People are still the most important assets

This month, we will attend the 8th Global Peter Drucker Forum in Vienna. As we prepare to depart, Michael reflects on last year’s conference and its theme of “Claiming Our Humanity – Managing in the Digital Age.”

The issue of leading and engaging a workforce in our highly technological digital society is one I ponder and deal with regularly, so it was only natural that I make the journey to pastry- and coffee-fueled Vienna to hear the leading thinkers from business, academia, and many other disciplines tackle this subject. The issue of technology in our homes, workplaces, and communities is largely ignored by the general public, but it affects all of us more than we think.

The nature of work is changing

Our world is changing, and it is changing faster than it ever has before. Companies are being disrupted faster than ever, and even large, established firms are not guaranteed to survive. This is driven mainly by rapidly evolving technology. Jobs are already being replaced by robots, artificial intelligence, and software. Manufacturing lines are mostly automated and software has replaced many lower-level professional positions. Now we’re even seeing technology encroach in knowledge work. Knowledge workers may not be replaced completely anytime soon, but many of their tasks are already being done by computers. It’s only a matter of time before those jobs – as they’re currently defined – are done entirely by software.

WWI was fought on horseback. WWII was fought with nuclear weapons. Rita Gunther McGrath

However, if we manage workplace automation properly, it can be a boon rather than a threat to employees. They can be freed from mundane, routine tasks to pursue more creative and innovative work, finding unique solutions to organizational problems and delivering additional value. Employees will need considerable knowledge of how the technology works and what it can do but not necessarily vast technical expertise or even programming skills.

Employees must learn to adapt to this new paradigm. They will need to be more creative and innovative and develop a habit of lifelong, continuous learning. Employees will also need to be flexible and adaptable, so the polymath will have a resurgence in an era where technical expertise is made obsolete as soon as technology changes. Those that know how to ride the changing waves and adapt to shifts in technologies, economic structures, and industry status quos will find it much easier to survive in the Digital Age.

In order for employees to adapt to this new landscape, leadership will have to learn to change as well. For one, leaders must continue to get away from “managing” and focus on “leadership.” I won’t get into the distinction here; there are countless books and articles on the subject. And, really, if you’re in a management position and you don’t know the difference, then you shouldn’t be a manager and you’re definitely not a leader.

Day 1 of the Global Drucker Forum

Mårten Mickos, former CEO of MySQL and Eucalyptus, stated that leaders, especially executives, must overcome fear, accept that their industries and organizations are already changing, and lead the change. In order to effectively lead change, leaders must focus on cultivating the organization’s values and culture and drive decision-making down the organizational chart. Trust employees to decide how to change and let them drive it, grounded in the values crafted and supported by leadership. The command and control model will no longer work, especially as more freelancers and partners end up in organizations that are not in the control of the company’s leadership. Employee engagement is the key to the future.

Of course, fundamentally, your organization will have to change as well. Flatter hierarchies will continue to be the trend and org charts will become more dynamic or even obsolete. In order to promote flexibility, organizations will need to start structuring around projects rather than functional silos. As projects start and end, the flexible organization with well-rounded, learning-oriented employees can reorganize and adapt as needed. What happens in the current model with a functional department built around a specific business process or technology that is suddenly obsolete? Layoffs or a zombie department devouring precious resources while providing little to no business value.

Though these are all large, difficult changes to undergo, the most difficult adjustment for many companies will be to do away with business processes and policies. Jim Keane, President and CEO of Steelcase Inc., submitted that business processes were designed to induce productivity in disengaged employees. I agree. Processes take the thinking out of work and implies an underlying mistrust of employees. They also hamper agility, problem solving, and critical thinking. Worse, anything that is a formalized process can be automated, so you don’t even need the employee. I would add that formalized business processes are also an excuse for poor management and leadership. Holding employees accountable to a process is a substitute for true performance management and employee engagement.

All of these organizational changes obviously necessitate a need for a different breed of employee like the one mentioned earlier. One that is flexible, knowledgeable in a variety of areas, and can think critically. The renaissance man (and woman) has returned to prominence. Expertise in one area is a sure path to irrelevance.

Society is not ready for the Digital Age

Discussions at the Drucker Forum were not limited to businesses. The fundamental changes we’re talking about here will require adapting our economy, public policies, and our society in order to be effective.

We don’t care if our employees leave, as long as they keep coming back.Kevin Roberts

Temporary work and the “gig economy” were prominent topics. This is a growing trend that doesn’t show signs of slowing down. Organizational loyalty is a thing of the past and, for the most part, the panelists – academics and business executives alike – we’re ok with that. Kevin Roberts, Executive Chairman of Saatchi and Saatchi, exclaimed in the way only he can, “We don’t care if our employees leave as long as they keep coming back!”

Though acceptance of this new idea of work is great for contractors, freelancers, and those of us who like to move around a lot, our public policy and entitlement systems are not designed with this kind of work in mind, at least no here in the United States. Health care, retirement, social security, and many other social services are all tied to employers. In order for these systems to work in the new economy, we need to rethink these systems and start connecting them to people, regardless of what company they work for or if they even work for a company at all. It’s time our public policies acknowledged that working for a formal organization isn’t the only way to contribute to society. Benefits should be provided to entrepreneurs, freelancers, volunteers, and traditional employees alike.

Looking beyond retirement and health care, our educational system must be improved and fundamentally altered to allow future generations to cope with this new paradigm. Schools today are focused on teaching what may be outdated skills and facts that can be learned more easily through a MOOC, the Khan Academy, or Wikipedia. Teachers teach to standardized tests and students are judged on how well they take these tests, not on what they’ve actually learned or are able to demonstrate. Instead of obsolete skills, pointless tests, and meaningless grades, education needs to shift to teaching problem solving and critical thinking skills and fostering the capability of lifelong learning. This isn’t about investing more in STEM, it’s about investing in cultivating more well-rounded, adaptable learners prepared for the world that is, not the one that never was.

A people problem needs a people solution

I’m not a human resource, asset, or capital. I’m a human being.Henry Mintzberg

For a forum dedicated to the question of technology in our organizations, there was little to no discussion of technology. Technology has always been about enabling people. Richard Straub opened the forum appropriately with a quote by Peter Drucker. “We are becoming aware that the major questions regarding technology are not technical but human questions.” This quote was from 1967, and nothing has really changed since then.

Ultimately, it has always been and still is about people. Henry Mintzberg elicited a rousing round of applause from a captive audience by calling on leaders to stop referring to people as assets, resources, or human capital. “I’m a human being,” he said. As technology replaces many of the tasks we do at work, it can seem that humans are becoming less of an asset to our organizations and society. But I don’t see it that way, and neither did the speakers at the Drucker Forum.

Despite Mintzberg’s criticism of the lingo – and by extension, the way we are treated – I believe that in the Digital Age that is all about networks and community, people will remain the most important resource in any organization. Digital technology is already a commodity. It is so prevalent and inexpensive that companies will find it difficult to realize any kind of competitive advantage solely from new technology. People will still be an organization’s most irreplaceable asset. The nature of our work will change, and we will certainly have to change along with it, but organizations, communities, and networks are still composed of people. It’s up to us to decide whether technology enables us and amplifies the positive aspects of our nature or rules us.

Michael Hahn