Monday, December 30, 2013

Excerpts from "Create Your Future the Peter Drucker Way: Developing and Applying a Forward-Focused Mindset"

 By Bruce Rosenstein


In their 2010 book The Truth about Leadership, top leadership authors Jim Kouzes and Barry Posner write, “The capacity to imagine and articulate exciting future possibilities is the defining competence of leaders. Leaders are custodians of the future. They are concerned about tomorrow’s world and those who will inherit it.”

The Mindset of the Future
Drucker believed in understanding exactly where you are now, as a way of getting to where you’d eventually like to be. Adaptability, flexibility, ingenuity, and resilience are goals to strive for, especially when so much is uncertain and nothing can be taken for granted.

The Uncertain Future
“It is the very nature of knowledge that it changes fast and that today’s certainties will be tomorrow’s absurdities.”
—Peter F. Drucker, Post-Capitalist Society, 1993

In Managing for Results, Drucker lays down two preconditions about the future. The first is that it “cannot be known.” The second is that “it will be different from what exists now and from what we expect.” Those ideas may seem obvious, but perhaps only in retrospect. Too often people and companies operate on the opposite, or differing assumptions.

Creating Your Future
At the most basic level, this principle involves developing, on an ongoing basis, what you want to accomplish and work toward and how you are going to get there. It also means not putting off decisions and actions so far into the future that they lose all meaning. Create knowing that life will be uncertain, that there will always be risks, and that change is the norm.

“The most effective way to manage change successfully is to create it.”
Peter F. Drucker, Managing in the Next Society, 2002

The Future Embodied in the Present
It is tempting to think that, if the future has not arrived yet, that it can be ignored, at least for a little while. Drucker stressed, however, that what makes the future happen is what you do today, in the present moment. Your actions accumulate and have an effect on what tomorrow will look like. This requires considerable thought about what you want your future to look like, and then more thought on how you are going to get there, with the realization that in some sense the future never really arrives. The roll-up-your-sleeves aspect of this is captured well in his words from 1974, “The future requires decisions—now. It imposes risk—now. It requires action—now.”

Making Friends with Change
Two sentences in particular go to the heart of my thesis in Create Your Future the Peter Drucker Way: “The point of becoming a change agent is that it changes the mind-set of the entire organization. Instead of seeing change as a threat, its people will come to consider it an opportunity.” Later he underscores the vigilance necessary for creating the future, combined with its inevitable uncertainties: “But what about future trends and events we are not even aware of yet? If there is one thing that can be forecast with confidence, it is that the future will turn out in unexpected ways.”

“To survive and succeed, every organization will have to turn itself into a change agent.”
—Peter F. Drucker, Managing in the Next Society, 2002

A chapter in Management Challenges for the 21st Century, “The Change Leader,” is the major statement in the book on how to approach the future. Drucker begins with the stark assertion “One cannot manage change. One can only be ahead of it.” (This is reminiscent of his pronouncement elsewhere that, despite the popularity of knowledge management, knowledge itself cannot be managed.) He points out that change is the norm, not something that should be put off or that should not happen at all. An organization (business or otherwise) must, in a conscious, deliberate way, take upon itself the task of leading change. Because the environment in which it is operating is characterized by “rapid structural change,” its very survival is at stake unless a successful future can be created by the change leaders within the organization. 

Who qualifies as a change leader? Identifying this quality is seen as a central challenge for the 21st century. Drucker describes a change leader as someone who “sees change as opportunity.” The leader “looks for change, knows how to find the right changes and knows how to make them effective both outside the organization and inside it.” This is certainly a challenge, because not everyone wants to look for change in the first place. It also suggests that a process is needed for identifying possible changes and for determining what actions to take. 

It may be helpful to think of change in terms of transitions, which we will explore throughout the book. This is the subject of William Bridges’ classic Transitions: Making Sense of Life’s Changes (2004, 25th anniversary edition). Change is often unwelcome, threatening, and disorienting. Transitioning from the old to the new can be difficult yet vitally important. Bridges writes that transitions comprise an ending, a neutral, in-between zone, and a new beginning. However we accomplish our transitions, we need to apply language and methodologies that make sense for each of us, as well as for our organizations.

Bridges observes that, whether a transition is personal or organizational, “[t]o become something else, you have to stop being what you are now; to start doing things a new way, you have to end the way you are doing them now; and to develop a new attitude or outlook, you have to let go of the old one you have now.”

Innovating for the Future with an Entrepreneurial Attitude
Innovators change how we look at the world, what we buy, and what we no longer buy. They change how we study and what we read. Entrepreneurs sense or create needs that consumers never knew they had. The best innovators and entrepreneurs make the future a different, better place from their creations, products, or services. They influence and change the mindset of their colleagues, employees, and customers.

“Drucker grasped, very early, the salient and determining fact of postindustrial society: that the fundamental role of knowledge in creating value in the marketplace gives workers control of the primary means of production, which are lodged within their skulls and get into the elevator with them when they go home. This shifts the underlying dynamic that shaped industrial society, the control of means of production (primarily machines) by owners. The result has been empowerment of individuals with the capacity to use their knowledge to create value.”

Risk Will Always Be with Us
Drucker pointed out that, although making the future was highly risky, not trying to make the future was equally or more risky. The element of risk is something we have to accept and factor in to our daily lives and decisions.
The concept of risk and being prepared for an unknown future relates directly to the unpredictability of so-called black swan events, as explained by Nassim Nicholas Taleb, in The Black Swan: The Impact of the Highly Improbable and other books. Such events are thought of as extremely unlikely to happen, yet if they do, the impact can be devastating. And Harvard Business School professor Clayton Christensen, who topped the “Thinkers 50” list of top management gurus in 2011, has written in books such as The Innovator’s Dilemmaabout the concept of disruptive technologies and events that have the potential to change completely the way entire industries conduct their business.
In a 1975 article for the Wall Street Journal, “The Delusion of Profits,” Drucker noted the risk and uncertainty inherent in all economic activity, which he called “the commitment of existing resources to future expectations.” He identified a number of potential areas for this risk/uncertainty: what and how your organization produces, what equipment you use, the markets within which you work, and larger changes outside your organization. All contained risk, and in the case of businesses, a minimum profit level should be determined to cover these future risks.
“To try to make the future is highly risky. It is less risky, however, than not to try to make it. A goodly proportion of those attempting . . . will surely not succeed. But, predictably, no one else will.”
—Peter F. Drucker, Management Challenges for the 21st Century, 1999

Working as best as you can in regard to risk, especially risk for long-range commitments, is one of the things that Drucker said defined what it means to be a manager. The key is to make those decisions as responsibly and rationally as possible, with the most intelligent use of information. Somehow you have to understand the relationship between risk and security. In the book Managing for the Future, he writes that “risk and security are not in opposition, but parallel.”

Working Smarter: Support Tools, for Transformation
Jesse Lyn Stoner, founder of Seapoint Center, is one of the most impressive people working in the field of leadership development. She has extensive experience as an executive, educator, consultant, coach, and writer. She is highly generative and generous and makes a profound connection with the readers of her blog. She was formerly with the Ken Blanchard Companies and coauthored a best-selling book, Full-Steam Ahead! (2011), with Ken Blanchard, a management expert and best-selling author.
In discussing Drucker’s concept of a knowledge worker, and what that means in today’s world and for the future, Stoner told me:
Until now, knowledge workers have been defined by the amount and type of their formal education. However, the differentiating factor is knowledge, not the system that provides it. One of the transformations brought about by the Internet is the availability of free information and with it the opportunity to learn in nonformal ways. I believe that the current education system will need to reinvent itself and will not be the “bestower” of the real knowledge workers in the future, and, in fact, might not even be now.
She shared her viewpoint that knowledge does not exist without a network or context to hold it. Individuals cannot hold knowledge and be useful to the system unless they share it. Collaboration is a fundamental underpinning of success. Therefore, knowledge of how to collaborate is as important as having content knowledge. We cannot create the future as individuals, but only through networks of shared meaning. Diversity of thought and perspective is as essential as biodiversity for successful endeavors.

I am impressed with her emphasis on the creation of meaning and its relation to a better future for all. “In my work in helping leaders create a shared vision,” she said, “I emphasize that we must dig below our assumptions to find what we most deeply desire. Vision leadership is not about selling a vision to the people. It is about connecting with what they deeply care about and illuminating it consciously. This was the brilliance of Martin Luther King Jr.”
Stoner emphasizes an approach that is driven by curiosity and the willingness to continue discovering. Although I help people create a vision, I also explain that you actually never achieve it. The closer you get to it, the better you understand it, and the larger it becomes. When I discuss characteristics of a compelling vision I explain that a vision should not be about beating the competition. Where do you go after the race is over? It’s about being the best you can be. It’s not about being number one, because, again, that defines you in terms of your competition instead of where you are going. In fact, the closer you get to your vision, the clearer the magnitude and meaning of the vision become, and it enlarges. There is no such thing as a five-year vision, only a five-year goal. The vision is what answers What’s next? after that goal is achieved.

Systematic Abandonment and Kaizen for Individuals: Remove and Improve

Although we will discuss the cycle of systematic abandonment and kaizen for organizations in Chapter 4, these business philosophies can and should be applied to individuals also. Drucker wrote often about systematic (or planned) abandonment. Simply put, it requires that you regularly ask yourself, if you were not already doing a particular activity, knowing what you know now about it, would you start doing it? If the answer is no, think of ways to change the situation. Perhaps you can delegate the activity, or the amount of time it takes can be gradually decreased. Perhaps you can stop doing it altogether.
Drucker believed that systematic abandonment and kaizen worked well together, since, if you have deemed an activity worth keeping, it should be done even better in the future. In his 1992 Harvard Business Review article “The New Society of Organizations,” Drucker writes:
Every artist throughout history has practiced kaizen, or organized, continuous self-improvement. But so far only the Japanese—perhaps because of their Zen tradition—have embodied it in the daily life and work of their business organizations (although not in their singularly change-resistant universities). The aim of kaizen is to improve a product or service so that it becomes a truly different product or service in two or three years’ time.
You can practice kaizen, even if you don’t call it that, if you are steadily, by trial and error, improving what you do on a daily basis. Small changes can add up to significant improvements.
The idea of using kaizen in a personal sense has become more widespread in recent years. The Japan-based designer Garr Reynolds has described it in this context on the influential “Presentation Zen” blog. Consistent with my premise that creating your future is an approach to life, Reynolds also calls kaizen an approach. “The overriding principle of kaizen is that it is daily, continuous, steady, and it takes the long-term view. Kaizen also requires a commitment and a strong willingness to change,” he writes.
Although Reynolds alluded to kaizen for designers, his ideas can be applied to almost any work. He emphasizes that kaizen is long-term and never-ending. You have to become comfortable with the idea that you never really arrive; you are always on the journey. Echoing what we learned from Bruna Martinuzzi in Chapter 1, Reynolds recommends adopting the Zen concept of a beginner’s mind. This helps you become more open and receptive to new ideas and concepts because you are not jaded and hobbled by your own experience and preconceptions. Being mindful and aware, looking at things afresh, is a sensible and practical way to approach the future.

“It is the individual knowledge worker, who, in large measure, will determine what the organization of the future will look like and what kind of organization of the future will be successful.”
—Peter F. Drucker, Management, revised edition, 2008

Constant, Unrelenting Change through Systematic Abandonment, Kaizen, and More

Constant change is exhilarating but exceedingly difficult. Drucker wrote that people in organizations need stability, even while all this change is happening. This is the responsibility of management, which must not only run the organization well but communicate its values. People can’t work well in a chaotic atmosphere. Even as you organize for constant change, you still have to have a vision for why people should work in a setting where change is the norm. Some of this comes about because the outside world is constantly changing, and while things may not necessarily change each day in your own work, you will still be affected by what is happening elsewhere. The nature of that world is constant flux, and constant uncertainty.
In a collection of articles from the Harvard Business Review, Peter Drucker on the Profession of Management, Drucker prescribes more tough love, advocating that a business must be balanced between today and tomorrow, that
it must be organized for the systematic abandonment of whatever is established, customary, familiar, and comfortable, whether that is a product, service, process; a set of skills, human and social relationships; or the organization itself. In short, it must be organized for constant change. The organization’s function is to put knowledge to work—on tools, products, and processes; on the design of work; on knowledge itself. It is in the nature of knowledge that it changes fast and that today’s certainties always become tomorrow’s absurdities.

This comprises an eternity’s worth of activities and could comprise many books on the various areas he covers. These are the ways you get to tomorrow, to live another day. They are not easy and are not meant to be easy.

In the most basic sense, Drucker believed that abandonment must be paired with kaizen, that is, continuous improvement. If you continually improve your products, services, and processes, you often end up with something innovative. In Managing in Turbulent Times (1980), Drucker called what later became known as systematic or planned abandonment “corporate weight control.” No matter what you call it, you don’t want to be on the wrong side of it, because it’s one thing to do your own abandoning, but it’s another to be part of what’s abandoned.

One of the most important points in Drucker’s writings is the primacy of change. This represents changes in both individuals and organizations.

When searching for a model for how to deal with change, particularly, how to work with the future in mind, it is helpful to compare what we do with how architects approach their work. They create something that does not yet exist. They build for future use, in many cases for future generations they will not live to see. They build something that must be adaptable to future changes, especially something that may need to be modified or even eliminated. They build something that must be functional and aesthetically pleasing. They must meet exacting standards and ultimately work with teams of other people. They must focus inherently on the new and the different. While aiming for something original and possibly unique, they must be aware of current trends and best practices from other disciplines, such as environmental standards, that will affect or play a role in what they are creating.

Organizing for Change and More

Drucker also maintained that change could not be accomplished without sloughing off yesterday by engaging in systematic abandonment. This concept appears in much of Drucker’s work. Both systematic abandonment and kaizen should be part of “policies to make the present create the future.” Policies in this sense can be thought of as mindsets translated into daily, purposeful actions. Unless you have the mindset that nothing is permanent and that nothing can be taken for granted, you will not be capable of freeing up resources that will yield (or at least have a better chance of yielding) better results in the future.

Being a change leader means focusing more on opportunities than on problems and ensuring that top-notch people are assigned to those opportunities. Drucker equated innovation with making change, making innovation and its various windows of opportunities part of a change policy. 

Innovation and Entrepreneurship

The concepts of similar, interrelated activities can be crucial for an organization’s success. For creating the future, individuals in today’s world must think and act in innovative ways and have entrepreneurial attitudes, whether or not they consider themselves entrepreneurs. In Managing for the Future, Drucker writes: “Systematic innovation requires a willingness to look on change as an opportunity.” Again, he encouraged a thought process and an approach with an attitude to openness to surprise, to something different from received wisdom or, as Drucker often put it, what “everybody knows.” Frequently, what “everybody” knows is wrong or is ripe for challenging or changing.

Drucker believed that these topics were tied to change that enabled higher, more productive, and better performing yields from resources. But he also believed that all institutions, business or otherwise, needed to engage in these activities, and not just every once in a while or on special occasions, but on a systematic, ongoing basis.

Innovation was seen by Drucker as a practical matter that should not be mysterious. He writes: “Business alone is designed to innovate. No business will long survive, let alone prosper, unless it innovates successfully. And neither innovation nor entrepreneurship [is] ‘inspiration,’ let alone ‘flash of genius.’ They are disciplines and require concepts, tools, and organized, systematic work.” This is consistent with what we have noted in his views on planning, namely, that focused thinking and persistent work and action undergird planning. A similar case can be made for innovation. It is also somewhat similar to effectiveness: a discipline to be learned rather than a sense of genius with which you are born.

Strategic Planning

The most important facet of Drucker’s views on planning, without considering time spans or ranges of decisions, is that it is based on thought and research about the current state of your business (understanding your present reality), deciding what your business is going to be and what it should be. He reminds us that the first thing it should be is different from what it is now. It is a mindset based not on forecasting, but on thought, analysis, and imagination. He says that we must ask ourselves, “What do we have to do today to be ready for an uncertain tomorrow?” All of this is predicated on the fact that we know uncertainty awaits, yet we can attempt to do something about it, if we have thought through the issues and decisions clearly enough.

As noted in Chapter 1, Drucker believed that decision making could be conceptualized as a “time machine,” with its roots in the present day and the present moment. The decisions made will then play out in a series of time frames. Just as he linked systematic abandonment with kaizen, he tied it to strategic planning. We have to eliminate or at least scale back the no-longer-useful or no-longer-productive in order to have the resources available for the work committed to in strategic planning. He also tied planning with risk. If we have done our strategic planning well, he believed that it allowed organizations to take on greater risk, since we will have a greater understanding of the holistic environment in which the decisions will be carried out. This is a better and more productive use of time than trying to plan to eliminate risk, which he believed was a futile activity. Finally, we need feedback systems that tell us how effective our decisions are.

In Managing in Turbulent Times, he notes the need for taking into account how a unique event, something that can’t be envisioned, can significantly change the fortunes of a business. This is similar to the “black swan” effect we have come to associate with the author Nassim Nicholas Taleb. Leaders and managers obviously have to preserve the best of their organization’s values, talents, and efforts, but simultaneously they must ensure that there will be a meaningful future, far into the future. In the same book, Drucker writes that “today’s executives are also charged with the responsibility for making the future of the business, with lead times that are becoming ever longer and in some areas range beyond ten years.”

He follows this up by saying, “Performance in management, therefore, means in large measure doing a good job of preparing today’s business for the future.”

Regarding strategic planning, in the revised edition of Management, he writes, “What do we have to do today to deserve the future?” We can infer from this that no organization is guaranteed to live forever, or even into the short term. Again, his tough love approach says that organizations must earn the right to live another day. It is a powerful call for responsibility and courage. And it issues a challenge, which is so characteristic of Drucker’s work, to both prove an organization’s worth and then prove that it has the capacity to compete in the inevitable new landscape that tomorrow will bring.

As he noted in Managing in a Time of Great Change (1995), you can use the techniques of looking for the future that has already happened as a way of planning in an uncertain world. The question becomes, in his words, “What has already happened that will create the future?” Taking this a step further, organizations can determine how they can create their own future, within this larger societal future. Part of that involves knowing those things at which you excel. He notes the similarities of his own construct of “strengths analysis” to Gary Hamel and C. K. Prahalad’s “core competencies,” made famous in their book Competing for the Future (1994).

Long-range planning could be mere wishful thinking if you have not seriously thought about how decisions will be carried out, in what time frame and by whom, and whether or not your organization has the talent to make those decisions effective.

Using Appreciative Inquiry to Discover the Future
Too many organizational exercises these days dwell on what has gone wrong, will go wrong, is going wrong, and not on what has gone well, which often seems to be taken for granted by company executives. AI (not to be confused with CI) builds on the positive, which fits in with Drucker’s idea of building on an organization’s strengths and minimizing its weaknesses. As part of a suite of techniques for building a corporate future on an ongoing basis, AI can be quite powerful. People inherently want to do good work, after all, and often take pleasure in and gain power from hearing about islands of excellence that are already within a company.

AI speaks to uncovering the potential that is already within an organization, somewhat similar to what knowledge management theoretically aims to do to leverage the knowledge that already resides in an organization.

A big part of AI is the idea of co-creation, that you do not have to do everything on your own, that you don’t have to reinvent the wheel. If there are visionaries within your company who are not known beyond their divisions, it is possible that they will become better known through AI.

AI speaks to the sense of curiosity that was so much a hallmark of Drucker’s work and that can be cultivated by any of us. This process of questioning sharpens and focuses our minds. Besides, wouldn’t we all rather be positive than negative? Doesn’t it create a better form of energy and renewal for the future?