Management as a Liberal Art Research Institute

AI as an Enabler of Management as a Liberal Art

Pooya Tabesh Ph.D.

PUBLISHED:

October 1, 2024

What is MLA?

Management as a Liberal Art (MLA), a concept championed by Peter Drucker views management not only as a technical practice focused on performance but as a humanistic discipline focusing on people, values, and the common good. In a previous blog post, I introduced the three knowledge pillars of MLA by proposing that the knowledge of individual and societal characteristics is as important as the knowledge of organizational drivers of performance. Therefore, I concluded that managers practicing MLA need to acquire and maintain a good understanding of individual-level, organization-level, and society-level factors that impact business operations. In that post, I also discussed how knowledge of various disciplines such as psychology, history, and political science, among others, can lead to a better understanding of these three pillars of MLA. 


In this blog post, my goal is to discuss how recent developments in Artificial Intelligence (AI) can enhance effective implementation of MLA by facilitating the access, interpretation, and maintenance of multi-disciplinary knowledge pertaining to individual, society, and organization.


What is AI?

AI (Artificial Intelligence) refers to the use of computational systems that simulate human cognitive functions, such as learning, reasoning, and decision-making, to collect, process, and interpret vast amounts of data. It can transform raw data into actionable insights by identifying patterns, making predictions, and suggesting solutions. While the term AI was coined around 1956, it only recently gained significant popularity due to the confluence of data proliferation, algorithmic advancement, and enhanced computational capacity and storage.


AI and MLA

At first glance, AI and MLA might seem at odds. MLA emphasizes human judgment, ethics, and values, while AI is often associated with data-driven efficiency and automation, which could be perceived as undermining the human elements central to MLA. However, these approaches are not inherently conflicting. Instead, AI can complement MLA by enhancing human-centered decision-making and supporting value-based aspirations. 


AI can play a significant role in enabling managers to put the MLA philosophy into practice. Recent AI developments facilitate the effective and efficient collection and analysis of individual, societal, and organizational data in ways that were not possible before. While predictive AI tools have existed for decades to facilitate analysis of technical organizational and industrial data, the recent advancements in natural language processing (e.g., large language models) and generative AI have opened new horizons for interpretation and analysis of existing knowledge in the realm of social sciences. In other words, generative AI enables a fast acquisition and interpretation of written information from knowledge sources that were not easily accessible decades ago. In essence, summarization of existing written knowledge about specific topics in philosophy, history, or other social sciences can take place in a matter of seconds. Therefore, gaining fundamental technical information about individual and societal factors that impact management is less costly or time consuming than before. Similarly, advanced AI tools and systems can collect and analyze large amounts of data from a variety of sources in real time to offer managerial insights.


Below, I explore AI’s role in helping managers gain a deeper understanding of organizational-level, individual-level, and society-level influences. Although individuals are embedded within organizations and societies, examining these entities separately offers a clearer view of how AI transcends different levels of analysis. 

 

AI Helping Managers Understand the Organization

AI’s predictive capabilities allow managers to analyze internal data to identify problems and to predict potential financial and operational risks directly relevant to organizational performance. This leads to more proactive decision-making and strategic planning within the organization. Similarly, AI-powered tools facilitate better internal communication and collaboration by analyzing interaction patterns, identifying communication bottlenecks, and suggesting ways to improve information flow throughout the organization. As another example, AI can automate routine reporting tasks and dashboards, giving managers real-time insights into how various parts of the organization function.


AI Helping Managers Understand Individuals

Organizations monitor employee performance, measure productivity, and provide personalized recommendations for professional development. AI tools can take the quality of these recommendations to the next level by considering employee characteristics (e.g., personality) or other outcomes (e.g., job satisfaction). AI-based tools, such as the ones built on psychometric tests, can analyze language patterns and behavior to infer personality traits. By understanding an individual’s traits (e.g., introversion/extroversion, openness to experience), the AI can suggest tailored professional development paths. Similarly, sentiment or emotion analysis can help managers understand the ongoing needs of their employees. For instance, modified LLMs can analyze written or spoken communication (emails, chat messages, or voice inputs) to detect sentiment and emotional tone. This can help gauge mood and satisfaction, giving a sense of an employee’s emotional state over time. If used properly, these insights can help managers boost organizational outcomes by improving job satisfaction and minimizing employee burnout or turnover. It is important to note that establishing clear guidelines and ethical frameworks for the use of AI tools is important to prevent issues related to privacy and ethics. Transparency in informing employees of the purpose and scope of AI-based monitoring is also important. Implementing guardrails such as data privacy protocols and ethical oversight committees can also help prevent misuse and ensure AI tools are used to enhance trust rather than erode it.


AI Helping Managers Understand the Society

AI can help managers understand different cultural and demographic trends by analyzing large datasets that reveal societal changes, consumer behaviors, and global shifts in market demands. For instance, AI tools can analyze social media conversations, news articles, and public forums to gauge public sentiment, identify trends, and understand societal expectations or concerns. Similarly, AI tools can also be used to model the environmental impact of a company’s operations or decisions, helping managers evaluate sustainable practices the benefit different stakeholders. For instance, a company planning to expand manufacturing facilities can use AI to better estimate the carbon emissions resulting from increased production. AI tools can simulate the long-term environmental impacts, such as air and water pollution, as well as public health consequences. Based on these predictions, managers may choose whether to implement more energy-efficient technologies.


AI significantly shortens the gap between when a trend starts and when managers can detect it. Unlike traditional methods where data lag behind real-time developments, AI’s real-time data analysis and predictive capabilities allow organizations to see trends as they emerge, not years later. This immediate access to information enables managers to respond proactively, rather than reactively, to shifts in the marketplace or societal expectations.


Concluding Remarks

While MLA focuses on nurturing a holistic view of management, AI can provide insights and tools that allow managers to efficiently gain a comprehensive understanding of the organizational dynamics within their proper context. This in turn, gives managers a better understanding of various individual and societal factors surrounding a business problem. Rather than replacing human insight, AI can empower managers to make more informed, value-aligned decisions, reinforcing the core principles of MLA.

The Future of Knowledge Work: What Drucker can teach us

By Karen Linkletter Ph.D. • November 19, 2024
Interview with Karen Linkletter at the 16th Global Peter Drucker Forum 2024  Video Interview

The Specifics of Management of the Knowledge Worker

By Ryan Lee • November 7, 2024
Nowhere is management theory demanded more than in managing the knowledge worker, and yet nowhere is management theory more inadequate in addressing a field’s issues than in knowledge work. This is the point Peter Drucker posited in his work Management Challenges for the 21st Century (1991), and to resolve it he came up with six factors that determine the productivity of the management worker. Among these, his final point that management workers “must be treated as an ‘asset’ rather than a ‘cost’” by any given organization is an important concept1. While it only gradually emerged within management theory over the century, it is crucial for any employer and any government to understand and apply if they are to retain a competitive advantage going into the future. Historically, management theory has been about improving the output of the worker through banal efficiency: how to increase the production of steel per head, how to increase the production of cars per hour, how to minimize deficient products, etc. In all these considerations, the worker is a disposable resource. When he is hired, he is set to a particular task that is typically repetitive and thus easily taught, and when he is not needed because of shortcomings in his work, company difficulties, or automation, he is laid off. Referred to as “dumb oxen”, workers were seen in management theory as machines to have productivity squeezed out of. The shift from a majority manufacturing to service-based economy during the first half of the twentieth century changed this dynamic to some extent. The American postwar economic boom introduced the office worker as a common source of employment. This trend continued throughout the conglomerate era of the 1960s and was helped by the decline of the American manufacturing industry in the 1970s. Now in a stage dominated by service and knowledge work, the American economy must approach management differently. The aforementioned cost-asset shift is a demonstration of why this is so, as Drucker’s emphasis on the knowledge worker’s autonomy means that they wield control, not only within their job but over who they should work for as well. This in addition to the high-capital nature of knowledge workers means that the old management theory approach to labor as disposable will backfire catastrophically for any company that tries it with their knowledge workers. It is also important to remember the demographic trends of the United States, and more so the world, in considering why the cost-asset shift is vital. For all of human history until some fifty years ago, population was considered to be in tandem with economic power, given larger populations yielded larger labor forces and consumer markets. Economic growth was thus also correlated with population growth, demonstrated by the historic development of Europe and the United States and the more recent examples of the developing world. Consequently, the worldwide decline in fertility rates, and the decline in population numbers in some developed countries, signals economic decline for the future. In the labor market, smaller populations mean fewer jobs that produce for and service fewer people. Although the knowledge worker has grown in proportion to the total labor market, these demographic declines will affect knowledge workers as well, meaning employers will have a vested interest in retaining their high-capital labor. To enforce this, the cost-asset shift will have to come into play. The wants and needs of the knowledge worker pose a unique challenge in the field of management. Autonomy, for the first time, can be regarded as a significant factor affecting all other aspects of this labor base. What good does a large salary provide a knowledge worker if they don’t feel that they are welcome at an institution? How would they perceive that their work is not being directed towards productive pursuits at their corporation, especially given the brain work and dedication given to it? Of course, the fruits of one’s labor has been a contentious issue in management ever since compensation and workers’ rights became a universal constant with the Industrial Revolution, but this is augmented by the knowledge worker’s particular method of generating value. Given that Drucker poses their largest asset and source of value as their own mind, they will intrinsically have a special attachment to their work almost as their brainchild. Incentivizing the knowledge worker is also only one part of this picture. Per Drucker, the knowledge worker’s labor does not follow the linear relationship between quantity invested and returned. The elaborate nature of knowledge work makes it heavily dependent upon synergy: the right combination of talent can grow an organization by leaps and bounds, while virtually incompatible teams or partnerships can render all potential talent useless. And the human capital cost of the knowledge worker, both in their parents and the state educating them and in cost to their employers, is astronomical compared to all previous kinds of labor. In conclusion, the needs and wants of the knowledge worker must be met adequately, especially in the field of management. Management must almost undergo a revolution to adapt to this novel challenge, for the knowledge worker is the future of economic productivity in the developed world. Those employers that successfully accommodate the demands of this class of talent will eventually reign over those that do not accept that this is the direction economic productivity is headed.  References Drucker, P. F. (1991) Management Challenges for the 21st Century. Harper Business.

The Wisdom and Continuing Relevance of Peter Drucker

By Michael Cortrite Ph.D. • November 7, 2024
What is wisdom? The dictionary says it is knowledge of what is true and right coupled with just judgment as to action. Jennifer Rowley reports that it is the “ability to act critically or practically in a given situation. It is based on ethical judgment related to an individual's belief system.” (Rowley 2006 p. 255). So, wisdom seems to be about deciding on or doing an action based on moral or ethical belief in helping other people. This clearly describes Peter Drucker and his often prescient ideas For the 100 th anniversary of Peter Drucker’s birth, Harvard Business Review dedicated its November 2009 magazine to Drucker. In one of the articles about Drucker by Rosabeth Moss Kanter (2009 p. 1), What Would Peter Say? Kanter posits that, Heeding Peter Drucker's wisdom might have helped us avoid—and will help us solve numerous challenges, from restoring trust in business to tackling climate change. He issued early warnings about excessive executive pay, the auto industry’s failure to adapt and innovate, competitive threats from emerging markets, and the perils of neglecting nonprofit organizations and other agents of societal reform. Meynhardt (2010) calls Drucker a towering figure in Twentieth Century management. He says no other writer has had such an impact. He is well-known to practitioners and scholars for his practical wisdom and common sense approach to management as a liberal art. Drucker believed that there is no how-to solution for management practice and education. Doing more of “this” and less of “that” and vice versa is not how Drucker suggests managers do their work. Rather, Drucker relies more on morality and the virtue of practical wisdom to solve problems related to organizations. The virtue that Drucker talks about cannot be taught. It must be experienced and self-developed over time. A good example of this is Drucker’s Management by Objectives (MBO). Drucker does not give technical advice on how to initiate MBO. Rather he wisdomizes his moral convictions that integrating personal needs for autonomy with the quest of submitting one’s efforts to a higher principle (helping people) ensures performance by converting objective needs into personal goals. (Meynhardt, 2010). Peter Drucker published thirty-eight articles in the Harvard Business Review (HBR) and seven times won the McKinsey Award presented annually to the author of the best article published during the previous year in HBR. No other person has won as many McKinsey awards as Drucker The former editor-in-chief of Harvard Business Review, Thomas A. Stewart, quotes Peter Drucker; “The few of us who talked of management forty years ago were considered more or less deranged.” Stewart says that this was essentially correct. Harvard Business Review's very mission is to improve management practice. Stewart says this mission is inconceivable without Drucker’s work. Drucker’s work in management planted ideas that are as fruitful today as they ever were. Stewart posits that each year, managers discover extraordinary and immediate relevance in articles and books that were written before they were born or even before their parents were born. Stewart (2016) tries to answer the questions: Why does Drucker’s work endure? and Why is Drucker still relevant? First, was Drucker’s talent for asking the right questions. He had an instinct for being able to not let the urgent drive out the important, for seeing the trees, not just the forest. This allowed him to calmly ask pertinent questions that encouraged clients to find the proper course to take. Secondly, Drucker was able to see whole organizations. Instead of focusing on small particular problems. Ducker had the ability to find the overarching problem as well. Stewart uses Drucker’s 1994 HBR article, The Theory of the Business to make this point. Many people were trying to analyze the problems of IBM and General Motors by looking for root causes and trying to fix the blame. Drucker, on the other hand, argued correctly that the theories and assumptions on which they had managed successfully for many years were outdated. This article is as relevant today as it was in 1994 because Drucker took the “big picture view.” And no one else has ever been so skillful at describing it. Thirdly, starting in 1934, Drucker spent two years at General Motors with the legendary Alfred P. Sloan, immersed in the workings of the automaker and learning the business from within. This allowed him to talk with authority, but he has always stayed “street smart and wise.” This mentoring helped give Drucker the gift of being able to reason inductively and deductively. He could infer a new principle or a theory from a set of data or being confronted with a particular problem; he could find the right principle to apply to solve it. Drucker’s first article published in HBR, Management Must Manage, challenged managers to learn their profession not in terms of prerogatives but in terms of their responsibilities, to assume the burden of leadership rather than the mantle of privilege. Many in the management/leadership field probably found Drucker to be “deranged,” but in 2024, this is important advice for leader (Stewart 2006). Just a few more of Drucker’s ideas that seemed well outside the mainstream when he proposed them but are standard practice today include: Managing Oneself, Privatization, Decentralization, Knowledge Workers, Management by Objectives, Charismatic Leadership Being Overrated, CEO Outsize Pay Packages, and Enthusiasm of the Work of the Salvation Army (Rees, 2014). Clearly, Drucker remains relevant! References: Kanter, R. 2009. What would Peter say? Harvard Business Review. November, 2009. Meynhardt, T. 2010. The practical wisdom of Peter Drucker: Roots in the Christian tradition. Journal of Management Development Vol. 29. No. 7/8. Rees, M. 2014 The wisdom of Peter Drucker. Wall Street Journal. Dec. 12, 2014. Rowley, J. 2006. Where is the knowledge that we have lost in knowledge? Journal of Documentation. Vol. 62, Iss. 2. 251-270. Stewart, T. 2006. Classic Drucker. Editor Thomas A. Stewart. Harvard Business School Publishing Corporation.
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