What Peter Drucker Would Be Reading

Peter Drucker

Recent selections from around the web that, we think, would have caught Peter Drucker’s eye:

1. No Managers? No Hierarchy? No Way!: The notion of doing away with managers and hierarchies at work in favor of “holacracies” has been widely misunderstood, according to Steve Denning in Forbes. (We’re confident that he isn’t referring to our post on the subject.) Indeed, says Denning, the notion that hierarchies or managers have become obsolete is preposterous. Instead, he explains, the new “hierarchies tend to be competence-based hierarchies, relying more on peer accountability than on authority-based accountability, that is, accountability to someone who knows something rather than to someone simply because they occupy a position, regardless of competence.”

2. Measuring Impact Isn’t For Everyone: Because most people who give money to nonprofits and other organizations want to know where their money goes, there has been a strong emphasis in recent years on metrics related to “impact.” Maybe too much emphasis, according to management professor Mary Kay Gugerty of the University of Washington and economist Dean Karlan of Yale. “An insistent focus on measuring impact in these cases can be costly, both in terms of money spent collecting that data (which could have better uses) and time (management’s focus on bad data vs. running their program),” they write in Stanford Social Innovation Review. “Even though learning about impact may become more feasible over time, in every case, organizations will better serve their mission by focusing on cost-effective, decision-driven data collection, rather than a rigid focus on impact.”

3. (Mis)leading Indicators: As we’ve noted, Peter Drucker argued decades ago that GDP was an outdated measurement of our economic health. More and more people are coming around to this point of view. The latest is historian and economist Zachary Karabell, who takes to the pages of Foreign Affairs to argue that GDP and other early 20th-century economic yardsticks are obsolete, and he adds that the solution isn’t just to come up with a snazzier substitute. “Rather than seeking new simple numbers to replace old simple numbers, economists need to tap into the power of the information age to figure out which questions need to be answered and to embrace new ways of answering them,” he writes.

4. Dx Quote of the Week: Last week, when we asked about the importance of purpose in a career, reader Anthony Ghosn had this to say:

As most Drucker students know, Rick Warren was a Drucker colleague and client, and the case could be made that a ‘purpose driven career’ and a balanced life/career through finding one’s purpose was never more defined than it was (and is) through the writings and teachings of Mr. Warren. This is not a Pollyannaish, Norman Vincent Peele notion of ‘bleeding hearts.’ It is the basis of entrepreneurial activity.

Personally, I can attest that this approach is extremely powerful for the individual. The challenge is, as I have found, that this kind of individual power is a threat to the shallow management and executive control that we have all experienced in organizational behavior through executives driven by Machiavellian fear and short-sighted initiatives.

The real breakthrough is when the organizational leader unleashes the power of purpose-driven aspirations. The leader that can stand back, let go and watch the power of a collective purpose-driven organization will realize unmatched success. It is a balancing act, and this approach requires fortitude and courage, but many organizations have succeeded and have sustainable organizational models with ‘purpose’ as an underlying and guiding principle.