[extropy-chat] In Memory of Peter Drucker

[Terry W. Colvin]

[In memory of Peter Drucker who died November 11th, almost 96. -Terry]

Also, see: < http://www.economist.com/displaystory.cfm?story_id=5165460 >
[Trusting the teacher in the grey-flannel suit]

< http://www.economist.com/surveys/displayStory.cfm?story_id=770819 >


Surveys

SURVEY: THE NEAR FUTURE


  The next society

Nov 1st 2001
 >From The Economist print edition


    Tomorrow is closer than you think. Peter Drucker*
    <http://www.economist.com/surveys/displayStory.cfm?story_id=770819#footnote1>
    explains how it will differ from today, and what needs to be done to
    prepare for it


THE new economy may or may not materialise, but there is no doubt that 
the next society will be with us shortly. In the developed world, and 
probably in the emerging countries as well, this new society will be a 
good deal more important than the new economy (if any). It will be quite 
different from the society of the late 20th century, and also different 
from what most people expect. Much of it will be unprecedented. And most 
of it is already here, or is rapidly emerging.

In the developed countries, the dominant factor in the next society will 
be something to which most people are only just beginning to pay 
attention: the rapid growth in the older population and the rapid 
shrinking of the younger generation. Politicians everywhere still 
promise to save the existing pensions system, but they--and their 
constituents--know perfectly well that in another 25 years people will 
have to keep working until their mid-70s, health permitting.

What has not yet sunk in is that a growing number of older people--say 
those over 50--will not keep on working as traditional full-time 
nine-to-five employees, but will participate in the labour force in many 
new and different ways: as temporaries, as part-timers, as consultants, 
on special assignments and so on. What used to be personnel and are now 
known as human-resources departments still assume that those who work 
for an organisation are full-time employees. Employment laws and 
regulations are based on the same assumption. Within 20 or 25 years, 
however, perhaps as many as half the people who work for an organisation 
will not be employed by it, certainly not on a full-time basis. This 
will be especially true for older people. New ways of working with 
people at arm's length will increasingly become the central managerial 
issue of employing organisations, and not just of businesses.

The shrinking of the younger population will cause an even greater 
upheaval, if only because nothing like this has happened since the dying 
centuries of the Roman empire. In every single developed country, but 
also in China and Brazil, the birth rate is now well below the 
replacement rate of 2.2 live births per woman of reproductive age. 
Politically, this means that immigration will become an important--and 
highly divisive--issue in all rich countries. It will cut across all 
traditional political alignments. Economically, the decline in the young 
population will change markets in fundamental ways. Growth in family 
formation has been the driving force of all domestic markets in the 
developed world, but the rate of family formation is certain to fall 
steadily unless bolstered by large-scale immigration of younger people. 
The homogeneous mass market that emerged in all rich countries after the 
second world war has been youth-determined from the start. It will now 
become middle-age-determined, or perhaps more likely it will split into 
two: a middle-age-determined mass market and a much smaller 
youth-determined one. And because the supply of young people will 
shrink, creating new employment patterns to attract and hold the growing 
number of older people (especially older educated people) will become 
increasingly important.


    Knowledge is all

The next society will be a knowledge society. Knowledge will be its key 
resource, and knowledge workers will be the dominant group in its 
workforce. Its three main characteristics will be:

.Borderlessness, because knowledge travels even more effortlessly than 
money.

.Upward mobility, available to everyone through easily acquired formal 
education.

.The potential for failure as well as success. Anyone can acquire the 
"means of production", ie, the knowledge required for the job, but not 
everyone can win.

Together, those three characteristics will make the knowledge society a 
highly competitive one, for organisations and individuals alike. 
Information technology, although only one of many new features of the 
next society, is already having one hugely important effect: it is 
allowing knowledge to spread near-instantly, and making it accessible to 
everyone. Given the ease and speed at which information travels, every 
institution in the knowledge society--not only businesses, but also 
schools, universities, hospitals and increasingly government agencies 
too--has to be globally competitive, even though most organisations will 
continue to be local in their activities and in their markets. This is 
because the Internet will keep customers everywhere informed on what is 
available anywhere in the world, and at what price.

Knowledge technologists are likely to become the dominant social--and 
perhaps also political--force over the next decades

This new knowledge economy will rely heavily on knowledge workers. At 
present, this term is widely used to describe people with considerable 
theoretical knowledge and learning: doctors, lawyers, teachers, 
accountants, chemical engineers. But the most striking growth will be in 
"knowledge technologists": computer technicians, software designers, 
analysts in clinical labs, manufacturing technologists, paralegals. 
These people are as much manual workers as they are knowledge workers; 
in fact, they usually spend far more time working with their hands than 
with their brains. But their manual work is based on a substantial 
amount of theoretical knowledge which can be acquired only through 
formal education, not through an apprenticeship. They are not, as a 
rule, much better paid than traditional skilled workers, but they see 
themselves as "professionals". Just as unskilled manual workers in 
manufacturing were the dominant social and political force in the 20th 
century, knowledge technologists are likely to become the dominant 
social--and perhaps also political--force over the next decades.


The new protectionism

Structurally, too, the next society is already diverging from the 
society almost all of us still live in. The 20th century saw the rapid 
decline of the sector that had dominated society for 10,000 years: 
agriculture. In volume terms, farm production now is at least four or 
five times what it was before the first world war. But in 1913 farm 
products accounted for 70% of world trade, whereas now their share is at 
most 17%. In the early years of the 20th century, agriculture in most 
developed countries was the largest single contributor to GDP; now in 
rich countries its contribution has dwindled to the point of becoming 
marginal. And the farm population is down to a tiny proportion of the total.

Manufacturing has travelled a long way down the same road. Since the 
second world war, manufacturing output in the developed world has 
probably tripled in volume, but inflation-adjusted manufacturing prices 
have fallen steadily, whereas the cost of prime knowledge 
products--health care and education--has tripled, again adjusted for 
inflation. The relative purchasing power of manufactured goods against 
knowledge products is now only one-fifth or one-sixth of what it was 50 
years ago. Manufacturing employment in America has fallen from 35% of 
the workforce in the 1950s to less than half that now, without causing 
much social disruption. But it may be too much to hope for an equally 
easy transition in countries such as Japan or Germany, where blue-collar 
manufacturing workers still make up 25-30% of the labour force.

The decline of manufacturing will trigger an explosion of manufacturing 
protectionism

The decline of farming as a producer of wealth and of livelihoods has 
allowed farm protectionism to spread to a degree that would have been 
unthinkable before the second world war. In the same way, the decline of 
manufacturing will trigger an explosion of manufacturing 
protectionism--even as lip service continues to be paid to free trade. 
This protectionism may not necessarily take the form of traditional 
tariffs, but of subsidies, quotas and regulations of all kinds. Even 
more likely, regional blocks will emerge that trade freely internally 
but are highly protectionist externally. The European Union, NAFTA and 
Mercosur already point in that direction.


    The future of the corporation

Statistically, multinational companies play much the same part in the 
world economy as they did in 1913. But they have become very different 
animals. Multinationals in 1913 were domestic firms with subsidiaries 
abroad, each of them self-contained, in charge of a politically defined 
territory, and highly autonomous. Multinationals now tend to be 
organised globally along product or service lines. But like the 
multinationals of 1913, they are held together and controlled by 
ownership. By contrast, the multinationals of 2025 are likely to be held 
together and controlled by strategy. There will still be ownership, of 
course. But alliances, joint ventures, minority stakes, know-how 
agreements and contracts will increasingly be the building blocks of a 
confederation. This kind of organisation will need a new kind of top 
management.

In most countries, and even in a good many large and complex companies, 
top management is still seen as an extension of operating management. 
Tomorrow's top management, however, is likely to be a distinct and 
separate organ: it will stand for the company. One of the most important 
jobs ahead for the top management of the big company of tomorrow, and 
especially of the multinational, will be to balance the conflicting 
demands on business being made by the need for both short-term and 
long-term results, and by the corporation's various constituencies: 
customers, shareholders (especially institutional investors and pension 
funds), knowledge employees and communities.


Against that background, this survey will seek to answer two questions: 
what can and should managements do now to be ready for the next society? 
And what other big changes may lie ahead of which we are as yet unaware?


* Peter Drucker is a writer, teacher and consultant who has published 32 
books, mostly on various aspects of society, economics, politics and 
management. Born in 1909 in Vienna, Mr Drucker was educated in Austria 
and England, and holds a doctorate from Frankfurt University. Since 1971 
he has been Professor of Social Science and Management at Claremont 
Graduate University, California.

-- 
"Only a zit on the wart on the heinie of progress." Copyright 1992, Frank Rice


Terry W. Colvin, Sierra Vista, Arizona (USA) < fortean1 at mindspring.com >
     Alternate: < fortean1 at msn.com >
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