Aereo picks up free over-the-air TV signals broadcast from the Empire State Building.
Last week, as JPMorgan Chase stumbled into what commentators are calling “an epic Twitter fail,” hundreds of people attending a major conference on “Managing Complexity” couldn’t help but take notice.
The event, the fifth annual Global Drucker Forum in Vienna, was aimed at providing insights into an era in which those running organizations find themselves less and less able to exercise control and are often buffeted by the unexpected—qualities that separate the genuinely “complex” from the merely “complicated.”
Seizing on a real-time lesson, a couple of the speakers pointed to the JPMorgan debacle, in which a senior executive was supposed to answer questions from the public on “leadership and life,” only to cancel when the scandal-ridden big bank was deluged with tweets attacking its ethics. (Example: “Is it true that, while you don’t always spit on poor people, when you do, you have perfect aim?”) The “Snarkpocalypse,” as Bloomberg News described it, seemed to underscore perfectly the highly dynamic, unpredictable business landscape that the conference was focused on.
But what is any management to do, given how quickly a situation can turn in today’s hyper-connected world?
The scholars and executives addressing the forum offered a variety of suggestions—practically all of them echoing, in key respects, the man in whose honor the gathering was held: Peter Drucker. Here are a half-dozen of their prescriptions:
First, our institutions need to radically decentralize. Don Tapscott, the co-author of Wikinomics and Radical Openness, made the case that some of society’s most difficult challenges could be met if it were made easier for people to self-organize, especially now that billions of individuals across the planet possess the digital technology to share knowledge and coordinate their activities. Instead, too many leaders get in people’s way in a vain attempt to hang on to power. We’re burdened with the “wrong organizational models,” Tapscott said.
Drucker, who died in 2005 at the age of 95, was never comfortable on a computer. But, amazingly, more than 50 years ago he urged organizations to move in the same direction that Tapscott is advocating today. “The new technology will demand the utmost in decentralization,” Drucker wrote in The Practice of Management, his 1954 landmark. “Any enterprise that attempted to centralize decision making at the top” would in the end “perish miserably. . . It would go under like the great reptiles of the saurian age who attempted to control a huge body by a small, centralized nervous system that could not adapt to rapid change in the environment.”
Second, it’s high time we embrace integrative thinking. Roger Martin, of the University of Toronto, told the forum that one reason we feel overwhelmed by complexity—a condition that, actually, has always existed—is because of a growing tendency to see and study problems within silos. Mistakenly, according to Martin, we are in “pursuit of narrow knowledge in a broad world.”
Drucker, who believed that the most effective managers look across a range of disciplines and draw on all of the humanities and sciences, would have loved Martin’s analysis. Indeed, it is said that a young person once asked Drucker how to excel as a manager. “Learn to play the violin,” he replied.
Third, it’s imperative that organizations place the customer at the center of everything they do. As Drucker well understood—and as many of the conference speakers emphasized—there is no other choice in an online age. “The customer now has the information,” Drucker wrote in Managing in the Next Society—and, as JPMorgan saw last week, with it comes the ability to do whatever he or she desires.
Fourth, wherever possible, managers must try to cut through the complexity by pushing for “simplicity, simplicity, simplicity,” in the words of Tupperware Brands Chief Executive Rick Goings. One of Drucker’s recommended ways to achieve this was to regularly abandon those products, policies and procedures that have become obsolete. At the same time, organizations can help their employees avoid information overload by ensuring that any data distributed is truly meaningful and is issued in a form that can lead to action. All the while, executives have to continually ask the right clarifying questions (a tactic that I detailed recently for Harvard Business Review). Among Drucker’s favorites: “What is our business, and what should it be?” “What does the customer value?”
Fifth, it’s crucial that organizations reach past their own walls to constantly learn. John Hagel of Deloitte’s Center for the Edge, who made this point most persuasively, invoked Sun Microsystems co-founder Bill Joy: “There are always more smart people outside your company than within it.” Drucker recognized this, as well. “There is no question,” he wrote, “that businesses need to understand what goes on beyond their spheres.”
Finally, if complexity tends to make things cloudy, organizations must stick to a strong set of core values if they’re going find their way. Part of this means demonstrating humility and acknowledging that, even with Big Data and great gains in behavioral science, there are lots of things that even the sharpest leaders will never fully comprehend.
Above all, it is vital to remember why your organization exists in the first place. The British social philosopher Charles Handy questioned how most companies would rank the three P’s—“passion, people and profit”—and added: “If money becomes the point, you have lost the point.”
Drucker, for his part, would have totally agreed. “Economic activities, economic institutions, economic rationality, are means to noneconomic (that is, human or social) ends rather than ends in themselves,” he wrote.
Umair Haque, author of The New Capitalist Manifesto, noted that it is an undue preoccupation with the last P—profit—that has caused so many people to become bitter about business. “There is a deep cynicism and mistrust of institutions today,” Haque said.
If you have any doubt that he’s correct, just ask JPMorgan.