Managing for the Future. By Peter F Drucker. Butterworth Heinemann; 287pp; £16.95. Review by Robert Heller.
Woods and trees, the latter being what you can't see the former for, bedevil management - and management writers. The multifarious complexity called business has innumerable aspects; most demand concentrated attention, and any one can become an urgent priority. As the trees soar in front and behind, it's hard to remember that they form forests: trends far weightier than any immediate issue.
The genius of Peter Drucker rests in uncanny ability to see the whole. Thus he sometimes seems a preter-naturally successful forecaster of epochal events like the USSR's break-up. But Drucker has "little use and scant respect" for forecasts. He simply observes what has happened, largely unnoticed, and draws conclusions that frequently turn the conventional wisdom on its head.
The range and power of the examples in these collected essays are astounding. Thus Drucker sees that Europe is evolving not in one direction but two: "an economy of competing national economies and an economy of competing European businesses." Managements must choose which direction to take. Such observations are supported, as ever, by a brilliant eye for telling detail, past and present.
Can a developed economy rely on underdeveloped customs? No: Toyota shipped 6,032 cars to China in 1989, half its weekly US deliveries. Did you know that productivity, whose "explosion was arguably the most important social event" of the past century, was so little understood that the 1950 Concise Oxford didn't list its present meaning? Or that Marshal Blucher, joint victor of Waterloo, could neither read nor write? Here Drucker's point is that learning has moved from option to necessity: today only learning and knowledge hold the keys to personal, corporate and national wealth. Without productivity and innovation, companies cannot attain or defend leadership: that also depends on going transnational, researching, designing, developing, engineering, making and exporting in an for any part of the developed world.
That's part of a future framework on which hang demands on management heavier and more numerous than ever. In this age of frequent restructuring, Drucker foresees that even the General Motors of 1995 is likely to have only "five or six management levels, as against the 14 or 15 it has now." Restructuring means increasing instability for middle managers, which Drucker expects to result in "due process" to protect the species against arbitrary dismissal.
This expectation embodies a moral standpoint: that is what should happen. But will it? In the same vein, he has written wisely about corporate governance under fragmented equity ownership in the US and Britain. Here his solution is a triennial "business audit" by outsiders. But could it ever come to pass? Typically, Drucker replies from deep knowledge: "only 60 years ago, managements equally resisted - in fact resented - demands that they submit themselves to a financial audit."
This analogy may not be complete: auditors represented no threat to the corporate power structure. But any proposal to improve corporate effectiveness by outside pressure is an assault on the powers of senior management. It has lately shown its intransigence in several ways, including new defences against hostile takeovers. These were falsely claimed to be an effective substitute for corporate governance as applied in Japan and Germany by bodies more powerful than the boards they invigilate.
Drucker swiftly strips the takeover deception bare: "even if radical surgery is not life-threatening, it inflicts profound shock." On those larger issues, he pinpoints the trends, never more sharply than in analysing topsy-turvy realities behind Japanese-US trade wars: but the solutions to such macro-problems remain uncertain.
Where the trends affect the micro-economy, however, Drucker is unbeatable on diagnosis and prognosis alike. Take culture change: or rather don't: "If you have to change habits, don't change culture. Change habits. And we know how to do that." While culture is not only valuable but may be ineradicable, habits are often neither. Or take "cutting staffs to cut costs": again, don't. Restructure the work instead. The right question - "Do we really need to do this, or should it be abandoned?" - needs asking of "every operation and every activity ... every third year or so," with 3% annual productivity improvement as a goal.
All 41 chapters abound with relevant ideas that range from the eye-opening (Japan's cheaper capital - and prosperity - was built on the simple foundation of tax-free savings accounts) to the practical (don't manage by walking about inside the company: walk outside, where the customers are). The book is perfect for managers who want their effectiveness enhanced. Then they can prove Drucker's abiding contention: that, in an age when all economists have failed, the economic future can still be managed - by management.
Robert Heller was the first editor of Management Today.