Today the productivity revolution is over. Forty years ago, Drucker notes, people who made or moved things were still a majority in all developed countries. By 1990 they had shrunk to one-fifth of the work force. By 2010 they will form no more than one-tenth. Increasing the productivity of manual workers in manufacturing, farming, mining, and transportation will no longer create much wealth. "The Productivity Revolution," says Drucker, "has become a victim of its own success. From now on, what matters is the productivity of nonmanual workers. And that requires applying knowledge to knowledge."
So when Drucker refers to an emerging post-capitalist society, he means one in which knowledge is replacing capital and labor as the critical economic resource. Implications? Or as an impatient friend of mine frequently asks, "So what does that mean to me?"
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Staying Smart Is the Greatest Challenge
Clearly, it means that the current disruption to the lifestyle of the American middle class -- those folks who rode the productivity revolution to a standard of living their parents and grandparents could barely imagine -- isn't going to be fixed by a few tax cuts and some budget reductions. The new American middle class, by and large, will be made up of those people who participate in the coming productivity gains in knowledge-based work. They'll be the people who, as William Bridges puts it in "A Nation of Owners" (page 27950891), come to think of themselves as You & Co. -- independent microbusinesses, companies of one. And by the same token, businesses -- that is, the companies and entrepreneurs who start them -- will grow and profit to the extent that they learn how to apply knowledge to work.
Many American companies are sorting through the new realities and reshaping themselves from the inside out for new and still evolving modes of competition. Nicholas Imparato and Oren Harari in Jumping the Curve (Jossey-Bass, 1994) wrote that companies are learning "to shift their priorities from stabilizing to innovating."
The first people to popularize a conceptual framework around what had been a trial-and-error approach to the new managerial efforts were James Champy and Michael Hammer, co-authors of Reengineering the Corporation (HarperBusiness, 1993). Reengineering as they defined it -- "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in . . . performance" -- wasn't the whole answer to how to do business in Drucker's post-capitalist age, but it was a good stab at creating a methodology for reinventing the way organizations get work done. Taylorism focused on the task and its execution: for example, what's the most efficient way of filing invoices? Reengineering looks at the larger process -- at materials acquisition, for instance -- and asks whether invoices are even needed. Reengineering requires organizations to toss out their old assumptions and redesign themselves, starting with a clean slate and open mind: Here's the job. Now how can we get it done?
But there is more to the transformation from capitalist to post-capitalist society than the reengineering of work processes, important as that is. Every notion we hold about the organizations that we call companies -- how they're organized, how they're managed, what they do -- is changing. A little more than a hundred years ago the idea of the modern corporation -- a legal entity independent of the place in which it was located and even of the people who owned it -- was as unknown and unimaginable as the transistor. So how can we know what companies of the future -- assuming there are companies -- will look like? Of course, we can't, but we can see the direction they're taking.
The most successful of today's large companies look hardly anything like the mass-production behemoths that my parents grew up with. Those were built like the Eiffel Tower -- rigid, vertical affairs bolted tightly together. They had a top, a bottom, and a lot of pieces in between; and one's job was defined by one's place in the structure. Command-and-control systems worked like the tower's elevator: up and down. There was simply no sideways motion. The man at the top -- it was almost always a man -- had the best view, so he got to make -- indeed, was expected to make -- the decisions.
By now we all know how those hierarchies worked and that 10 to 20 years ago they began to encounter trouble. The Japanese were outperforming them and so were upstart entrepreneurs. And the history of their response is familiar, too. They first looked for strategic fixes: maybe they weren't in the right businesses, so they swapped stars, dogs, and cash cows, and then looked for core competencies. They're still looking. In the March/April 1995 issue of the Harvard Business Review, three British consultants propose the "parenting advantage" model of corporate strategy, which posits that large diversified corporations should own only those businesses to which they are uniquely capable of adding more value than other corporate parents could. Interesting, but not the stuff of revolution.
What gets closer to illuminating the revolution that has begun in corporate America is a book by two CSCIndex consultants, Michael Treacy and Fred Wiersema. In The Discipline of Market Leaders (Addison-Wesley, 1995), they describe companies that are beginning to do what Drucker says they should do: apply knowledge to knowledge.
Treacy and Wiersema show that it's not the company with the best product that's going to win -- or in other markets, the company with the lowest costs or the one with the best total solution to a customer's problem. Whatever a company does to create customer value, it's not how well it performs today that matters in the long run but how good it is at learning to do it better. For instance, Treacy and Wiersema cite Cott Corp., a beverage company that doesn't make, bottle, or distribute soft drinks. Cott is what Treacy and Wiersema call a customer-intimate company, because it strives to provide ever more comprehensive solutions to its customers' needs. Cott, they write, "uses its knowledge of soft drinks to design and implement sophisticated private-label branding strategies for customers like Wal-Mart and Safeway." Cott consists largely of a bunch of smart people who know how to create and deliver profitable branded retail products, which are what its customers are looking for.
