized business and generating more fast-growing “gazelles” remain major entrepreneurial challenges. Germany has shown the way, its “Mittelstand” encompassing numbers of world leaders or “hidden champions” in highly specialised fields, as demonstrated by Hermann Simon. This entrepreneurial success story has not happened overnight. Many family-owned Mittlestand businesses are exemplars of stewardship in its truest sense, demonstrating long-term commitment to a business and to the employees who are its heart and brain. Are there lessons here for giant corporations and the stock markets they trade on?

While digital technology creates extraordinary opportunities, it also disrupts existing economic, social and physical infrastructures in ways and in time-spans that make the social consequences hard to absorb. Drucker observed long ago that each social problem is a business opportunity in disguise. Social entrepreneurship and social innovation must play their part here. Not all solutions in this field will generate the financial flows to make market-based responses viable. But besides innovative public private partnerships, digital technology could yet enable the emergence of a “sharing economy” for acts of citizenship and mutual support and exchange that is worthy of that name. Together with state agencies combining in a new “Entrepreneurial State”, such institutions may knit together a flexible social web to provide security for the most needy.

The emerging world has embraced the notion that only entrepreneurship can lay the foundations for decent lives and a good society – important, because the challenges are daunting. By 2050 two billion young adults will enter the global workforce. These are the genuine challenges of the world, beside which many of the luxury problems that politicians, trade unions and advocacy groups tussle over in the West pale into insignificance.

For sure, transition into a new settlement that is not yet fully formed is painful and frightening. But it can be shaped by society’s responsible groups, among which management, as Drucker always reminded us, is a leader. Our vision: a new age of innovation and entrepreneurship that brings to bear the energy, the creativity and the “wisdom of the crowds” in a new way – as the practical wisdom of engaged, motivated and ethical individuals; open and critical minds who connect in the real and virtual worlds to understand and solve human problems in novel ways. Entrepreneurship leads us back to the essence of being human – the ability to create something that may not been seen even imagined before. No algorithm can do this. Entrepreneurs, entrepreneurial managers and a new entrepreneurial mind-set may represent our secular opportunity to make the difference between secular stagnation and secular prosperity – as such, a true defining moment for the 21st century.

About the author:

Dr. Richard Straub is founder and president of the Peter Drucker Society Europe and a member of the EFMD Executive Management team.