Drucker Forum Anniversary Report 2018 by LID Business Media

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THE DRUCKER FORUM ANNIVERSARY REPORT

Rachel Botsman Simon Caulkin William A Cohen Kate Cooper Erica Dhawan Tamara J Erickson Anil K Gupta Vlatka Hlupic Julia Hobsbawm Herminia Ibarra Roger L Martin Mariana Mazzucato Rita McGrath

The Institute of Leadership & Management is proud to partner with the Global Peter Drucker Forum

Tony Oâ&#x20AC;&#x2122;Driscoll Ben Pring Don Tapscott Kiran Trehan Dave Ulrich Penny de Valk Vivek Wadhwa

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Haiyan Wang

THE DRUCKER FORUM ANNIVERSARY REPORT

The Drucker Forum Anniversary Report

Happy anniversary by Matt

Packer

Let me advance a clutch of maxims that will help to set this publication – and the Forum to which it is dedicated – in the appropriate context: “No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organised in such a way as to be able to get along under a leadership composed of average human beings.” “There is nothing quite so useless as doing with great efficiency something that should not be done at all.” “Accept the fact that we have to treat almost anybody as a volunteer.” And lastly, with equal parts caution and wry humour… “So much of what we call management consists of making it difficult for people to work.” Democratised leadership as an energising force. Avoiding a wheels-spinning obsession with efficiency. Fair, humane treatment of employees. Processes that drive productivity, not stunt it. The themes and messages that emerge from those lines are unmistakeable. The quotes themselves, of course, come from Peter F Drucker. With that clarity of wit and insight, it should be safe to assume that Drucker’s writings and teachings cast more than enough light to help us secure the human dimension firmly at the heart of the workplace. Yet all around us, evidence suggests that the progress he strived to encourage is far from inevitable. Indeed, in the considered view of social health guru Julia Hobsbawm – interviewed on page 46 of this report – human beings are currently grappling with “the most hostile landscape the working world has known for a century”. How did we get here? What can we do to shield ourselves from the present environment’s caustic effects? And how can

we nudge the conditions around us back into line with what Drucker himself would regard as positive processes and practices? It is the aim of this journal to provide some thoughts on each of those questions. By virtue of timing, we are delighted to present a larger plot of real estate in which those thoughts can roam. This year’s Drucker Forum – taking place under the thematic banner ‘Management: the Human Dimension’ – is the tenth such gathering. As befits a landmark anniversary, we have ramped up the number of pages – a move that has given us the scope not just to preview the driving concerns of this year’s event, but to revisit, update and celebrate the headline themes of every Drucker Forum so far. Here, then, is what you will find in this very special report: Welcome

Peter Drucker Society Europe president Richard Straub paves the way for the report’s themes with observations on the steady convergence between humans and software

Reclaim the future

Institute of Leadership & Management chief executive Phil James urges managers to follow Drucker’s advice to predict the future by shaping it

Saving the human dimension Top-ranked Thinkers50 strategist Roger L Martin on how turning workers’ brains on will safeguard the future of democratic capitalism Year 10 Preview

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Harness the power of questions A Class with Drucker and The Art of the Leader author William A Cohen hails the relevance of Drucker’s consulting model today

Year 6 Update

The new rules of creativity US tech entrepreneur and academic Vivek Wadhwa notes that innovators should meet the needs not of the present – but the future

Have faith no more Author and Saïd Business School lecturer Rachel Botsman asks who is regulating the online giants that depend upon our trust for commercial survival

Year 2 Update

Year 7 Update

Mindset: the big shift

Renowned management scholar Professor Vlatka Hlupic on how leaders should use empathy as a tool for creating values-driven workplace cultures

Opportunity on Planet Asia

Innovation expert Anil K Gupta and China India Institute managing partner Haiyan Wang explain why this will be the Asian century Year 8 Update

Year 3 Update

Organisational behaviour expert and McKinsey Award-winning author Tamara J Erickson skewers outdated assumptions about leadership

An upgrade for wellbeing

Writer, broadcaster and academic Julia Hobsbawm on why the time is ripe for organisations to plug into the principles of social health

Year 4 Update

How to fly the complexity chasm

Technology author Ben Pring argues that AI won’t “automate us away” – but enable us to do things that we have never done before

Year 1 Update

Ten things that are no longer true

The myth of bad robots

Duke University’s Fuqua School of Business professor Tony O’Driscoll on what managers should learn from the ‘Miracle on the Hudson’

Year 9 Update

Ten questions for 2018 A formidable gallery of management and leadership experts explores key themes from the speaking schedule of this year’s Drucker Forum

Year 5 Update

Gala pictures We take a fond look back over a decade of after-hours comradeship – and sartorial elegance – among Drucker Forum speakers and attendees

I am excited and honoured to introduce this world-class lineup of thinkers. I very much hope that you enjoy their provocative thoughts and perspectives. And now, for a deeper dive into how Drucker’s theories resonate throughout this report, I hand over to the Peter Drucker Society Europe’s Richard Straub, and The Institute of Leadership & Management’s Phil James.

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Matt Packer is a freelance journalist specialising in business, finance and leadership, and is editor of this publication

23/10/2018 11:44:21 AM

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Welcome by Richard

“You can graph human evolution – it is mostly a straight line – but we do get better and change over time,” said the author and robotics engineer Daniel H Wilson. “And you can graph technological evolution, which is a line that is going straight up. They are going to intersect each other at some point, and that’s what’s happening now.” Wilson captures in a few words the challenge the world faces: how do humans make a meaningful difference in the face of rapid technological advance? Yet at last year’s Global Peter Drucker Forum, Shagun Tripathi, a student winner of the Drucker Challenge Essay Award, reversed that equation. She asked: “What would robots do if humans took over?” Her poser speaks to the fact that people retain many advantages over machines – and have fundamentally different capabilities.

Straub

This year marks the tenth year of the Global Peter Drucker Forum. It is fitting that, in the sumptuously humane surrounds of the Hofburg, Vienna’s former imperial palace, the Forum explores the edge that human beings can bring. Peter Drucker once called the computer “a total moron because it makes no decisions; it only carries out orders”. Since he uttered those immortal words, the world has moved on. The advent of artificial intelligence and – at an embryonic stage – artificial empathy, means machines are no longer moronic. They issue each other orders. They learn. Yet their processes still originate from, and are triggered by, human beings. They reflect our ambitions – and also, as research has shown, our biases. As masters of an increasingly powerful digital army, our responsibilities have grown exponentially, and the value of our contributions amplified to match. Drucker’s advice that the computer “forces us to think, to set the criteria” is even truer now than when he wrote it. Humans have the world at their fingertips. So, human-centred thinking is an obligation, not an option. Let’s start here. This anniversary souvenir edition of the Drucker Forum Special Report is the biggest yet, and contains more thought-provoking, stim-

ulating pieces than ever. The world-class thinking within provides vital mental nourishment on the eve of the Forum. This is the second year of the report’s strategic partnership with the UK’s Institute of Leadership & Management, a relationship that has the promotion of human-centred business at its heart. Our concordat is an important stride towards our mutual goal of harnessing the human difference worldwide. That difference must remain key. Wilson is probably right in his forecast that human and computational skill are approaching an intersection. But that does not mean that we should naively entrust the machine, however capable, with decisions and choices that belong to humanity. That would make us the morons! Yes, there is the opportunity to institute an era of teamwork in which people and machines come together, each playing to their complementary strengths to achieve things for humanity that neither could do on their own. But it has to be under our management and control. It is only on these terms that the two lines on Wilson’s graph can rise as one. Dr Richard Straub is president of the Peter Drucker Society Europe

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Editor Matt Packer

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Chief Subeditor Sally Raikes

Publisher Martin Liu

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Reclaim the future by Phil James

eter Drucker was a reluctant futurist. “Trying to predict the future is like trying to drive down a country road at night with no lights, while looking out the back window,” he once said. As our only terms of reference are in the past, bold predictions are prone to ending in an accident. Yet Drucker didn’t intend us to ignore the future – far from it. Instead he advised managers and leaders to construct it. “The best way to predict the future,” he said, “is to create it.” The Institute of Leadership & Management helps managers question what it means to attempt to control the future, while giving them the tools to help consider and give shape to it. The Global Peter Drucker Forum is crucial in developing the ideas and instruments that will give leaders the means to compose the next generation of companies, organisations and nations. That’s why, on the Forum’s tenth anniversary, the Institute is honoured to bring to Vienna a specially selected global delegation of leadership thinkers. This cavalcade of minds will help the Institute develop the tools required for what’s coming. Debate, discussion and innovation are crucial precursors to a better future. The Institute is proud to be in the second year of our strategic alliance with

the Global Peter Drucker Forum on this special report. This year, to celebrate the tenth anniversary of the Forum, the report is its biggest ever. It explores the Forum’s theme of the human dimension, intermingled with timeless lessons from the Forum’s nine preceding instalments. The lead interview is with Roger Martin, Thinkers50’s top global management thinker, himself a persuasive critic of the present economic settlement and an advocate for fundamental change. Yet Martin is no pessimist – change is possible, he says, if we are determined to shape it. As ever, Drucker was ahead of his time. The future is at the mercy of those who shape it. Leaders must avoid gazing through their cars’ rear windows. It is time to take the wheel.

Phil James is chief executive of the Institute of Leadership & Management

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Saving the human dimension As the Drucker Forum celebrates its 10th anniversary, the workplace is losing its human face. Algorithmic management techniques and a pervasive urge to wring more data out of the activities that staff perform are luring leaders away from common-sense incentives, such as improving pay, training and opportunities for growth and development. In honour of this yearâ&#x20AC;&#x2122;s theme, Thinkers50â&#x20AC;&#x2122;s number-one influencer Roger L Martin warns that there is more at stake than tolerable working conditions if managers lose sight of the human dimension

Drucker Forum Year Ten: 2018

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Preserving organic intuition in the workforce won’t just make companies better – it will safeguard the very future of democratic capitalism, Roger L Martin tells Matt Packer

Images courtesy of Roger L Martin, Inc

ith his calm, mea- Which presumes that the person in quessured timbre, Roger tion is the only possible version of that perL Martin gives a son. And that’s a terrible thing, because first impression of what makes people special is that they can being impervious to grow, develop and learn things. So, people fear. Yet within the opening minute of our analytics scares the living daylights out of talk, the top-ranked Thinkers50 business me – because the guys who invented anstrategist confesses that he is “terrified” by alytics said you should never use them for a force upon which legions of managers that purpose.” rely daily: people analytics. “If I take this For Martin, another clear-andpen and drop it,” he explains, “it’s going present threat to the human dimension to fall at a rate of 9.8 metres per second, in the workplace stems from “job designs squared, because gravity belongs to that that turn people’s brains off ”. In a typical part of the world where things cannot be modern job, he says, “you don’t need to other than they are. That part of the world use your brain other than for memorising is the one we should analyse, so we better the algorithm required to perform it. But understand the causes and maybe it turns out that effects we see around us. between 3pm and 4:30pm, Democratic “But just because I’ve this place gets really busy, invented that methodoland if we could just slightly capitalism is ogy doesn’t mean that I staffing, it would reresilient if the adjust should use it for the part duce a huge annoyance to of the world where things the customer; or perhaps a population can be other than what certain product has a code as a whole they are – such as people. If that doesn’t scan properly, you say, ‘I’ve analysed this and if we manufactured it continues to person and their activities, differently, it would make support it and I can therefore predict the customer’s experience everything about their that little bit better… that’s future as an employee,’ then you’re apply- when people have their brains turned on: ing analytics in the wrong way – because to figure out better ways to do the job, you’ll convince yourself that this person rather than the ways they’ve been given can never be different: ‘If I trained and as commands.” developed them and gave them more reThat second threat, he stresses, is intisponsibility, they wouldn’t get any better, mately linked to the first. because I’ve already analysed how good they are.’ And that, I think, is what people Circles of influence analytics are starting to do.” Those threats, though, are symptoms of the The Myers-Briggs Type Indicator human dimension’s current malaise – not (MBTI), Martin notes, is a perfect exam- causes. For the macro factors, Martin has ple. “The research on that is very volatile,” scanned the wider world of economics he notes. “If you take Myers-Briggs ten and diagnosed an obsession with efficientimes, you’ll get four or five different cy as a key driver of workplace gloom. He profiles. Or it’ll put you in a box and say, explains: “To understand what’s happen‘Well, you’re an INFP, and that’s what you ing in the economy, and in particular why can do, and you can’t do this other stuff.’ there’s a stagnation of incomes, I dipped

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into complexity theory. There are two Martin acknowledges the system’s imperways of measuring inequality: you could fections, he is nonetheless convinced that ask, ‘Are poor people getting a lot poor- it provides the most fertile conditions for er than the average person?’ and/or, ‘Are human advancement. Yet it is undeniably rich people getting a lot richer?’ And it’s under threat. “Democratic capitalism is interesting – I thought that poor people resilient if the population as a whole conwere getting poorer, but it’s not true. The tinues to support it,” says Martin. “And difference between the tenth and 50th continues to consider it productive and percentiles of income in most developed effective. And continues to vote. Certainly countries is overwhelmingly flat. But the in the US, democratic capitalism is getdifference between the 90th and the 50th, ting less resilient. We’re getting extremes or the 99th and the 50th, or the 99.9th of inequality. We’re getting people not and the 50th is where the gap is growing.” voting. If you talk to the average AmeriMartin elaborates: “If you put more can now, they say, ‘Why even bother? The and more pressure on any given system, it whole system is rigged for other people.’ tends to go from a normal So we have to recognise bell-curve model, where that if we keep going after the points are independent that extra degree of effiKnowledge of each other, to a Pareto ciency because we think upon which distribution, where the it’s inherently good, then points are interdependent we’re going to make the you cannot – or, in other words, where overall system less resilbase action an effect becomes its own ient.” cause. And that’s what’s So where did this is rarely worth happening in income and manic drive for efficiency having at all wealth right now: being spring from? Martin lays high-income gives you the blame “squarely at the greater opportunities to upgrade yourself, feet of the MBA degree”. He notes: “In and to be in the circles you need to be in 1908, Harvard Business School became to ensure you’ll get even wealthier.” the first MBA-granting university, with Martin notes: “For years, there has 33 regular students and 47 special stubeen ever-increasing pressure for efficien- dents. Then by the 100-year mark, MBAs cy in the economy: ‘Let’s make markets accounted for 27% of all graduate degrees open so we have as much free trade as awarded. So the MBA is now the 800lb possible; let’s allow companies to merge gorilla of education. And there was a if it raises efficiency.’ And even ways of seminal moment in the late 1950s, where manging companies: ‘Let’s make them the Rockefeller and Carnegie Foundamassively efficient; let’s drive out every tions both commissioned important and piece of waste in retail; let’s figure out profound studies of business education in ways to have the bare-minimum person- America. And the reports they published nel required to do the work.’ All of those in 1961 both totally flamed the MBA, are driving the economy towards Pareto saying, ‘Hey – these courses are taught by distributions with more extreme outputs. undertrained staff who are mostly retired And the problem with those models is executives coming in and telling their war that they are less resilient.” stories.’ So the reports criticised the MBA for providing an anecdotal education. And A system in crisis? they called for MBAs to be much more The stakes attached to that loss of resil- economically and scientifically rigorous.” ience are nigh-on vertiginous. Extreme What happened next is unsurprising. outputs pose risks not just for morale “Those reports set the MBA on a path in the workforce, but for the long-term towards becoming a far more quantifiable survival of the very political system to beast,” says Martin, “and it essentially which developed nations have grown adopted the code of economics – which, accustomed: democratic capitalism. While from Adam Smith onwards, of course,

has totally prized efficiency. So even though schools don’t come out and say to managers, ‘You must swear a Hippocratic-type oath to maximise efficiency at all costs,’ that’s very much the effect of their approach. Lately, programme directors have said, ‘No, we should ensure there’s a commitment to social issues, too.’ But if you ask the question, ‘Is there a neat toolbox for a manager who hasn’t been on an MBA programme to switch from leadership that’s based purely on efficiency to making different types of decisions?’, there just isn’t. About 98% of what you hear is all about maximising efficiency – oh, and by the way, don’t hurt the planet.” Martin notes: “I was trained by a wonderful man called Chris Argyris – the father of organisational learning – and he taught me that knowledge upon which you cannot base action is rarely worth having at all. If you’re teaching unactionable knowledge in every domain other than how to maximise efficiency, the outcomes will certainly reflect that.”

Expanding possibilities

Who, then, does Martin regard as the current saviours of the human dimension – the crusaders who are working to preserve our organic consciousness in the world of work? “Well,” he says, “the real genius here is a fantastic woman from MIT called Zeynep Ton, who wrote a book called The Good Jobs Strategy, which basically documents what happens when firms turn workers’ brains on. Two fields that are considered particularly brainless in terms of how workers are treated are retailing in general, and discount retailing in particular. And Ton shows that if you systematically turn retail workers’ brains on, you just annihilate your competition, and make tons and tons of money, with the help of happy, productive, highly paid staff. Do you have to make a huge sacrifice in your profits to be nice to your workers? No. In fact, if you want your profits to go way, way, way up, you should be nice to your workers. You should pay them more. You should train them more. You should build in more slack, because workers simply aren’t programmed for a routine where they have to

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work every last second, so they can never stand back and think about how to do things better.” Martin points out: “What gives me the greatest hope is that there are real companies out there that are treating their workers in such a way that Aristotle would recognise as a good idea – and are getting really, really big. For example, Costco, Trader Joe’s and Four Seasons. Ton is getting fan mail from people in other fields who are saying: ‘Yes, I know you wrote about retail, Zeynep – but guess what? We’ve followed the plan laid out in your book in our call-centre firm, and the same thing applies exactly.’ “So I think there are vast gains to be made from saying to your workers, ‘Please use everything of yourself – not just your arms and legs – and we’ll design a work system that assumes you’re doing just that.’ And I think the sky’s the limit. Those companies aren’t just surviving. They’re beating the crap out of their competitors. They’re growing like crazy. Making more money. It’s an upward spiral: their people are deliriously happy because they’re being paid lots, they’re

being asked to do difficult and challenging things that expand and stretch their capabilities, and they’re getting rewarded for it. So, remind me again why someone thought turning people’s brains off was a good idea?” Martin notes that the benefits of switching brains on in the microcosm of the workplace will naturally flow into the macro, socio-political milieu. “The Zeynep Ton message that really resonates is, you’ve got to ask yourself the question: ‘Am I utilising my people in a way that sets up a system to expand possibilities in their lives?’ There’s a clear choice. Do I look at the people who work for me and say, ‘I’ll take away their decision-making authority, turn them into automatons and wreck our ability to serve customers better, so they won’t like us very much and we won’t make a lot of money’? Or: ‘I’m going to utilise every last neuron, and give us the opportunity to make the lives of our customers better by discovering new ways of doing things, so that people in the company can earn better salaries that help them become not just better consumers, but better parents, too.’

“If we look at this year’s Drucker Forum topic, which is super-mainstream, and hits the nail squarely on the head in terms of what’s required right now, leaders of organisations can sustain democratic capitalism by making the most out of their people – not the least. You won’t even have to worry about pay being an incentivising variable, because it will take care of itself. Things in life sometimes aren’t as complicated as they seem. It all comes down to the golden rule: if you literally treat your people the way you’d want to be treated yourself, why would they want to go elsewhere?” Roger L Martin is the world’s top-ranked management thinker, a leading business strategist and the author of 11 books, including (with Jennifer Riel) Creating Great Choices. Matt Packer is a freelance journalist specialising in business, finance and leadership, and is the editor of this publication

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Harness the power of questions In its first year, the Drucker Forum focused on the legacy of the groundbreaking management thinker in whose name it began: Peter F. Drucker. In tribute to the man himself, we present this piece from William A Cohen, which looks at how Druckerâ&#x20AC;&#x2122;s consulting model still has a powerful relevance to leaders and entrepreneurs today

Illustration by John Holcroft

Drucker Forum Year One: 2009

The Drucker Forum Anniversary Report

Your brain can drift. But employing simple techniques can help you become a brilliant problem-solver, writes William A Cohen

ood consultants win plaudits. Some are deemed “very smart”, others are lauded for being “good communicators”, “charismatic”, or “innovators”. More still are applauded for being “born salesmen”. No such faint praise for Peter Drucker: he was an acknowledged genius. Drucker’s genius led to differences in his approach to both consulting and his views of management. Drucker’s consulting model was to ask questions.

Talk to yourself

you struggle to find a solution directly, questioning the brain as a separate entity eliminates much of the garbage that prevents you from finding an answer. The pressures and stresses you are under are sometimes too great for this simple technique to bear fruit. But the brain can work subconsciously, even while the conscious brain tends to blot out useful information emanating from your subconscious. The question, then, is how we separate the two.

Distract yourself

One answer is to create a diversion. This Years ago I read an article in which the may be done in a variety of ways. Inauthor recommended that talking to one- ventor Thomas Edison used the simple self was really quite useful in problem- technique of sitting in a darkened room. solving and management Others take a nap or simdecision-making. The auply go to sleep at night Researchers and find they wake in the thor maintained that if you talked to yourself and asked morning with the solution. discovered your brain questions as a I’ve had this happen to me that simply separate entity, you would without any effort, and frequently be rewarded with you have, too. distracting one maybe effective answers. In fact, Scientists at Carnegie group for a your brain would answer – Mellon University found or at least attempt to answer that all these techniques few minutes – any question you decided did was simply distract the led to their to ask. conscious brain, frequently I tried this technique even for just a short pemaking a and was surprised at just riod, while allowing the much better subconscious mind to do how easily it worked and how frequently it provided its job and continue to work. decision me with sometimes immeThey investigated the brains diate – and highly effective of individuals attempting to – answers to a variety of questions, with solve problems that their conscious minds which all of us face on a daily basis. couldn’t handle. Using the purchasing of an Psychologists tell us that one reason imaginary car as the task, along with confor this phenomenon is that your brain flicting and multiple wants and needs, the already has all the facts necessary for subjects were divided into three groups (see problem resolution stored away in your box over page). The researchers discovered memory, but some of these facts cannot that simply distracting one group for a few be easily accessed directly. By eliminating minutes led to their making a much better the various psychological blocks when decision.

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Drucker’s five basic questions Drucker’s five basic questions were brought together in a single book, and edited by Frances Hesselbein, winner of the Presidential Medal of Freedom in 1998, and one of my official presidential advisers at the California Institute of Advanced Management (CiAM).

What is your mission?

Drucker’s favourite mission statement was from a very old business. The statement was his favourite for a very important reason. It changed Sears, Roebuck & Co from a struggling mail-order house that flirted with bankruptcy, to America’s leading retailer, all within ten years. What were these magic words? That Sears, Roebuck & Co should be the informed and responsible buyer for the American farmer and the American family. Does my own organisation, the California Institute of Advanced Management, have an identified mission? You bet it does! The mission of CiAM is to provide a flexible, affordable, and high-quality education based on the principles and values of Drucker – the father of modern management – to enable students to immediately apply their knowledge and ability with integrity and success.

Who are your customers?

My friend, entrepreneur Joe Cossman, started selling garden sprinklers that consisted of a flexible plastic hose with holes in it. He sold mainly through supermarkets and similar outlets. One day he read that his hose was being used in the poultry business as an inexpensive way to cool poultry pens during the hot summer months. This prompted him to redefine his business and target an entirely new market for his product. Clients need to continually track sales so they can identify their customers. Sometimes, your customers are not who you think they are!

DRIVEN TO DISTRACTION How diversion improves decision-making Scientists at Carnegie Mellon University wanted to test how being distracted for just a short period can affect the brain’s effectiveness. To do this, they divided their research subjects into three groups and asked them to purchase a car. The results may surprise you. Group 1 was asked to come to an immediate decision, so consequently it could do little about weighing the pros and cons to come to an optimal decision. Group 2 was given time to try to consciously solve the problem to decide on the optimal car. Group 3 was given the same problem, but also a ‘distracter’ task to perform. While it held their attention and distracted their conscious effort, their non-conscious minds continued working on the car problem. The distracted group did significantly better than the other groups at selecting the optimum car. It performed better at considering the range of factors in the purchase decision. Yet this group was distracted for only a few minutes. Clearly this method was more effective than even sleeping for many hours.

What do your customers value?

In the mid-1980s, Coca-Cola made a huge mistake when it attempted to introduce New Coke in response to ‘The Pepsi Challenge’, a marketing promotion that was slowly eroding Coca-Cola’s market. Pepsi, its arch-rival, had challenged the public through a series of television advertisements and live events to blind-taste its product against its chief competitor. The tests revealed that Americans leaned towards Pepsi, a sweeter drink than classic Coca-Cola. In response, Coca-Cola introduced, to much fanfare, New Coke as a revolutionary soft drink. You could almost hear Coca-Cola marketers shouting: “So you guys at Pepsi want a challenge, do you? We’ll give you a challenge!” Coca-Cola had carefully conducted its own blind-taste tests and formu-

lated a product that was sweeter than its classic brew – and was consistently preferred over either its own original product or that of its rival, Pepsi Cola. There were two problems. First, as psychology writer Malcolm Gladwell points out, scientific tests have shown that most consumers prefer a sweeter drink when asked to take a single sip. In prolonged consumption, however, sweeter products are often less popular. Second, taste was not the thing that Coca-Cola’s customers valued. Above all, they valued CocaCola’s image. It was as much an American icon as mom, apple pie, and John Wayne. With this market, Coca-Cola’s previous campaign – that it was ‘The Real Thing’ – resonated. However, the US public rebelled in huge numbers against New Coke, which appeared not to be The Real Thing at all. After millions of dollars in advertising and promotion and taking on detractors in the media, eventually

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HOW TO DEVELOP GOOD QUESTIONS Here are some guidelines for developing questions that I think Drucker would approve of:

• Will the question act as a catalyst for further discussion with your client? • Will the question arouse curiosity? • Will the question promote an exploration of new ideas? • Will the question challenge your client to make a suggestion? • Is the question open to a variety of different views and responses?

Coca-Cola surrendered and New Coke was quietly withdrawn from the market.

What results are you getting?

Drucker knew that without measuring your results, you are not going to make any progress. In fact, you can’t tell if progress is being made or not. So by results, Drucker wanted numbers. “Show me the money!” doesn’t just mean cash. It means quantified results.

What is your plan?

As with everything, Drucker had questions he felt important to ask before developing a plan. Drucker wrote that a leader must start with three questions. The first was his familiar: “What business are you in?” That one is pretty much covered in the mission question.

But he had two more. “What will the business be in the future?” Moreover, Drucker wanted to know, “what should the business be in the future?” Although these questions need to be considered separately, they need to be integrated, too. This is because the present is connected with the future. We have short-range plans for projects, products, and initiatives. These have an impact on what our business will be in the shortterm future, whether we like it or not. What should it be is a question of the more distant future. How far distant? Ten years is not too far distant. I’ve seen organisations plan for 25 or even 50 years ahead. Regardless of the time horizon, the answers to the three questions must fit together. One doesn’t suddenly jump from the business we are in today without intermediate steps that help us realise what our future business should look like.

• Will the question help uncover controversies in the subject matter? • Is the question directly connected with the client’s operation? • Will the question encourage the client to examine their own thinking?

Drucker’s use of questions may be a very different approach from your own modus operandi. But this technique is sound and yields amazing results. It is easily adapted and can be integrated into a variety of other techniques that you employ in an operation.

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The new rules of creativity As the Forum turned to the interplay between innovation and leadership, one of the most eye-catching sessions from its second year was futurist and author Matthias Horx’s speech, ‘The Age of Creativity’. In his address, Horx explained how leaders should use the cultural ‘meme’ of Peter Drucker as a driver for a new generation of creative breakthroughs. In that spirit, the following piece from Vivek Wadhwa argues that innovators must apply their imaginations to the needs not of the present – but the future Illustration by John Holcroft

Drucker Forum Year Two: 2010

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Much of what is needed has already been created. To innovate for the future, you must be able to see it, writes Vivek Wadhwa

istory is no longer a guide to the future. This is how it used to work: once in a blue moon, a major discovery was made, or else something transformative was invented, and the human existence advanced on the back of it, in one giant leap. Think of the effect the discovery of fire had. Winters became tolerable. Food could be cooked and, thus, rid of many poisons. Nighttimes became active. Lives rapidly lengthened. Agriculture helped us feed our rapidly growing, maturing population. General nutrition levels rocketed. Lives became healthier and happier. The invention of sails triggered international travel. Powered flight made it exponentially quicker. Lives become wider; richer. Yet if we saw just one such milestone in our lifetime we were lucky spectators of history. The big difference in the digital age is that we now see one almost every year.

The convergence of new technologies – for this is the golden age of creation – means forecasting human needs beyond the next five years is a troublesome, yet crucial, exercise. I have previously written in these pages that many of today’s children will never drive a car because, by the time they reach driving age, most cars will be able to drive themselves far more proficiently than most humans can. Thus, the need to learn to drive will become the reserve of the enthusiast, not the commuter. Hold that thought. If one of the fundamentals of adulthood – the traditional coming-of-age milestone of gaining a driving licence – is superfluous, what else will be? The answer is: quite a lot. To create things that people will need in a decade, or two decades, inventors must recognise that they will need a lot less. Those who want to create for the new landscape should know what it is likely to look like.

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RULE 1

The efficiency rule Creations should boost sharing and keep costs low

Owning a car is no longer a status symbol for everyone – to the young, it is a sign that you live in the backwoods. Many wealthy Londoners and New Yorkers don’t invest in a costly, rapidly depreciating asset anymore. They just hire a brand new, state-of-the-art automatic vehicle when they want one. If they can’t be bothered to drive, or fancy a drink, they call up an Uber at a fraction of the price – and twice the convenience – of a black or yellow cab. The result: for urban dwellers, the whole motoring experience just got rapidly better and cheaper. Think about that. A lot of people have no need to own – or even drive – a car anymore. Old, cramped, inefficient cars are becoming worthless.

Motoring is just one example of how cost-effective service excellence is rendering expensive ownership redundant. As we get better at extracting what we need to live, and finding new ways to create it, life will become radically cheaper. There are huge benefits to this. It may sound hyperbolic now, but it will soon become apparent that a comfortable life will be within reach of nearly everyone on Earth. Lesson The successful products and services of the future will ride the new wave of efficiency. Think of technologies that allow doctors to analyse ten to 20 times as many images in a day than they do now; of self-

driving cars that can be pooled among 20 leaseholders; of shopping services that can drone-deliver to your door within an hour of order – without any need for you to sink time at the mall.

RULE 2

The tool rule Creations that help people help themselves will succeed

The barriers to entry in a whole raft of sectors are gone, or going. Invention has put paid to many of them. Want to start and market a business? An off-the-shelf, do-it-yourself website looks the part and costs a few dollars. Many of us are already checking our own heart-rate and fitness using smart watches and user-friendly apps – self-diagnosis in healthcare will become ever more sophisticated. What about making stuff ? 3D printers were once the realms of science fiction, then the expensive toys of super-rich geeks, but within a few years they will be in every garage. Smartphone mount broken on your road bike? Why buy one when you can download a plan from the internet and just 3D-print one? Modular software, self-healthcare, 3D-printing… the greatest creations of the modern age are those that help people to help themselves. Lesson The successful creations of the near- and mid-future will help people serve themselves. Learning devices that foster the rapid, easy gain of know-how will be popular. Robots that perform menial duties that once cost the earth to hire-in will sell to allcomers. Software tools that make starting your own enterprise ever easier – navigating tax law, linking supply chains, automating the search for customers – will bring their creators riches. Innovators should concentrate their efforts in creating products and services that help others advance their own lives.

RULE 3

The overkill rule Creations that help people tackle input excess will prosper

We will soon have too much of everything. As rapid innovation and rapid cost-decreases reduce the price of everything, our problems will arise from consuming too much, rather than too little. For all the focus on poverty and malnutrition, the diseases of affluence – obesity, diabetes, cardiac arrest – are the biggest killers in much of the West. And the developing world is catching the plagues as it adopts the Western diet. The prognosis gets worse: falling prices of junk food mean its consumption is likely to rise. The overload in our stomachs is mirrored by the overload in our ears, and in our brains. The march of social media and 24-hour communication is degrading our attention span and rendering us unable to concentrate, so incessant, many and various are the calls on our time. In all segments of life, abundance will become a much greater challenge than scarcity.

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Lesson Innovators should focus on creating products and services that allow users to escape information overload, and reduce their consumption of suboptimal or irrelevant content. Products that foster better selection – less quantity and higher quality – will succeed. Curation tools that hone and handpick from information streams will do well. Digital concierges that navigate consumers quickly and effortlessly to the best food and drink, and away from the mediocre and the unhealthy, will thrive.

RULE 4

limited. Creators should examine things that are not yet fully digital and explore how they can be made so – before their competitors get there first. Think about communication: how could virtual business meetings be made more real? Why do trains still have drivers when several networks around the world – such as London’s Docklands Light Railway – have been using driverless locomotives successfully and safely for years? Every time you buy a paper ticket for a transport network, theatre show or movie, remember that process can and will be superseded. Will human waitresses be needed in ten years? There will be an android for that.

The digitisation rule Automate and computerise everything before someone else does

Sentimentality will get you nowhere. Anything and everything that can be digitised soon will be. The story of digitisation is one of natural, logical progression. It began with words and numbers, then morphed into games, before – and we forget how recently this change arose – becoming the standard format for rich media such as movies, images, and music. The march of the machines has swallowed up much more. Complex business functions, medical tools, industrial processes, and transportation systems are all entering the digital space. Inexpensive sensors that can monitor pretty much everything are becoming commonplace. Empathy is a quality robots cannot yet command, but they are already capable of undertaking the functions of basic daily care. Everything that can be reduced to binary code will be. Lesson There may remain niches for old-fashioned analogue products – vinyl records have just scored their best year in two decades. But the market for retrograde goods will always be

RULE 5

The cyborg rule People won’t just wear your inventions, your creations will become part of them

The cyborg is living in the present day. Implanted retinas already use silicon to replace neurons. Custom prosthetics that operate with the help of software are already personalised parts of humans’ bodies. The military will use computer-guided exoskeletons in the next few years. On the domestic stage, the exoskeletons are expected to become a tool to aid the mobility of the elderly and disabled. Meanwhile, real-time health feedback will see us tattoo sensors into our bodies to track key health indicators. The information those sensors gather will be transmitted instantly, and wirelessly,

to our phones. The once-controversial Google Glass will eventually seem like child’s play – expect Terminator 2-style head-up displays born of retinal implants before too long. When part of you is machine, how human are you? The philosophical dimension will keep thinkers awake at night. In the meantime, innovators will get busy. Lesson Wearable technology is just the beginning of a revolution. Creators of the future will consider the human body as a land of opportunity. Embedded tech that helps people excel physically and mentally will make innovators rich. Super-tasting nasal implants. Babel fish-style in-ear translators. Telescopic retinal adaptors. They were once the preserve of comic books. Some day soon they will seem mundane. This article is based on ideas in Vivek Wadhwa’s book (co-authored with Alex Salkever), The Driver in the Driverless Car: How Our Technology Choices Will Create the Future bit.ly/driverlesscarbook Watch Matthias Horx’s original speech ‘The Age of Creativity’ at bit.ly/AgeOfCreativity Vivek Wadhwa is a distinguished fellow at Harvard Law School and Carnegie Mellon University’s College of Engineering

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Mindset: the big shift Redefining the role of business in society was a key theme of the third Drucker forum, with questions of shared values and social responsibility consistent features of the programme. In the third article of our anniversary supplement, renowned management scholar â&#x20AC;&#x201C; and founder of the Drucker Society London â&#x20AC;&#x201C; Professor Vlatka Hlupic urges leaders to harness empathy as a means of increasing performance in their organisations Illustration by John Holcroft

Drucker Forum Year Three: 2011

The Drucker Forum Anniversary Report

Initiate a change in your people’s attitudes and behaviours and your organisation will transform itself, writes Professor Vlatka Hlupic

he big shift never arrives by person makes,” one executive told me. chance. Moving individuals “Usually that senior person or your manfrom a Level 3 mindset (tra- ager doesn’t have enough information to ditional, controlled) to Level make the right decision. So they call you 4 (emergent, enthusiastic) back, ask for more information … you alcan be brought about through practical most end up making the decision yourself training and coaching. In many cases, a anyway.” Such testimonies are common. crisis or a threat triggers Appointed decision-makers the demand for change have the power but When leaders often (see Figure 1). Or there lack the tools to make the may be a perceived need calls. Their subordinates engage in to improve engagement commonly have the tools empathic and performance across but lack the power. the board. Sometimes, There are other scenaribehaviour, the sheer slowness of os where a big shift is likely. they directly decision-making in a rigid When a leader steps down, hierarchy causes frustrainstead of anarchy ensuing, alter their tion to build until the case sensible people step in to own brain for more empowerment encourage self-organising and distributed leaderchemistry, and teams of knowledge workship becomes compelling. with key individuals that of people ers, “You have to wait for the acting more as facilitators decision that the senior around them than traditional executives.

Leaders who want to bring about the big shift can implement my ‘Emergent Leadership’ model. It is a tenweek ‘Individual Shift’ programme (see Figure 2). The initial self-assessment often reveals a dissonance between leaders’ self-impression and the actual situation.

Introspective dissonance In the initial individual assessment of the programme, using an online tool, leaders are asked in detail about how they actually operate, and how they perceive the organisation and their colleagues. In the results of an individual assessment, someone may consider himself to be mostly at Level 4, but the analysis reveals a person anchored at Level 3. This can be disheartening for the individual. It may be the case that the individual feels culturally constrained to operate in a command-and-control

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FIGURE 1: Change-makers Four triggers for a mindset shift

1. Where there’s a will

2. Tired of waiting

3. Opportunity from crisis

4. The king is dead

There is a collective understanding in the company that change is necessary

Executives grow exasperated with waiting for decisions from distant leaders

A threat to the business sparks action

A leader leaves and selfmotivated employees step into his or her role

manner. He may have gained early business experience in an environment dominated by targets, bonuses and formal hierarchy for making most decisions. In my coaching experience, it is common for executives to consider themselves to be more empowering than they actually are, and to struggle in practice to cede control, despite their best intentions. But many are both willing and able to move up to a higher level of operation. The move up to Level 4 often means letting go, having the confidence to say to a suitably knowledgeable and empowered individual: “Go ahead with that course of action. You don’t have to check in with me for approval at every step.” They learn to say: “You design that project, and I’ll help resource it,” instead of: “Do it this way, to this set of guidelines, and you get a bonus for meeting this deadline.” This shift in individuals’ mindsets transforms the

organisations they work in. In the past, the tacit assumption in both personal and organisational development has been that the two are separate or only loosely connected. But this limiting belief understates the extent and depth of interdependence. Individuals proceed through levels of development – for example from Level 3 to 4 – both while and by influencing others. In turn, organisations exhibit similar levels of operation. Imagine that a leadership team with a controlling approach oversees a competent but underperforming company. Some key leadership individuals gain insight into these weaknesses, and begin to empower themselves and their colleagues to move to a higher level. Once tangible benefits to the organisation are experienced, confidence grows to repeat and deepen the process, in a virtuous circle.

This interdependence can be observed in neuroscience. When leaders engage in empathic behaviour, they directly alter their own brain chemistry, and that of people around them.

Confidence boost

When an empowering approach to leadership takes hold, the confidence soars not only in the individual given such responsibility, but his or her team members, and other teams within the organisation who are inspired by the example. Trust, communication and exchange of ideas multiply. The benefits that begin to ripple out through the organisation include: accelerated project completion, more innovation, increased organisational resilience and adaptivity, sustained growth, ability to renew or reinvent the organisation and better retention of knowledge workers.

FIGURE 2: Mindset management The 12-week ‘Individual Shift’ programme for lifting a leadership team from Level 3 to Level 4 1

Week

1 KICK-START WORKSHOP

One-day workshop: introducing key concepts, set goals, discussing group results

2 INDIVIDUAL AND GROUP PRACTICE Covering levels 1 to 3

Self development (up to 4 hours) Two individual coaching sessions (2 x 1.5 hours) Two peer coaching group sessions (2 x 0.5 hours)

3 SUPPORT WORKSHOP

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Organisational culture is not something separate or ‘out there’. It is continually being created by the people who make up the company: their values, conduct, self-awareness, ability to communicate and collaborate, and their relationships. Another implication is that developing leaders may be a more effective, and more cost-effective, approach than managing individuals out of organisations and replacing them.

THE LEXICON OF LEADERSHIP How language tells a story about capability If a person is anchored at Level 3, then the coach can use the language of Level 4 to initiate the shift of the mindset to Level 4. Often, it is about letting go of fear, so it can involve personal work. Once the higher level is seen to be effective, the leader feels empowered rather than threatened by having ceded formal control. A major implication of the research is the recognition that performance depends

Implications

Making the shift to Levels 4 and 5 can improve business achievement across a range of objectives: more productivity and better service, more innovation, superior customer service and financial returns. Given the evidence base supporting these findings, one would expect most organisations to be at such levels – or to be close to and/or aspiring to achieve them. This is not the case, however. According to Dave Logan and John King’s book Tribal Leadership, more than twice as many employers are at Level 3 (49%) than at Level 4 (22%). The sheer gap between our knowledge and our achievement is huge, and previously understated. As a profession, we in management are not even close to being rigorously evidence-based, or the best that we can be. A quantum leap in performance is needed, and we now have knowledge on the ‘how’ as well as the ‘what’, for individuals and their teams.

One-day workshop: support for adopting Level 4/5 thinking, behaviour and actions

upon culture, which in turn is an aggregation of individuals and groups operating at certain levels. ‘Culture’ can come across as an abstract concept, but those who are living in a high-performing workplace experience it tangibly. They use phrases like: “There’s a real buzz about this team.” Figure 3 shows typical phrases used when individuals are anchored at Level 3 and Level 4 respectively.

FIGURE 3: Examples of thought and language patterns at Level 3 and Level 4 LEVEL 3

LEVEL 4

I am in charge

We can achieve great results as a team

I need to be in control

We identify shared values and aspirations

If they underperform, I may have to sack them

The more I delegate, the more I get back

I feel overworked

I feel inspired

I worry about burnout

I am fulfilled at work

I do not tolerate mistakes

We try to learn from mistakes

My leadership style is based on formal power

I am seen as a role model

Professor Vlatka Hlupic is a management consultant, executive coach, award-winning international thought leader and author of The Management Shift and Humane Capital

4 INDIVIDUAL AND GROUP PRACTICE Covering levels 3 to 5

Self development (up to 4.5 hours) Two individual coaching sessions (2 x 1.5 hours) Three peer coaching group sessions (3 x 0.5 hours)

5 INTEGRATION WORKSHOP

One-day workshop: future personal steps, moving towards an organisational shift

The Drucker Forum Anniversary Report

The shape of firms to come In the Forum’s fourth year, attendees pondered the theme ‘Capitalism 2.0: New Horizons for Managers’. A crucial part of exploring new horizons is letting go of old perspectives – and to that end, world-renowned business thinker Tamara J Erickson led a session highlighting which assumptions about management and leadership must be shed in order to move forward. Here, she uses those assumptions as a springboard to predict the habits most likely to steer corporates to success in the near future

Drucker Forum Year Four: 2012

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Which leadership practices and behaviours will unleash the iconic business brands of tomorrow? Tamara J Erickson provides ten predictions

t the 2012 Drucker Forum, I had the pleasure of sharing my work on outmoded legacy practices that were continuing to wield an undue shaping influence upon firms, in a session entitled: ‘Re-Think: Ten Assumptions that Are No Longer True… But Still Shape Our Organisations Today’. The statements I cited were:

how ridiculous the phrase, “We live in the time of greatest change” can be. In many periods of history, entire industries have been virtually eliminated in the face of major changes. Pressure from foreign competition prompted the silk weavers of the 18th century to double down on cost. They brought work in-house and, in so doing, abandoned the variable-cost model that had given them the agility required to serve their small, highly fickle market. Within a decade, a once-vibrant indus1. Keeping our costs down and our quality high will allow us to win in try was gone: tens of thousands of looms today’s marketplace. stilled. Two centuries later, demand for 2. Communication is difficult and costly. affordable cars from the rapidly burgeon3. A leader is out in front, knows where ing middle class forced hundreds of auto we are going, and supplies all the manufacturers to do what they had been answers. doing harder and faster, while a handful 4. There will always be a line of qualified invented a new organisational and leadyoung people outside my door, eager ership approach to meet the challenges of for a job. scale and cost – all while retaining quality. 5. A business organisation is comprised Within a decade, assembly-line carmakof employees. ers completely wiped out hundreds of 6. All our employees value basically the stubbornly craft-based competitors. same things. Allowing ourselves the luxury of 7. Hard work and loyalty will be believing that the challenges we face today rewarded with a steady career and are unprecedented is both inaccurate and comfortable retirement. an excuse for inaction. Companies that 8. If you pay people more, they’ll work stick to old practices for too long, trying harder or better. harder to do more of what has worked in 9. The individual’s responsibility is to do the past, usually fail – and fade from memhis or her own job well. ory. Those who invent new ways forward – new structures and leadership practices – 10. People have a single job. are those we will continue to revere. Today, after six further years of working The second lesson from history can with companies and executives around the be derived from the old saying, “Form world – as well as studying patterns in his- follows function.” In the context of my tory – I would like to shift argument, it means that from those statements to success depends upon Companies predictions about the ways your ability to focus on in which successful compathe most important activthat stick to nies will be structured in the ities: the one or two things old practices you need to do to succeed. future and the practices that effective leaders will adopt. Most leaders spend far too for too long A cursory glance at much time on activities usually fail business history reveals that are well-understood,

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and could be delegated to others. But the leadership’s focus and organisation’s design must be optimised around the small set of activities that are most differentiating – or, as I like to say, those that will make your business ‘iconic’. So, evolving from the assumptions I questioned back in 2012 – and guided by my research over the past six years – I now offer ten predictions for leaders and organisations.

will rely upon networks that can be tapped as needed, shaped by a variety of deals on renting or sharing. That will extend to the notion of full-time employment: a form of ‘ownership’ that will increasingly give way to a set of more flexible employment arrangements. Owning less will build optionality into the organisation’s design, thereby promoting agility.

adding to raw materials will certainly continue. But the opportunity for financial returns will be far greater in adding value to connections. Those new forms of value creation will include matching or aggregating unorganised resources; providing mechanisms for curation and ratings – and creating trust through branding, assurance or inspection.

5. Experimentation will proliferate

1. ‘Mobilising intelligence’ will catalyse

This will allow firms to tap exactly what they need, exactly when and where they need it – like integrating an Uber-style reflex into key business processes. Of course, it doesn’t make sense to access every resource in these ways. Indeed, you should now begin to classify your assets, with the intent of continuing to own: Scarce resources Those you are willing to own even if you don’t need them full-time, just to guarantee availability when you do. Strategic resources Those you want to prevent others from accessing. Resources with certain and stable demand For which you have absolutely no doubt about future need. Human resources Required to form and maintain critical relationships, and render tacit judgments. By contrast, assets you should begin to rent and coordinate include: Fungible resources Widely available in the market, particularly if demand fluctuates and qualifications are certified by a third party (such as a driver’s licence). Specialised resources Required only sporadically, but generally available. Resources with an uncertain demand In which having options is more valuable than any slightly lower cost derived from ownership. Associated with business areas that will require agility.

firms’ efforts to become iconic

When we think back on the first half of the 21st century, all of the most memorable companies will have excelled at one or more of these functions: Innovating Combining different types of knowledge and expertise to come up with something better. Curating Adding value by collecting and harnessing small units of knowledge. Collaborating Sharing valuable information with the right person at the right time. Customising Creating insightful relationships with customers, suppliers and others. Sensing Detecting, and responding agilely, to market and environmental shifts. Learning Experimenting with new approaches; selecting and embedding the best in ongoing activities. More than 30 years ago, Peter Drucker foresaw the role that mobilising intelligence would play, when he said: “The most important, and indeed the truly unique, contribution of management in the 20th century was the 50-fold increase in the productivity of the MANUAL WORKER in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of KNOWLEDGE WORK and the KNOWLEDGE WORKER.”

2. Organisations will own less

As the cost of conducting transactions falls, organisations will have less of a requirement to own assets. Instead, they

Work processes will be increasingly based upon coordination

4. Strategic success will depend upon the value of your connections

Tactical decisions will shift from adding value to assets owned to creating platforms of peers. As a business model,

The role of long-range, detailed numerical plans will shift from commitments to be enforced rigidly to guidelines to frame flexible approaches. Companies will focus on developing a compelling and well-understood purpose to guide people at all levels of the organisation in choosing appropriate behaviours, providing the latitude to experiment. More will join chief executive Jeff Bezos, who says, “Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.”

6. Tasks or projects will be the fundamental units of work

People will bid on projects based upon their preferences. Some projects will be short (months); others very long (perhaps a decade or more). Some workers will take on multiple projects at a time. Job titles will be time-bound and actionor outcome-oriented, rather than defined by business units. Pay will be tied to outcomes, varying by project difficulty or desirability. Product lines – and functional or geographical units – are industrial-era constructs, working against many of today’s desired behaviours. But projects are the natural shape of knowledge work. Project-based firms will have a greater facility for tapping the workforce – allowing senior individuals to phase down, yet remain productive on an iterative basis, and providing younger staff with the variety and challenge they crave. Importantly, paying for outcomes is the only sensible way to value knowledge work: it can’t be judged on the basis of standardised processes, and its quality can only be judged upon completion.

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practices: craft unique experiences. Don’t offer a little bit of everything: excel in offering specific things that the people who choose to join you really want – things that align with your values. Meaning is the new money.

10. Leaders will shift from being in front to creating a context for others to contribute and succeed

7. Every company’s HR department will

8. Companies will compete for

function as a talent agency

talent by offering credentials with commercial value

The primary metric of success will be fitness for purpose, rather than retention. How many of our tasks are staffed by people with the full complement of skills desired? How close is our staffing to that ideal? To support the ‘own less’ maxim, placing part of one’s workforce in a contingent relationship hardwires one’s firm with the diversity of ideas required for innovation, ensuring that projects are partially staffed by people brought in specifically for the task at hand – hopefully with fresh thinking and perspectives. Again, Drucker was far ahead of my own thinking here. Almost 30 years ago, in one of our collaborative research publications, he predicted that the HR function was heading inevitably towards a radical new operating model. He understood that the 21st-century workforce would be composed predominantly of knowledge workers in a diverse set of arrangements – some part-time, some cyclical, some salaried, some contract-based – and that they would not need ‘managers’ in the traditional sense. In his view, the growing complexity of the workforce – the need to juggle a wide variety of individuals with diverse preferences and needs, and a dizzying array of relationships – would take staffing out of general management and into a specialised, agency-like HR function.

Or what I call ‘badges’. Today, young people decide which job to accept based upon which one is most likely to increase the value of their personal asset – through the depth and breadth of learning offered, the employer’s market prestige and/or the quality of networks formed. Upshot: tell candidates how much more they will be worth on the market after two years with you, and why. Compete for talent on the basis of learning credentials. Where possible, develop task-specific badges that your employees can publicly display. Articulate value in increments no longer than two years: if you want individuals to stay for 30 years, you will need 15 great stories about the valuable credentials they are set to earn.

Mobilising an individual’s intelligence can’t be forced or required. You won’t even really know if people have done it to the best of their ability. Going forward, individuals’ willingness to invest discretionary effort will make or break your success. So, a leader’s role is now to create conditions in which talented people choose to do great work. Outstanding leaders who encourage such conditions consistently exhibit four behaviours. They: Disrupt Ensure a continual infusion of new perspectives. Intrigue Ask questions – framing challenges in ways that are evocative and inspiring. Connect Make it easy for individuals to share insights, observations and ideas. Engage Communicate compelling purposes and curate a culture that delivers on the experience. We are at an exciting point. The changing environment favours the bold: those who invent new ways to shape organisations – and new ways to lead.

9. Organisations will need to convey their uniqueness

You must have a distinctive, differentiating, meaningful brand that will resonate between projects. Shift from trying to be all things to all people to attracting and retaining those who value your offerings. The best companies will be able to say with confidence, “Not everyone would want to work here.” And whatever you promise, deliver it fully through the work experience. Stop adopting best

Tamara J Erickson is a McKinsey Award-winning author. She is also an adjunct professor of organisational behaviour at London Business School, where she has designed – and directs – the leadership programme for seniormost executives, ‘Leading Businesses into the Future’

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How to fly the complexity chasm As the business world evolves into a dense web of partnerships, against a backdrop of sharp technological and geopolitical shifts, the potential for complex scenarios to arise only increases. In honour of the fifth Drucker Forum’s theme, ‘Managing Complexity’, Tony O’Driscoll of Duke University explains how leaders can tell the complicated from the complex – and what they can learn from the flying skills of one Captain Chesley Sullenberger

Drucker Forum Year Five: 2013

The ‘Miracle on the Hudson’ contains lessons for us all, writes Tony O’Driscoll

n 15 January 2009, Captain Chesley ‘Sully’ Sullenberger found himself in a frighteningly complex situation that no commercial airline pilot had previously experienced: he was sitting at the helm of a completely disabled Airbus A320-214, a mere 3,200 feet above one of the most densely populated places on the planet. In that same instant, Sullenberger had a flash of insight that helped save the lives

of all 155 passengers onboard US Airways Flight 1549. The skyscrapers of New York City agonisingly close, Sullenberger’s moment of clarity was the realisation that he was no longer flying a powered commercial aircraft. Instead, he recognised he was piloting a 70-ton glider. Drawing upon his US Air Force experience of flying gliders, Sullenberger immediately lowered the nose of the plane to change its pitch and maintain optimal glide speed. The manoeuvre allowed him

to create maximum forward momentum as the aircraft’s wings sliced through the air, creating lift and buying him the precious seconds he needed to clear the George Washington Bridge by less than 900 feet, before successfully ditching the aircraft into the Hudson River. Insights like Sully’s represent moments of clarity that emerge serendipitously from a seemingly endless cacophony of complexity. Insights are non-obvious and unexpected, qualitative and profound,

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The complexity chasm

As the connectedness and complexity of an organisation’s operating context increases exponentially, leadership’s ability to anticipate environmental shifts and predict outcomes plummets precipitously. In navigating an increasingly volatile, uncertain, complex and ambiguous (VUCA) business environment, organisations find themselves vacillating violently between complicated and complex operating contexts, with many plunging to their demise in the chasm that exists

between them: more than half of the Fortune 500 have disappeared since the year 2000. In complicated operating contexts, the connection between cause and effect is knowable. Decision trees of possible outcomes can be identified, risks and probabilities around these outcomes can be calculated, and contingency plans for each path can be predetermined, controlled and de-risked. In complex operating contexts, by contrast, the relationship between cause and effect cannot be predetermined. Patterns of relationships and interactions emerge and recede in unpredictable ways, momentarily revealing possible progression-paths to pursue that vanish as quickly as they appear. Both the outcomes themselves and the paths to get there are emergent and cannot be predicted, controlled and de-risked ahead of time. The two operating contexts could not be more different to each other: complicatedness is like chalk, while complexity is like cheese. Each operating context requires its own unique leadership response.

Different context, different response As leaders navigate back and forth between complicated and complex operating contexts, they must repeatedly identify which side of the complexity chasm they are operating in. Then they must immediately apply the leadership response required within that context. In a complicated operating context, this involves in-depth analysis of known possible outcomes to determine an optimal course of action, identifying risks to this optimal path and isolating trigger points that would invoke contingency plans to minimise these risks. To avoid being derailed in this operating context, leaders must counteract their desire to over-analyse, avoid placing too much stock in the advice of subject matter experts, and overcome the blindness of their own biases. In so doing, they can effectively and efficiently deliver against a given expected outcome. Leaders learn – often the hard way – that there is a complexity threshold

FIGURE 1: Reframe, rewire, reconfigure

REFRAME what you SEE

REWIRE how you THINK

RECONFIGURE what you DO

FIGURE 2: The complexity chasm

Low

Environmental certainty

and relevant and constructive. They lead to a discovery that momentarily clarifies the complex by revealing something that previously went unnoticed, or by recognising something familiar from a different perspective. In turn, this revelation or recognition leads to an unexpected decision or course of action that can yield an unexpected positive outcome. Sullenberger’s ‘glider’ insight momentarily clarified the complexity of his operating context, allowing him to identify a positive progression-path of decisions and actions that avoided almost certain disaster. The pilot’s ability to reframe what he saw, rewire what he thought, and reconfigure what he did in response to his moment of clarity culminated in what became written into US national history as the ‘Miracle on the Hudson’. Many leaders in organisations today find themselves dealing with complex situations that are strikingly similar to the one Sully faced on that fateful day in 2009: the environment within which they are operating is uncertain; the outcomes they are striving to achieve are unpredictable; and the consequences of the rapidfire decisions they make and actions they take can lead to the sudden demise of their enterprise. Like Sully, leaders captaining their enterprises must learn to successfully navigate complexity by reframing what they see, rewiring what they think and reconfiguring what they do to ensure that their organisations operate in a perpetual state of readiness for the unexpected. But where do we begin?

COMPLEX • Unknowable

COMPLICATED

• Unordered

• Knowable

• Unpredictable

• Ordered

• Uncontrollable

• Predictable • Controllable

High High

Outcome predictability

Low

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FIGURE 3: Complicated chalk and complex cheese COMPLICATED CHALK

COMPLEX CHEESE

Assumes ORDERED universe

Assumes UNORDERED universe

Deterministic (can predict outcome ahead of time)

NON-deterministic (cannot predict outcome ahead of time)

Whole EQUALS sum of INDEPENDENT parts

Whole GREATER than sum of INTERDEPENDENT parts

FACT-based

PATTERN-based

LINEAR

SYSTEMIC

PREDICTABLE environment and outcomes

UNPREDICTABLE environment and outcomes

OPERATES like a MECHANISM

EVOLVES like an ORGANISM

Behaviour EXPLAINED by PROPERTIES of components

Behaviour EMERGES through INTERACTIONS of components

Leaders COMMAND and CONTROL

Leaders CONNECT and COLLABORATE

FIGURE 3A: Complicated operating context

FIGURE 3B: Complex operating context

Analysis of possible known outcomes to determine optimal course of action

Conduct multiple small and diverse experiments to uncover progression paths

CONTEXT CHARACTERISTICS

CONTEXT DERAILERS

CONTEXT CHARACTERISTICS

CONTEXT DERAILERS

Multiple cause-effect relationships

Analysis paralysis

Cause and effect cannot be foreseen

Temptation to control the situation

Requires expert analysis/diagnosis

Overconfidence in expertise

Patterns emerge from interactions

Desire to solve the problem

Multiple possible ‘right’ approaches

Bias blindness

Pattern structures reveal progression path

Looking for facts, not patterns

ACTIVITY-BASED RESPONSE

Identify outcomes, contingencies and triggers • Create decision tree of possible outcomes • Identify risks and develop contingencies for each possible outcome • Identify trigger/decision points for invoking contingency plan(s)

Identify patterns, develop insights and conduct progression-path experiments • Scan the context for signals of unanticipated influences • Probe the environment to surface patterns emerging from signals • Develop insights • Identify progression path experiments to test

RELATIONSHIP-BASED RESPONSE

Increase rise/contingency awareness • Engage experts required to identify and address contingencies • Increase stakeholder awareness of risks and contingency plans • Prepare stakeholders for consequences of contingency plan execution

Work the human network • Engage partners in the network who can support pattern recognition activity from their vantage point • Protect time and space for patterns to emerge • Maintain flexible and strong communication channel with all stakeholders

above which attempting to maintain control inevitably leads to failure. Leaders seeking to successfully navigate complex operating contexts must – first-andforemost – unlearn the lessons of experience they adopted in successfully navigating complicated ones. Attempting to navigate a complex operating context by applying a complicated leadership response often exacerbates the situation, culminating in devastating unanticipated outcomes. Complex operating contexts are unordered, unpredictable and uncontrollable. They consist of polarities to be navigated, not problems to be solved. And they

require a much more agile and adaptive leadership response. The leadership response required in a complex operating context involves ongoing iterations of test-and-learn experimental cycles to identify patterns, develop insights and discover highleverage progression-paths. To avoid being derailed in this operating context, leaders must overcome their temptation to control the situation, delay their desire to problem-solve, stop seeking facts and start uncovering patterns. Once a potential progression-path is identified within the complex operating context, leaders move back across the

chasm into the complicated operating context by taking swift action to test the progression-path and learn whether or not the course of action it revealed will achieve the desired outcome.

Avoiding fatal leadership errors There are two fatal errors that leaders commit in navigating back and forth across the complexity chasm. First, they misdiagnose their operating context, often assuming it is complicated when it is actually complex. Second, they apply an incompatible leadership response for

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the context they are operating in, of- a critical course of action via traditional ten applying a complicated leadership command and control, leaders must learn response while operating in a complex to connect and collaborate openly around operating context. the issue at hand. Successfully navigating Einstein is widely credited with the a complex operating context is dependent quip, “Everything should be made as on synthesising multiple diverse persimple as possible, but not simpler.” As spectives in order to develop a collective human beings, we naturally gravitate holistic appreciation for what is actually towards the comfort of simplicity and going on. In complex contexts, none of us clarity, and away from the anxiety of com- is as smart as all of us, and breadth and plexity and ambiguity. depth of perspective in making sense of This natural tendency to seek stability, the complex operating context increases coupled with our innate the likelihood of survival. desire to quickly resolve a Secondly, leaders There is a given problem, often causmust learn to rewire how es us to underestimate the they think by applying an complexity novelty and complexity of iterative, insight-drivthreshold the situation at hand. en, cognitive approach, Our strong desire to above which as opposed to a linear, bring a situation back hypothesis-driven one. attempting into control causes us to An insight-driven apoversimplify the operatproach requires that leadto maintain ing context and apply the ers recognise patterns that control wrong leadership response, emerge from the complex resulting in unanticipatweb of relationships and inevitably ed and sometimes catainteractions occurring leads to strophic consequences. within the complex opTo avoid peril in traerating context, develop failure versing the complexity insights around the underchasm, leaders must learn to overcome lying structures that cause these patterns their natural proclivity to commit these and identify possible progression-paths errors by reframing what they see, re- to move back towards stability and wiring how they think and reconfiguring control. In complex environments, there what they do. are no mistakes. Instead, every unsucFirstly, leaders must learn to reframe cessful progression-path is reframed as an what they see by relinquishing control and opportunity to learn and adapt. Tolerance adopting a beginner’s mindset. Instead for making mistakes and resilience in of launching headlong into solving an recovering from them lies at the very core unanticipated problem or deciding upon of the collective sense-making process reFIGURE 4: The complicated/complex infinity loop

ng nti Co

encies

COMPLICATED

Progression

pa th s

COMPLEX

Triggers

Insights

Outcomes

Patterns

FIGURE 5: Critical leadership errors

OPERATING CONTEXT

LEADERSHIP RESPONSE Outcomes Triggers Contingencies

Error 1 Underestimating the complexity of the operating context

Error 2 Applying a complicated leadership response to a complex operating context

Patterns Insights Progression paths

quired to successfully navigate complexity. Thirdly, leaders must learn to reconfigure what they do. The more connected we become, the less control we have. The reality today is that industries and organisations are a complex and interdependent amalgamation of people, processes and technologies. To successfully navigate back and forth across the complexity chasm, leaders must reach beyond traditional organisation boundaries to bring together disparate and diverse sets of people, processes and technologies, and reconfigure them in real time to synchronise with their operating context. It is only through collaborative engagement and agency around a collective shared perspective that organisations can see and seize opportunities for growth that will sustain them over time. So, when you next find yourself facing a frighteningly complex situation, remember to reframe what you see, rewire how you think and reconfigure what you do to ensue you do not commit a fatal leadership error. Try to be a little like Sully and, as you glide to safety, always remember that navigating complexity is definitely NOT complicated! Dr Tony O’Driscoll is a professor at Duke University’s Fuqua School of Business and a research fellow with Duke Corporate Education

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2017

2015

Here comes the night The Drucker Forum gala dinner is the social highlight of the Forum. Taking place on the Thursday evening, at the end of day one, it always makes for a memorable and elegant night out. Here, we look back in pictures at galas from the past nine years. We look forward to seeing everyone at this yearâ&#x20AC;&#x2122;s event.

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a rom t.

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The myth of bad robots Technology’s role in shaping the future of work was a key talking point of the sixth Drucker Forum: ‘The Great Transformation: Managing Our Way to Prosperity’. In the following piece, Ben Pring argues that, far from being a threat to job prospects, artificial intelligence will open up a host of previously undreamt-of opportunities Illustration by John Holcroft

Drucker Forum Year Six: 2014

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Just as the microscope led to the growth of modern healthcare, artificial intelligence will be a boon to the workplace, writes Ben Pring

In 1831, Manchester Royal Infirmary in the UK used 50,000 leeches in treating the ill of the first great industrial city. Twenty years later, Dr John Leonard Riddell, of Tulane University in New Orleans, invented the first practical binocular microscope. In 1930, Manchester Royal Infirmary closed its leech aquarium.

us to do work that has previously been unimaginable. New tools allow us to do new things. Incredibly powerful tools allow us to do incredibly powerful new things. New tools don’t automate people away. They allow people to do things that people have never been able to do before. AI is set to revolutionise just about everything we can think of, in the way t’s often said that the future is here that technologies like the microscope – it’s just unevenly distributed. That changed medicine. In another generation, uneven distribution of progress can using non-AI infused technology will also be seen in historical record. The seem as barbaric as using leeches does bottom fell out of the leech market today. It’s likely that the next generation when Hirudo medicinalis – long the go-to of ambulance-chasing lawyers will argue solution for barbers and surgeons – was that doctors who don’t use AI tools are superseded by Riddell’s technology that guilty of medical malpractice. allowed doctors to see, at a cellular level, In the transformation from leechwhat was truly causing the problem. es to microscopes, did Riddell destroy A microscope could detect the bacte- anyone’s job? Well, probably he did. The ria that was causing tuberculosis; an intes- leech magnates of Manchester no doubt tinal infection that would lead to cholera; went to their graves cursing his name. But a cell mutating into a cancer. The medical microscopes were central to the explosive microscope created possibilities that not growth of healthcare that led to the poponly made the leech redundant, but cre- ulation and economic growth that made ated an industry that today employs mil- the modern world. lions of people around the world. In the Nobody in their right mind now process, the technological advance made would argue that we should have stayed the world a better place. in a leech-based paradigm. This simple allegorical Of course, if your current New tools story is an entry point to business model is a modunderstanding how AIern version of leech breeddon’t related technologies are set ing or leech retailing, then automate to change the world again AI is bad news. You may be – to employ billions of people away. able to eke out a living for people, and, in the process, a generation or two, as the They allow make the world an even leech magnates did until better place. people to do 1930. But nobody mournFor AI isn’t, as it is ed the demise of their things that being popularly portrayed business – and nobody will in the click-bait media, mourn the passing of their they have a job destroyer. AI is a modern equivalents. never been new tool – a ‘datascope’, The medical field, in perhaps – that will allow fact, presents lots of opable to do us to see in much more portunities to see how the before fine-grain detail, and allow interplay between tools

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D DENSITY

and people – between man and machine – plays out, and will play out, in the future. And nobody is closer to this – and more bullish on the possibilities ahead – than Dr Eric Topol, author of bestseller The Patient Will See You Now and founder and director of the Scripps Research Translational Institute in La Jolla, California. Topol has recently taken the ‘AI is a job destroyer’ argument head-on in radiology, where advances in machine-based MRI analysis have led some to believe that radiologists will soon be as redundant as leech wranglers. In an opinion piece for the March 2018 Journal of the American College of Radiology, Topol and Perelman School of Medicine associate professor Saurabh Jha MD wrote: “AI is an adjunct to radiologists … whose purpose is to scale the productivity of radiologists … AI’s true impact on radiologists will be its ability to integrate information, rather than hasten information extraction … the amount and sources of information are outstripping our ability to understand their significance … AI is well placed to perform pixel biopsies.” Topol sees AI not as a tool that reduces the labour component of a process, but as a way to increase the overall scale of the process. In short, the tool will allow the radiologist to see and do more, to manage much finer-grain information and, in sum, produce better outcomes. This is a profound insight and outlines a much more realistic vision of how AI will create the future of work, not just in medicine, but in every field. The three key ingredients of this future are density, complexity and speed.

COMPLEXITY

Density

The first microscopes had a scale of 9X (i.e. they could make things appear nine times larger than they were). The most advanced microscope in use today (at McMaster University in Ontario, Canada) has a scale of 14mX (i.e. it can make things appear 14 million times larger than they are). The density of this pixilation is extraordinary and is opening new vistas in areas such as nanotechnology, which will be core to the next generation of electronics and technology. Greater and greater levels of density can be seen in just about any aspect of contemporary life, but ironically, are often hard to see. Take, for example, an ordinary Monday morning for an ordinary office worker in an ordinary town in any country in the Western world. Wake up • check email • check Twitter • text the children to wake up • put on the TV • scan CNN, the BBC, read the frontpage of the New York Times, The Sun, and BuzzFeed • get dressed • get out of the front door Travel to work • check email again • check Twitter • dial into conference call • scan Apple News • check E*TRADE • ‘Shazam’ the song playing in the railway station

SPEED

• book hotel for tomorrow’s business trip • check email At desk • check email • respond to email • check Twitter • get mad at Twitter • start work on overdue report • check Twitter… All before 8:30am… This density would be completely unrecognisable to Dr Riddell. Put him in a time machine and catapult him forward to 2018 and he would be catatonic amid the bustle of the world in which he found himself. Tim Urban of acclaimed blog ‘Wait But Why’ talks about Die Progress Units (DPU) to illustrate this idea – the amount of time it takes human beings to achieve enough progress that the shock of bringing a time traveller to your era would kill them. Even somebody retired for a few years and adrift from contemporary work mores would be shocked by this density of information, activity and action. Yet this is completely normal to most of us now.

Complexity

Allied to density is the complexity of life and work in 2018. Again, take an average ordinary worker in an average ordinary job and think about how many information sources they are trying to juggle, how many steps there are in the process they are executing, how many stakeholders need to be consulted,

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how many reports need to be generated, how many accounts need to be reconciled. Now think about a superstar hedgefund manager, a video-game developer, a commercial jet pilot, a CGI filmmaker, a reinsurance portfolio executive, a national security analyst. The complexity of these jobs – the information that needs to be sourced, managed, integrated, analysed, leveraged – is a far cry from the jobs that Richard Scarry would have outlined in his What Do People Do All Day? children’s book from just a generation ago. My job, as I’m sure is true for most Drucker Forum attendees, is far more complicated than it was just a few years ago. I work with teams of people all around the world – we schedule meetings for mutually inconvenient times – with different cultural attitudes and expectations. I need to juggle much more information than ever and need to be au fait with developments far beyond the walls of head office, let alone my home office. My clients, as are yours, are more demanding and unforgiving than ever. The stakes are higher. Bad decisions have greater ramifications. Disruption is a greater and greater reality. Life, and work, has never been less simple. Hence why, as an aside, so many people from Marseilles, to the aforementioned Manchester, to Mason, Ohio, have a deep nostalgia for the past: for less complicated times.

Speed

In the 1990s, the chief executive of the software company Oracle, Larry Ellison, had an infamous dictum – the 24-hour rule – that made it clear that if you didn’t respond to an email within 24 hours, you’d be out of a job. In 2018, that seems quaint. 24 hours? If you don’t reply to an email within 24 minutes nowadays you’re considered a loser; a B-player in an organisation that only hires A-players. The acceleration of modern business life is so extraordinary as to be almost invisible. Because we are the proverbial frogs in the pan of heating water, we find it hard to comprehend how much faster work, and life, occurs than it did just a few years ago. Information travels around

the world in a fraction of a second. Ideas spread from San Francisco to Singapore as fast as they do to Sacramento. People fly from Sydney to Beijing for a lunch meeting and then turn around and go straight back home. In James Clavell’s wonderful series of books about the first Europeans in Asia (Shogun, Tai-Pan etc), the world record in 1848 for the fastest journey from London to Hong Kong is set at 59 days. Now that’s a 15-hour flight. Many people understand the meaning and significance of Moore’s Law in computer hardware. Far fewer, I wager, understand the significance of the speeding up of every aspect of the modern world. And yet this speeding up, this exponential curve we are in, which shows no sign of faltering, is unprecedented across the long arc of man’s existence. As Canadian Prime Minister Justin Trudeau put it at the World Economic Forum in January 2018, “The pace of change has never been this fast, yet it will never be this slow again.”

always done – allow people to do things faster, easier and more proficiently than they could without tools. AI and automation will only have a net negative effect on jobs if – and this is a huge ‘if ’, that we don’t subscribe to – we can’t find new things to do. Dr Riddell’s microscope allowed people a panoply of new things to do, thank heavens. Our new tools, in medicine and every other industry, will allow us to grapple with a world that is denser, more complex and faster than ever before. From that algorithm (Dn x Cn x Sn) emerges the future of all our work. Leeches need not apply.

The algorithm of change Topol’s insight of how AI will allow radiologists to see more data (the pixel biopsy), integrate that with other information sources (‘multilayered data’, in his medical vernacular), and make faster decisions, is transferable into any discipline and business process one can imagine. Density, complexity and speed are all set to be turbocharged by new AI and machine-learning capabilities. ‘Datascopes’ will allow your business to see more data, integrate it with other data, and make decisions faster than ever. And, in doing that, create incredible new opportunities for commercial growth and levels of employment. In the recent book What To Do When Machines Do Everything, my co-authors and I argue, some would say counterintuitively, that in ten years’ time, employment levels in the Western world will be higher than they are today. For some people that’s a head-scratcher. But in our vision, as in Topol’s, AI is the next generation of tool that – as tools have

Ben Pring leads Cognizant’s Center for the Future of Work and is co-author with Malcolm Frank and Paul Roehrig of the book What To Do When Machines Do Everything

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Have faith no more How can we leverage digital technology to augment human capacity, rather than automate and replace it? That was a driving question at the heart of the seventh Drucker Forum, ‘Claiming Our Humanity – Managing in the Digital Age’. As the following provocative analysis suggests, one human capacity that has been heavily automated over the past few years is trust. Is our reliance on the world of technology platforms eroding our natural, healthy scepticism, leaving us ever more open to deception?

Illustration by John Holcroft

Drucker Forum Year Seven: 2015

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The buck now stops with nobody in particular, writes Rachel Botsman

placed my trust in others just as trust in the wider world collapsed. While being lifted aloft on a chair, as is traditional for a Jewish bride, Lehman Brothers filed for bankruptcy. It was Sunday 14 September 2008. Nobody at my wedding quite knew then the scale of the pandemonium that was to play out when the markets opened the following morning. But as they drank the night away and learned of the ensuing crisis on their smartphones, most of them justifiably feared the worst. As guests danced around us shouting “Oy! Oy! Oy!”, outside the venue the global financial crisis was just getting started. A decade later and the world has not only learned to trust again, it has done so on a grand scale unimaginable in the febrile days of the late noughties. Trust has

become the global currency – everything, from vintage goods to home improvement loans, is traded by trust. Conventional systems remain, but the trend is all one way. When I wrote my first book in 2011, I expressed surprise that a little disruptor called Airbnb held 10,000 properties on its books. My gasp of amazement feels faintly embarrassing now. By the end of 2017, Airbnb boasted four million listings in 191 countries. It is – by far – the biggest hospitality company in the world.

The star-rating fallacy

But who is regulating the giants of the trust economy? eBay is a peer-to-peer trading platform that is self-regulated by its buyers and sellers, via feedback and review. Yet only 2% of its feedback is negative or neutral. Buyers who don’t

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like what they get from eBay tend to leave no feedback at all, fearing either tit-fortat reprisals (the seller can give them bad feedback in retaliation), or else decline to comment because of an antiquated sense of politeness which holds that if you have nothing nice to say then it’s better to say nothing at all. But without negatives, positives are near worthless. Grade inflation on eBay, TripAdvisor, Airbnb and elsewhere is hindering the system. The stars are hopelessly misaligned.

Brands without assets

If users are not taking responsibility, who is? Whose job is it to act? The buck certainly doesn’t appear to stop with the companies, who have a mixed record at best. When regulator Transport for London revoked Uber’s licence to operate in the city in 2017, there was uproar from some, before the city’s mayor Sadiq Khan made the point that it could not be right that a technology platform be waived the responsibility to meet local regulations simply because it had lots of customers. Issues of accountability are incredibly complex in an age when platforms offer branded services without owning any assets or employing the providers. Tom Goodwin, a senior vice-president at Havas Media, put it well when he wrote in an article: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media

owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” When things go wrong in this brave new world they raise the critical question of where accountability lies, and how we find the right balance between selfregulation and traditional top-down compliance that was not designed for an age of ‘distributed trust’.

responsibility for the fiasco. When a customer shops at Tesco, their trust clearly lies in the supermarket, not the (largely hidden) companies further down the supply chain. The same principle fails to apply to technology platforms from Facebook to Amazon, Alibaba to Uber, where the question of who we trust still lacks a clear answer.

Who do we trust?

Just as traditional engineers build bridges, roads and railways so reliable that we don’t In January 2013, UK retail giant Tesco had consider their use a risk, contemporary to withdraw 10 million hamburgers and trust engineers build computer systems other products from its shelves. The rea- so ostensibly foolproof that our minds son? Many of its products, settle in a place where we purporting to be made of don’t consider the risks we The history beef, had been exposed are taking. of new as containing horsemeat. Tinder, the dating app, The discovery sparked a is a platform designed technology national outcry and was to match singletons for is not that we nights out or something headline news for several days. Even the then-prime to arrange hooktrust it too little, more; minister, David Cameron, ups based on shopping but that we got involved, reassuring a through a handful of words horse-loving country that and a catalogue of photos. trust it everything possible would Where once at least some too much be done to address a “very face-to-face contact was shocking crime”. required; now a face on a To some extent, Tesco deflected, say- screen is enough. “I used to think it was ing that its supplier the Silvercrest factory, completely ridiculous to compare trust which was then owned by the ABP Food between people with trust in these online Group, had breached its trust. Yet it is- platforms,” Professor Coye Cheshire, a sued a full apology and publicly accepted social psychologist at the University of

The old-fashioned way

THE TRUST ILLUSION In the trust game there are two participants, a sender and receiver. They are anonymous strangers. Both are given $100. The sender can send any amount of the money, or none of it, to the receiver. The sender is told that whatever amount they send will be trebled – by the experimenter – for the receiver. The receiver then has to decide how much of his money to return to the sender. He can send any amount of it back, or none of it. Therefore, the sender can turn a profit or lose everything. The point of the game

is that sending a large amount indicates a high degree of trust that the unknown recipient will give back at least what he was sent. The late Professor J Keith Murnighan created an experiment whereby he asked participants to list the names of people they trusted and those they distrusted. These names were then flashed up on a screen in front of the participants – so quickly they had no chance of reading them – prior to their taking part in the game.

The results were stunning. Senders who had been exposed to the names of people they trusted sent an average 50% more to the anonymous receiver than those exposed to the names of the people they distrusted. “We found we could stimulate feelings of trust for a stranger without people even realising,” wrote Murnighan. “Imagine a fanatic fan of Elvis Presley. If I know someone is a huge fan of Elvis, I might casually drop Elvis’s name to activate more trust in me. There is clearly a risk of manipulation.”

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California, Berkeley, tells me. “I’m not certain that is the case any more, because in some ways we have offloaded some of our cognitive power.” The challenge of trust in the digital age is the speed at which we grant our trust with a swipe, click, share or accept. Once we are in an accelerated state of trust, it can be hard to slow down. “The problem comes down to social translucence,” says Cheshire. “How much of the social interaction – our behaviours and the underlying mechanisms that enable interactions – how much of that is visible?”

Lab rats

For one week in 2012, social psychologist Dr Adam DI Kramer launched an experiment using the world’s biggest laboratory of human behaviour – Facebook. He wanted to discover the propensity for ‘emotional contagion’ – do the emotions expressed by our Facebook friends affect our own mood? By tweaking the algorithms to include more positive or negative content, Kramer was able to assess the

extent to which the posts of others made users more or less happy, and more or less likely to visit Facebook. What was extraordinary about the experiment was not so much its findings (the changes were, relative to Facebook’s scale, minuscule) but the reaction to it. The experiment became notorious; its users complained of being “lab rats”. Yet, even according to Facebook itself, the chances of users of the platform being experimented upon are precisely 100%. “At any given time,” says Dan Farrell, a Facebook data scientist, “any given user will be part of ten experiments the company happens to be conducting.” When the University of Illinois surveyed Facebook users, it found that 62% of them were unaware that it manipulated its feed at all. That means that of its more than two billion users, more than one billion think the system instantly and without prejudice shares whatever they or their friends post. The truth is out there, but few hear it. The tech giants – through careful trust engineering – have manufactured an

image of being neutral brokers, platforms that act as meeting- or trading-places between users. The shock at which ‘fake news’ was exposed as such following the US presidential election in 2016 was a consequence of a human race that is now more likely to place its trust in a distant algorithm than experts or authorities. The history of new technology is not that we trust it too little, but that we trust it too much. Traffic lights, stop signs and road lanes – latterly airbags and seatbelts – arrived decades after the motorcar. Similar checks and balances on the trust economy will need to arrive much more quickly. No system is ever completely foolproof, but we must hope that our recent bump with the trust economy is just a minor collision, not a fatal accident. This piece is based on chapter four: ‘Where Does the Buck Stop?’ in Rachel Botsman’s book Who Can You Trust? (Penguin Portfolio, 2017)

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Opportunity on Planet Asia In his landmark 1985 book ‘Innovation and Entrepreneurship’, Peter Drucker described an economic shift that he considered to be at an early stage: the move from an ‘employee’ society towards an entrepreneurial society. In Drucker’s view, that tectonic shift was being driven by a range of forces, such as changing demographics, globalisation and advances in information and communication technology. What was true in 1985 is even more so today, and that transformation has now taken root in Asia. In honour of 2016’s Drucker Forum theme ‘The Entrepreneurial Society’, the following piece explains why

Drucker Forum Year Eight: 2016

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Chief executives need to know how to unwrap Earth’s new powerhouse, write Anil K Gupta and Haiyan Wang

than the US or Europe. By 2025, Asia’s GDP will be larger than that of the US and Europe combined. In short, in a mere 25 years (2000-2025), the structure of the world economy will have changed dramatically. Figure 2 helps us make sense of why Asia is growing at such a breakneck pace. The answer lies in the three big legs of emerging Asia – China, India and Asean. All three are growing much faster than the other big emerging markets of the world – Latin America and Africa, whose economies are growing at around 4% a year. Asia’s advantage relative to Latin America and Africa? First, massive scale. As a result, on purely economic grounds, most of the world’s multinationals feel compelled to invest and manufacture within China, India and Asean rather than export to these markets. This trend brings

35.8

Asia 30.9 28.0 27.9

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US 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: UNCTAD

FIGURE 2: GDP growth rate (%)

Making sense of Asia’s growth

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Figure 1 tracks the global GDP share of the world’s three economic legs – the US, Europe and Asia. As recently as 2000, all three legs were about equal in size, each accounting for almost 30% of the world’s GDP. In fact, at that time, the US accounted for a slightly bigger share than the other two regions. It is a very different story today. Asia is now 50% larger

not only capital but also know-how. Second, a deep love for science, technology, mathematics and engineering (STEM). Just look at Asia’s disproportionate share of PhD students in the Stem fields in US universities. As a result, Asian economies are able to absorb foreign technology at a faster pace than in Latin America and Africa. It also means that China and India are today’s the world’s two fastest rising technology powers. Third, political stability. Country risk is lower in Asia than in most economies of Latin America and Africa. Lower country risk makes both foreign and domestic companies more willing to invest for the longer run in Asia than elsewhere. Fourth, very high rates of saving. As a result, Asian economies have more domestic capital available for investment in infrastructure, a foundational requirement for economic growth.

FIGURE 1: Share of world GDP (%)

2003

rom small roads doth great economies grow. In the early 1990s, China was a relatively small economy that had just built its very first highway. Benefiting from the IMF’s help, India had barely managed to escape bankruptcy. How the structure of the global economy has changed over the last 25 years! China is now the world’s second-largest economy and competing with the US on all fronts – economic, technological and geopolitical. India is today the world’s sixth-largest economy. By 2022, it will pass Germany to become the fourth-largest and, by 2025, may even overtake Japan into third place. Southeast Asia is another powerhouse. Home to 600 million people, the ten countries comprising the Association of South East Asian Nations (Asean) account for US$2 trillion in GDP, just a tad smaller than India’s and, as a region, make up the third-fastestgrowing economic block in the world after China and India. By almost all measures, it can be said that this will be the Asian century. Other than the ongoing digital disruption, nothing could be more important for chief executives than emerging Asia – because it is these economies that will play the central role in shaping Asia’s destiny over the next decade and beyond.

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Europe or elsewhere. They also benefit from geographic proximity and shorter supply chains. Figure 3 aptly captures the growing intra-Asia integration via trade. The prospects for further trade integration within Asia look promising. China, India, Asean, Japan, South Korea, Australia and New Zealand are currentWhat could hold ly negotiating an intra-Asia free trade agreement (Regional Comprehensive Asia back? Economic Partnership, or RCEP). As THREAT 1. and when RCEP becomes a reality, it will The middle-income trap provide another fillip to rapid growth in The biggest risk is a middle-income trap, intra-Asia trade. Asian economies are also coming closwhere a country that attains a certain income gets stuck at that level. China’s er via foreign direct investment. When per capita income has to reach only one Chinese and Japanese giants look at large quarter that of the US for it to become and fast-growing markets for investment, the world’s largest economy. India’s per India and Asean loom large. Thus, it is not capita income needs to reach only one- surprising that Chinese technology comtenth that of the US for it to become panies such as Alibaba Group and Tenthe world’s third-largest economy. In cent have made some of their largest (and short, given their vast populations, even if multibillion dollar) outbound investments China and India were to keep growing as in India and Southeast Asia. This is true also of Japanese and South middle-income economies, Korean companies. Japathey would become ecoBy almost nese car companies enjoy nomic powerhouses. Over all measures, over 50% market share the last 100 years, very few India. Hyundai from countries have managed it can be said in South Korea is the numto avoid a middle-income that this will ber two carmaker in India. trap, the exceptions being Samsung and LG ElecSouth Korea, Singapore be the Asian tronics are the two largest and Taiwan. Will Chicentury companies in India’s home na, India and Indonesia appliance market. And manage to break through? As in the case of South Korea, this will Japan just launched India’s first bullet train project – the capital investment of require massive structural reforms. Asia’s fortunes also depend on how around US$20 billion is being financed geopolitical tensions play out. North almost solely by Japanese banks. Korea, the East China Sea, the South China Sea, the China-India border, the Asia’s opportunities India-Pakistan border and the Middle for multinationals East are some of the world’s major geopolitical hotspots, all based in Asia. If any of There are two important ways in which these tensions morph into full-scale war, multinational corporations can leverage the rise of Asia: the consequences could be catastrophic. • as market destinations THREAT 2. • as global platforms to expand the comAsia becomes more ‘Asian’ pany’s reach in other markets Asia is becoming more internally integrated. Rapid growth means that Evolving market opportunities for exports and imports opportunities in China among the Asian economies are growing As China’s economic growth slows from at a faster pace than trade with the US, the average of 10.5% during 1980-2010

to around 6% today, its economic structure is also changing. Sectors such as steel, cement, glass and construction machinery – whose fortunes are tied to growth in infrastructure and real-estate development – suffer from slow growth and massive overcapacity. These are no longer viable market opportunities for foreign multinationals. The automobile sector has also slowed considerably. The days of 30+% annual growth are gone. Car sales are now growing at around 5% a year. With the ubiquitous spread of ride-sharing, even this level of growth will shortly taper off. Selected opportunities do exist, however. As Chinese buyers trade up, demand is shifting from mass-market cars to luxury brands, including Tesla in electric vehicles. The real growth opportunities lie in industries that cater to new needs and wants. • Industrial automation The driver here is a shrinking labour pool. • Solutions for energy efficiency Driven by leadership’s desire to reduce China’s massive dependence on imported oil. • Solutions for pollution control and abatement Along with India, China is home to many of the most polluted cities on earth. • Solutions for agricultural productivity and water scarcity Even though China is a vast country, only one-eighth of its land area is arable. China also suffers from acute scarcity of fresh water. • Business-to-business services As Chinese companies become bigger, get listed, go global and make acquisitions, they need leading-edge professional services of all types – accounting, legal, investment banking, you name it. • Business-to-consumer services Highgrowth opportunities exist in almost all domains – childcare, eldercare, healthcare and financial services. With a very high proportion of dual-career couples, a growing number of families in China have the financial means but not the time to devote to childcare. A very high rate of savings also means that they need advice regarding how to invest money wisely instead of gambling it on speculative real estate or ill-advised

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stock market investments. As the population gets rapidly older, they also need help taking care of their parents – in terms of not just healthcare but also retirement homes and nursing homes. • Higher-quality goods and travel Given the clampdown on corruption, conspicuous consumption – by government officials – has come down dramatically. Yet, with rapidly growing affluence, millions of Chinese households are trading up in the quality of what they eat and wear, how they live, what car they drive and how they spend their free time. This may not mean more Ferraris and Porsches, but it does mean more Mercedes-Benz, BMW, Audi, and Land Rover cars. It also means more imported food and dining out. Perhaps, most important of all, it means more foreign travel.

Evolving market opportunities in India

India is running about 13-15 years behind China, the time gap between 1978 and 1991, when China and India respectively launched their economic reforms. Thus, market opportunities in the India of 2015-2020 are, in many ways, similar to those in China during 2000-2005. India’s biggest drive today is a rapid build-up of infrastructure. Thus, demand for all types of products and services connected to the construction sector is growing faster than the economy as a whole. This includes not just industrial products such as construction machinery but also consumer goods such as home appliances. Similar to the China of 15 years back, the car market is growing rapidly. India today is the fastest-growing car market in the world. There are, of course, important differences between today’s India and the China of 2000-2005. Today’s technologies are far more advanced. As India becomes more urban, the government is pushing for the creation of smart cities. As solar power becomes price-competitive with fossil power, coal demand is rising much more slowly than anticipated – and demand for solar and wind power equipment has skyrocketed.

FIGURE 3: Percentage of Asia’s merchandise exports To rest of Asia 52%

56%

22%

17%

2000

2005

60%

13%

14%

2010

2015

To US

Source: UNCTAD

Similarly, on the consumer side, some of the biggest growth stories are private schools and after-school tutors for children, financial services to help people manage their savings, smartphones, social media, e-commerce, ride sharing, readyto-eat food, dining out, and travel. After China, outbound travel from India is the second fastest growing in the world.

Leveraging China and India as global platforms

In 2013, President Xi Jinping launched the Belt and Road Initiative (BRI) with the goal of boosting China’s road and maritime connectivity with the rest of the world, most notably Asia and Eastern Europe. By some estimates, BRI could mean a capital investment of around US$1 trillion over 20 years. Companies such as GE and Honeywell are looking at the BRI as a potential opportunity to leverage their strengths in China and partnerships with Chinese companies to grow their business in the BRI countries. India is playing a different kind of platform role. Unlike China, the Indian government makes the country far more open to foreign multinationals and does not pursue a my-market-for-yourtechnology policy. As a direct result, most of the world’s technology giants prefer to do leading-edge R&D work in their Indian rather than Chinese labs. Google has its second largest R&D lab in the world – after Silicon Valley – in India. This is true also of other technology giants such as IBM, SAP, Adobe and Texas Instruments. Google and Facebook look at India as the ideal platform for the development of internet services that would work well with low-end smartphones, slow bandwidth speeds, and be extremely affordable. Once developed for India,

these solutions can then be rolled out to other emerging markets. Something similar is also playing out in the automobile sector. Companies such as Ford, Hyundai and the Renault-Nissan-Mitsubishi Alliance now use India as the launchpad for the development and marketing of cars aimed specifically at emerging markets. The logic is that success in India can be cloned easily in other emerging markets.

Asia beckons

Asia’s GDP today is 50% larger than that of either the US or Europe. By 2025, it could be bigger than that of the US and Europe combined. Asia will still be growing faster than any other region of the world. Asia is also becoming internally more integrated – by trade as well as investment linkages. Thus, becoming smart and serious about Asia is a strategic imperative, not an option. There exist massive and growing opportunities to benefit from the large markets for almost everything in Asia. In addition, China and India offer the potential to serve as global platforms to enter and succeed in markets outside Asia. Two of the key requirements for success in Asia include making Asia your second home, and learning to make sense of the world, not just through Western, but also Asian eyes.

Anil K Gupta is the Michael D Dingman chair in strategy and entrepreneurship at the Smith School of Business, the University of Maryland, and a visiting professor at INSEAD. Haiyan Wang is managing partner of the China India Institute

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An upgrade for wellbeing Under the theme of ‘Growth and Inclusive Prosperity’, last year’s Forum challenged attendees to create a ‘social ecology’ of organisations that enable value creation, entrepreneurship and innovative behaviours. To that list, we might add wellbeing, or – as Julia Hobsbawm OBE frames it – ‘social health’, a networks-based approach to improving human lives within the workplace. Here, she explains how this presents an intuitive source of care for our most basic and most complex needs

Drucker Forum Year Nine: 2017

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Social health is a fast-growing force for sanity amid the most hostile landscape the working world has known for a century, Julia Hobsbawm tells Matt Packer

ast year’s Drucker Forum was in the curious position of looking one year ahead to this year’s tenth anniversary of the global financial crisis. While the trauma that flowed from the events of 2008 has, in many respects, yet to fully subside, Julia Hobsbawm points out that seeds of hope were sown during one of the earliest efforts to understand what had happened. “Joseph E Stiglitz chaired two commissions in the wake of the initial flashpoints,” she says. “In 2009, a landmark report from one of those commissions specifically urged us to rethink the whole framework of evaluating gross domestic product as the sole yardstick of economic strength and, for balance, reintroduce measurements of ‘social capital’. Social health is a theory I’ve developed very much on the shoulders of giants at the World Bank – including Stiglitz – who, around 20 years ago, first identified social capital as a metric of equal value to those we use to gauge economic performance.”

Defining wellness

Andres Reynaga

By the time Hobsbawm appeared at the 2017 Forum, she had elucidated her theory in her acclaimed book Fully Connected: Social Health in an Age of Overload. With her concept fully formed in those pages, the time was ripe to lead the Forum’s attendees towards its central tenets. “My starting point was the wellness market,” she says. “I invited people in the audience to raise their hands if they’d

ever bought a pair of trainers, and pretty much every hand in the room went up. Then I asked them if they’d ever bought a vitamin: similar response. And then, whether they’d ever counted a calorie – again, lots of hands. And I congratulated them on being part of what is, according to the Global Wellness Institute, a $3.7 trillion industry.” She explains: “What fascinates me about that statistic is it shows just how far and fast we can move on particular issues when we involve culture. A large part of that industry – namely, the apparel market – is behaviour-driven, focused upon styles and how we display our fitness. But at the same time, that $3.7 trillion figure also highlights an enormous gap – because there’s so much more to measure within, and around, the sector than dollar value. One of the most interesting things about the wellness industry is that it is really only 70 years old. Its origins are rooted in changes that the world was asked to make around physical health after the Second World War, with the advent of the World Health Organization (WHO). Upon its inception in 1948, the WHO published an official definition of health, which stated: ‘Health is a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity.’ Even though the world now is very different to the world of 1948, the WHO’s definition remains the same. “The gap I identified relates to the definition’s inclusion of social wellbeing.

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In the past 70 years, we’ve devised a range of metrics-based systems to manage our physical and mental health. We know, for example, that the three dominant factors behind physical health are i) nutrition and hydration, ii) exercise and iii) sleep. And we know that the same applies to mental health – although we could argue that stress levels and professional, early intervention are also crucial factors there. So, my question to the Forum was: could we not have a similar set of metrics around wellbeing, under the banner of social health? And I define that as a relationship between three principles that, together, I call the KNOT: i) a functional flow of Knowledge; ii) well-managed NetwOrks and iii) realistic Timeframes.”

Muscular approach

must update and upgrade our behaviours – and our measurements.” What of how numerous workers in recent years have sought solace in mindfulness? “I regard the mindfulness movement’s success at work as an important outlier,” Hobsbawm says, “but by no means the end of the journey. I’m a fan – but frankly, the idea that it’s going to solve the calamitous complexity with which we are all now surrounded is wishful thinking. Mindfulness is about shifting towards totally different ways of viewing and managing change. But social health is a much more muscular, policy-based, corporate and economic approach to delivering leaner, more agile, more engaged and more effective workforces, comprised of people who are fit for purpose.”

In Hobsbawm’s assessment, the impera- Going mainstream tives to plug into social health are urgent. Since Hobsbawm addressed last year’s “Look at the costs of globally stagnant Forum, there have been encouraging signs productivity,” she says. “Look at the costs that her message is catching on. In March, of stress levels and a lack of wellbeing at Cass Business School appointed her as work. Some 12.5 million working days are honorary visiting professor of workplace lost in the UK every year, social health – an entirely equating to more than new role – providing her We seem to £2.5 billion of missing revthesis with an instant edenue; 60% of all working have lost sight ucational platform. In a days lost across the EU are similar development, she of how to link notes, “Arianna Huffingattributed to stress. So we have a heavy-duty causeton asked me to become productivity and-effect ratio. New editor-at-large of the soand economic cial health section on her technologies are hardly helping. I’m not ‘anti’ techperformance wellbeing resource, Thrive nology, as such – clearly, Global. So these ideas, to wellbeing it is easing and driving which are very much in the disruption and change in a spirit of Drucker, are benumber of key markets. But its net effect coming more mainstream. In addition, I within the arena of the workplace has been continue to sit on the board of the Workto reduce productivity and increase stress. force Institute Europe. As well as buildShe notes: “Typically, the factors ing up further research, I’m being asked behind workplace stress fall into a to develop social health implementation bucket of organisational behaviour and plans for organisations that are eager to management-related issues – for example: have solutions in place.” ‘My manager’s given me a set of imHobsbawm is also campaigning for possible deadlines’, or ‘The pressure to the WHO to amend its definition of perform without the correct assis- health in a way that corresponds to the detance is enormous.’ So I’ve become very mands and challenges of 21st-century life. interested in health as a metaphor. We “Wellbeing needs a reboot,” she says. “And seem to have lost sight of how to link if we drill down further into the themes productivity and economic performance behind my KNOT principles, there are to wellbeing. And with that in mind, we three main areas for leaders to tackle.”

Too much information

“We are drowning in a form of ‘infobesity’. Companies need to build much more sophisticated strategies and teams to address not just knowledge deficit – but knowledge surfeit. So they must start to ask questions to distinguish between i) the knowledge they have that is fundamentally applicable to short-term performance and market intelligence, versus ii) the knowledge required for longer-term reskilling of the workforce and taking part in the collaborative, collating and sharing economy. In tandem with infobesity, of course, there is also a crisis of trust in truth and believable information, characterised by the clash between experienced, trained experts and more instinct-based populists.”

Networks aren’t working

Unreal time

“Following my extensive research of around 80 years’ worth of the social science around networks – from the original sociogram all the way up to behavioural economics – it is abundantly clear to me that there are serious issues with how companies implement network strategies among their own staff. They are focusing far too much on networking, and not enough on networks. Evidence indicates that siloed networks based around special interests are nothing like as productive or effective as cross-platform, cross-gender, cross-age, interdenominational, diverse networks. So conducting a strategic audit and assessment around networks is critical.”

“The elephant in the room for business – particularly among managers – is that timeframes and timelines are completely

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out of sync with reality. Quarterly results are meaningless to the humans that have to live sustainable lives within organisations where, in addition to fulfilling their roles, they must also spend time building relationships, putting down roots of knowledge and adjusting their work habits to more agile modes. A major driver behind the type of stress that blights performance and spawns presenteeism is concern over timeframes. So my mantra – which is a bit simplistic, but deliberately so – is: treat your calendar, diary or schedule like your body. Don’t let anything go in it that you yourself wouldn’t choose to digest.”

What moves the needle? That point on scheduling feels particularly apposite for a corporate world in which Tesla’s maverick chief executive Elon Musk recently insisted that he has no choice but to work 120-hour weeks. It would be remiss of this journal not to seek Hobsbawm’s views on the example that Musk has been setting. She says: “In the same way that mindfulness is an outlier of various systemic changes that will probably culminate in a wider aware-

ness of social health, Musk will come to be seen as the poster child for the moment where we finally grew weary of techno-evangelism. And, indeed, the whole idea that the workaholism of Silicon Valley is the answer. So in that sense, I think he’s a hugely symbolic figure.” Hobsbawm continues: “For me, social health is all about reframing what we do, how we do it, when we do it and with whom we do it, in order to make sense of what I regard as the most hostile landscape the working world has known for a century. Right? It’s about asking, ‘What really moves the needle?’ It’s about being totally different in our thinking and behaviours. And interestingly, I think that one of the best examples of social health in the public sphere in recent times was an event in which Musk was denied a leading role: the Tham Luang Nang Non cave rescue that retrieved the Wild Boars junior football team.” She explains: “Musk was left to carp from the sidelines with his rigid, toy submarine that wouldn’t have gone around the tunnel. But if we turn to the real rescue operation, all the core ingredients of social health as I define it – i.e. knowledge, networks and time – were in evidence. At incredibly short notice,

the team had to amass very complicated information about rainfall, rock formations and oxygen levels. It assembled a network of 10,000 people over ten days, ranging from mountaineers through to the military, through to mindfulness experts – mindfulness actually played a key role in keeping the boys calm – all against a backdrop of time. “They operated not to some made-up schedule, but to a real one, which was: ‘We have to get the boys out before the oxygen runs out and the rain comes down.’ And they did it. It was a wonderful, beautiful example of social health in action.”

Julia Hobsbawm OBE is a business consultant, speaker and broadcaster. She is founder of knowledge networking firm Editorial Intelligence and author of Fully Connected: Social Health in an Age of Overload. Matt Packer is a freelance journalist specialising in business, finance and leadership, and is the editor of this publication

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Ten questions for Year Ten From the place of business in society to the role of technology in the workplace; from our constant itch to innovate to our quest to free our potential; and from the rise of CEO activism to the importance of managing for the long term, this year’s Drucker Forum examines a host of topics with intimate links to the human dimension. On the following pages, ten management and leadership experts explore a range of questions drawn from the Forum’s speaking schedule, previewing this year’s key themes

What should business be contributing to society right now? Answered by leadership coach and mentor Penny de Valk

usiness and society can no quality of workplaces. Massive advances longer be disconnected – if in technology are throwing this social they ever were. Customers, responsibility into sharp relief – in parshareholders, employees, ticular the combination of biotechnology suppliers and communi- and artificial intelligence, which will have ties all co-exist to create social and significant and far-reaching impacts upon financial value. Globalisation and tech- society. Among them will be significant nology have accelerated that intercon- job losses and workforce disruption – not nectedness. It is the task of business to to mention the social effects of our growing, manage the tensions between all those pervasive trust of algorithms: software stakeholders. As such, telling us what to watch, the financial, social and who to date… and, of The pace environmental interdepencourse, what is news. of today’s dence between business and Society has always had society now not only goes to adapt to industrial and changes is without saying – it is enterprise changes. But faster than critical to our future. the pace of today’s changes The corporate citiis faster than anything we anything zenship responsibilities have experienced before. we have of any organisation today Innovation in the past ten are subject to sharp conexperienced years alone will have huge sumer vigilance, from paysocial consequences on an before ing taxes through to the unprecedented scale.

So, what business needs to be working on now to contribute to society is trustworthiness. Trust is critical to any interdependent relationship – especially in uncertain times. We have seen big data and its manipulation erode trust, as huge and historically reliable brands contravened privacy expectations. Regulation will be the natural response. But we don’t even have time to get the regulatory frameworks in place for what is coming. Enterprise is an important and powerful force. It serves and fuels society, as well as being deeply dependent on it. We need our business leaders to understand the responsibility this interdependence confers upon them – and to behave with the wisdom and integrity necessary to balance the benefits and manage the risks. For further thoughts on this topic, check out the Day One 09:00-10:00 session, What Business Must do Now in Society

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What will the humanmachine workplace partnership look like in ten years’ time? Answered by technology author and Blockchain Research Institute co-founder and executive chairman, Don Tapscott

ver the past several years, is already having upon venture capital. we’ve seen technologies We should be wary of this, as the idea emerge that will form of ‘creative destruction’ – i.e. disruptive the foundation of a new technologies creating as many new jobs relationship with ma- as they destroy – may be upturned by AI. chines. Using our understanding of those As the human-machine relationship technologies – artificial becomes more deeply enintelligence, the Internet meshed, data will become Blockchain of Things, big data and an increasingly valuable reand the blockchain – we can get a source. As such, it’s crucial sense of how the nature of that we end our current Internet of work might change. system of ‘digital feudalThings will The first disruption ism’, in which the data that for which we should be individuals are left with erode rigid preparing ourselves is today is expropriated by delineations perhaps the most obvious: a small handful of enorjobs that today serve as mous, digital conglomerbetween foundational aspects of the ates. To combat inequality, firms modern economy simply the individuals making will not exist. what amounts to the oil of With regards to class, that next wave the 21st century should have sovereignty of disruption will be less discriminatory over how it is used. than previous eras. Autonomous vehicles At work, Bring Your Own Device will displace jobs in trucking, but that (BYOD) is already widespread. But that says nothing of the seismic impact that concept is fairly narrow in scope, limited blockchain will have upon finance, or to staff bringing in laptops, phones or au-

dio and video equipment. In the future, the concept will greatly expand, enabling companies to pool resources, people and other assets – just as fishermen may pool their resources to rig a ship. Blockchain and the Internet of Things will erode rigid delineations between firms, as idle or underused assets such as energy, computing power, vehicles or even talent are offered up in a true ‘sharing economy’. Overall, I think digital technology is about to become much more deeply integrated into human interaction, with blockchain serving as the transactional platform for this ever more intimate relationship. In ten years’ time, the entire dichotomy between human and machine may seem like a dated concept. Only time – and our own resolve – will tell. For further thoughts on this topic, check out the Day One 10:30-11:30 session, Human Questions, Machine Answers: The Blended Future of Work Ten questions for Year Ten

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What drives our most fruitful innovative behaviours? Answered by Cotential chief executive and leading authority on connectional intelligence, Erica Dhawan

company’s informal net- efforts. Having identified those influencworks contain cutting-edge ers, management can then increase the clusters of entrepreneurial, probability of success within their broadinnovative thinking: clusters er, collaboration-based change efforts. that management can identify and turbocharge. So, fruitful innova- I recommend these three strategies: tive behaviours stem from fostering and encouraging informal networks. These informal influencers are not the However, they are not enough by most senior people in your organisathemselves. Strong, effective collabo- tion, but those who have high, informal ration – another catalyst for innovative influence in knowledge-sharing – and impulses – should be channelled through can therefore be critical to change efforts. systematically designed efforts: specific You will most easily identify them by askinitiatives underpinned by a clear frame- ing informal networks to nominate who work for measurement, empowerment they are most likely to go to in relation to collaborative efforts within and outside and accountability. their own teams. SuperTo drive innovative connectors should behaviours, then, manInformal receive special attention agement should first of influencers from management to lead all continue to learn from innovation programmes organic, informal netare key to works to uncover not just – and join high-potential, designing best-practice approaches, rotational leadership teams. but informal influencers collaborative who are key to designDevelop specific, efforts ing broader, collaborative centrally-mandated

connectivity initiatives that address key business priorities – e.g. anything from culture to safety. Ensure that there is clarity on the behaviours required to achieve success within those initiatives, together with incentives to implement high-value collaboration behaviours.

Measure the effectiveness of collaborative efforts within formal terms of accountability and empowerment. Keeping a collaboration scorecard, or non-controversial targets around collaboration (such as between local and headquarters offices), is very beneficial in ensuring the sustained success of innovative behaviours.

For further thoughts on this topic, check out the Day One 11:30-12:30 session, The Very Human Pursuit of Innovation Ten questions for Year Ten

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How can leaders unlock human potential? Answered by WE-LEAD director and professor of leadership and enterprise development at the University of Birmingham, Kiran Trehan

uch has been written in success came from the work of all the staff the media about the im- and management/leadership teams in portance of strong lead- those firms. The business leader’s esseners to a business’s success. tial contribution is to unlock the human But when it comes to potential in their workforce. competitive advantage, our research at the Enterprise and Diversity Alliance How can this be done? Research suggests makes it increasingly clear that organi- that these are key determinants of success: sations with diverse workforces perform better because they attract top talent, 1. Developing inclusive leadership yield greater employee satisfaction and This means establishing clear aims and are better at problem-solving, decision- a sense of direction that are understood making and innovation. The research throughout the business, along with each shows that firms in the top quartile for employee having a full understanding of unlocking human potentheir role. tial – including through Develop a diversity – are more 2. A step change in culture that likely to have higher HR development Profinancial returns than the vide time and resources rewards industry average. for staff to hone their innovation One could be forgiven abilities, including homefor thinking that the likes grown talent. Don’t write of the late Sergio Marchionne – who led off someone’s potential before they have not one, but two, failing businesses back been given an opportunity, with support, from the brink of collapse to rude health to show what they can be. One of Sir Alex (the now-merged Fiat and Chrysler), and Ferguson’s biggest successes at Mancheswho worked a gruelling number of hours ter United was to nurture home-grown each day – had single-handedly creat- talent. Understand the importance of ed business magic. But the truth is that diversity and the need to create an

organisational culture that supports achievement by all – and that removes barriers to the development of potential. 3. Encourage and reward innovation Develop a culture that rewards innovation. Celebrate the best examples and encourage progress across the board. Create and develop thought leadership throughout the organisation, encouraging staff to come up with new ideas and use their own initiative – while at the same time allowing some room for mistakes. Ensure that those who report to them do the same with their immediate staff. 4. Mentoring A powerful tool for building bridges to leadership. Our evidence highlights the value and power of peerto-peer learning networks as creative vehicles for unlocking hidden potential within firms. For further thoughts on this topic, check out the Day One 13:30-14:45 plenary session, Human Potential – Are We Cracking The Code? Ten questions for Year Ten

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What are the most urgent, strategic factors that organisations must consider now? Answered by global strategy, innovation and growth consultant Rita Gunther McGrath

trategic inflection points seem to be upon us far more frequently today, and to arrive with greater speed – often with a digital element. With that in mind, strategists must ensure they are building the capability to do three things well:

as “leverage core competences” – isn’t particularly useful in dynamic environments: the very competences that allow a company to serve its customers well during the ‘pre-inflection point’ stage could become fatal anchors once that point has occurred. A concrete example of the need to anticipate strategic inflection points – 1. Grasp the implications of an impend- and potentially shift the mix of capabiling inflection point while it is still at a ities that an organisation uses to address nascent stage – while the firm has the them – can be seen in AT&T’s decision greatest scope to either take advantage of this year to spend $81 billion on acquirthe watershed moment, or ing the content assets of avoid its worst effects. Time Warner. Following Grasp the its recognition that sim2. Create a shared point of ply running networks implications view about what to do. was likely to become a of an commoditised, unat3. Galvanise the organisatractive business, AT&T impending tion to take the approprihas determined that inflection point owning exclusive access ate action. while it is still to desirable content is a Ironically, much adpotentially attractive pillar nascent vice from the past – such for its future business.

For consumers, being able to access that content in any form – and on any schedule – they choose is attractive (and probably inevitable). And in becoming an attractive partner for top, creative people (which includes a willingness to pay top-dollar for sought-after talent), AT&T has completed a blend of vertically integrated entertainment and news that will be difficult for competitors to copy, at scale. To carry that off required sharp insights into the marriage between delivery and content, mastery of the technologies that make the marriage both feasible and cost-effective, and the leadership skills necessary to work through the inevitable organisational realignment. For further thoughts on this topic, check out the Day One 15:15-16:15 session, Strategy in the Face of Reality, featuring Rita Gunther McGrath Ten questions for Year Ten

The Drucker Forum Anniversary Report

To what extent should CEOs be activists? Answered by specialist leadership and management editor, author and columnist Simon Caulkin

hief executive activism is direct responsibilities to their companies’ vexed terrain. On the one immediate stakeholders, as well as indihand, in a fractious, polar- rectly to society. This makes cost-benefit ised, post-trust world where calculations difficult and essential, but people are desperate for at the same time a hopelessly unreliable answers to existential questions, pressures guide to doing the right thing. to speak out on capital-‘I’ issues such as Ethics, as economist John Kay reimmigration, the enviminds us, “are about what ronment, gun law, LGBT to do when good behaviour CEOs rights, inequality, race and profitable business are and gender relations and not necessarily the same damned by Brexit – all of which have thing”. CEOs damned not speaking by not speaking out can triggered recent CEO intervention – will not go very easily damn themout can very away. In that sense, CEOs selves if they do. What to easily damn have little choice. do? Hidden in plain sight Yet in an era when themselves if is one area where CEO reputations can be swept activism would be welthey do away overnight in a come, and is arguably long social-media blizzard, overdue – one, moreover, the consequences of speaking out can on which CEOs are uniquely qualified be unpredictable and costly. “Not every both to speak and to take remedial action. business decision is an economic one,” It is business itself. former Starbucks chairman Howard As has become ever clearer since Schulz has put it. Agreed, but along- the global financial crisis, the shareside their moral conscience, CEOs have holder-dominated capitalism that has

ruled for the past 40 years bears a heavy responsibility for the excesses and inequalities that are helping to fuel today’s social discontents and, in some countries, now threaten democracy itself. Even after Larry Fink, head of BlackRock – the world’s largest investor – gave a lead by declaring in his 2018 letter to CEOs that companies can only prosper in the long term by making “a positive contribution to society”, only a brave few CEOs have committed themselves publicly to breaking the stranglehold of (erroneous) conventional wisdom. Ironically, CEOs channelling their activism into business would benefit everyone, not just the sections of society targeted by their current efforts. They should use their courage where it has the most effect. For further thoughts on this topic, check out the Day One 16:15-17:30 plenary session, Should Managers Be Activists? Ten questions for Year Ten

The Drucker Forum Anniversary Report

How can organisations become more people-centred? Answered by RBL Group partner and Rensis Likert Professor at the Ross School of Business, University of Michigan, Dave Ulrich

ecades ago, my mentor taught me: “Organisations don’t think – people do.” In my subsequent career of studying, advising and writing about workplaces, I have validated and extended his insight: “Organisations don’t think – people do; but organisations also shape how people think, act and feel.” Leaders have a responsibility to create better organisations by accepting – and acting upon – four key premises: 1. Realise that organisations are a form of sustained competitiveness. In today’s world, competitors can match product design and delivery, technological systems or access to capital much more easily than they can match people and culture. In our research, we have found that employee sentiment

has a dramatic impact upon customer and investor outcomes. 2. The term ‘organisation’ is much less about morphology (roles, rules or routines) than it is about capabilities. An organisation is defined by what it is known for, and good at doing. Indeed, we have found that those capabilities have four times the impact on business results as individual competencies. When leaders define and deliver the correct capabilities, they win in both the marketplace – and the workplace.

An organisation is defined by what it is known for, and good at doing

3. Customers shape how an organisation operates. Every organisation has a culture that shapes how people think, act and feel. Some nurture the correct culture by ensuring that internal employee actions are consistent with external customer promises.

A customer-oriented approach shapes leadership competencies – and an organisation’s investment-market valuation is dramatically influenced by the quality of its leadership. 4. HR is not just about processes, but delivering business results. Through dozens of studies, we have found that leaders can sustain organisational success by designing and delivering integrated HR solutions that run across the domains of people, performance, information and work. HR practices are the tools that leaders have for i) delivering valued organisational outcomes for customers and investors, ii) fostering the correct capabilities, and iii) ensuring sustained competitiveness. For further thoughts on this topic, check out the Day Two 09:00-10:00 session, The Human-Centred Organisation of the Future, featuring Dave Ulrich Ten questions for Year Ten

The Drucker Forum Anniversary Report

How does the state create value? Answered by the UCL Institute for Innovation and Public Purpose director, Professor Mariana Mazzucato

he current predominance This is just as much about the quantity of of short-term thinking public funds, as of the structure: the more reflects fundamental mis- we pretend government is not a key valueunderstandings about the creator, the less we invest in its capacity state’s proper economic role. and capabilities to co-create value. To that Contrary to the post-crisis consensus, end, it is vital to debunk flawed narratives active, strategic public-sector investment about how value and wealth are created. is critical to growth. That is why all the The popular assumption is that the great technological revolutions – whether state facilitates wealth creation (and in medicine, computers or energy – were redistributes what is created), but does made possible by the state not actually create wealth acting as an investor of itself. Business leaders, It is vital first resort. by contrast, are considYet we continue to ered to be productive to debunk romanticise private actors economic actors – a notion flawed in innovative industries, used by some to justify ignoring their dependence rising inequality. Because narratives on the products of public businesses’ (often risky) about how investment. Elon Musk, activities create wealth – for example, has not and thus jobs – their leadvalue and only received more than ers are thought to deserve wealth are $5 billion in subsidies higher incomes. Indeed, from the US government; as I argue in my book created his companies, SpaceX The Value of Everyand Tesla, have been built on the work thing: Making and Taking in the Global of Nasa and the US Department of Economy, what characterises the current era Energy, respectively. is that value-extractors are masquerading as The only way to revive our econ- value-creators. omies fully requires the public sector If these assumptions were true, to reprise its pivotal role as a strategic, tax incentives would spur an increase long-term and mission-oriented investor. in business investment. Instead, such

incentives – such as the US corporate tax cuts enacted in December 2017 – reduce government revenues, on balance, and help to fuel record-high profits for companies, while producing little private investment. Indeed, while profits are at record highs, investment is not. We must acknowledge that value is determined collectively: by business, workers, strategic public institutions and civil-society organisations. The way those various actors are structured, and how they interact, determines not just the rate of economic growth, but also whether growth is innovation-led, inclusive and sustainable. A decade on from the financial crisis, the need to address enduring economic weaknesses remains. It is only by recognising that policy must be as much about actively shaping and co-creating markets as it is about fixing them when things go wrong, that we may bring this malaise to an end. For further thoughts on this topic, check out the Day Two 10:00-11:00 session, Beyond Market Failures: How the State Creates Value, featuring Mariana Mazzucato Ten questions for Year Ten

The Drucker Forum Anniversary Report

Why is it crucial to manage for the long term? Answered by the Institute of Leadership & Management’s head of research, policy and standards, Kate Cooper

eter Drucker cautioned ways of understanding time: long-term or managers and leaders against short-term orientation. Typically, you will short-termism, and it is find that organisations in Japan embrace vital to heed his warning. We long-term orientation, sacrificing shortshould want our organisa- term gains for a more sustainable outlook. tions to last. If we look at the impact of Charles Hampden-Turner and Lehman Brothers or, more recently, Fons Trompenaars observe that Carillion failing the test of time, the con- people perceive time as either sequential, sequences are plain to see. Not so much for in which one event strictly follows anthose organisations’senior teams, who were other, or synchronous: an interweaving able to move on. But for the thousands of of past, present and future. The latter – employees who worked for them, and a sense of how decisions in one era can for the armies of contractors and small ripple into another – is interestingly also suppliers in their networks. They are the prevalent in Japan. people who were left to fear the future. If he were with us now, Peter Drucker If we look at brands that have survived may well judge that shareholder capitalfor centuries, a significant proportion of ism has failed, because the shareholding them are located in Japan. Any culture in lobby – comprised of powerful funds – has which long-living companies thrive must become steadily more influential, and its have a healthy attitude to demand for rewards chantime – an acceptance and nels short-term, sequential Corporate appreciation of the long thinking. If meeting that lifespans are demand becomes the reaterm that supports those firms in their longevity. shortening all son for any corporation’s The psychologist Geert existence, that could actuthe time Hofstede identified two ally threaten its existence.

Few of us come to work with the express intention of making shareholders happy. The vast majority of us – particularly millennials – are seeking higher purposes to support, which will attract long-term investments of passion and energy. Corporate lifespans are shortening all the time, and are likely to get even shorter if our obsession with rewarding shareholders – or focusing on other financially driven short-term goals at all costs – continues. Contrast the decline of corporate longevity with the experience of our most prominent charities and non-profit organisations: brands that have survived for decades, because higher purposes and long-term thinking are woven into their very fabric.

For further thoughts on this topic, check out the Day Two 13:15-14:15 session, Managing for the Long Term Ten questions for Year Ten

The Drucker Forum Anniversary Report

How should leaders balance technology and people? Answered by the Charles Handy professor of organisational behaviour at London Business School, Herminia Ibarra

he question of what role development of advanced technologies, humans should have in the indicate that we are in the early days – not AI age has spilled a lot of in terms of the invention of smart systems, ink in the press, but little but in terms of their adoption and imacademic research. The plementation at scale within companies. dominant argument is that, as machines Pioneers are few, and the majority of firms take over more routine, are still experimenting administrative, monitoraround the fringes – often There is a ing and control tasks, the unable to scale because of onus will be on people to organisational issues. unique role carry out the more uniqueWe call this ‘organfor humans to isational lag’: a discreply human tasks: those that require judgement, creplay in leading ancy between the rate at ativity and, in particular, which new technical and change interpersonal skills, such managerial ideas emerge, as empathy. and when they are finally While that may be so, when we weigh implemented in organisations. That lag up the contributions of machines and slows down the accretion of productivity humans, it’s important to acknowledge and innovation gains from new technolthe vast need for change in our largely out- ogies until, or unless, adopting firms also dated organisational structures and cultures. invent new processes, procedures and Reports on the state of play in the organisational structures that leverage the corporate world today, relative to the new capability.

That means that there is a unique role for humans to play in leading change, or moving organisations from their current state to a hopefully better future. Making change is very different from improving efficiency – which is the type of task that machines do so well. It requires envisioning a different way, getting others on board, inspiring people to shake old habits and mindsets… and, above all, making uncertainty more attractive than the known present. So far, people have the edge on that.

For further thoughts on this topic, check out the Day Two 14:30-15:45 session, Technocrat or Humanist – Finding the Leadership Balance, featuring Herminia Ibarra Ten questions for Year Ten

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