A Better Workplace --- Meridian Group's Newsletter, Number 33

Peter Drucker's Effective Executives—Then and Now

Drucker, the management guru who died in 2005, started his career in the 1940s. What was effective leadership then is very different from effective leadership today.

Peter F. Drucker was born in 1909. In one of his last articles, What Makes an Effective Executive, Harvard Business Review, June 1, 2004, he summarizes a lifetime of consulting experience. Effective leaders he has known followed eight practices or rules. The first two are:
1. They asked, "What needs to be done?" and
2. "What is right for the enterprise?"

The answers have changed in 65 years.

Peter Drucker—the Early Days
Drucker personally knew the legendary General Motors CEO Alfred Sloan. He cites "Give 'em hell" President Harry Truman and General Electric's CEO Jack Welsh, whom Drucker calls "America's best known CEO".

During most of Drucker's life, executives such as these were selected for their command and control personalities, people who took charge, made decisions, and expected and got compliance. This leadership style dominated the 20th century, and is still the most common. It carries imagery from two World Wars and the Korean War. These are "strong" leaders, posing issues in black and white, and decisions as right or wrong, win or lose. Their top-down, autocratic decisions value obedience and loyalty. While he may ask for input, this leader decides, "What needs to be done?" and "What is right for the enterprise?" Their personalities are charismatic. Wealth, power and forceful egos fascinate the public. They make great press. They are successful.

The New World
By the end of the century a new and less charismatic leadership style was showing better results, not in terms of making the CEO slot, but in terms of company performance. These leaders rarely make the press. Who knows Tim and Richard Smucker, the co-CEO brothers of J.M. Smucker in Orrville, Ohio, (named No.1 of 100 Best Companies to Work For by FORTUNE in January 2004)? These participative executives don't always appear decisive or directive. Though clearly focused on performance, they are rarely combative, so may not climb to the top of big companies. They lead by creating a climate where managers and employees are well informed, understand what is needed and know how they fit into the bigger corporate picture. They carefully build a climate of high trust and openness, where people at all levels feel inspired and responsible, creatively handling issues and decisions in their work areas.

This process-and-people-oriented leadership style is more effective in today's volatile marketplace where uncertainly is normal. Rapid response times and high performance come with an engaged, committed workforce, not with traditional centralized control that tends to create passivity or dependency at lower levels. I personally experienced this contrast between the old and the new style with one of my clients.

"Only with the Heart That One Can See Rightly" *
The plant was an 800-person food processing operation, one of several in the corporation. I had worked three years on developing the plant culture. Productivity made one of those sudden, predictable, evolutionary steps (see Newsletter # 31, http://www.meridiangrp.net/articles/news31.html) it rose 40% over a three-month period. Corporate headquarters sent out a team of engineers to analyze the plant's operations and report their findings.

The engineers stayed for a week, watching, asking questions, examining records, and measuring. When they left to prepare their report, Gerry, the plant manager, commented, "They have no idea why this plant is so productive. The people here won't let it be unproductive. Those engineers can't see that it is everyone's attitudes that make it work so well. All they saw was what people were doing."

The New Manager May Be Misunderstood by the Old
Gerry was definitely a new style of manager, though he worked in a corporation that had a decidedly centralized, charismatic, leadership and decision style. Although Gerry's plant routinely outperformed every other plant in the corporation, how he did it was not always appreciated. A common complaint of visiting executives from corporate headquarters was, "That plant is out of control. The managers aren't making decisions."

These executives, trained in a top-down decision-making, could not understand how Gerry managed his large operation. Gerry's leadership style had empowered 800 decision makers, who loved their jobs, loved to come to work, and wouldn't let the plant be anything but the best. He had 800 people in control of the plant. If people sought meaning in their life, Gerry gave them plenty of opportunity on the job.

"What needs to be done?" and "What is right for the enterprise?"

Traditional Answer
Drucker's earlier leaders thought immediately of the substantive decision. What is the right answer? How do I gather information to make the best decision? How should I communicate this best to my subordinates? How should I measure and control performance?

Emerging Answer
What we are seeing recently is a leader who balances a sharp focus on what to do with sensitivity on how it is done. They hold together both substance and process, watching the effects of their actions on other people. They ask, "Will my actions build and sustain an inspired, engaged workplace?" Together with his immediate work team this leader might discusses such questions as:

• Where do we stand? What are the issues, problems, and opportunities? What needs to be done?
• What are we doing to keep everybody well informed on what's going on inside the company, with our customers, and in the emerging markets?
• What are we doing to encourage openness, trust, and strong relationships?
• Who should we recognize today for a creatively demonstrating the qualities we want more of around here?

The World Then and Now
When Drucker began his career in 1939 there were no TVs, no computers, and only one type of phone, Bell system, black and mostly hand-cranked. Life was slower, simpler, and highly protectionist. There was lots of slack in both the company and its markets to support the waste that accompanies centralized, autocratic systems. To these gray-flannel-suit managers, the answers to Drucker's questions were clear and obvious.

Today the answers to these same questions are also clear and obvious, but very different. Fewer companies can afford leadership styles that don't tap the potential energy, creativity and responsibility of all employees.

*"It is only with the heart that one can see rightly; what is essential is invisible to the eye." The Little Prince, Antoine De Saint-Exupery.