Joe’s Journal: Strengthening the Whole by Weakening a Part

“There is one fundamental insight underlying all management science. It is that the business enterprise is a system of the highest order: a system whose parts are human beings contributing voluntarily of their knowledge, skill and dedication to a joint venture. And one thing characterizes all genuine systems, whether they be mechanical like the control of a missile, biological like a tree or social like the business enterprise: it is interdependence. The whole of a system is not necessarily improved if one particular function or part is improved or made more efficient. In fact, the system may well be damaged thereby, or even destroyed. In some cases the best way to strengthen the system may be to weaken a part—to make it less precise or less efficient. For what matters in any system is the performance of the whole; this is the result of growth and of dynamic balance, adjustment and integration, rather than of mere technical efficiency.”

— Peter F. Drucker

I worked in systems for a long time, so I understand Peter Drucker very well here. What he is saying is very important now given the state of our economic systems and the meltdowns that we have experienced.

[EXPAND More]Financial function in the economy as a whole and in organizations is over-weighted and the result has been that we’ve had a financially driven economy that is focused more on finance than on production, engineering, quality services and the like. What Drucker is saying is that the best way to redirect our economy is to reduce the strength and role of finance within our organizations and our government and political systems.

In academia we have worked hard to improve financial functions, but even here at the Drucker School for example it can be a challenge to find a balance between the field of finance and management philosophy. Drucker himself understood that there needed to be a balance; he did not downplay the importance of finance, but he understood that there ought to be a balance and that finance could and should not simply dominate.

Overall, I think that on a personal, organizational and national level we now have to shift the focus away from finance. We have to weaken this part of our political and economic system in order to strengthen the whole. We need to find ways to create incentives for people to pursue non-financial areas like math, engineering and science where we are seriously lagging behind the rest of the world. We need to understand that just because we can do these technical things with finance very well, it doesn’t mean that we ought to be so focused on them and that, in fact, we will have to move away from them if we have any hope of recovering.

— Joe Maciariello[/EXPAND]