Peter Drucker’s Unique Approach to Management
In this episode, Bernard Jaworski, the Drucker Chair in Management and the Liberal Arts at CGU, visits the podcast to discuss the discipline of management as well as some of the key ideas of Peter Drucker. We discuss what makes the Drucker School of Management unique in its approach to business education and the role of business in social change, amongst other topics.
Episode Transctipt:
Marcus Weakley:
Welcome to Episode Six of Breaking the Shackles of Time. I’m Marcus Weakley, the host of the podcast. I’m joined today by Bernie Jaworski, the Drucker Chair in Management and the Liberal Arts at the Drucker School of Management at Claremont Graduate University. This position, this chair is named in honor of Peter Drucker, the founder of modern management. It is awarded to an internationally recognized scholar who carries on the Drucker legacy of tempering sound business practices with a commitment to social responsibility.
Marcus Weakley:
Jaworski comes to the Drucker School from the Switzerland-based IMD. Prior to that, he spent a decade as a senior partner of the Monitor Group, a global management consulting firm. During his Monitor career, he co-founded and co-lead two of the global practice areas, the e-commerce practice and the executive education unit. In addition, he served as a tenured full professor of marketing at the University of Southern California, faculty at the University of Arizona and a visiting professor at Harvard Business. Thank you so much for joining us. I’m very happy that you’ve agreed to jump into the podcast and talk about management with us here today.
Bernie Jaworski:
Very excited to be here, Marcus. Thank you very much for the invite. I’m always happy to talk about the work of Peter Drucker, right? I’ve consumed the Kool-Aid, if you will. So, I’m very happy to be the vessel that explain some of his basic ideas to a broader audience. So, thank you for my inviting me.
Marcus Weakley:
Nice. Great. Well, let’s start even one step further back and then we’ll hone in on Peter Drucker, but what I’m interested in is for folks who don’t really have an idea about why you would go to school to study management, instead of just maybe just running a business type of thing, what exactly does it mean to study management? What are some of the major methods and approaches of the field? Why does one get an MBA?
Bernie Jaworski:
Yeah, that’s a great question. As I thought about that question, there’s two ways to answer. One is around a philosophy. The second is around tools and methods. So, from a philosophy perspective, I tend to think of management as having three different orientations, three different schools of thought, much like you’d find a school of thought in psychology or sociology. So, the schools of thought that I think exists near management are one is taking a shareholder-only perspective that it’s all about profit. It’s all about economics. It’s all about supply and demand, let free markets operate. That’s coming from what’s called the Chicago School of Economics, and Milton Friedman being probably the most important person in that space.
Bernie Jaworski:
The second school of thought is purpose-, values-led companies. You see a lot of this in the last 20 years with people, particularly young folks in their 20s, want to join a company that has a purpose that has values as orientation. They’re buying into the overall mission and purpose of that company. Now, they obviously want to make money. They want to make good economic returns, but in addition, they think their mission is broader than that.
Bernie Jaworski:
And then this third school of thought, which is the Drucker school of thought is that all the reason we’re doing all of this management is not simply to allow your organization to function well and produce economic returns. You want to have an impact on society in general. That your belief is that in order for society to function, all the organizations need to function well, for profit, nonprofit, and government. In that sense, Drucker’s view is the broadest view. It’s really fundamentally saying, since organizations are largely comprising society. Contrast to 20 years ago, we can have a bunch of agrarian farm-led communities. Here, we’re basically a society of organization. So, it’s the organization’s responsibility to help society function. It’s a very, very different perspective, very, very broad.
Bernie Jaworski:
Now, sitting on top of that, though, is that there’s another thing that when you said, “Getting management education, why would you do that?” Being more narrow now, I tend to think of it as what we oftentimes termed as hard skills and soft skills. The hard skills are things that you’d expect to be there, accounting, finance, supply chain, operations. These are things where they’re known frameworks. There’s standard procedures to do it. There’s ways to solve the problems that are well known. You follow standard accounting procedures, and so forth. You need to know those, those skill sets are baseline foundation.
Bernie Jaworski:
But in addition, the Drucker school, like many other schools, teaches soft skills. How do you have a productive conversation? How do you lead a team? How do you lead and manage yourself? How do you manage time? How do you coordinate the activities of others? So, these are the combination of things that any business school would do, soft skills and hard skills, but under the context of these alternative philosophies.
Bernie Jaworski:
So, you can imagine the Drucker school puts a lot of emphasis around function of society. It doesn’t mean we don’t do hard skills and soft skills. We do, but there’s an orientation philosophy you have to buy into. I’d be shocked that the Chicago School of Economics or Business School teaches stuff that we teach around functioning society. Now, that doesn’t mean they don’t have a course here and there, but it’s not the umbrella under which they guide curriculum development.
Marcus Weakley:
Yeah. So, is the Chicago School still known for what it became so famous for in the ’70s?
Bernie Jaworski:
I would say this, there is the Chicago Business School, Booth School and then there’s Chicago Economics Department. I’d say the Chicago Economics Department is the same as the Friedman’s view, doesn’t mean they have a couple different outliers here and there. But on the Business School side, they’re a much broader perspective, but still very economics oriented, very driving around shareholder value.
Marcus Weakley:
Got you. So, I think that’s a really helpful way to frame it for folks that there is a philosophical even paradigmatic view that there are different ways to approach the system that goes into running a business and engaging with broader society, the economic systems as well as other social systems. I think it’s really helpful to frame Drucker… I mean, I didn’t know that that he wanted to take a step back to look at maybe organization as a whole, right? Which is going to include things like government and nonprofits and how do all of those interact to form and shape society.
Bernie Jaworski:
Well, it’s funny to say that, because most people don’t understand that’s where Drucker’s coming from. Most people think of Drucker as the father of modern management. That’s what he’s known as.
Marcus Weakley:
That’s the phrase.
Bernie Jaworski:
He backed into that. It wasn’t his foreground issue, study management, solve management problems. That was not his issue. His issue was coming out of post-war Germany and watching Hitler rise in Germany and escaping Germany going to London. His view was, “Man, society has to function well. That’s what has to happen. How do we get that to happen? Well, we have large organizations. Okay, we have large organizations. Man, these guys really need to function well, and help not only contribute to society, but also contribute to the welfare of individuals inside of it. So, therefore, they need management. Here’s what management looks like.”
Bernie Jaworski:
So, in other words, in a sense, I want to say he backed into the study of management, but that was not the foreground issue. The foreground issue is, “How does society function well?” All along the way, I guess, we have to learn management and understand the practice of management. Most people don’t get that. Most people think of him as he was a management guy. Half his books were actually in functioning society and half his books around management.
Marcus Weakley:
Got you. Did he see something special in the role of the business manager and being able to-
Bernie Jaworski:
He did.
Marcus Weakley:
… shape society and play a part in this broader well-functioning?
Bernie Jaworski:
He did, he really did. That’s just mind blowing. I can refer you actually to one of his most important books, it was called the Practice of Management 1954. He took people through the journey of what it means to be a manager. It’s the very first book that looked at the whole field of management and integrated into one common framework. What he did is he built up. The book goes from, “What is the purpose of the business? What are they trying to achieve?” But then he went into, “What does it mean to structure activities and organize the organization to be productive and efficient?” Then he took it into the level of individual leaders and what they need to do. Then he took it into areas of management and management and the worker interface between them.
Bernie Jaworski:
He ended the book with the responsibilities of management. The responsibilities of management were things we’re talking about right now, which is they have a moral and ethical responsibility to allow people to develop and have social status within the organization. They got to get back to the communities they live in, because fundamentally, that is the community, the organizations are the community. The aggregated set of organizations are the community. Man, organizations have to step up.
Bernie Jaworski:
Now, importantly, he wasn’t saying this to be, “Geez, I want to be really nice guy to everybody.” He said, “At the end of the day, the first responsibility management’s economic performance.” So, you got to hit your performance targets. But if you do that, then everything else takes care of itself. Let me add one other point to that, not make it too fine a point. What he said was, “Fundamentally, if you deeply, deeply understand customers and what they fundamentally care about in profound ways and profound liberal art ways to understand everything they care about looking for their wants, their desires, their beliefs, you’re going to have products that are going to be in high demand.
Bernie Jaworski:
As a result of having products that are high in demand, you can then charge premium prices. As a result of premium prices, you get this enormous economic performance. As a result of economic performance, you can take care of the workers. You can take care of the communities you live in.” So, at the end of the day, very pragmatic, but the starting point was deeply, deeply focused on customers. If you do that, then this whole perpetual motion machine around higher economic performance, higher returns, take care of the workers, develop workers, develop society, help the community. So, the perpetual motion machine kicks off with a customer-centered view, a deep, deep understanding of what customers are looking for.
Marcus Weakley:
Got you. Cool, very cool idea. Could we touch on the last part in that chain a little bit? I would love to have a better sense and to provide a better sense for the listeners of what it looks like to give back through a Drucker view? You mentioned taking care of the employees and giving back to the community. So, the first part seems relatively straightforward. You pay good wages, you take care of your employees. Otherwise, here in the United States, obviously, like providing good health care and those other sorts of elements that are important. But what does it look like for a business through the Drucker philosophy to connect with and to give back to the community?
Bernie Jaworski:
Yeah, so this is a really important point. So, one of the things that’s happened, Marcus, over the last 10 to 15 years has been something called corporate social responsibility. This is going to sound terrible, but I hope it doesn’t. Generally speaking, people put together a corporate responsibility department. They have somebody in charge of corporate responsibility. That includes everything from philanthropy to community service to getting employees to contribute, a way in around their willingness to contribute to various causes, that the organization is sponsoring. All that is great. You can’t disagree with that. That’s all really good outcomes.
Bernie Jaworski:
But Drucker’s view is everything that organization does touches society, everything. So, sometimes you need to departmentalize thing and put in department, it feels like that. I’m over here in accounting. I’m over here in finance. I’m over here in supply chain. Thank God I don’t have to worry about that stuff. I can just keep my head down and focus on what I need to do. But from Drucker’s perspective, no, no, no, everybody has to contribute. Everybody touches society. Everybody does something. So, it’s a broader perspective than we have a foundation that gives money back to the homeless or we do a number of community things related to building houses and things like that. But that’s not it. It’s everything we do.
Bernie Jaworski:
So, just to go on a complete tangent for a second, Edward Jones is one of the most Drucker like organizations in the world. They have their values as being one of the key things is impacting the communities they live in. It’s a value of Jones. Drucker consulted with Jones for 20 or 30 years, became very intimately tied into the organization. These guys believe very, very deeply in their souls that everybody in the organization is out in the community impact the community in some way, shape, or form. Each individual is in the community.
Bernie Jaworski:
So, sure, Edward Jones has a bunch of stuff they do as an organization, but the idea that everybody takes that as a responsibility is quite profound. I can speak with some authority around this topic, because every year, we run a program for Edward Jones Drucker School. They invite 30 or 40 of their high performing people, and they come in for a three-day program at the Drucker School. When we raise this issue, the other fact when I raised the issue, that you can just tell these people are deeply committed to this. This is their fabric. They buy into this concept. It’s not something you do on the side. It’s enmeshed in everything that they do. That’s a profound restatement of you’re just having a department that does that type of orientation.
Marcus Weakley:
Yeah, that’s amazing. Because the department, as you rightly said, that’s a really great step, but it could also at times fall into window dressing or it seems like, right? There’s a tendency with institutionalizing these sorts of things that you just do the minimum for perception’s sake even at times. It’s very different to do it from the inside out. Cool. So, I would like to lead that in when you said you do a three-day training with the top 30 or 40 folks from Edward Jones. I’m interested when Drucker went to start a school to translate a lot of his philosophy and his ideas into management education, what were some of the founding elements that you think that the school at CGU really embodies and continues from when Drucker founded it that helps shape students in this unique trajectory and philosophy?
Bernie Jaworski:
Marcus, that’s a dangerous question to ask if you want to listen to the next six hours of me what that looks like, I’d say, as a professor, that’s like-
Marcus Weakley:
How about 20 minutes?
Bernie Jaworski:
Yeah. Okay. 20 minutes.
Marcus Weakley:
At most.
Bernie Jaworski:
Yeah, yeah, yeah. It’s exactly right question. So, let me mention three or four things related to Drucker’s philosophy. The very first thing is its humanistic. Meaning it’s very much centered on the employee. There’s a great phrase of Drucker around helping the common person, a common man right back in the ’60s, but helping the common person do uncommon things. When an organization is properly structured, you unleash talent inside of that organization directed towards its purpose. So, this is related to the idea that not only did he want people to live in a society where they have social status and function, very, very important, you can argue there’s a lot of things going on, which like the United States economy, where that’s not happening, right? So, first thing is social status.
Bernie Jaworski:
Second thing is he had a lot of faith in people that people could… He had this term called contribution. So, Drucker introduced this phrase ‘management by objectives’. That was Drucker’s phrase. When people hear that phrase, they think it sounds like management sets the objectives and then they manage them. That’s not what he said.
Bernie Jaworski:
What he said was, “The best form of unleashing talent is to have the employee figure out the purpose of the organization, the purpose of their division, the purpose of their unit, the purpose of their manager’s role, understand all of that, and then say, ‘What are my strengths? What can I contribute?’ And then I have a conversation with the manager saying, ‘Given the purpose, given the organization, given the unit, given what you need to achieve, I think I can do three things this year.'”
Bernie Jaworski:
So, it’s not job description based. It’s based on this individual who’s thinking deeply about what the organization needs and taking my strengths and applying them against. That’s step one. Then they have a conversation that goes back and forth to myself and my manager eventually agree. It’s not those three objectives. It’s objective one, two, and four. Three, we’ll hold off on next year. We’ll do one, two and four. Then he said, “The second thing related to that is self-control.” The best thing you can do is allow workers who are very close to the problem to take ownership for the work and to actually direct the work.
Bernie Jaworski:
So, don’t put a lot of shackles on that person, give them freedom within a framework to be able to deliver against those objectives. So, humanistic in the sense that… By the way, what’s also happening on the way there is that person’s learning, because they’re not giving the responsibility to their manager. They’re learning and adjusting, sensing and responding. So, they’re developing themselves along the way. So, point number one is humanistic.
Bernie Jaworski:
Point number two is purpose and mission-led that is that for Drucker, you had to identify the purpose. You had to identify the vision of where the organization was going in order to really direct the overall organization towards that particular business purpose. Actually, in this context too, the other part was you also need to specify the end game. So, for Drucker, the vision. “What does it look like when we’re done?” was very, very important, specifying what’s going on. But all of this is sort of giving a direction, a North Star. Another element of Drucker’s work… I’ll mention two others and then we’ll go from there. … is he always believed in values-led organization.
Bernie Jaworski:
He has this phrase that as people need vitamins, organizations need values. I was just reading an article this morning around the McDonald’s CEO who was dismissed this past year after having relationships with employees. What the new CEO said was, “That’s not consistent with our values. Forget whether it’s right or wrong. It’s not consistent with the values of McDonald’s to do that.” So, values-led organizations allows people to say, “I fit those values, I fit that mission purpose, I understand where we’re going. I opt in to be part of that organization.” So that’s another component part of how he thinks about this.
Bernie Jaworski:
The last thing that’s very, very important for Drucker is he uses the phrase ‘continuity and change’ all the time, because organizations compete over multiple time periods. Organizations disappear, Blockbuster. So, the problem for organizations is they have to manage it to time periods. They have to optimize and run the machine they’re currently running as well as they possibly can. And then they have to allocate 20% of the time to the future and figure out, “What’s the future look like?” and then migrate the company to the future.
Bernie Jaworski:
Netflix has undergone about seven of these transformations in the last 20 years, all the way from way back to when they first migrated the DVDs, DVDs was 0.05% of the world economy in terms of the ways people watch video, but Reed Hastings at the time said, “The future is DVD.” The organization looked at him and said, “That’s the dumbest thing ever heard.” But they had to move away from DVD then to move to stream, and they had to move away from streaming to content. It’s very hard for organizations to make this leap, but Drucker called it, “continuity and change”. You’ve got to manage continuity and keep focused on running the machine we currently have that’s making the money.
Bernie Jaworski:
But at the same time, environments change, and we need to adjust our business to fit that new environment. Somebody’s got to do that. That takes a lot of time and effort. That’s something you do on weekends. So, you got to manage this issue, I call it managing through time periods. I think he said exactly the same thing in 1954, but it morphed into managing continuity and change. So, those are a little bit of a flavor of the work. Obviously, he wrote 36 books. I know what you want me to do, podcast to review all 36 of them, but that just gives you some flavor of the orientation that he had from individual worker up to mission-driven, purpose-driven.
Marcus Weakley:
Got you. I can see how those could really guide and shape, especially the soft skills that you were talking about before, that are a key element of an education in management. You probably have a lot of options and which ones to teach which way and what’s driving those, right? So, it sounds like all three of those, the humanistic approach, the value approach, and the last one you were talking about, about continuity and change, I think all of those really probably inform, the soft skills-
Bernie Jaworski:
[inaudible 00:21:15].
Marcus Weakley:
… the school teachers. Yeah. Great. Well, if you wouldn’t mind maybe shifting gears a bit, one of your areas of expertise is in e-commerce. You mentioned Netflix, which is a great example, because I definitely remember subscribing and getting… I mean, it’s going to age me a bit, but getting DVDs delivered to my home. So, that’s what like Netflix was for a long time for me. And then now it’s something so dramatically different. I think it’s a good example, but it also speaks to in a certain way, what e-commerce began as and now, the dominating force that it is. I would love to hear a bit about maybe an intersection or how you see Drucker’s philosophy informing this new now massive arena of eCommerce and what some of the connections are there?
Bernie Jaworski:
Well, I’ll answer the question at two levels. At the first level, so one of the things I do when I teach Drucker’s philosophy, all MBA students have to take me whether they want to learn or not about Drucker’s philosophy, and I would say, “What I do is I teach his philosophy.” And then I’ve written a number of contemporary cases of firms that are competing right now. From a company like Becton Dickinson to a company like ResMed, do some sleep apnea, to a company like SMA, which is a management consulting company that just moved all their business onto a digital platform. They’ve made all their consultants available to the…
Bernie Jaworski:
So, the client can log into the site and mix and match the consultants they want for the project needs they have, incredible transparency, incredible transparency. That’s never happened before. So, what I do is I take Drucker’s theories, and I apply them to contemporary issues that are unfolding right now. In this case, I just finished about a week ago. So, I’ll invite the CEO in to talk to the class, Zoom, I should say, Zoom into the class at the end of August.
Bernie Jaworski:
Point number one, Drucker’s purpose philosophy applies to today’s organizations, it just does. It fits perfectly. In fact, in some ways, it fits as well if not better than he was writing back in the 1950s. Because this notion of being purpose-led, this notion of being driven by values, the notion that we have to make society function well and contribute better, if you think about what’s going on today’s markets, those are all themes that are just so profound and so much in front of us. So, point number one.
Bernie Jaworski:
Point number two is the interesting thing about the eCommerce world it’s feels to me and this is just my armchair observation is that it’s bifurcated into two different groups. The giants that are out there, the Facebooks, the Googles, the Amazons of the world, Microsoft, the so-called FANGs. That group operates a particular way, but the issue there, which will be concerning to Drucker is monopolistic competition. Are there certain things that are happening out there that it’s actually not society’s benefit to have them do certain activities?
Bernie Jaworski:
Now, I would argue, I think Drucker would look at some of these things and say, “Management needs to step in a little bit more aggressively in some situations. We can talk about specific situations, but Facebook issues right now that we’re all aware of, I think Docker look at that with some sense of concern around what they’re doing. So, I think there is a legitimate issue there. That’s point number one.
Bernie Jaworski:
Point number two is related to perhaps this monopolistic competition is then I see there’s everybody else. Everybody else would benefit from Drucker’s thinking. In particular, I think the most interesting issues, going back to managing two time periods, the reason firms disappear is because they do very well in one time period. But even though they see the second time period coming and what the future looks like, so they see the migration of DVD over to streaming, they can’t get out of their way. So, they’re stuck in that world. They just can’t get out of the way.
Marcus Weakley:
Yeah, we’re seeing that interesting stories, too.
Bernie Jaworski:
Yeah. Well, Blockbuster CEO said on one earnings call about 10 years ago, somebody just asked about Netflix. This is again 10 years ago, maybe 15. I can’t remember exactly when. The Blockbuster said, “Listen, guys, Netflix is 0.03% of the market, I could care less about Netflix. They’re not even a player.” He’s on the record of saying this. Okay, well, I guess he didn’t see the future, but equally important is ignoring it. I think it’s great for the small businessperson or the medium businessperson sized company would be asking themselves this question, “Am I allocating enough time to future? How do I get there?”
Bernie Jaworski:
Now, the other thing interesting enough of what Drucker said was it’s the next level down in management, that below the office of the CEO that should be doing it and worrying about it and thinking about it really deeply, because they’re the ones that are often going to be running that enterprise in five to seven years. So, he had some very practical suggestions on how to make that happen.
Marcus Weakley:
That’s cool. I wouldn’t have initially thought that, but that makes sense too. That’s looking to the future as well. Yeah. Actually, I don’t really know. I’m just assuming that things seem to be moving even more quickly now. So, that ideas like this specific idea of looking to the future, especially with e-commerce and the rapid turnover of technology, that this is probably even more important to any business working in that area.
Bernie Jaworski:
Yeah, so let me say a few words about that. Drucker called that the theory of the business. For Drucker, what he meant was if the macro economic conditions change, the macro environment changes, there are fundamental things that are shifting in customer behavior or in technology that you have to revisit the purpose of mission. Therefore, you have to revisit where you’re going. So, the theory of the business changes, you’ve got to do things differently, right? So that’s first thing he said, which is absolutely central to what we’re talking about. Environmental speed is more important, where things are changing more rapidly, you got to revisit that theory of the business much more frequently. That’s the first observation.
Bernie Jaworski:
The second observation, which is a really mind blowing one, that people never really saw from the work of Drucker. But if you read his work very carefully, you can see this is Drucker believes that the actions of organizations shaped the evolution of macroeconomic forces. So, in other words, it wasn’t as simple as, “Let me see where the environment’s going, the economic environment’s going, where my industry is going. I’m going to see where it’s all going. Oh, I’m passive recipient to that. I have to adjust my business strategy to fit. The industry is moving to streaming. Oh, geez, I guess I have to do that.” Instead, what Drucker said was great managers practice creative destruction. They actually see, “Here’s what the future looks like.” They try to shift the economic forces in a way that actually benefit them.
Bernie Jaworski:
So, the easiest way to describe this would be something like regulatory policy. If I can shift regulatory policy here in this way, then all of a sudden, I have more opportunity than I had before. So, Drucker did not see the broad economic or industry level conditions as setting constraints on the organization. Great managers shape the economic and industry conditions in which they operate, which is a mind-blowing idea, but it’s exactly right. It’s very Schumpeterian in terms of practicing creative destruction. You’re trying to not only get to the future, you’re trying to manage the context in which you operate inside it. So, that means managing potentially and shaping customer behavior, shaping and managing customer behavior.
Bernie Jaworski:
There’s a good illustration. If you said binge watching 20 years ago, people had no idea what the hell you’re talking about. No, they didn’t even want to imagine what that look like, but the idea now that you’ve binge watched 10 episodes of Netflix back to back, when it comes down, five, four, three, two, one. Yeah, why not? What the hell. It’s changed how we operate our customer behavior, but any action of firm takes can change competitive forces, can change technology evolution.
Bernie Jaworski:
You can buy new technology and shut it down. You can buy new technology and accelerate it. These are all economic forces that impinge upon the business, but great managers see them and ‘manage’ them. They influence them, they shape them. That’s one of the Drucker’s most profound ideas, even though it’s lost in the context of 4,000 other grandiose ideas.
Marcus Weakley:
I think that binge watching example is a great one. I mean, I’ve thought about it at times, where we probably wouldn’t even agree to do that same behavior in other contexts, right? We want to watch three movies back to back or something along those lines, right? Socially, we don’t really accept in the same way, let’s say, playing video games or something for eight hours. But the context has been shifted for customer behavior specifically for streaming TV shows or hour length about shows. It seems like a good example of that. In a more micro sense, it sounded like he was also talking about the more macro sense.
Marcus Weakley:
So, let’s say, you use streaming as an example in general, too. So, I mean, that’s something that Netflix from a Drucker philosophy, I mean, correct me if I’m wrong, he would more or less say that Netflix helped create that shift in social behavior by seeing the technology was there and then reshaping their business around it and making a strong push for it, type thing?
Bernie Jaworski:
That’s exactly right. By the way, great firms, when they do that, other people in the industry line up behind them. They say, “I guess that’s where it’s going, we should probably do it too.” But if you’re the lead guy and the other people are following you, you have time in your hands, because you figured things out a bit ahead of everybody, right? So, it’s perfectly fine for anybody else to follow.
Bernie Jaworski:
You’d say, “Oh, no, I wish nobody followed me into streaming.” No, no, no, you want Amazon, you want everybody else to follow you, because that then becomes the industry’s standard of which you now by virtue of being three or six or a year ahead of everybody, you have the ability then to understand what users are doing and then shape user behavior once again, because you’re ahead of everybody else. So, you want people to follow in your way. Yeah, yeah. So, that’s exactly right.
Marcus Weakley:
Makes perfect sense. I think that Netflix is a great example of that. No one’s doing it better than them still. So, the one other area of expertise that you have is in leadership, right? Engaging with what we’ve been talking about, with Drucker’s philosophy now and how you feel that it applies maybe even better now to when he initially was writing about it, how does that transfer into leadership? What are some of the most important characteristics do you think of a 21st century or contemporary business leader?
Bernie Jaworski:
So, Drucker and his phrase, “The only source of lasting competitive advantage is the people that you have.” So, people tend to think of competitive advantages in different ways. You position your firm in the marketplace to gain some sort of economic performance, but the reality is that if it all starts with people, then figuring out who to hire, how to bring them in. Drucker was a massive proponent of developing people. He felt organizations either develop people or they stunted them. So, organizations need to develop people. He felt also people were the asset the firms have that depreciate the quickest and the ones that were least invested in.
Bernie Jaworski:
So, management development, treating people right, giving them learning opportunities, advancement opportunities are all central to [inaudible 00:33:42]. Yeah, so I think on leadership side, if I’m going to give advice for leaders today, one is going to be that same notion of people oriented is absolutely critical to making sure that you function well as an organization. But that’s correlated with the second point, which is that we know with diversity, inclusion and all things that are happening today, the ability to have different views in our organization, we know there’s been a history of working management on having divergent views, different views of playing devil’s advocate, all those are really critical to getting a better decision.
Bernie Jaworski:
So, Drucker would be a big advocate for diversity, inclusiveness, and getting different voices into looking at problems. People have different orientations, different backgrounds, all that will be incredibly central. I think that’s a center of gravity issue for leaders today.
Bernie Jaworski:
I think third is technology. I mean, for better or for worse, you have to be on top of contemporary technology and what’s unfolding and the ability to understand where everyone’s going. Obviously, the one big trend that’s happening right now is around mobility. Everybody’s concerned about mobility. What does it mean to have everything running off your mobile phone? What does that look like? So, the ability to embrace technology, not fear, but embrace it and try and stay as best you can either on top that are very fast follower I think is really important. But some of the fundamentals around things that we teach, role modeling behavior, the ability to be agile, the ability to be customer-focused as the orientation to the business, a lot of these things are ones that are building strong teams. A lot of these are timeless.
Bernie Jaworski:
So, I think in addition to the timeless ones, you probably have two or three things that reflect the speed of change that’s unfolding. This notion of continuity and changes is Sears and Roebuck back in the ’50s and ’60s, you couldn’t go slow around continuity and change. In the world of graphics chips, the overall product life cycles last time was in that industry. Product life cycles would be three months. By the time you launch it, by the time that’s shipped, game’s over, so to speak. So, three months, right? So, it’s just mind boggling, the speed at which certain things operates. I do think speed’s there. I think technology’s there, but I think people-centeredness and diversity is actually very, very important to be front and center to be thinking about today.
Marcus Weakley:
Nice, has this pandemic changed… I mean, it’s starting to feel like it’s quickened to move towards a shift in using technology with organizations. Do you feel like this might shift things a bit in terms of remote working and not relying on a physical space as much for conducting business? I mean, apart from the e-commerce side, using a website to do business in some way, but just also the behind the scenes running of a business, do you think there might be a broader social shift afoot because of what’s been required by this that might change some business practices in the future?
Bernie Jaworski:
There’s no doubt about it. Everything I’ve been reading suggests that productivity is going up on the part of the workforce rather than down. Again, these are knowledge work positions. So, this is not necessarily fast-food running. But everything I’ve been reading suggests productivity is going up, A, and B, people are enjoying it more. So, what’s interesting about this, as a general rule, social interaction there is certainly missing. But as a general rule, the idea of working from home and doing things. Obviously, there’s complexity here. I would love to run the systems diagram analysis around what this looks like. So, you can imagine the chess match.
Bernie Jaworski:
Okay, so I’m working at home and being more productive. Okay, so what’s the good news? The good news from that is the environment’s better, because I’m not at my vehicle driving to work. I’m able to focus my energy on work-related issues, as opposed to other things that are around me.
Bernie Jaworski:
What’s the downside? Downside was my family and work, it all blended together. Am I spending more time with my family or less? What does it mean to manage kids that are doing the schooling that are 7 or 8, 9, 10 years old? We have that problem of okay, well, for these kids… I come from very wealthy families, they’re fine. But the kids that are coming from the poor, inner city neighborhoods, what do they do? And then by the way, play this out a little bit further. If all of a sudden people don’t need their corporate headquarter campus, which has a ton of resources allocated to it, what are we going to do with real estate? So, what’s going to happen to commercial real estate here?
Bernie Jaworski:
Here’s the most poignant example I think is WeWork. Who is going to go to a WeWork facility these days? As in fact, 6 months from now, 12 months from now, who’s going to use WeWork or how is WeWork going to reconfigure themselves to deal with that issue? WeWork, a year ago, I was like, “Oh, yeah, this is great. It’s a good [inaudible 00:39:05].” I meet a bunch of people, everyone shares the facilities. Now, what a disaster, right? So, I think we’re going to see some follow up, I don’t know. You’ve got X that leads to Y that leads to Z. If commercial real estate collapses, what does that then mean for residential housing? Maybe the price becomes much more reasonable, access to residential housing. So, I’d love to do that systems analysis there.
Marcus Weakley:
It’s a quite a systems diagram there.
Bernie Jaworski:
Yeah, that would be.
Marcus Weakley:
Feeds in really to the idea of the system’s thinking principle that those unintended consequences of the shift, right? You’re pointing towards a number of those, where changing this one factor might really change the number of things overall. Yeah. So, I guess we’ll have to see how this plays out.
Bernie Jaworski:
Yeah.
Marcus Weakley:
Thank you so much for joining me today. This has been a wonderful conversation. I think a great introduction to Peter Drucker’s ideas, also, what’s going on at the Drucker School at CGU, and then some of your own areas of expertise as well. So, thank you so much for joining me today. I really appreciate it.
Bernie Jaworski:
It was a lot of fun for me, Marcus. Thanks. I’d be happy to come back. If you need a second go round at some point, I’m happy to join you again. It was a lot of fun for me to share Drucker’s ideas. As I said, I’ve had a lot of the Drucker Kool-Aid. So, I’m happy to share it with everybody else at this point.
Marcus Weakley:
Well, I had a first sip, and it tastes pretty good, so.
Bernie Jaworski:
Good, good. If it was a 5:00 podcast, we’ll be having martinis at this point. But apparently it’s [crosstalk 00:40:39], we’ll stick with the Drucker Kool-Aid for now.
Marcus Weakley:
Sounds good. Well, once again, thank you so much. From Studio V3 at Claremont Graduate University, this is Breaking the Shackles of Time. Thank you so much for listening, and hope to have you come and listen again next time.
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