„Davos in management” – what topics were discussed during 7th Global Peter Drucker Forum in Vienna?

„We are becoming aware that the major questions regarding technology are not technical but human questions”, Peter Drucker – these words, although already 50 years old, are currently more up to date than ever. During 7th edition of Global Peter Drucker Forum in Vienna (5-6th of November) many questions were asked about the future that awaits humans in the times of rapid technological breakthroughs. And what are their consequences for societies, organizations, and of course, management.

A very broad and varied circle tried to find the answers: academic professors (in management, psychology, social studies, philosophy, economics, design), CEOs and members of supervisory boards of large enterprises (ranking from USA to China), consultants and advisors, as well as entrepreneurs, investors, representatives of „young generation” and over 400 participants. Diversity of their environments, diversity of their backgrounds was necessary to at least try to comprehend, what kind of times we are living in. And times, oh yeah, times are interesting.

Very often an abbreviation “VUCA” was brought up during the conference– a term describing the current environment of organizations, managers and employees.

VUCA means volatile, uncertain, complex and ambiguous.

Among forces that influence modern companies you can find:

• Globalization, meaning greater competition on the market
• Deregulation – meaning even greater competition and even lower rates,
• Development of new technologies („software eats everything”) and its result (e.g. sharing economy, uberization)
• Power shift on the market from seller to buyer (thanks to the internet, a lot of organizations are now naked)
• Great need for truly talented and motivated knowledge workers (that aren’t so eager to work in large corporation as they were before)
• But also other expectations towards knowledge workers – as some part of them will be eaten by software very soon (according to research, 40-70% of highly qualified jobs will vanish till 2030)
• Even shorter lives of products and services and the need to react immediately to constantly changing customers needs
• Massive disruptions on the market, meaning unexpected breakthroughs in products or services that instantly eliminate competition’s products and services (all walkmans and discmans send their regards)
• Even greater pace of change
• And finally, the fact that now the winner takes it all – takes the majority of the market, of money, and the others have to compete over a very little slice of pie that is left

So, how do organizations deal with such immensity of complex challenges?

Well, generally – not very well.

• The life span of companies has drastically shortened in the past years – from approximately 61 years to 20.
• The biggest changes in top 10 of best companies in the world but also greatest bankruptcies happened during last decade

As Charles-Edouard Bouée, CEO of Roland Berger, said:

CEOs of large companies are currently very afraid. They fear of being the next to fall. And fear causes paralysis.

Sense of uncertainty and fear in this very VUCA world are completely understandable (although some pointed out that what we call VUCA, is actually an everyday life for Italians and Argentineans). So as understandable are attempts to tame this uncertainty and fear.

But problems of companies are caused by the fact that they are looking for stability in the wrong place – in their past successes.

Most of executives are trying to repeat what they’ve accomplished in the past, using methods that succeeded. Only additionally boosted with new technologies.

Example? Dambisa Moyo, economist and member of supervisory boards of such companies as SABMiller, Barclays Bank, or Seagate, noted that supervisory boards are very conservative and they approach using technologies in a very linear way. Meaning, they are interested in them only in the way they can cut costs even better. Since cost-cutting was working well so far…

Because they have only one goal: make even more money for shareholders. The most important values are: efficiency and predictability. Therefore power is concentrated at the very top, therefore hierarchies exist, therefore managers are appointing tasks and controlling very tightly their performance. Everyone is happily (or usually not) preoccupied with improving this system – monitoring goes beyond the Orwell’s boldest imaginations, resources (meaning people) are reduced to minimum (that can be surely minimized in the next quarter) – some of them were laid off, some of them were outsourced and some became individual contractors; finally, companies had themselves re-organized, restructured, and obviously, created a large number of project groups improving processes. And as for growing discouragement of their employees – they funded them a meeting or two with motivational speaker, maybe some gamification or relaxing workshop session on making sandwich pastes from legume seeds.

And it’s for nothing. It’s all for nothing. This never-ending busyness, hoards of e-mails, overlapping meetings – this bustling lethargy – is a purely vain effort.

None of the companies functioning in above-described way is able to face even one modern challenge. Of course, they can buy themselves some scraps of time with this evil-fated cost-cutting, but you can’t achieve new, using the old methods. Palliative management, after long period of slipping down, ends after all with a fall.

As Tammy Erickson from London Business School noted:

If the mindset of executives and managers, that perceive lack of change and stability as normal, and change as something weird, that has to be managed immediately, won’t change, then nothing will change in these companies.

They simply have no chances with competitors that follow completely different philosophy. What are they? What exactly do they do? Check out my next post.

More about the conference: http://www.druckerforum.org/

Photo source: Robert J. Heath