The Frontiers of Management. Peter F. Drucker
only ten years ago and at that time what I said was obvious. Today it would be silly.
The third thing promoting the entrepreneurial society perhaps is the most important, although I'm not sure whether I'm talking chicken or egg. There's been a fundamental change in basic perception over the past, make it, fifty years. The trend was toward centralization—in business, in government, and in health care. At the same time, when we came out of World War II we had discovered management. But management was something that we thought could work only in large, centralized institutions. In the early 1950s, I helped start what became the Presidents' Course given by the American Management Associations. In the first years, until 1970, for every hundred people they invited, eighty wrote back and said: “This is very interesting, but I'm not GE. What would I need management for?” And the same was true when I first started to work with the American College of Hospital Administrators, which gave a seminar in management. Hospital administrators needed it, but invariably we got the answer, “We have only ninety beds; we can't afford management.” This has all changed now. Don't ask me how and when. But nowadays, the only place left where you still have the cult of bigness is in Japan. There, bigger is better and biggest is best.
So, in part, the entrepreneurial society came about because we all “learned” how to manage. It's become part of the general culture. Look, Harper & Row—who is the publisher for [Tom] Peters and [Bob] Waterman—half of the 2 or 3 million books they sold were graduation presents for high school graduates.
Q: Your book or In Search of Excellence?
A: Oh, no, no. Not my book. My book would be hopeless. They couldn't read it, much less master it. The great virtue of the Peters and Waterman book is its extreme simplicity, maybe oversimplification. But when Aunt Mary has to give that nephew of hers a high school graduation present and she gives him In Search of Excellence, you know that management has become part of the general culture.
Q: Does the arrival of the entrepreneurial society mean that we should be rejoicing now because our national economic future is assured?
A: No. It's bringing tremendous change to a lot of vast institutions, and if they can't learn, the changes will be socially unbearable.
Q: Has any of them started to change?
A: My God, yes. The new companies are the least of it, historically. The more important part is what goes on in existing institutions. What is far more important is that the American railroad has become innovative with a vengeance in the last thirty years. When I first knew the railroads in the late 1940s, there was no hope for them. I was quite sure that they would all have to be nationalized. Now, even Conrail, the government-owned railroad, makes money.
What has happened in finance is even more dramatic. In, make it, 1960, some smart cookies at General Electric Credit Corporation realized that commercial paper is a commercial loan, not legally, but economically. Legally, in this country, it's a security, so the commercial banks have a hard time using it. Our number-two bank is not Chase and not Bank of America. It's General Electric Credit.
The most robotized plant in the world is probably the GE locomotive plant in Erie, Pennsylvania. Twenty years ago, GE didn't make a single locomotive in this country. It was much too expensive. They were all made by GE Brazil. Now, the U.S. plant is far more automated than anything you could possibly find in Japan or Korea.
That's where the innovation has been, and that's where we need it, because if we don't get the changes in there we will have one corpse after another, with enormous social danger.
Q: Is that why you wrote Innovation and Entrepreneurship?
A: I wrote the book because I felt the time had come to be a little more serious about the topic than most of the prevailing work was and also in part because, bluntly, most of the things you read or hear seem to me, on the basis of thirty years of work and experience, to be misunderstandings. The entrepreneur—the person with George Gilder's entrepreneurial personality—yes, there are such people, but they are rarely successful. On the other hand, people whom Gilder would never accept as entrepreneurs are often very successful. Entrepreneurship is not a romantic subject. It's hard work. I wanted to dislodge the nineteenth-century folklore that holds that entrepreneurship is all about small business and new business. Entrepreneurs range from the likes of Citibank, whom nobody has accused of being new or small—or General Electric Credit—to Edward D. Jones & Co. in St. Louis, the fastest-growing American financial-services company.
But there's another reason. When I published Practice of Management thirty years ago, that book made it possible for people to learn how to manage, something that up to then only a few geniuses seemed able to do, and nobody could replicate it. I sat down and made a discipline of it. This book does the same with innovation and entrepreneurship.
Q: Well, you didn't invent the stuff.
A: In a large part, yes.
Q: You didn't invent the strategies. They were around before you wrote them down.
A: Not really.
Q: No? What I'm trying to say is that people were doing these things—finding market niches, promoting entrepreneurial behavior in their employees—before your book came out.
A: Yes, and everybody thought it required genius and that it could not be replicated. Look, if you can't replicate something because you don't understand it, then it really hasn't been invented; it's only been done.
When I came into management, a lot of it had come out of engineering. And a lot of it came out of accounting. And some of it came out of psychology. And some more came out of labor relations. Each of those was considered separate, and each of them, by itself, was ineffectual. You can't do carpentry, you know, if you have only a saw, or only a hammer, or you never heard of a pair of pliers. It's when you put all those tools into one kit that you invent. That's what I did in large part in this book.
Q: You're certainly one of the most accessible of the serious writers on management topics.
A: Well, I'm a professional writer, and I do not believe that obscurity is a virtue.
Q: Why do you work alone? No staff?
A: I don't enjoy having to do work to keep other people busy. I want to do the work I want to do and not the work I have to do because I have to pay them or they have to eat. I'm a solo performer. I've never been interested in building a firm. I'm also not interested in managing people. It bores me stiff.
Q: Do clients come to you now?
A: With one exception I don't do any consulting elsewhere.
Q: Why are you interested in business? If your overarching interest is in organizations, why not study other kinds? Why not political organizations?
A: My consulting practice is now fifty/fifty profit-nonprofit. But I didn't come out of business. I came out of political journalism. In my second book, The Future of Industrial Man, I came to the conclusion that the integrating principle of modern society had become the large organization. At that time, however, there was only the business organization around. In this country, the business enterprise was the first of the modern institutions to emerge. I decided that I needed to be inside, to really study a big company from the inside: as a human, social, political organization—as an integrating mechanism. I tried to get inside, and I had met quite a few people as a journalist and as an investment banker. They all turned me down. The chairman of Westinghouse was very nice to me when I came to see him, but when I told him what I wanted he not only threw me out, he gave instructions to his staff not to allow me near the building because I was a Bolshevik. This was 1940.
By 1942, I was doing quite a bit of work for the government. I had given up looking for a company to study when one day the telephone rang and the fellow said, “My name is Paul Garrett, and I am vice-president of public relations for General Motors Corp. My vice-chairman has asked me to call you to ask whether you would be willing and available to make a study of our top management structure.” Since then, nobody at General Motors has ever admitted to having been responsible