JITE v34n1 - Under Review - Managing in a Time of Great Change
Drucker , P. F. (1995). Managing in a time of great change. New York: Truman Talley Books. $24.95, 371 pp. (ISBN 0-525-94053-7).
David C. Bjorkquist
University of Minnesota
Those who are confused, discouraged, and depressed by the current condition of the world of employment and the ways in which it is affecting them can find many plausible explanations in this Peter F. Drucker book. While the title suggests a focus on "managing", the primary emphasis of the book is on "time of great change". Thus, it will interest a wider audience of readers than those with management responsibilities. The book is not futuristic, according to Drucker, in that it deals "…with changes that have already irreversibly happened" ( p. ix ). His base of information is international and will challenge the ethno-geo-centric view that many readers may hold.
This book is a collection of essays written by Drucker from 1992 to 1995 most of which have been published previously as "field tests" of the ideas. The essays have been organized into four major parts: Part I, Management; Part II, The information-based organization; Part III, The economy; and Part IV, The society. Interviews with Drucker precede and follow the four book parts. Because the book is a collection of essays and was not written sequentially, individual chapters can stand alone, with some redundancies from chapter to chapter.
This is a book to be read discriminatingly because of Drucker's advocacy for his convictions. To his credit, he is open about many of his views and readers will gain a fuller realization of the political nature of management, work, society, and economics. Clearly, Drucker would like to be politically influential. Some of his ideology coincides with that of some contemporary politicians, although I am not aware of any cross-referencing among these individuals. It should not be surprising that Drucker is pro-business in his views and some might call him a conservative, although this overly simplistic label does not fit him well. In one chapter entitled, Six rules for Presidents , Ronald Reagan is praised for his ability to set priorities on things that needed to be done while Franklin Roosevelt, Lyndon Johnson, and Bill Clinton are criticized for their inability to do the same.
Readers should watch for generalizations that Drucker uses to make his case. For example, he refers to delivery truck drivers as illustrative of "…employees who work in subordinate and menial occupations…" ( p. 87 ) and concludes that their jobs differ little from the wage earner of yesterday. In addition to the demeaning description of the occupation, Drucker ignores the fact that the knowledge base required of today's driver has expanded. Delivery truck drivers work in a highly competitive industry wherein customers expect undamaged, quick, and accurate deliveries with the capacity to track the location of their parcels. This is far different from the predecessor dray hauler. Drucker goes further and creates a dichotomy of "knowledge workers" and machine operators. Machine operators "…could be told what to do, how to do it, and how fast to do it" ( p. 88 ). Knowledge workers, on the other hand, "…cannot be supervised effectively" ( p. 88 ). This categorization of work fails to recognize that all workers use knowledge in their work, that there are multiple forms of knowledge, and that there is a continuum of levels of knowledge. It is doubtful that occupations in the age of the knowledge worker will become as sharply separated as Drucker concludes.
Another example of a Drucker generalization has to do with the nature of skill development and the transferability of skills to knowledge work. He writes, "…the new [knowledge] jobs require, in the great majority, qualifications the blue-collar worker does not possess and is poorly equipped to acquire" ( p. 226 ). Fortunately, there are many mid-career workers who refuse to be written off in this manner, who have acquired new skills to remain productive for themselves and their employers. Zuboff ( 1988 ) describes the advantage of skilled paper mill operators in developing and extending the theoretical knowledge base needed to improve plant performance. As one worker stated, "The more I learn theoretically, the more I can see in the information. Raw data turns into information with my knowledge" ( p. 94 ). More intense examination of the skill transfer problems associated with job revision than that presented by Drucker is needed in order to develop solutions. It is not economical, just, or humane to declare that a major segment of the labor force is outdated and irretrievable.
Drucker has written provocatively and, despite the wariness expressed by this reviewer, sounds a message to be contemplated by individuals, organizations, and society-at-large.
Current members of the labor force can better understand the nature of employment and learn how they can be productively employed in the future. Given the stiff competition for customers, employers must be flexible in order to adjust to changes in demand. One alternative is to "out source" work previously done within the company (i.e., contract specialized firms or individuals). Increasingly, temporary employees are hired in appropriate numbers and with the knowledge-base needed to complete the required tasks. Alliances, partnerships, and joint ventures, with or without investment in each other, can provide mutually beneficial capital and expertise. Neither long-term employer commitment to employees nor employee loyalty can be expected. Drucker states, "…the more an organization becomes an organization of knowledge workers, the easier it is to leave and move elsewhere" ( p. 86 ). The certainty of lifetime employment no longer exists. Consequently, individuals must take responsibility for preparing themselves for their own job placement. They must think beyond specific skills and knowledge; they must also develop the skills needed to plan a career, hunt for a job, cushion for periods of unemployment, and maintain and develop saleable knowledge. This is the era of what Mallon ( 1996 ) calls the "portfolio career." Artifacts of every job add evidence of the worker's capacity for productive employment.
The value of land, labor, and capital becomes secondary to specialized knowledge. Companies need specialized knowledge to be productive, but "…specialized knowledge by itself produces nothing" ( p. 76 ). Therefore, knowledge workers need to link themselves with firms in order to apply their specialized knowledge. Companies provide the tools of production and the application of the specialized knowledge required to make them productive. The individual's economic value is in the close linkage of specialized knowledge with productivity. In this type of market, the value of experience and educational credentials diminishes as a primary medium of exchange. Members of the labor force need to know their own strengths and how they can be applied to production. Competitiveness among knowledge workers can be expected as each vies for more advanced levels of the commodity that employers need. Future work patterns will consist of employment with more than one organization (sequentially and/or simultaneously) along with continuous education and training, interspersed with unemployment.
In a world of work comprised of numerous temporary organizations, careers need a locus of control other than the organization. Drucker's suggestion is for each person to assume individual responsibility. Others cannot be relied upon to provide the continuity that good career planning requires. Consistent with career planning writers, such as Bolles ( 1996 ), Drucker's view is that workers must understand themselves, and particularly know which competencies they possess. Self-knowledge is essential if individuals are to market themselves to prospective employers. It also provides the basis for identifying gaps between a person's present level of knowledge and that which is desired.
Every organization needs to have a theory of its business, that is, assumptions about the environment of the business, society, the market, and customers; the specific mission of the organization; and the core competencies needed to accomplish the organization's mission. These three sets of assumptions must fit reality and connect with each other. They must also be tested constantly since every theory of business eventually becomes obsolete. Drucker suggests that every product, service, and policy should be challenged with the question, "If we were not in it already, would we be going into it now"? ( p. 33 ). An organization should not squander its resources on things that it should not do. Abandonment is preferred to prolonging the life of an unsuccessful venture. While scrutinizing its internal functioning, an organization also should be looking outside, particularly at its non-customers.
Organizations should employ knowledge to innovate. The new is created by continuously improving everything that the organization does, exploiting the organization's knowledge by building on successes, and making innovation part of the organizational system. These goals can be achieved through decentralization, which places decisions near the performance. Business must "…create the resources of knowledge and people to respond when opportunity knocks" ( p. 44 ). Drucker advocates that 10-12% annually be invested in creating and maintaining resources for the future, including research, technology, marketing, service, and people development.
Organizations must be information-literate; that is, know what information is needed, when it is needed, the form in which it is needed, and where it can be acquired. The most important information is about what goes on outside of the organization, which is the location of organizational results, opportunities, and threats. Data are not to be confused with information; the challenge is to convert data into usable information. Quantification has been popular in business but has not provided measurement to aid decision-making about the allocation of scarce capital and people resources.
According to Drucker, the knowledge society is a society of organizations. He identifies three societal sectors into which organizations fit-the familiar private and public sectors, plus a new non-profit sector. Each organization has a function that is consistent with the sector of which it is a part and it should hold true to its purpose. Therefore, every organization must be free to upset, disorganize, and destabilize if that is what is required for the organization to fulfill its purpose. Organizations in the private sector should not engage in the activities of the non-profit or public sectors because that would impede their economic performance. As a result, businesses will at times find it necessary to close factories and eliminate jobs on which communities depend in order to remain competitive and economically viable. This does not mean that a private sector organization bears no social responsibility; but, according to Drucker, it is irresponsible for organizations to stretch beyond their competence because to do so detracts from their capacity to succeed at their core tasks and mission. Because of the single-mindedness of private sector organizations, there are constant tensions due to the community's need for stability and the organization's need to destabilize; the organization's need for autonomy and society's concern for the common good; and the application of the expertise of knowledge specialists (frequently deployed in teams) toward meeting the organization's productivity needs.
Society-at-large is global with implications for domestic societies and individuals. At the heart of Drucker's explanation are four lessons about the world economy. First, the world economy is non-national in the flow of money and information as well as the trade within cross-border alliances. The daily money flow exceeds what is needed to finance international trade and investment for several months. However, information transactions (e.g., face-to-face, print, Internet, movies, and videos) are even larger and are "…probably growing faster than any other category of transaction in economic history" ( p. 145 ). Second, the meaning of export and import has changed because trade has increasingly become trade in services. The United States trade deficits (in goods) are offset by large surpluses in services, including financial and retailing services, higher education, tourism, health care, entertainment, and royalties on books and technology. Third, the driver for growth, prosperity, and employment for every developed nation has become the international economy. The domestic economy and international economies are indistinguishable except in a political, social, cultural, and psychological sense. Fourth, the Asian-rim nations (Japan, South Korea, Hong Kong, Taiwan, Malaysia, Thailand, Indonesia, and Singapore) have become the models for trade policy. Each of these nations has refrained from managing short-term economic fluctuations; rather, they have invested heavily in education and training, rewarded saving and investment, and penalized consumption. Also, these nations have given priority to performance on the world economy over domestic economic performance.
In the society of organizations that Drucker describes, with each sector (private, public, and non-profit) dedicated to its own mission, there are unresolved problems of attending to the common good. The public sector (government) is unable to address the problems of society and "…in every developed country, society is becoming sicker" ( p. 252 ). Huge welfare bureaucracies have been created but have failed to measure up to the problem. This is one of the reasons for suggesting that a new non-profit sector (with the potential to become the social sector) is needed. The second reason for suggesting the viability of a social sector has to do with the number of volunteers who work in social organizations. The 90 million volunteers in the United States, working an average of three hours per week, are predicted to increase to 120 million volunteers donating an average of five hours per week. Churches are the largest single group of organizations within the non-profit sector. About 70% of the non-church social organizations have come into existence during the last 30 years.
Drucker cites the Salvation Army, Alcoholics Anonymous, and private secondary schools as examples of the effectiveness of non-profit organizations in addressing social problems. He also claims that non-profits have, in large part, been responsible for advances in medicine, mental health, and inner-city education. With the success of the non-profits coupled with the incompetence of government in solving social problems, partnerships between government and non-profit social organizations should be formed with government serving a facilitative role. For example, each $1.00 given to a non-profit could be worth $1.10 deduction on income taxes. Vouchers could be given to move students from public to private schools. Instead, Drucker states, bureaucracies are threatened and tend to be hostile to non-profits because non-profits do a better job and undermine bureaucratic authority. For the non-profits to reach their potential they need to become better at managing themselves and raising money, which will have to come from greatly increased giving of personal income. Drucker does not advocate the development of partnerships between non-profit and private sector organizations for functions vital to businesses, such as training and job placement.
Government, in Drucker's view, needs to assume a more limited role. Agencies, such as OSHA, which he contends has failed to improve safety since 1970, should regulate less. Many malfunctioning programs should be abandoned because they do not produce results and cannot be fixed. Domestic policy should focus on improving the country's competitive position in the world economy.
Because the new resource of the age (knowledge), is non-economic (i.e., land, labor, and capital), Drucker writes that politics extends beyond negotiation and compromise over economic interests. The new politics is about values and moral issues over which citizen groups and lobbyists are unwilling to compromise. Issues such as right-to-life, the environment, and equity for groups that are treated by their advocates as absolutes and have become matters of intense debate and public policy.
In this book, Peter Drucker has advanced, often in a provocative manner, many important ideas that will help to explain what, to some, has seemed mysterious. He has assembled together many pieces of information and has interpreted the relationships among them. Many, perhaps most, readers will exclaim "right on" as they digest major sections of the book. Other ideas will irritate and even anger some readers because Drucker's objectivity has been blurred by his advocacy of his beliefs. The opinions of a guru of the status of Drucker cannot be ignored; but this is a book to be read cautiously. Those who are preparing for work roles and those who prepare them should heed Drucker's observations about the workplace and the nature of employment. Charges that educational institutions provide fodder for the business and industrial machine have a ring of truth. Educating workers who are capable of self-determination is, in some ways, a test of the ideology of democracy.
Organizations, including teacher education programs, should weigh the wisdom of Drucker's advice. What would it mean to redirect resources toward strengths and abandon, rather than repair, activities that are not succeeding? Most teacher education programs likely are engaged in activities that they would not choose to begin today, but have been doing for a long period of time. This is especially challenging when resources are dwindling and making changes may be interpreted as a sign of weakness. However, it may be the time when dramatic changes can produce the greatest return and are needed most.
Bolles , R. N. (1996). What color is your parachute? A practical manual for job-hunters & career-changers. Berkeley, CA: Ten Speed Press.
Mallon , M. (1996). Developing the portfolio career. In E. F. Holton III (Ed.), Academy of Human Resource Development Conference Proceedings (pp. 300-307). Minneapolis, MN: The Academy.
Zuboff , S. (1988). In the age of the smart machine: The future of work and power. New York: Basic Books.
Reference Citation: Bjorkquist, David C. (1996). Review of Managing in a Time of Great Change. Journal of Industrial Teacher Education , 34(1), 88-95.