Managing Complexity was the topic for this year’s Global Peter Drucker Forum in Vienna a few weeks ago.  Complexity overwhelms the old style of command and control management, but the followers of Drucker offer better alternatives.  I wish could have attended, but I will have to be satisfied summarizing based on the writings of others.

Background

This is the fifth annual forum held by the Peter Drucker Society of Europe, each held in Vienna.  This non-profit association aims to “contribute to the evolution of management as a vital function in modern society.”

If money becomes the point, you have lost the point.
– Charles Handy

Key Lessons

• Complexity is Increasing – causing uncertainty about the future.  Roughly 60% of Apple’s revenues are generated by products that are less than four years old; this year’s Global Electronics Forum in Shanghai featured 22,000 new products.  It is not really that the world is getting too complex, but  rather our organizations are simply ill-equipped to handle it using the traditional functional silos.
• Organizations are in trouble – only 11 percent of the workforce is passionate about their work.  John Hagel III reported that rate of return on assets of US firms is only one quarter of what it was in 1965.
• There are alternatives – Tim Brown talked about design thinking, with a different kind of ecosystem, and a different kind of organizational “code” that is creative, adaptive and open.
• Decentralization is key – Don Tapscott showed video of starling murmeration which demonstrates coordinated action without any central control.  I would note that computer simulations have shown that the same behavior can be produced by small set of simple rules on a large number of individual automata.  I don’t think his message was that flock behavior is what we want people to do, but just to express the idea that decisions can be decentralized and still attain coordinated aggregate behavior.
• Let Go of Power – you can’t decentralize otherwise, but one of the biggest barriers to effective management is executives wanting to hold on to power.  They questioned whether an organization really needs a CEO and other management.  (See Absolutely Self-Managed Workers)
• Core Values provide Control – self management only works when there are strong core values and culture to guide individuals.  Julian Birkinshaw warned that merely letting individuals go in any direction risks ending up like Enron, whose talented staff were encouraged to “run around the world looking for sexy businesses.”
• Curate not Command – here again we see terms reminding us that the organization grows organically, and good management is more like tending a garden than controlling a machine.
• Agile is coming to mainstream management – We have known about Agile for 25 years as a way to cope with the complexity of software development.  Now we see mainstream management discussing the same principles for their organizations.
• Active Leadership still involved – There is still a key role for wise leaders to play in curating an effective organization.  Assigning clear high level goals and matching talent to goals are active steps benefit from good leadership.
• Some will be left behind – older organizations that cling to traditional management will not be able to keep up.  John Hagel III said that there is an increasing divide between “linear institutions and the non-linear world that is developing around us.”  The world is changing and management has a choice whether to change with it or not. Fredmund Malik reinforced that older organizations that remain in denial of the need to change will become extinct.
• The Information Revolution matters – Doris Drucker spoke about how the Information Revolution is not about technology but about human behavior and human values.  Social technology has transformed how the public relates to each other, now it needs to transform companies as well.
• Five dimensions of how organizations must evolve
  • Goals – Rick Goings said that purpose is the glue that holds people together.  The goals of an organization are not to make money, but rather many other more meaningful things.  Charles Handy said “If money becomes the point, you have lost the point.”
  • Structure – is hierarchy still the right way to think of things?
  • Coordination – agile projects, design thinking, strategic agility, mission command — all names put to newer ways to think about coordination.
  • Values – The values that have become much more important are transparency, continuous improvement and sustainability.
  • Communications – the many-to-many social style communications in an always-on world is the way organizations must evolve.
• Cut Complexity When Possible – complexity falls into two buckets: unavoidable complexity imposed by the external world, and needless complexity imposed within.  Whenever possible, simplify, simplify, simplify according to Rick Goings.
• Inspire a Sense of Purpose – management needs to become leadership, not commanders.  Purpose is what drives motivation and excellence.
• Discovery and Innovation are the keys – it is not doing, but change of what we are doing that leaders need to focus on.  It is not sitting in cubes heads down, but instead building networks and questioning everything that will bring about new organizations.

The future is not something to be predicted. It is something to be achieved.
– Don Tapscott

Good management requires no predictive power!
– Peter Gomez, Professor Emeritus of Management, University of St. Gallen

Interpretation

This is so important to see the change going on in our organizations as something more fundamental than automating business processes.  The funny thing is, that Peter Drucker predicted much of this decades ago.  A conference series dedicated to Drucker is worth following.

Now … how can I get a ticket to the one next year?

Sources

• End of the imperial corporate leader; CEOs have to trust staff to get on with the job – Andrew Hill
• It’s complicated – Adrian Wooldridge, The Economist
• A New Center Of Gravity For Management? – Steve Denning, Forbes
• How Companies Can Survive the “Snarkpocalypse” – Rick Wartzman, DruckerInstitute, Nov. 20, 2013
• The TED of all Leadership Management Conferences – A Review of the Drucker Forum 2013 – Dan Pontefract
• We Need Fundamental Change In All Our Institutions – Don Tapscott
• Shift Index 2011: The Most Important Business Study — Ever? – John Hagel, The Center for the Edge
• Six Drucker Questions that Simplify a Complex Age – Rick Wartzman
• The Dumbest Idea In The World: Maximizing Shareholder Value – Steve Denning, Forbes
• The Golden Age Of Management Is Now – Steve Denning, Forbes
• The Meaning Of Management: The Great Awakening – Steve Denning, Forbes
• Mr. Classroomachev: Tear Down This Wall – Dan Pontefract, TED talk
• Video Library of All Talks – Global Peter Forum Site