How Drucker Thought About Complexity 06-26

How Drucker Thought About Complexity

by John Hagel 

Throughout his life, Peter Drucker strived to understand the increasing complexity of business and society and, most importantly, the implications for how we can continue to create and deliver value in the face of complexity. I have long been influenced by Drucker's work. In the 1960s and 1970s, he was already anticipating some of the implications of the Big Shift just beginning to emerge: the transition to an information economy, the centrality of knowledge work, and the transformative impact of digital technology on all types of work.

Around that time, two forces coincided, each amplifying the disruptive capacity of the other. First, the deployment of the digital microprocessor and packet-switched networking marked the beginning of the rise of the digital infrastructure that would eventually span the globe, driven by exponential performance improvements in computing, storage, and bandwidth technologies. Digital technology unfolded on top of a second force that had been building for a few decades: a global movement in public policy towards economic liberalization which was systematically reducing barriers to the movement of goods, money, people, and ideas across the boundaries of nations and industries.

The combination of these two forces created enormous opportunities but also enormous challenges. They have systematically and significantly eroded barriers to entry and movement on a global scale. The result is relentlessly mounting performance pressure. Evidence of this pressure is starkly captured in the return on assets (ROA) for all public companies in the US since 1965. Over this period, there has been a sustained and dramatic erosion in performance: ROA has collapsed by 75 percent.

As the effects began to play out in the '70s and '80s, Drucker wrote extensively about the need for management practices to change. He knew that as the nature of work transformed and the pace of change increased, existing management practices, not to mention worker skill sets, would quickly become outdated and fail to meet the needs of the coming information economy. The widespread erosion of ROA confirms that our management practices and institutions are struggling to respond to the relentless pressure. Why haven't they responded more effectively?

The vast increase in the complexity of the economic and social landscape over these decades offers at least a partial explanation. There are many ways to think about complexity, but one key dimension is the degree of connection and interaction among participants. Thanks to the forces described above, we are more connected on a global scale than ever before. Not only are there more connections among more people, the speed of interactions has increased significantly, so that even small events in remote areas can propagate quickly, setting off cascades of events that evolve beyond anyone's expectations. Witness the grassroots political movements that are increasingly shaking up "stable" political regimes around the world. Power laws with spiky heads and very long tails progressively crowd out the familiar bell curves that made life seem predictable.

In this environment, we must re-examine the basic assumptions that drove our business success in the past, starting with the most basic question of all: why do we even come together in institutions such as firms? Almost 80 years ago, Ronald Coase won the Nobel Prize in Economics for an essaythat suggested that we do this for the sake of scalable efficiency — it costs less to coordinate activity within a firm than across independent entities. At the time, this was a remarkably accurate description of the rationale driving the emergence of large corporations around the world.

But times have changed. As the complexity of our environment increases, we need to step back and reassess this rationale. The cost and difficulty of coordinating activities across entities, on a global scale, is far lower now. The pace of change is accelerating and the degree of uncertainty increasing. Perhaps a new rationale will be required to drive institutional success in the future. Perhaps we need to move from a rationale of scalable efficiency to one of scalable learning — designing institutions and architectures of relationships across institutions that help all participants to learn faster as more participants join.

Drucker didn't quite frame it in these terms, but perhaps we need to expand our focus on innovation beyond the narrow frame of technology and product innovation. If we are to successfully adapt to the escalating complexity of our environment, we need to invest more time and energy in exploringinstitutional innovation. In his later writings, Drucker began to explore the periphery of this idea through several themes that are equally relevant to our current perspective:

• The importance of lifelong learning in a rapidly evolving information society


• The need to decentralize organizations around employees — viewing them as assets capable of expanding growth rather than as fixed costs to be eliminated — and to move away from standardized and tightly-specified process flows


• The need for institutions to focus on building capability around core strengths — one of the reasons he was an early proponent of outsourcing as a way to simplify operations and to focus management on what really matters


• The importance of focusing on the dynamics of evolving economic and social processes rather than on static equilibrium models.

Drucker anticipated many of the challenges and opportunities that we all face in an increasingly complex global society. It is up to us to pick up where he left off.

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How to Succeed as a Square Peg in a Round Hole

CULTURE COMFORT AT THE WORK PLACE CAN BE ACHIEVED BY GIVING UP ON THE CULTURE COMFORT..........

Weird it may look, but nothing is closer to the truth than the above statement. Every culture and a custom gives a certain level of mental and spiritual comfort to the person used to it. Especially, when you are in a demography or  where everyone wears the same feathers, staying within the culture and traditions appears to be the most natural thing. The trouble starts only when you are thrust into an alien culture on account of your professional compulsions.

Here, it helps if you can give up on, or relax on the fastidiousness in following the cultural or traditional customs. Giving up is inversely proportionate to the comfort you can gain the work place.

Now the article....

The continuous advent of new technology and the emanation of technology from the Asian and other countries have created a situation where cross cultural work environment has become common place.

Though work place is no worship place, people carry certain cultures, customs, mannerism and behavior patterns which have their roots in the upbringing specific to the regions. This makes the people of one region culturally and socially misfit in other regions.

They finally end up as “Square pegs in round holes”.

This usually happens internationally, but in vast and diverse countries like India & China, it can happen in different regions within the country.

The pace at which the world is becoming small everyday is inversely proportionate to amount of migration of people across the countries and continents. The people belonging to the local culture will always have an advantage over the migrants. At the same time, it is incorrect to assume that one culture is more business friendlily than other. Recent economic resurgence by Asian countries specially India & China has proved that giant strides can be effected staying within the conservative culture of the east.

So the time has come for a change, a change in attitude. Instead of complaining about the incompatibility, it is better, we level the playing field so that it is compatible to everyone, and prevents the loss of time, money and other resources.

It is the joint responsibility of the management and the concerned executive to make the acclimatization process seamless.

How to go about it???

1 Understand the culture divide as culture diversity

Just as we respect bio-individuality of human beings, similarly diversity of culture should be respected. A better working relationship can be established out of the understanding that different behavior is because of the different culture and not because of the lack or insufficiency of attributes.

For example disruptiveness is known as innovation in western culture, where as In eastern culture it is considered bad manners.

In a meeting western culture dictates that you need to be proactive, you need to initiate the discussion, lead the discussion, and beat others in making yourself heard by the management.

In Eastern culture each member is expected to be highly disciplined and respect the seniority of other members. He is allowed to speak only after the seniors have expressed themselves. He speaks only when he is asked for an opinion and then also speaks in a manner and tone that doesn’t hurt or contradict his senior. But he also speaks out his mind freely & participates actively within the confines of his culture.

So while expressive & effervescence are the need of one culture, quiet refrain and restraint, are the Hallmark of the other culture. A management that understands this diversity will put the expressiveness or lack of it in proper perspective & create affinity between the different team members.

2. Conduct research about the norms at prospective work place.

Conduct research on the culture & customs at the prospective work place. Prepare a mind set to accept what you get, and do without, what you won’t. If you are going to USA, it is better to habituate yourself with the American English.

It can be done by being active and participating in discussions on the social media platforms. Most of the discussions on the social media are in American English. You will find that most of the words are spelt differently in American English, when compared to what you must have learnt in the Queen’s English.

See a few Hollywood movies to perfect your English pronunciations. Many online interactive website are also of help, but they don’t teach you slang which is common place in corporate world. People use even four letter words without meaning any harm or ill will towards the other person. Please get used to take them normally.

In case you are going to UK, you need to perfect the Queen’s English, the work etiquettes, and even the dress codes. You also need to prepare yourself to put up with Color and Race discrimination at least in the initial stages.

3 Familiarize yourself with team norms.

Once you join the organization, first thing you do is familiarize yourself with team norms. Ask the team lead about the norms; put your difficulty level before him. Confabulate with your colleagues. Put up patiently with their barbs and jabs. Your restraint will help convert these into ocean of love and affection, and you will see helping hands all around.

4 Psych yourself for inclusive participation in the team.

Having won the first battle of acclimatization, you need to observe and mimic the mannerism & the attitude. This will help to psych you into a position of equality and confidence with other team members. Now you should start participating in the inclusive participation in all the team activities.

5 Dedicate extra time and efforts in skill building.

Now that, you are equal, or perhaps more equal than others in your team or even the blue eyed boy of the team, it is imperative that you devote extra time & effort to build your skills. You have the extra responsibility to make the management feel that your output is worth the investment made in you and it is prudent of them to invest in people with your culture background.

6 Be a role model for the people of alien culture.

Your adaptability, your sustainability, your delivery levels should convince people and the managements and help in building of cross culture teams everywhere.

7 Be the jolly good fellow of the organization and the corporate world

Now it is payback time for you. Be a friend philosopher and guide for the people from alien cultures. Be an incubator where new comers can find the initiation process healthy and enjoyable. Be charitable, and liberally spread your knowledge among the needy. Get on to the social media and help the people the world over in getting over the cross culture hiccups.

Best Wishes,

Shyam