TIME The Drucker Difference

Getting Past the Great Ideological Divide in Business Today

In 1946, as unionized workers in America’s steel mills, coalfields, rail yards, auto plants and electrical equipment factories crippled the economy by launching a wave of strikes, Peter Drucker urged the two sides in the great struggle to find some way to get past their deep differences.

“What we need is not an ideology,” he wrote, “but a science—a new science of industrial peace.”

The same might well be said of the defining divide in today’s business world: those who hold that “maximizing shareholder value” is a corporation’s primary mission versus those who believe that companies have an obligation to provide benefit to a multitude of stakeholders.

That this is a clash being waged by individuals who cling to their own dogma and tend to talk right past one another is underscored by a study being released today from the Aspen Institute’s Business and Society Program.

“Often,” says Miguel Padró, an Aspen program manager, “there’s more ideology than pure logic at play here.”

To better understand this dynamic—as well as its myriad nuances, which suggest where common ground may lie—Aspen commissioned the Keller Fay Group, a marketing research firm, to conduct 28 one-hour interviews with corporate executives, investors and scholars about the purpose of the corporation. The study doesn’t identify who said what, but it does list the participants, which included folks from PepsiCo, Kroger, Eli Lilly, the Ontario Teachers’ Pension Plan, BlackRock, Generation Investment Management, Northwestern University, MIT and Harvard.

Many of the views expressed were stark. “Societies that don’t have shareholder value as a goal never succeed,” said one of the interviewees, who added that “the old Soviet Union . . . was the ultimate stakeholder society.” From the other end of the spectrum came this: “Corporations serve society rather than the other way around. . . . To the extent there’s a single mission, it would be a social one. But really, when you unpack that a little bit, you’re talking about a lot of different missions that affect the wellbeing of a range of stakeholders.”

Interestingly, Drucker had problems with each of these positions, at least in their most extreme forms. It was in the 1950s, he noted, that General Electric CEO Ralph Cordiner and some of his peers began to preach “that senior executives were responsible for managing the enterprise ‘in the best-balanced interest of shareholders, customers, employees, suppliers, and plant community cities.’ That is, what we now call stakeholders.”

The trouble was that “Cordiner’s generation and its executive successors did not define what performance and results produce the best balance, nor did they develop any kind of accountability,” Drucker explained. At the same time, he wrote, “boards of directors . . . became increasingly impotent and increasingly rubber stamps for a company’s top management.” And any organization is bound to deteriorate “into mediocrity and malperformance if it is not clearly accountable for results and not clearly accountable to someone.”

By the mid-1970s, this failure had spurred the rise of a new philosophy: putting shareholders first. “It sounds much less noble than Cordiner’s assertion of the ‘best-balanced interest,’ but it also sounds much more realistic,” Drucker observed in a 1991 essay for Harvard Business Review. Yet this, too, had a fatal flaw: “For most people,” Drucker pointed out, “‘maximizing shareholder value’ means a higher share price within six months or a year—certainly not much longer.”

As I’ve written, this has led to all kinds of misguided corporate decisions that, while enabling executive pay to bloat, have done serious damage to both company and society in the long run.

Which brings us to where we are today: one camp pushing a model that didn’t work terribly well decades ago, and the other pushing a model that has degenerated into what McKinsey & Co.’s Dominic Barton disdainfully describes as “quarterly capitalism.”

This would be utterly depressing, except that the Aspen study also contains some glimmers of promise. Notably, more than half of the respondents either strongly or somewhat strongly agreed that the primary purpose of the corporation is to serve customers’ interests—an idea that has been advanced by the University of Toronto’s Roger Martin as ultimately the best means to please shareholders themselves.

“To create shareholder value,” Martin has written, “you should instead aim to maximize customer satisfaction. In other words—and nobody should be surprised by this—Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers.”

Beyond that, according to Aspen, greater accountability for corporate management was “a central concern” among those interviewed, while “long-term value creation appears to be a unifying goal.” Indeed, as Keller Fay put it, “this may be the most surprising—and gratifying—outcome of the study: Some of the most vehement criticisms of short-term decision making emanated from the enthusiastic shareholder-value advocates.”

Can we really shift to a customer-oriented, long-term-focused business culture undergirded by adequate accountability? Not easily. But launching an in-depth dialogue on the topic, as Aspen has done, is an important step toward the way that Drucker wanted companies to behave: “Unlike Cordiner, they do not ‘balance’ anything,” he wrote. “They maximize.” But they do not attempt to maximize shareholder value. Instead, “they maximize the wealth-producing capacity of the enterprise.”

“It is this objective,” Drucker concluded, “that integrates short-term and long-term results and that ties the operational dimensions of business performance—market standing, innovation, productivity and people and their development—with financial needs and financial results.”

All of which seems a lot more like science than ideology to me.

A final word: “Everything human beings do,” Drucker wrote, “obsoletes sooner or later.” It is with this in mind, and with bittersweet feelings, that this marks my last “Drucker Difference” column. After more than six and a half years of tying Peter Drucker’s timeless insights to current events—first at BusinessWeek, then at Forbes and now at Time—the moment has come to turn my attention to other priorities and other writing. But don’t be fooled: This shouldn’t be read as a sign that Drucker’s wisdom is no longer relevant. Quite the contrary. So, please, take part in the continuing conversation @DruckerInst. I look forward to seeing you there.

TIME The Drucker Difference

This Is What Makes Most Executives Want to Cry

678746—Getty Images

If you’ve advanced in your professional status and dread that upcoming trip to Cincinnati, you’re not alone.

According to a new report, summarized in a fun infographic at the HBR Blog, senior executives who spend a lot of time on planes and in hotel rooms tend to find travel a lot more burdensome than do support staff.

The authors, from the company Carlson Wagonlit Travel and the business school HEC Paris, surveyed more than 7,000 corporate travelers and examined travel from the perspective of six different ranks—from support staff to the C-suite—with an eye on 33 different stressors, including immigration and customs, flight seating, fear of flying, hotel quality and expense reports.

Many of the results were intriguing. For example, “the most senior executives are much less stressed by flying in economy-class seats”; it is lower-ranking managers who are bothered. The authors suggest this is because GMs and CEOs often set travel policies and “therefore wear their economy-class membership as an emblem of shareholder value.” Another finding: Women are much more stressed than men by travel across nearly all measurements. A third insight: Post-trip expense reports cause a lot of stress for vice presidents, very little for CEOs.

Peter Drucker would have appreciated the high degree of stress being generated overall by business travel. Although he jetted around the world a lot, he was nevertheless a skeptic of frequent travel, noting that executives did just fine before airplanes became an ordinary, everyday part of life starting in the 1950s. Then suddenly, “the advantage of direct access, face to face, to associates, partners and customers in faraway places so greatly outweighed the fatigue and cost of air travel as to encourage gross overindulgence in it,” Drucker wrote in The Changing World of the Executive.

All the while, new forms of communication were actually making physical presence less important. “Executives will therefore have to think more carefully about what to use travel for,” Drucker advised.

In The Effective Executive, he took even sharper aim at business trips, pointing out that travel easily squanders time, a top manager’s most precious resource. “The jet plane is indeed overrated as a management tool,” Drucker wrote. “A great many trips have to be made; but a junior can make most of them. Travel is still a novelty for him. He is still young enough to get a good night’s rest in hotel beds.” For that reason, travel was a leading candidate for pruning, an example of the work of executives “that can easily be done by others, and therefore should be done by others.”

TIME The Drucker Difference

Some Words of Wisdom From Peter Drucker to My Daughter

Dear Emma,

Next week you will graduate from college, a milestone that calls for a little fatherly advice—advice, to be precise, from the “father of modern management.”

So here, with an assist from your own dad, are half a dozen insights courtesy of Peter Drucker, a man who earned his degree more than 80 years ago and then spent the next six decades mulling what it takes to be successful. I must warn you that Drucker believed “education should confer duties rather than privileges.” In other words, none of what I’m about to tell you is going to be easy.

For starters, have the courage to quit your first job. I know, I know. You aren’t even gainfully employed yet and the labor market is brutal, especially for recent grads, and I’m suggesting that you already be prepared to give notice.

But “on the whole,” Drucker wrote, “young people have a tendency to hang on to the first job . . . beyond the time when they should have quit for their own good.” So, as crazy as it might sound, be ready to bolt if you aren’t learning enough, or if you don’t work for an employer that, as Drucker put it, is willing “to heap responsibility on people in junior positions.”

“Your first job may turn out to be right for you—but this is pure accident,” Drucker noted. “Certainly you should not change jobs constantly or people will become suspicious rightly of your ability to hold any job. At the same time, you must not look upon the first job as the final job; it is primarily a training job, an opportunity to analyze yourself.”

Second, Drucker isn’t kidding about analyzing yourself—or “managing oneself,” as he termed it in a famous essay that you and all of your classmates would be smart to read. As you step off campus, now is the time to begin to understand: What are your strengths? How do you perform at your peak? What are the core values that you would never compromise? What kind of work environment would provide the best fit?

And then there is the most important question of all: Where can you make the most meaningful contribution? “Odd as it seems,” Drucker remarked, “you will achieve the greatest results in business and career if you drop the word ‘achievement’ from your vocabulary. Replace it with ‘contribution.’”

Third, as you contemplate contributing, be bold. Stretch yourself. Yet don’t overreach, either. “To aim at results that cannot be achieved—or that can be under only the most unlikely circumstances—is not being ambitious; it is being foolish,” Drucker wrote.

Fourth, steel yourself for plenty of ups and downs as you make your way. In fact, one of the worst things that can happen to a person, Drucker asserted, is “too much success too soon.” One of the best things, meanwhile, is to get knocked around at an early age. It teaches you how to cope.

“Anyone who has been through earlier setbacks has learned that the world has not come to an end,” Drucker wrote. “But the person who comes up against it for the first time at the age of 45 is likely to collapse for good. For the things that people are apt to do when they receive the first nasty blow may destroy a mature person, especially someone with a family, whereas a youth of 25 bounces right back.”

Fifth, take stock regularly and honestly assess how it’s going. Drucker did this every summer, judging his work from the preceding year, “beginning with the things I did well but could or should have done better, down to the things I did poorly and the things I should have done but did not do.” With this unvarnished view, you’ll be well positioned to reset your priorities going forward.

Finally, keep in mind that, while you’re about to receive your diploma, it’s up to you to continue learning. There’s simply no choice in an era where knowledge quickly becomes obsolete.

Drucker liked to tell the story of the man who attends his 40-year college reunion and sees his former professor just as he is about to administer a final exam. The old grad looks at the test and says, “Professor Smithers, these are the same questions you asked us 40 years ago!” Smithers nods and says, “Yes, but the answers are different.”

“We always thought it was a joke. No—this is wisdom,” Drucker explained. “The answers to questions do not remain the same. . . . You learn to do a little better, to push back that infinite boundary of ignorance just a bit.”

Of course, you must never stop learning for another reason, too. It’s the one thing that keeps life interesting. And “boredom,” as Drucker cautioned, “is a deadly disease.”

By offering these guideposts, Drucker’s ultimate intention was clear: for everyone to find “personal satisfaction” and to “feel that she contributes, performs, serves her values and fulfills herself.” Mom and I couldn’t wish for you any more than that.

TIME The Drucker Difference

Retool Your Business With a Clean Sheet of Paper

Peter Drucker taught us, again and again, to focus on “tomorrow’s breadwinners” and cease pouring resources into today’s breadwinners, much less yesterday’s.

In an age when business requires faster adaptation than ever, many now take this principle for granted. But it still can be tricky to put into practice, which is why executives continue to talk about the best way to actually get from yesterday to tomorrow.

“In any transformation I’ve seen, the winner is always the one who takes out a clean sheet of paper and says, ‘This is how you would do it if you didn’t have the drag of your traditional business,’” Perry Evans, CEO of Closely, a digital marketing firm, said in an interview published in Sunday’s New York Times.

As we’ve noted, Drucker loved this particular approach, urging that everything any organization does be periodically put on trial for its life.

This exercise will not only help you determine what to stop doing; it will also help you figure out what to double-down on. In fact, “the starting point is to identify the activities that are productive, that should be strengthened, promoted and expanded,” Drucker counseled in Managing in a Time of Great Change.

One more tip for a successful transformation: Involve a variety of junior people within the enterprise, and not just the leaders, in thinking about it. In an interview that appears in Managing in the Next Society, Drucker spoke of one company that he particularly admired.

“Every three months, a group of people from the organization—younger people, junior people, but never the same people—sits down and looks at one segment of the company’s products, or services, or process or policies with a question: If we didn’t do this already, would we go into it the way we are now?” Drucker explained. “Every four or five years, that company has systematically abandoned or at least modified every single one of it products and processes, and especially its services. That’s the secret of its growth and its profitability.”

TIME The Drucker Difference

$3 Billion Silicon Valley Suit Shows How Not to Manage

A Google logo is seen at the garage where the company was founded on Google's 15th anniversary in Menlo Park, California
Stephen Lam—Reuters

In 2006, Google’s Eric Schmidt suggested that his company had the perfect road map to “manage the new breed of ‘knowledge workers’” who now propel so much of the world economy, and especially the digital economy: follow Peter Drucker.

“After all,” Schmidt said, “Drucker invented the term in 1959. He says knowledge workers believe they are paid to be effective, not to work 9 to 5, and that smart businesses will ‘strip away everything that gets in their knowledge workers’ way.’ Those that succeed will attract the best performers, securing ‘the single biggest factor for competitive advantage in the next 25 years.’”

Unless, that is, you and your rivals agree that you won’t try to attract those high-performing folks in the first place, at least not actively.

In a case set for trial next month, Google, Apple, Intel and Adobe Systems have been accused in a class-action lawsuit of colluding to suppress wages between 2005 and 2009 by, among other things, agreeing not to woo each other’s employees. More than 64,000 people are seeking $3 billion in damages.

It will be up to a federal court jury in San Jose, Calif., to decide whether the tech giants violated antitrust law—though the current betting is that a pre-trial settlement is likely. What is already clear is that they violated Drucker.

In documents that surfaced this week, Schmidt and executives from other companies openly discussed their no-poaching agreement. In a March 2007 email, for example, Schmidt assured Apple’s Steve Jobs that a Google recruiter who’d called into Apple had gone against company policy and was being fired for her actions. “Should this ever happen again please let me know immediately and we will handle,” Schmidt wrote. Jobs replied with a smiley face.

Drucker would have found nothing to smile about in any of this. One of the hallmarks of the knowledge age, he pointed out, was the ability of software engineers and other specialists to shift fluidly among different employers.

“Employees who do manual work do not own the means of production,” Drucker wrote in Management Challenges for the 21st Century. “They may, and often do, have a lot of valuable experience. But that experience is valuable only at the place where they work. It is not portable.

“But knowledge workers own the means of production,” Drucker continued. “It is the knowledge between their ears.” The upshot of this reality: “Knowledge workers have mobility. They can leave.”

Among tech companies, one of the principal ways in which employees wind up leaving Corporation A for Corporation B is when they’re directly solicited in a process referred to as “cold calling.” “This form of competition, when unrestrained, results in better career opportunities,” the U.S. Justice Department noted in 2010 when it settled a civil suit with the same companies now embroiled in the class-action case.

It is in restricting cold calling that Schmidt, Jobs and their cohorts revealed something rather remarkable about themselves: They’re just as intent on exercising power over their workers as the old-line corporate dinosaurs that Silicon Valley tends to look down upon.

Drucker would have been the first to tell them that they’d never get away with it. “The center of gravity in employment is moving fast from manual and clerical workers to knowledge workers who resist the command-and-control model that businesses took from the military years ago,” he wrote in 1988 essay for Harvard Business Review.

Perhaps even more on point are Drucker’s words from Landmarks of Tomorrow—the 1959 book that Schmidt cited as an inspiration.

The organization “must never be permitted the dangerous delusion that it has a claim to the loyalty or allegiance of the individual—other than what it can earn by enabling him to be productive and responsible,” Drucker wrote. A company “must never be allowed to consider its relationship to the individual member as an indissoluble union; it must treat it as existing only for a specific purpose and therefore revocable.”

In a new introduction to Landmarks of Tomorrow, written in 1996, Drucker took credit for foreseeing “the shift to knowledge as the new major resource.” But he also acknowledged missing a huge development: “the information revolution.” Drucker said that this oversight was all the more inexcusable given that, at the time, he was consulting for IBM and lecturing to many an audience that the computer was about to upend “the way we were going to do work, be organized, think, and that, indeed, the computer was but a symptom of a basic change—the change from experience to information.”

In the end, Drucker concluded, “if the book were to be given a score as an ‘early diagnosis’” of some of the most significant trends emerging in society, “it would thus not get an ‘A+.’ But it probably deserves an ‘A-.’”

Schmidt and his pals didn’t miss the information revolution, of course. And I’ve praised Google in the past for some of its employee practices. But they whiffed so badly on understanding how to treat knowledge workers in regard to their employment prospects, I’d bet Drucker would give them an ‘F.’

TIME The Drucker Difference

This Is the Secret to Pixar’s Monster Success

Pixar Exhibition At Caixaforum In Madrid
Gabriel Solera—Getty Images

How on earth does Pixar do it?

The computer-animation production company has turned out 14 box-office blockbusters in a row. Rave reviews. Great screenplays.

Now, Ed Catmull, one of the company’s founders, has written a book, Creativity Inc., which promises to clear up a bit of the mystery. In an excerpt prepared for Fast Company, Catmull explains that one of the company’s “key mechanisms” is the “Braintrust,” which meets every few months or so and operates on the following principle: “Put smart, passionate people in a room together, charge them with identifying and solving problems and encourage them to be candid.”

Catmull says that there are two important characteristics of the Braintrust. The first is that it offers much-needed perspective. “People who take on complicated creative projects become lost at some point in the process,” he writes. “Where once a movie’s writer/director had perspective, he or she loses it. Where once he or she could see a forest, now there are only trees. How do you get a director to address a problem he or she cannot see?”

The second is that the Braintrust concerns itself with the task, not the person. “The film—not the filmmaker—is under the microscope,” he says. “This principle eludes most people, but it is critical: You are not your idea, and if you identify too closely with your ideas, you will take offense when challenged.”

Peter Drucker would have surely been taken with Catmull’s insights, and in fact we’ve covered a number of these points before, including the importance of candor, trust and perspective.

But one area worthy of elaboration is the need to make sure the work at hand doesn’t get too personal.

Drucker recognized that many people identify closely with their jobs—and so it’s not surprising that they can take it hard when their ideas are questioned or criticized. A person’s “relationship to his work underlies all of man’s life and achievements,” he wrote in The Practice of Management.

And yet, like Catmull, Drucker thought it crucial for people not to view challenges to their ideas as a personal affront. “Emotions always run high” over key decisions, Drucker noted. “The smart thing is to treat this as constructive dissent and as a key to mutual understanding.”

At the same time, those doing the questioning need to be careful not to make it personal. They must focus on “What is right?” rather than “Who is right?” “To put personality above the requirements of the work is corruption and corrupts,” Drucker asserted. “To ask ‘Who is right?’ encourages one’s subordinates to play safe.”

TIME The Drucker Difference

5 Secrets to Being a Great Mentor—From Someone Mentored by the Best

The Encyclopedia of American Business History notes that Peter Drucker was not only “the most important managerial theorist of the 20th century” but also “a mentor to several generations” of executives.

Next week, with the release of Bob Buford’s Drucker & Me, readers will be offered a window into perhaps the deepest of those relationships. From it, there is much to learn.

The book recalls the friendship forged between Drucker, known as the “man who invented management,” and Buford, a cable television pioneer from Tyler, Texas, who later dedicated his considerable intellect and energy to social entrepreneurship and the building of America’s megachurch movement. (Royalties are being donated to the Drucker Institute, which I run.)

Buford’s narrative begins at the end of Drucker’s life, shortly before he died in 2005, at age 95, when Buford realizes that he has come to visit his friend for the last time. From there, after a short introduction to the significance and impact of Drucker’s work, Buford retraces the extraordinary connection that they built over 23 years.

It started with a letter that Buford wrote to Drucker, seeking his counsel on how to improve the performance of a business that was already growing fast. The next thing Buford knew, he was on his way to Drucker’s modest ranch house in Claremont, Calif., for a one-on-one meeting. Things blossomed quickly from there.

“In terms of friendship, we were an unlikely pairing,” Buford writes. “A generation apart in age. One of us spoke English with a heavy Austrian accent. The other spoke Texan. I owned a cable television company. Peter didn’t even own a television. . . . I followed the Dallas Cowboys. He followed Japanese art.”

Yet for all of these differences, the two clicked. Their sensibilities and worldview were totally in sync. “In Peter,” Buford explains, “I found a soul mate.”

In addition to being a charming read, Drucker & Me conveys many management lessons—on relentlessly providing what the customer values, on engaging in “planned abandonment,” on aligning people’s strengths with the work that they’re asked to undertake. But above all, the book is a wonderful guide on how to be a mentor, filled with useful takeaways. Here are five:

First, a model mentor doesn’t just give answers. In Drucker’s case, he had Buford write him a long letter before each of their sessions, ensuring that Buford had carefully thought through the challenges with which he was grappling. When they finally sat down together, Drucker would pepper Buford with questions.

“He wanted Bob to think for himself,” Jim Collins, for whom Drucker was also a mentor, observes in the foreword to Drucker & Me. “The greatest teachers begin with humility, a belief that only by first learning from their students can they be of greatest service to them.”

Second, a model mentor is always fully present, recognizing the tremendous trust he or she has been handed. “Whenever I was with him,” Buford recalls of Drucker, “he was focused. If the minister of Japan called, the minister would have to wait until my meeting ended.”

Third, a model mentor doesn’t shy away when the professional blends with the personal, understanding that someone’s career and the rest of his or her life are often intimately linked. On this score, Drucker & Me contains several dramatic turning points, including the drowning death of Buford’s 24-year-old son, Ross.

As soon as Drucker heard the terrible news, he phoned. “For the next several minutes, we had a very affectionate, compassionate, intensely personal conversation, and his sadness for my losing Ross almost seemed to match my own,” Buford writes. “And then he said something that was remarkable in its candor even as it echoed my own thoughts. ‘Isn’t it a shame that it takes this kind of moment for you and me to have the kind of conversation we just had?’”

Fourth, by truly listening, a model mentor can help introduce a level of clarity that would likely be unattainable otherwise. “Your mission, Bob, is to transform the latent energy of American Christianity into active energy,” Drucker told Buford eight years into their relationship. Writes Buford: “Just like that, he nailed it. He took my meandering thoughts . . . and articulated exactly what I wanted to do.” Indeed, this single insight from Drucker was the spark that Buford needed to create Leadership Network, a highly effective nonprofit that teaches church pastors how to multiply their own impact in the community.

Finally, a model mentor gives permission, encouragement and applause—but also demands accountability. “After a while,” Buford says, that “long rambling letter” he sent before each consulting session with Drucker “became my performance report. I’m not sure he would have allowed me access, at least in the early going, if I had no results.”

In his 1990 book Managing the Nonprofit Organization, Drucker credits two of his first bosses—one at a financial firm, the other at a newspaper—with being ideal mentors in their own right. “They were totally un-permissive and demanding. And they did not hesitate to chastise me,” Drucker recounted. “But they were willing to listen to me. They were sparing with praise, but always willing to encourage.”

Obviously, he learned well, exhibiting these very same traits with Buford. But so, in turn, did Buford learn well.

I know this firsthand. Although we, too, are from different worlds—I’m a Jewish guy from Baltimore, a generation younger than Buford, and much more a basketball than a football fan—we share many core values. And while I would never claim to be as close to Buford as he was with Drucker, his guidance and friendship have been indispensable. He has urged me, along with my staff, to sharpen the Drucker Institute’s mission, leading us to where we are today: “strengthening organizations to strengthen society.” He has pushed us to think bigger and aim higher.

Inc. magazine once called Peter Drucker “the North Star of mentors.” Bob Buford, I can attest, shines awfully bright himself.

TIME The Drucker Difference

Want to Succeed? You Should Seriously Consider Doing Nothing

If you want to motivate yourself to keep doing something, rather than getting lazy and copping out, here’s an idea: Make “do nothing” one of the choices you present yourself with.

The reason, according to a study by University of Pennsylvania marketing professor Rom Y. Schrift and Georgia State University marketing professor Jeffrey R. Parker, is that adding in the do-nothing choice makes us more likely to persevere in what we set out to do.

For instance, if you plan to start working out and join Gym A or Gym B, add in the option of not joining any gym at all.

“Whether it is workplace management, the health care arena or parenting, a subtle addition of a seemingly innocuous option can actually make someone want to do something even more,” an article in Knowledge@Wharton explains.

Puzzling? “It sounds counterintuitive because we assume that the option of doing nothing reduces persistence,” Schrift tells Knowledge@Wharton. “However, if I choose something, I learn about my preferences. Just knowing that fact helps us persist longer when there’s adversity or hardship.”

Peter Drucker would surely have agreed that giving yourself the option of doing nothing can be clarifying. In particular, it can help you figure out what the decision is really about, a topic we’ve addressed before. Gym A or Gym B may really be a decision about how much to work out, for example.

But Drucker would also likely add that sometimes the option to “do nothing” is a good one to consider because sometimes it’s best to, well, do nothing. As Drucker pointed out in Management: Tasks, Responsibilities, Practices: “There is one question the effective decision-maker asks: ‘Is a decision really necessary?’ One alternative is always the alternative of doing nothing.”

And sometimes, in fact, “there are those conditions with respect to which one can, without being unduly optimistic, expect that they will take care of themselves even if nothing is done.” That’s why Drucker advised, “If the answer to the question ‘What will happen if we do nothing?’ is ‘It will take care of itself,’ one does not interfere.”

It’s a rule too often ignored by decision makers (not to mention gym rats).

TIME The Drucker Difference

Here Is Exactly Why You Wish You Were Self-Employed

In 1952, as the age of the Organization Man dawned, Peter Drucker wrote an article in Fortune titled “How to Be an Employee.”

In it, he dispensed all sorts of advice, including tips on how to communicate with your boss, how to figure out what kind of job is right for you and even how to tell when it’s time to quit. The entire essay was predicated on a major historical shift from an economy once made up of farmers, merchants and craftspeople to one increasingly dominated by large corporations.

“Ours has become a society of employees,” Drucker wrote. “A hundred years ago only one out of every five Americans at work was employed, that is, worked for somebody else. Today the ratio is reversed, only one out of five is self-employed.”

The question now is whether we’re poised to swing sharply back in the other direction—and, if so, what it means.

Certainly, lots of workers seem to be pining for just such a change. A study released today by the online education company CreativeLive suggests that 55% of employed U.S. adults, some 78 million of them, “would jump ship from a traditional job to be self-employed—if they could still pay their bills.” The finding is based on a Harris Poll survey conducted earlier this month of 2,122 people ages 18 and older, 1,120 of whom were employed.

That more than half of American workers would like to strike out on their own says a lot about what folks value in their jobs—and, in turn, what most employers are evidently failing to provide them. It’s also a blunt reminder of the ways in which people’s career expectations have been upended in the decades since Drucker penned that Fortune piece.

“The whole labor market has changed,” says Mika Salmi, CreativeLive’s CEO, noting that the concept of lifetime employment at a single company has gone the way of the typing pool.

This reality, in which it has become common for enterprises to downsize even when they’re solidly profitable, is surely driving some of the growth in self-employment. Indeed, the ranks of proprietors in the United States—owners of businesses who are not wage and salary workers—have practically doubled as the traditional social contract between employer and employee has been ripped apart, rising from 11% of those with a job in 1970 to 21% in 2011, according to an analysis last year by NewGeography.com.

Yet Salmi is convinced that there’s another reason people are so hot to go it alone these days: Their jobs don’t offer a sufficient outlet for their creativity. “People are simply unfulfilled,” says Salmi, whose company provides courses in a variety of areas: photography, video, design, business, audio, music and software.

Some use the skills they acquire through CreativeLive to land a fresh position in their present workplace. Others learn new things so as to pursue a hobby—something Drucker would have advocated, by the way, for the corporate stiff and the self-employed alike. “People who have no life outside their jobs are not the really successful people,” Drucker wrote. “I have seen far too many of them shoot up like a rocket because they had no interests except the job; but they also come down like the rocket’s burned-out stick.”

Meanwhile, many of the 2 million students who have taken a CreativeLive class to date have parlayed the knowledge they’ve gained into starting their own business. Salmi doesn’t have exact numbers, but he says this group of entrepreneurs is clearly a sizable part of his company’s customer base. Feeling hopelessly stuck in a job, “these are people who say, ‘I have to get out of here,’” he explains. “They really want to do something different.”

Harris Poll backs him up. Among its findings: Thirty-six percent of employed adults want to quit their current job in search of something more creative.

Interestingly, Drucker tended to sneer at the idea of “creativity.” “Only the dilettante can afford to forego monotony and to look for ‘creative fulfillment,’” he asserted in Concept of the Corporation, his 1946 landmark. After all, as Drucker observed, most every occupation has plenty of aspects to it that are mind-numbingly dull—even being, say, a concert pianist: “Very few assembly line jobs are . . . as tedious as to practice the scales.”

“It is not routine and monotony which produce dissatisfaction” on the job, Drucker added, “but the absence of recognition, of meaning, of relation of one’s own work to society.”

In this regard, I think Salmi and Drucker are actually saying much the same thing: People are looking for a sense of purpose in what they do. Salmi happens to frame this around “creativity.” Drucker would have used a different C-word: contribution. But both, in the end, would have come to the same place.

“Loyalty can no longer be obtained by the paycheck,” Drucker wrote in a 1992 essay for Harvard Business Review. “The organization must earn loyalty by proving to its knowledge employees that it offers to them exceptional opportunities for putting their knowledge to work.”

Otherwise, they may well bolt—and go hang their own shingle someplace else.


Here’s the Best Case for Taking Major Risks

As Peter Drucker asserted decades ago, any effective nonprofit must have an eye to innovation.

That’s one reason grantmakers often speak of taking chances and trying new approaches. However, as Gabriel Kasper and Justin Marcoux observe in Stanford Social Innovation Review, in recent years, in dicey economic times, “many funders have lost their appetite for experimentation and risk, even as they trumpet their desire to make big bets.” In the end, some foundations “are willing to support only safe, established programs.”

The trouble with going small or safe is that it doesn’t get you far enough. As the authors note, “In many cases, existing approaches are proving insufficient to truly crack the intractable social and environmental problems that we face.” Instead, they argue, funders must steel themselves to “take risks on less proven approaches, open themselves up to exploring new solutions and recognize that innovation requires flexibility, iteration and failure.”

For that reason, the authors offer up eight ways for foundations and other funders to “inject innovation into grantmaking.” Among them is the practice of dedicating “10 percent of your grantmaking budget to support projects that seem promising but don’t fit neatly into your strategy.” Another one: “Use your special opportunity fund” to “explore a new area that is tangential to your primary strategies but shows potential.”

Drucker would have been all for these ideas. In fact, in Drucker suggested that organizations have two budgets: “an operational budget for the things that are already being done, and an opportunities budget for proposed new and different ventures.” While the opportunities budget would be much smaller than the operations budget, “both should be given the same amount of top management time and attention.”

As for the size of such budgets, Drucker was right in line with Kasper and Marcoux, suggesting that “the 10% or 12% of annual expenditures needed to create and maintain resources for the future—in research and technology, in market standing and service, in people and development—must be put into a constant budget maintained in years good and bad.”

Perhaps even more important than the specific size of an opportunities or “futures” budget is the mindset behind one. Drucker pointed out that budgeting is commonly thought of as a financial process. “But only the notation is financial,” he explained in Management: Tasks, Responsibilities, Practices. “The decisions are entrepreneurial.”

Your browser is out of date. Please update your browser at http://update.microsoft.com