Allyson Stewart-Allen studied with Professor Drucker. She tells Peter Drucker about his sustained influence and how this year’s Forum will take his ideas further.

 
What started as a small creek, invisible to most has become a powerful torrent. This is not just wishful thinking  –  the 2012 IBM CEO survey conducted with more than 1 700 business leaders in 64 countries contains compelling evidence: only 4 percent of the CEO  plan to do everything in-house. Two thirds of the CEOs plan to partner extensively. More than half of them are making substantive changes to enable their organizations to work with external collaborators. In the field of business model innovation it is particularly apparent that outper-forming companies are those who embrace partnering and open innovation approaches.

 
Hence open innovation with co-creation is imposing itself as much more than just another management tool. Maybe it is an element of a paradigm change  with profound implications for company organisations and their culture. Open, collaborative innovation and co-creation does not come easy  –  it requires overcoming old engrained mind-sets and attitudes. This is also why CEOs are seeking collaboration as the number one trait in their employee as a critical element of creating a more open and collaborative culture. The fundamental shift that needs to occur is also well expressed by Venkat Ramaswami and Francis Gouillart, authors of  The Power of Co-Creation  when they say: Ultimately, co-creation is about putting the human experience at the centre of the enterprise’s design. The time has come for a democratic approach, in which individuals are invited to influence the future of enterprises in partnership with management…

 
Yet, much work needs to be done to better understand the “how”. This is where policy makers have a key role to play, by allocating resources not only to traditional R&D but to the exploration and enhancement of new value creation approaches. This should happen in the Knowledge Triangle –  Education, Research and Business must co-create it. Ultimately it will be a prepare the ground to accelerate innovation and to drive growth and jobs in Europe.

 
Richard Straub is President of the Peter Drucker Society Europe and Vice Chair of the Open Innovation Strategy and Policy Group. A European Union initiated Conference “Open Innovation 2.0” will further explore the potential of this powerful approach to Innovation.

 
When Peter Drucker uttered these words to a group of IBM executives, new complexities were tripping up the world. It was 1955.

 
In the more than half a century since, of course, the level of complexity has only increased across all of our institutions – political, economic and social. Indeed, as we move further into the 21st century, the complexity curve seems to be growing exponentially. The notion of achieving neatly laid-out objectives through systematic planning has become increasingly questionable. More and more, managers feel overwhelmed by the speed of change and the degree of uncertainty in their environment.

 
All of this makes the theme for the fifth annual Global Peter Drucker Forum – set to be held in Vienna on November 14 and 15, 2013–particular timely. This year, we will gather under the banner “Managing Complexity.”

 
Trying to master complexity is – well, quite complex. While the interconnectedness of the world brings about tremendous benefits such as ubiquitous access to knowledge and borderless communication, it also generates unprecedented risks. Complex global systems – financial markets, energy grids, supply chains that span continents-are by their nature fragile. And thus management failures can have catastrophic consequences, as we have repeatedly witnessed during the past decade.

 
“In any system as complex as the economy of a developed country,” Drucker warned in The New Realities, “the statistically insignificant events, the events at the margin, are likely to be the decisive events. . . By definition they can be neither anticipated nor prevented. They cannot always be identified even after they have had their impact.”

 
Yet most managers still seem to be anchored in command-and-control and cause-and-effect thinking patterns. Organizations continue to be understood as machines (complicated but predictable) rather than as organisms (highly complex, adaptive systems with limited predictability). Meanwhile, linear approaches to problem solving often have the opposite effect of what is intended.

 
How should managers cope with an increasingly complex environment? What does complexity mean for management practice in the 21st century?

 
Do we have to adjust our current management approaches or are we talking about something bigger – that is, fundamental changes or even a new paradigm?

 
What can managers learn from complexity sciences without falling into simplistic analogies between natural systems and social systems? Can we calculate our way out of complexity?

 
What are good practices pointing in the direction of new, more adequate management methods and tools? Are approaches such as design thinking, Agile Software Development and “Antifragility” some of the keys to a better future?

 
What are the consequences of complexity for the management of risks in business and society? Can we simplify complexity as many of us would wish?

 
Since analytic methods alone cannot provide the answers to complex, human systems, what can we learn from the arts and humanities?

 
As we begin to gear up for this year’s Drucker Forum, you are invited to provide your perspectives on these or other questions related to complexity. (They will be published on this blog after review by a small editorial team.) Please join the conversation either by commenting or by sending proposed blog posts to the following address contact[at]druckersociety.eu.

Richard Straub, President of the Peter Drucker Society Europe, referred to the participants of the conference as essential components in an engine of change, driving towards new and better horizons, both socially and economically.
He later quoted Winston Churchill in his opening comments, in which he spoke of capitalism as ‘ the worst form of economic system, except all the others that have been tried’.
This statement very much set the tone for the two day event, and implied that rather than deconstructing the current capitalistic systems, where the hedge fund and investment of firms of Wall St ‘ruthlessly and often irresponsibly fight to game the system’ (Roger Martin, 2012), most power figures in business believe the best tactic to be improvement of this economic approach, tweaking the rules, tightening loopholes and creating value on various levels.

It would seem that the message voiced by a number of young people in attendance, suggested that if joblessness is the end-product of higher education, the institutions that provide the programmes of supposed ‘learning’ shouldn’t be surprised if students choose to find their own tailored methods of development and focus their efforts towards more personally interesting and beneficial activities. The need to be resourceful and proactive has never been of such significance.

The Global Drucker Forum raised a number of points that are strongly cohered to the activities of ThinkYoung. Lynda Gratton, of the London Business School, referred on multiple occasions to the European wide issue of youth unemployment and touched upon the skills mismatch phenomenon, an issue that leaves many employers deficient of suitable candidates. Tammy Erikson, of Erikson Consultants and Dan Shechtman, of the Israel Institute of Technology, further spoke of the fear of Entrepreneurial Failure as something we should see as a concern, and in addition, highlighted a number of stigma points that should be better acknowledged and combatted in this continent. To supplement this, Dan Schechtman identified an imperative need to teach ‘real’ physics at kindergarten level, explaining that Europe must embrace a scientific mind-set to foster future technology entrepreneurs.

Skills Mismatch is currently a topic of real interest because of economic stagnation and soaring unemployment rates. It is defined as the gap between an individual’s job skill’s and the demands of the job market.
ThinkYoung recently launched a pan European survey of the skills mismatch phenomenon as a portion of the ‘Our Future Mobility Now’ initiative, a project realised by the European Association of Automotive Manufactures. This study involved 868 respondents from 48 different countries, encompassing 16 different languages, and produced a number of conclusions very much interrelated with thoughts of the Drucker Forum: http://thinkyoung.eu/overcoming-the-skills-mismatch.

For 2013, ThinkYoung are launching a ‘Failure Campaign’, consisting of a survey targeting young individuals in 4 EU member states, an accompanying documentary; and will be collaborating with a San-Francisco based initiative in the organisation of the first European Failcon – An event bringing together technology entrepreneurs, investors, developers and designers to study their own and others’ failures and prepare for success.
We want to convey the message that failure is acceptable, but standing up and rediscovering entrepreneurial drive is compulsory. I particularly like the notion that a failure should be called a ‘Nearling’ (21lobsterstreet, 2012), in the sense that you always learn from things that are not entirely successful, but are pursued initially with the correct intentions.

In response to the perceived deficiency of Entrepreneurial spirit at European level, ThinkYoung has taken action to combat this, hosting two consecutive entrepreneurship schools for those individuals who are interested in startup yet lacking the self-confidence and knowledge to move forward. In direct complement to this, whilst speaking in Vienna, Hongjun Wang, founder of TAOTPR ‘The Art of Taking Personal Responsibility’, highlighted the need for people to take control of their own development, defy the norms and constraints placed upon them and enter into the unknown in search of personal gains and professional growth.
Whatever goals one may have, the 2012 Global Peter Drucker Forum has began to aggregate a critical mass of business power figures, that not only focus on providing maximal returns for shareholders, but share inspiration to create social value, engage in philanthropy, demonstrate passion and think in an unorthodox fashion to pursue different avenues in search of multi level prosperity.

According to Drucker the five deadline business sins are applied to Vestas in this article and as follows.

 1. The first and easily the most common sin is the worship of high profit margins and of “premium pricing. (Peter Drucker)

The financial targets for Vestas’No.1 in Modern Energy strategy were defined October 2009, as Triple 15. The aim was to achieve an EBIT margin of 15 per cent by 2015 with corresponding revenue of € 15 billion and annual growth of 15% was required. In 2011 Vestas announced it was abandoning its Triple 15 plan. Even around 2008 when Vestas’ shares soared, at least 15 Chinese companies were commercially producing cheaper wind turbines. Tellingly Vestas’ position was then that:

“We will not go into price competition and we are not going to compete with the cheapest,” Finn Strom Madsen, president of Vestas Technology R&D, later told at a meeting.

2. Closely related to this first sin is the second one: mispricing a new product by charging, “what the market will bear”. (Peter Drucker)

With the Triple 15 strategy Vestas’ calculation was that at 90 USD per barrel of oil, wind energy would be a competitive alternative energy source to oil and gas, but as underlined by the Magazine Cleantechnica  April 2012 it is stated that:

…as the prices of fossil fuel energy sources continue to rise, wind energy prices continue to fall and dropped about 4%.

 3. The third deadly sin is cost-driven pricing. The only thing that works is price-driven costing. (Peter Drucker)

In regard to this deadly business sin the following quote by Vestas on prices and cost in 2009 and 2012 almost tell their own story.

“We have a strong belief we’ll see a reduction in construction costs,” said Kasper Ibsen Beck, a Vestas spokesman. “We have changed the business organization, streamlined production, reduced costs on core technologies that are too expensive and are reducing fixed costs.” (Vestas 2012)

The prospect of being taken over by Mitsubishi Heavy Industries is considered by many industry experts to be the best business prospect for Vestas, as it would add know-how and capital to the company. Unsurprisingly, as Vestas shares have fallen more than 90 percent since peaking at 692 kroner ($119) in 2008.

 4. The fourth of the deadly business sins is slaughtering tomorrow’s opportunity on the altar of yesterday. (Peter Drucker)

Does Vestas sacrifice tomorrow’s business opportunities in its current restructuring process?

“Based on more recent patent application filings Totaro and Assoc. a consultancy firm, recognized several future technology trends as well as new concluding that technologies and their patents will likely be directed towards six core areas with grid integration and monitoring and control among the six.

Vestas seems to have decided to have focus on product innovation, operational efficiency and profitability. But wouldn’t Vestas be better off if it made a more radical innovation focus around its competences within grid integration and become a world leader with Smart Grid Energy control systems?

 5. The last of the deadly sins is feeding problems and starving opportunities. (Peter Drucker)

From Vestas’ announcement of its reorganization of top management around early 2012 it becomes clear that the new organization is staffed to solve the issues of lowering the cost base and increase short-term sales of existing products. From Vestas’ restructuring we can only guess, but one can reasonably suspect that it falls within the ballpark of Drucker’s fifth deadly sin of feeding problems of the aforementioned problems and starving future opportunities.

Peter Drucker’s writings on five deadly business sins are more than 20 years old, yet it is striking how relevant they still seem applied to a present days’ business case like Vestas Wind Systems.

Link to full article at Innovation Management:

http://www.innovationmanagement.se/2012/11/05/the-case-of-vestas-wind-systems-and-peter-druckers-five-deadly-sins-of-business/

AUTHOR:

Jørn Bang Andersen, Senior Advisor Innovation, Nordic Innovation & Advisory Board Member to Kellogg Innovation Network

In The Practice of Management, Drucker explained that, ‘A decision should always be made at the lowest possible level and as close to the scene of action as possible.’ In development and post-conflict programming, we need to enable those we are trying to help to be at the centre of all decisions, and to empower them to make the decisions themselves which will change their lives sustainably. In this holiday blog post, I am keen to introduce the Grassroots Reconciliation Group (GRG), a small NGO I currently work for in northern Uganda, which uses an innovative bottom-up management system to achieve its goal of reintegrating former child soldiers into community life.

While this year’s YouTube phenomenon, KONY2012, attracted a wealth of attention to the plight of child soldiers in northern Uganda, its critics have fairly pointed out that the issues it presented did not necessarily depict the nature of problems faced by formerly abducted people today. An estimated one in three boys and one in six girls in northern Uganda was abducted by the LRA during the twenty-year conflict. Between 33,000 and 50,000 children were used by the LRA as slaves, distributed as ‘wives’ among the rebel cadre, or forced to pillage and kill on the front line.

‘When I came back home, people said I had evil spirits. I felt as if I was being chased away.’

Walter, Koc Goma parish

 ‘I felt like a stranger, like an outsider. I had no one to talk to and nobody seemed to trust me’.

Stella, Anaka Parish

The LRA left northern Uganda in 2006. The majority of these child soldiers and ex-combatants have also now returned to their villages. Indeed, most are no longer children. But the return home has presented a whole new set of challenges for these young adults; many are stigmatized because of the atrocities they committed, while others continue to be haunted by trauma from what they saw or did ‘in the bush’. With war and captivity preventing education or agricultural production, few have any employment today, or skills from which to gain an income.

‘When I first returned my mind was disturbed. This group has helped me to cope with everyday life; it has given me a purpose and a sense of belonging, something I hadn’t felt since I left LRA.’

Esther, Olwal 

The Grassroots Reconciliation Group was set up in 2007 to respond to this gaping need for community-based reintegration in northern Uganda. We have since worked with over 1,000 people, engaging groups which combine former child soldiers along with other community members to work together on reconciliation, peacebuilding, and livelihood-development activities. Evaluations have shown that 92% of beneficiaries report improved relationships after engaging in a GRG group. 67% have created new businesses as a result of GRG’s intervention, and 87% are now able to save money. This combination of improved relationships and livelihood opportunity has created hope and a new future.

Above: Group members working together on collaborative farming.

What makes the findings all the more interesting – certainly to followers of this blog – is that the achievements result largely from an innovative management approach. While most NGO-projects in northern Uganda (and elsewhere) tend to be designed in air-conditioned HQ offices in London or New York (for example), GRG’s projects are all designed in villages, by the very people who GRG seeks to partner with and help. Each individual and each community is different. GRG itself works across a vast geographic area spreading from the main regional town of Gulu to the remote, dry Uganda-South Sudan border. Different groups face different challenges, and see different solutions to their problems. Not only must we respond to these diverse challenges, but we need those people we work with to feel that they are in control. Otherwise, impacts will be short-lived as beneficiaries will not feel in control of their own futures.

‘My relationship with the ex-combatants has improved because of farming together – when you go in the field and you laugh, you get to know how to talk to others and resolve disputes.’

Alex, Olwal parish.

Above: Group members of ‘Kica Ber’ (meaning ‘Being Kinds is Good’) collaboratively identifying their priority problems.

While companies seek to respond to the changing needs of their customers, GRG’s bottom-up model puts the customers in control of what they are provided with. GRG supports groups to explore their problems, and to identify the possible solutions themselves. Groups design their own long-term plans for individual and group development (see more here), and implement these plans themselves with GRG’s support. The most common area of our work is group livelihood support – where training and agricultural inputs increase skills and income among members, while also enabling groups to experience collaboration, problem-solving and bulk marketing for the first time – while other areas of work are as diverse as community microfinance, trauma counselling, traditional reconciliation ceremonies, and recreational opportunities.

GRG changes as the groups do, with change monitoring systems and a heavy presence in these communities enabling us to respond to new requirements as they arise.

Above: Group members on the South Sudanese border performing a play about how to solve land conflicts to their fellow community members.

In Managing the Non-Profit Organization, Peter Drucker wrote: “The “non-profit” institution neither supplies goods or services nor controls. Its “product” is neither a pair of shoes nor an effective regulation. Its product is a changed human being. The non-profit institutions are human-change agents. Their “product” is a cured patient, a child that learns, a young man or woman grown into a self-respecting adult; a changed human life altogether.”

The ‘product’ of the Grassroots Reconciliation Group is a new future for the hundreds of former child soldiers in northern Uganda who GRG seek to reintegrate. Clearly, not an easy product to manufacture, nor immediately apparent what the product would look like. GRG’s bottom-up management approach enables clients decide what the ‘product’ will look like, and puts them in charge of production.

Above: Members of Can Deg Wor (meaning ‘Poverty needs no quarrel’) sharing a joke while on a group activity.

To see more about GRG’s work, please check out our brand new video launch here. GRG’s work would not be possible without the generous donations of people like you. Your donation could help change the lives of more people like Esther and others in these pictures. Please donate here. Thank you, and Merry Christmas.

Feel free to contact Christopher at chris@grassrootsgroup.org. The views expressed in this blog post are those of the author alone, and do not necessarily represent those of GRG or any other party.

On the first evening – a cocktail party for speakers and essay-winners – I introduced myself to a man standing alone. I noticed that he had a tiny gold medal pinned in his lapel. He was Dan Schechtman, winner of the 2011 Nobel Prize for Chemistry, and a pioneer of Israel’s entrepreneurial revolution. We spent about ten minutes talking about entrepreneurship, as well as his efforts to teach physics to very young children (5 year-olds). He described how he teaches the concept of phase states (solid, liquid and gas) by having them pretend that they are atoms and then forming different relationships with each other, depending on the state they are in. Thus for solids the atoms (children) are packed together as tightly as possible but for liquids they have to form molecules (two hydrogen atoms for every oxygen atom, in the case of water), which allows them to move around in little clusters, and so on. Professor Schectman is clearly a thinker in multiple dimensions and I was delighted to find that he was a fan of Bucky Fuller’s work. According to the Nobel Committee his discovery in the structure of crystals “… revealed a new principle for packing of atoms and molecules…this led to a paradigm shift within chemistry.” (Thanks, Wikipedia).

Playing in the Open Patch

The conference itself consisted of a series of plenary sessions and panels, more of which in future blogs. For the moment the big news is that my entry for the Drucker Essay Challenge, which was runner-up in the manager/entrepreneur division has been posted: PRACTICAL WISDOM – 2012 Drucker Essay. The awards were given out at a gala dinner that we held at the wonderful Palais Ferstel, which is attached to the Café Central, one of the key meeting places for the intellectual elite of Vienna in the late 19th and early 20th centuries. Apparently Vladimir Lenin and Leon Trotsky were regulars and the Vienna Circle of logical positivists met there often.

As I expected, I was by far the oldest of the award winners. When my turn came, I asked to say a few words to the assembled company. I began: “I should explain my “mature” condition. A few weeks ago I heard a wonderful quote from the CEO of LEGO: ‘You don’t stop playing when you grow old – you grow old when you stop playing.’” At that a sort of collective sigh ran through the group. I continued: “For me Peter Drucker never stopped playing and he never grew old.  Thank you very much.”

It was a great party that followed the awards and the enthusiasm and excitement among the younger essay winners was intense. As we all danced in a circle to the music of the well-known Austrian rock band Papermoon, it struck me that that the passion of these young people was as palpable as that of Dan Schectman’s and that the zeal with which he had spoken of entrepreneurship and teaching concepts from physics to very young children was quite as intense as theirs. It was this passion that seemed to permeate the entire conference and I feel sure that Peter Drucker would have endorsed it whole-heartedly: Never stop playing!

AUTHOR:

I am a speaker, consultant and management educator, who helps managers and organizations learn from their past, understand the present and create their future. As a reflective practitioner, I have a unique niche in the field.  I spent twenty-five years working in corporations in several countries in a series of organizational “train wrecks” as the Western World began its radical transition from the industrial era to the age of knowledge and information.  I extracted from my experience some highly innovative ideas about leadership, the management of change and the dynamics of organizations that promote creativity and learning. I have spent another two decades honing my thinking as a consultant and teacher.  I communicate these ideas to audiences around the world in the form of creative presentations, in-depth seminars and management development programs. My articles have been published in leading business publications such as the Financial Times, Globe and Mail, Harvard Business Review, Strategy+Business, and several academic journals.

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This post was first published on http://www.davidkhurst.com/.

This is the gala dinner of the 4th Peter Drucker Forum, the Austrian- born writer, teacher and consultant, who was once tagged as “the Man who invented management.” He liked to call himself a “social ecologist” – i.e. someone who deals with the man-made social environment in which we operate.

For two days last week, an eclectic mix of close to three hundred corporate executive, entrepreneurs and prominent members of Academia from all over the world gathered at the heart of the Austrian capital to debate and reflect on the future of Capitalism – no less!

The Forum covered a wide array of topics from role of education to the emerging needs of social entrepreneurship.

Squarely rooted in what we would now tag as more than familiar emerging global trends:

• The unfolding worldwide value crisis
• A burning imperative to reconcile profit and social justice, or as mentioned by Georg Kraft-Kinz the Deputy CEO of Raiffeisenlandesbank Noe-Wien and Holding, ‘economic success needs to be combined with welfare.’’
• The raging talent war where… “Talent won” joked legal Peter Y. Solmssen – Member of the Managing Board and General Counsel of Siemens
• The need to re-kindle economic elasticity via fostering entrepreneurship, that by the way can be taught as asserted by Dan Shechtman Professor Technion Israel Institute of Technology, Department of Materials and 2011 Nobel prize laureate in Chemistry
• The impact of social media in traditional and emerging economies

The conference was however, thought provoking and innovative. It positioned itself as providing orientation in the jungle of ready made solutions and answers. Getting participants thinking in new ways about key issues was a key objective.

It was particularly evident in their challenge of the sacrosanct concept of shareholder value.

Shareholder value was for once not tagged as necessary evil that one would have to accept and live with, but as a concept in great need of tweaking and repackaging as Roger L. Martin, the dean of Rotman School of Management eloquently described.

The notion of “comprehensive profit” – profit that would harmoniously balance short-termism and sustainability was presented and debated, but not in a vacuum.

Different operating models – from customer owned companies, to entirely non-profit organization, from global partnership, to state-owned entities were presented to give a framework or contextualized the concept. The models worked as a large term of reference to explore, pick and choose, mix and match.

This desire to show potential paths for evolution was even clearer when the role of education was tackled and the need of constant learning to engrain in the wonderful world of corporate.

“Corporate acts as environment were not enough space is given to develop new mental maps of thinking” mentioned Thomas Sattelberger Vice-President Board of Trustees, European Foundation for Management Development (EFMD). the role of business schools of the future would be to act as laboratories of creations of ideas and minds.

“Opening closed systems, by pushing the exploration side to the traditional exploitation side that corporations cherish so much is the name of the new game, creating army of volunteers workers that feel thriving” he added.
Roger Martins Opposable mind meets purpose driven millennial- should be the battle cry of any corporate executive.

So what it is to bring back home?

The first thing is thinking differently, breaking free from some of the old models is the only way to create a paradigm shift. There is a community of kindred spirits in the Peter Drucker Forum- ready to step in and help. It is a question of taking the first step and reaching out.

The second thing, and it will appear counterintuitive, the community of kindred spirits that showed up in Vienna was largely European, educated, born and raised. It comes with predefined psyche and patterns.

As the executive of a prominent pharmaceutical company currently stationed in Brazil mentioned, “There is an emerging theme in Brazil- Capitalism is too important for us to leave it to the capitalists. Emerging countries want to create their model of capitalism and, actually of leadership that talk to them, makes sense for them.”
Europe and the US are not longer the reference. Asia is too fragile stuck between Lee Kwan Yew benevolent leadership and the new direction of China 18th Party directives Africa is still suffering from perception issues hard for westerners to truly overcome.

The world currently emerging is still hesitating between a muli-polar structure or a truly global and collaborative structure. What is it going to be and how can we influence it?

This is the challenge I want to pose to the 5th edition of the Peter Drucker Forum, let’s hear it from the BRIC, the next eleven, the women, the twenty something, and the African – they ARE the paradigm shift- let’s debate collaboration and technology they are the driving shaping forces of economies and leadership of tomorrow… Until 2013.

AUTHOR:

Marianne Abib-Pech has led a highly successful international career in finance. She left France, her home country, in her twenties to study Finance and Business organization at Herriot-Watt University in Edinburgh. She then worked for some of the most admired corporations of the past twenty years, from Arthur Andersen and Motorola to General Electric and finally Shell, as Global CFO of one of their downstream divisions. She was the only woman ever hired externally at this level of the finance organization in Shell.

Throughout her career, she has been exposed to the best leadership training possible and always demonstrated a keen interest in developing leaders within and outside her own teams.
Marianne is the Founder of Leaders! a global leadership consultancy and think tank operating in Europe and Asia. Leaders! Specifically focuses on leadership emergence, leadership transformation and cognitive diversity – gender, cultural and generational – to create business value.
Marianne is a regular columnist in The Huffington Post, The Independent and Global Corporate Venturing. The Financial Times Guide to Leadership is her first book.
She currently splits her time between Hong–Kong, London and Paris.

This post was first published on http://www.huffingtonpost.co.uk.