'Flashes of Genius'
A noted thinker on 20th-century business organization warns about entrepreneurial complacency and delusions.
Published May 1996
EMAIL THIS ARTICLE
PRINTER FRIENDLY
COMMENT ON THIS ARTICLEPeter Drucker on entrepreneurial complacency and delusions . . . and the madness of always thinking you're number one
Whenever Peter F. Drucker is introduced, you invariably hear him described as "the seminal thinker on 20th-century business organization." Those illustrious terms actually do Drucker a disservice. They relegate his substantial works to the dubious category of classics, tomes revered by many but read by few. And for reasons that continue to baffle me, Drucker continues to be thought of as someone whose thinking is a lot more relevant to people working in large companies than in entrepreneurial ones. Nothing is further from the truth. In fact, Drucker's Innovation and Entrepreneurship (Harper & Row, 1985) is still the most authoritative book on the subject.
At 86, Drucker is Clarke Professor of Social Science and Management at Claremont Graduate School, in California. Both the man and his work have been my intellectual compass for the past two decades. He possesses the boundless curiosity of a great reporter but combines it with a refusal to be cynical about the individuals and institutions he observes. His work is concrete, specific, and clear at a time when too much economic and organizational observation is muddled and confused.
A friend who is a lifelong Drucker devotee and I were fishing the San Juan River in New Mexico recently when a violent thunderstorm hit. We stayed on the river until we could feel static electricity building in our fishing poles. Finally we ran for cover. "Remember you were asking what it was like interviewing Peter Drucker?" I asked. "Well, it's a lot like holding a fiberglass fishing pole during a violent storm." If you enjoy a bit of electricity in your life, the interview that follows offers an alternative to standing in a large body of water in the middle of a thunderstorm.
-- George Gendron
* * *Inc.: Do you agree that we in the United States are the best practitioners of entrepreneurship, that we're way ahead of other countries?
Drucker: Absolutely not! It's a delusion, and a dangerous one. We may have the largest number of new-business starts and new-business failures, but that's all. We're probably not even number two.
Inc.: Who's number one?
Drucker: Undoubtedly Korea. Barely 40 years ago, Korea had no industry at all. The Japanese, who had ruled Korea for decades, didn't allow any. They also didn't allow any higher education, so there were practically no educated people in Korea. By the end of the Korean War, South Korea had been destroyed. Today Korea is world class in two dozen industries and the world's leader in shipbuilding and other areas.
* * *Inc.: If Korea is number one, and we're not number two, who is?
Drucker: Not too far behind Korea is Taiwan, which like Korea was preindustrial in 1950. Today Taiwan is a world leader in a number of high-tech areas, including microchips. And don't forget the Chinese, who are starting new business after new business on both sides of the Pacific.
* * *Inc.: Okay, so third is still respectable, no?
Drucker: The U.S. record is no better than Japan's or Germany's. Japan has a larger proportion of world-class companies that either didn't exist 40 years ago or were mom-and-pop shops: Sony, Honda, Yamaha, Kyocera, Matsushita, for example.
Germany owes its rise from the ashes of World War II to its present position -- the world's third-largest economy and number one in per capita exports of manufactured goods -- to an explosion of entrepreneurship that turned hundreds of brand-new or obscure little shops into world-class manufacturers and industry leaders.
One example is Bertelsmann, one of the world's largest multimedia companies, which is active in 40 countries. In 1946, when Reinhard Mohn, the great-grandson of the founder, returned from a prisoner-of-war camp, Bertelsmann was a small-town publisher of religious tracts.
* * *Inc.: You said a moment ago that America's entrepreneurial "delusion" is dangerous. How so?
Drucker: What bothers me more than the fact that the common belief in our entrepreneurial superiority simply isn't true is that it's lulling us into a dangerous complacency -- not unlike our complacency about management in the early 1970s. Then we were convinced that American management reigned supreme, just as the Japanese were about to run circles around us in mass production and customer service.
I'm afraid our complacency about our entrepreneurship and innovation is going to have us outflanked again, not only by the Japanese but also by the Koreans.
* * *
