Management as a Liberal Art Research Institute

The Computer’s Relevant Companion - the Knowledge Worker

Ryan Lee

PUBLISHED:

October 7, 2024

Peter Drucker wrote extensively on the computer as both the symbol and the tool of the digital revolution. His contexts, however, emphasized its effects on the economy and workforce rather than on society and populations as a whole. In fact, there is a two-way relationship between the introduction of the computer as a standard tool of industry and the effects of demographic shifts on the importance of quality over quantity. In tandem with the knowledge worker, the computer is the driving force of the future, whether in terms of society or economics.


Drucker’s reasoning for emphasizing the computer was a result of this shift in human lifestyles. If families are to have fewer children and if societies are to decline in populations as a result, the computer, or at least the iteration of technology it symbolizes, is the perfect tool to preserve economic growth and stability in the face of this predicament. Moreover, the shift is not one-way. The reason rearing children has become far more of an expense is also itself due to the nature of the economies these children will be entering upon maturity, especially in the most developed nations. Rather than menial farm or industrial work like before, these children are being prepared for service work, office work, “white-collar” work that involves increasing proportions of brainpower. This is observable in the development of the United States over the past century. Beginning with the 1920 census, which recorded the outright transition from a rural-majority to urban-majority America, the nation’s psyche became enraptured with the trappings of an industrial-service society from the rise of consumerism and credit to the automotive assembly lines of Ford and GM that employed much of the now-prospering working class6. It is not merely a coincidence that Taylorism reached its apex in the American mind around this time, as this was the first era where scientific principles could be developed and widely applied to entire industries to accentuate efficiency. While not applicable to artisans and craftsmen of the past, whose guilds and exclusivity hampered productivity and output, scientific approaches to management were finally able to be applied to a working base whose labor itself was based on scientifically derived outputs. However, most production around this time still focused on mostly menial toil and was linearly proportioned with growth in the human base that made it possible. An assembly line worker could be trained to maximize the number of wheels he could fix to a chassis per hour, but he couldn’t be trained to design new cars or to identify points of improvement in existing ones. As such, for the factory owners of this time, the fixture for economic growth rested upon hiring more workers to speed up the process. 


As time passed, however, the American economy gradually shifted towards being composed of service jobs, with this transition having been solidified in the public mind with the flight of the automotive industry from the now-labeled Rust Belt to East Asia, particularly Japan, in the 1980s. This weakened the relationship between population and economic growth, but the new service jobs as well as the remaining manufacturing jobs still retained a semblance or more of training and outright repetition. Even at the peak of the American conglomerate phenomenon in the late 1960s, taking Boeing’s dominance in the aerospace industry in Southern California for example, most employees were still assemblers, engineers, and office workers who were hired and designated to do a specific task within their company. At this point, the only people who were delegated the task of independent and spontaneous decision making were management, a growing yet still small segment of the workforce. 


The employment landscape now has been radically altered. Drucker already predicted it in his time, but the rise of the knowledge worker has marked a departure from all other previous forms of labor. For practically the first time in history, a significant and growing proportion of the workforce is both autonomous and a common asset in their own right. Unlike the artisans of the agrarian age who required wealthy patrons for their services to be of use and unlike the scientists of the industrial age who required direction from laboratories for their research, the knowledge worker is able to utilize both traits in such a manner and on such a scale that they have already began shifting the patterns of the American workforce, and to that extent American social life. During the Covid-19 pandemic, the widespread emergence of remote workers was in significant part due to the proliferation of knowledge workers in the nation’s service-based economy, and the continuation of this trend even after all pandemic precautions had subsided has given the corporate employee far greater leverage in employment than before. Much of this has only become a reality in due part to the computer. As well as performing the office grunt work that Drucker had observed in the 20th century, the computer has now also taken on the role of a presence augmenter, hastening communication far past what telephone or fax could ever have done with email and video calls. 


Looking past the immediate implications of the computer itself on society, the subsequent shifts in workforce patterns can be argued to have as much if not more of a dramatic impact on societal constructs. Given a newfound leverage over their employment, knowledge workers have the ability to individually bargain with their employers over matters like payment incentives to the extent that only a union was capable of before. Their advent also collides with the concept of unions, which have traditionally relied on member numbers and a grasp over the “human toil” of companies that is now increasingly being replaced with machinery. The aspect of human quantity is now especially important given current demographic trends. The developing world can no longer expect the benefit of increasing populations nor the agrarian settings to stimulate such effects in the long term. Given that economic development has nearly ubiquitously been linked with simple growth in things like population, these trends will initiate steep declines in the prosperity of countries with shrinking populations. It is in this context that the value-concentrated knowledge worker will begin to play a primary role, as their autonomous nature renders them independent of the quantity-growth economic relationship. This combined with the fact that their value lies with their mind, a nearly infinite source of ideation, will mean that their presence within the workforce will likely become the new economic driver of a country, even without growth in terms of quantity. 


Coming back to the computer, it is the very augmenter of productivity that separates the quantity-based output of yesteryear from the concentrated production that will dominate the future. However, its functions are limited to simple automation without its counterpart in the Digital Revolution: the knowledge worker. The synergy between the two is something governments and corporations alike must quickly understand if they are to retain their competitive edge, and it will be the subject of discussion in works succeeding this one.



Drucker, Peter. (1942) The Future of Industrial Society (1942)

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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