hope you’ll be visiting me there

Here are two prominent examples of the corporation as a confederation. Eighty years ago General Motors first developed both the organizational concepts and the organizational structure upon which today’s large corporations everywhere are based. And it was based for seventy five of these eighty years on two basic principles. We own as much as possible of whatever we manufacture and we own everything we do. Now it is experimenting with becoming the minority partner in competing companies: Saab in Sweden, Suzuki and Isuzu in Japan and its about to become the controlling minority partner of Fiat. At the same time, it has diverted itself of 70 or 80 percent of what it manufactures.

The second example goes exactly the other way. It’s Toyota, which for the last twenty years or so has been he most successful automotive company. It is restructuring itself around its core competency—manufacturing. It is moving away from having multiple suppliers of parts and accessories to having only one or two everyplace. At the same time, it uses its manufacturing competence to manage these suppliers. They remain independent companies but they are basically part of Toyota in terms of management.

ACTION POINT: Understand the structure of your industry by analyzing whether your organization and its competition are more like GM or Toyota

A long with full time employees, PEOs and temp workers, there may also be a closely linked but separately managed organization made up of nontraditional employees in the new corporation. Increasingly, employees take early retirement but they do not stop working. Instead, their ”second career” often takes an unconventional form. They may work freelance or part-time or as temporaries or for an outsourcing contractor or as contractor themselves. Such “early retirement to keep on working” is particularly common among knowledge workers.

Attracting and holding these diverse groups will become the central tasks of people management in the new corporation. These people do not have permanent relationships with the business. They may not have to be managed but they have to be made productive. They will therefore have to be deployed where their specialized knowledge can make the greatest contribution. Managers need to work closely with their counterpart in the outsource contractor organization on the professional development, motivation, satisfaction and productivity of these nontraditional workers.

ACTION POINT: Attract and integrate nontraditional employees effectively into your organization.

A decision is a commitment to action. Until the right thing happens, there has been no decision. And one thing can be taken for granted; the people who have to take the action are rarely the people who have made the decision. No decision has intact been made until carrying it out has become somebody’s work assignment and responsibility and with a deadline. Until then, it’s still only a hope.

A decision will not become effective unless needed actions have been built into it from the start. Converting a decision into action requires answering several questions:

Who has to know of this decision?
What action has to be taken?
Who is to take it?

The action must be appropriate to the capacities of the people who have to carry it out. This is especially important if people have to change their behavior, habits or attitudes for the decision to become effective.

ACTION POINT: Think through a decision you have made. Who has to know of the decision? What action has to be taken? Who has to take the action? Make sure the people who have to take the action are able to do it.

The decline in manufacturing as a creator of wealth and jobs will inevitably bring about a new protectionism. For the first reaction to a period of turbulence is to try to build a wall that shields one’s own garden from the cold winds outside. But such walls no longer protect institutions and especially businesses that do not perform up to world standards. It will only make them more vulnerable.

The best example is Mexico, which for fifty years from 1929 on had a deliberate policy of building its domestic economy independent of the outside world. It did this not only by building high walls of protectionism to keep foreign competition out. It did it and this was uniquely Mexican in the twentieth century world by practically forbidding its own companies to export. This attempt to create modem but purely Mexican economy failed dismally. Mexican actually became increasingly dependent on imports, both of food and of manufactured products, from the outside world. It was finally forced to open itself to the outside world, since it simply could no longer pay for the needed imports. And then Mexico found that a good deal of its industry would no survive.

ACTION POINT: When manufacturing jobs decline, is the country’s manufacturing base threatened? Why is it so difficult to accept that society and the economy are no longer dominated by manual work in developed economics?

The most believable forecast for 2020 suggests that manufacturing output in the developed countries will at leas double, while manufacturing employment will shrink to 10 to 12 percent of the total workforce. What has changed manufacturing and sharply pushed up productivity are new concepts such as “lean manufacturing.” Information and automation are less important than new theories of manufacturing, which are an advance comparable to the arrival of mass production eighty years ago.

The decline in manufacturing as a creator of wealth and jobs will inevitably bring about a new protectionism, once again echoing what happened earlier in agriculture. The fewer farm voters there are, the more important the “farm vote” has become. As numbers have shrunk, farmers have become a unified special-interest group that carries disproportionate clout in all rich countries

ACTION POINT: Determine the rate of growth in output per person in your manufacturing or operations functions. Is your organization experiencing the manufacturing paradox? Recommend programs for retraining excel manufacturing workers.

Old and amply tested wisdom holds that unless a company’s business is primarily the trading currencies or commodities, the firm inevitably will lose and heavily, if it speculates in either. Yet foreign exchange risks make speculators out of the most conservative managements.

Executives will have to learn to protect their enterprise against several kinds of foreign exchange risks: losses on sales or purchases in foreign currencies and loss of sales and market standing in both foreign and domestic markets. These risks cannot be eliminated. But they can be minimized or at least contained. Above all, they can be converted into a known, predictable and controlled cost of doing business not too different from any other insurance premium by the use of hedging and options. “Internationalizing” the company finance is also the best—perhaps the only—way in which a purely domestic firm can protect itself to some degree against foreign competition based on currency rates.

ACTION POINT: Protect your business against foreign exchange risk by hedging your exposure

Rarely has there been a more torrid political love affair than that between government and generations that reached adulthood between 1918 and 1960. Anything anyone felt needed doing during this period was to be turned over to government and this; everyone seemed to believe made sure that the job was already done

But now our attitudes are in transition. We are rapidly moving to doubt and distrust of government. We still, if only out of habit, turn social tasks over to government. We still revise unsuccessful programs over and over again and assert that nothing is wrong with them that a change in procedures will not cure. But we no longer believe these promises when we reform a bungled program for the third time. We no longer expect results from government. Who, for instance, believes anymore that changes in the foreign aid program of the Unites States (or of the United Nations) will really produce rapid worldwide development? What was a torrid romance between the people and government for so very long has now become a tired, middle-aged liaison that we do not know how to break off but that only becomes exacerbated by being dragged out?

ACTION POINT: Propose a program to your congressional representative that applies logic from the work of your enterprise to solve a social problem and that doesn’t require new government funds.

Throughout history, the craftsman who had learnt a trade after five or seven years of apprenticeship had learnt by age eighteen or nineteen, every thing he would ever need to use during his lifetime. Today the new jobs required a good deal of formal education and the ability to acquire and apply theoretical and analytical knowledge. They require a different approach to work and a different mindset. Above all they require a habit of continuous learning.

What miz of knowledge is required for everybody? What is “quality” in learning and teaching? All these will, of necessity become central concerns of the knowledge society and central political issues. In fact it may not be too fanciful to anticipate that the acquisition and distribution of formal knowledge will come to occupy the place in the politics of knowledge society that the acquisition of property and income have occupied in the two or three centuries that we have come to call the Age of Capitalism.

ACTION POINT: Make learning a lifelong habit.

Managing in a Time of Great Change

Post capitalist society is both a knowledge society and a society of organizations, each depends on the other and yet each very different in its concepts, views and values. Specialized knowledge by itself produces nothing. I can become productive only when it is integrated into a task. And this is why the knowledge society is also a society of organizations: the purpose and function of every organization, business and non-business alike is the integration of specialized knowledge into a common task. It is only the organization that can provide the basic continuity that knowledge workers need to be effective. It is only the organization that can convert the specialized knowledge of the knowledge worker into performance.

Intellectuals see the organization as a tool; it enables them to practice their techno, their specialized knowledge. Managers see knowledge as a means to the end of organizational performance. Both are right. They are opposites; but they relate to each other as poles rather than as contradictions. If the two balance each other there can be creativity and order, fulfillment and mission.

ACTION POINT: Write a letter to your boss and colleagues describing the contributions you expect to make. Indicate your understanding of how your contributions integrate into the contributions of your colleagues to produce results for the organization.

Managing in a Time of Great Change