Extract from: Winfried Weber, Die Purpose-Wirtschaft, 2024, eBook (Amazon Kindle http://tiny.cc/9eznzz )
Picture Source: Archäologisches Institut, Georg-August-Universität Göttingen „Leaders and followers are both following the invisible leader – the common purpose.” Mary Parker Follett, 1922
„Though we talk glibly of configuration, purpose and process, we do not yet know what these terms express.” Peter Drucker, 1957
Both quotes indicate that the concept of purpose in the context of business, management and the common good has not only been discussed for a few years and cannot be seen as a fad. The pursuit of profit and a focus on the common good are the two sides of the same coin, for which the pioneer of modern management Mary Parker Follett and the mastermind Peter Drucker developed terms and concepts many decades ago.
If you search for the source code of modern management with the somewhat simple keyword "father of management", you will find a remarkable number of hits in search engines, especially for Peter Drucker (1909-2005). However, the everyday term "father" of modern management is based on a misconception: the father is a mother that hardly anyone knows. This is because Peter Drucker and other pioneers of management, such as Warren Bennis, point to a female pioneer, Mary Parker Follett (1868 - 1933), as the source code of modern approaches. She deserves the honor of having introduced the groundbreaking innovations in management to the world for the first time. However, the pioneering thinker was forgotten soon after her death (1933). Do some research on the keyword "mother of management", you won't find anything on non-English languages and international websites.
The following anecdote fits in with the development and history of modern management. In 1951, the former director of the Geneva International Management Institute, Lyndall Urwick, pointed out to Peter Drucker that his texts for the American Management Association were very similar to those of Mary Parker Follett. Drucker then asked him, "Mary who?" Drucker then researched Parker Follett's texts and later called her "the prophet of management" in the foreword to a Parker Follett anthology (Drucker 1995). Warren Bennis described her as a "swashbuckling advance scout of management thinking" and summarized her influence as "just about everything written today about leadership and organizations comes from Mary Parker Follett's writings and lectures" (Bennis 1995). Henry Mintzberg interprets her work in this way: "We are still hypnotized by the idea of hierarchy according to Fayol. And are all too often blind to the insight of peer cooperation, that wonderful concept of 'collective responsibility' according to Mary Follett." (Mintzberg 1995). Mary Parker Follett can therefore be regarded as an adventurous pathfinder in the organizational undergrowth, whose merits for modern management cannot be overestimated. The fact that she has fallen into oblivion, like many later thought leaders in management theory and practice, is due to popular scientific literature in which reference is rarely made to primary sources by original authors or authors do not take the trouble to do extensive research (see Weber 2005).
There is a remarkable parallel between the most important management thinker Mary Parker Follett and her peer Peter Drucker. Both were initially concerned with democratic theory and initially published mainly texts on issues relating to the further development of liberal democracy. Both based their later books and their thinking on organization and leadership on insights from the social sciences and humanities rather than business administration (Drucker speaks of "management as a liberal art" and Follett also initially refers to practical experience of social cohesion and social innovation). Another parallel in both biographies is that it was not until Parker Follett and Drucker were over forty years old that management topics became a late focus of research, whose personal achievements and implications for the development of democracy and management are still hardly seen and received today.
In Follett's books "The Speaker of the House of Representatives" (1896) and "The New State" (1918), she argued that democracy had to be learned. "Sooner or later every one in a democracy must ask himself, what am I worth to society?" (Follett 1918). Her questions revolved around the new challenges facing politics (including as an advisor to US President Theodore Roosevelt), group dynamics, power games, the tension between the individual and society, and the preservation of plurality and diversity. Their future designs for practical politics focused on participation, decentralization, balance of power, interdependencies, civil society "self-government" and the important role of the local community. "The study of democracy has been based largely on the study of institutions; it should be based on the study of how men behave together." (ibid., p.19) and elsewhere, "Moreover in society every individual may be a complete expression of the whole ... When each part is itself potentially the whole, when the whole can live completely in every member, then we have a true society" (ibid., p. 77).
Drucker also initially became known for his research into totalitarianism. His book "The End of Economic Man. The Origin of Totalitarianism" (1939), written in exile in England and America, has long been considered a classic in Great Britain and Japan. Drucker was one of the first to formulate a theory of totalitarianism and analyzed the economic and intellectual-historical foundations of totalitarian systems in a European context. His book was praised by Winston Churchill, for example (Churchill 1939). Drucker argues that fascism embodies "pure negation" based on "naked authority" without any legitimacy. He explains the European crisis with the collapse of the liberal promise and the individualized individual, who becomes susceptible to scapegoat theories and mass suggestion. As with Parker Follett, it was coincidences that would lead Drucker to the social science foundations of management from the mid-1940s onwards.
It is amazing that Parker Follett and Drucker both extended their social and political analyses of democracy by applying them to the social system of organization and the function of management.
A key to understanding the management innovations of Mary Parker Follett (born 1868) is her life story. Even as a girl, she had to take on family responsibility at an early age. Her father died when she was a teenager and her mother was physically disabled. Equipped with self-discipline and tenacity, she enrolled in the Society for the Collegiate Instruction of Women in Cambridge/Massachusetts in 1892 and studied political sci-ence, law, philosophy and economics. After her extensive studies in government and her doctorate summa cum laude at Ratcliffe College (1898), she worked as a social entrepreneur and "voluntary social worker" for the disadvantaged in Boston from 1900 to 1915. She founded several social centers, among other things to integrate young immigrants in the Boston suburbs. In 1911, she was involved in the founding of the East Boston High School Social Center, a secondary school that offered evening classes for the socially disadvantaged. When she then came into contact with industrial managers (such as Henry S. Dennison or later B. Seebohm Rowntree) in the mid-1910s, her work and the response to her social innovations were to extend to important decision-makers in business. A social worker and manager of the Boston community was to develop into the prophetess of modern management. With her theory of human and social interaction and her pioneering management models, she discovered a field of application that in the 20th century, as an era of a society of organizations, placed management as a social function and innovation factor of a liberal society at the center.
The journalist Mark Gimein once summarized in Fortune the broad impact of management philosophers, in this case Tom Peters (who was the first US business bestselling author to be described in the Economist as one of the "original management gurus" and describes himself as a student of Peter Drucker) on management: "Now that we live in a Tom Peters World" (Gimein 2000). Tom Peters, the media's first management philosopher of the "managerial masses" (ibid.), will probably be forgotten. However, the great mastermind Mary Parker Follett will go down in the history of the management profession as the person who played a key role in shaping the source code of modern management. Nevertheless, her insights have remained unknown outside a small network of experts to this day, presumably because her approaches were located in the field of human relations and not in the paradigm of the rationalist management of Frederick Taylor or Henry Fayol, and probably also because she spent decades as a woman in a male-dominated field.
As Vice-President of the National Community Center Association in New York, Mary Parker Follett gave the remarkable lecture "The Psychological Foundations of Business Administration" to personnel managers at the annual conference of the Bureau of Personnel Administration in 1925. For Follett, organizations, like communities or cities, were social systems made up of networks of social groups. A 'self-governing principle' would be the appropriate leadership guideline to ensure "the growth of individuals and of the groups to which they belonged". If leaders wanted to achieve common goals, it made sense for them to interact directly with each other. "Moreover, we now have to lay somewhat less stress than formerly on this matter of the leader influencing his group because we now think of the leader as also being influenced by his group." (Par-ker Follett 1995) Follett develops a leadership model in which the concepts of power, authority and hierarchy are replaced by circular approaches. The categories of leader and led dissolve for Follett.
“These psychologists were making tests, they said, for aggressiveness, assuming that aggressiveness and leadership are synonymous, assuming that you cannot be a good leader unless you are aggressive, masterful, dominating. But I think, not only that these characteristics are not the qualities essential to leadership, but, on the contrary, that they often militate directly against leadership.” (Parker Follett 1949)
Follett developed some central concepts and theses from observing hierarchical management processes. A classic management approach in hierarchical structures weakens the structures of an organization. Power needs to be redefined. Modern leadership is no longer based on "power over", but on "power with". Those who understand power as "power over" in order to achieve their own goals are acting (self-)destructively. More and more power is then needed to achieve the set goals. Management is always and primarily about cooperation with others. The focus is on interactive influence, and it is about group processes with potential self-organization instead of stabilizing hierarchical structures. "The study of community as a process dissolves hierarchy, for it makes us emphasize the qualitative rather than the quantitative." (Follett 1918)
Follett's criticism was aimed at the prevailing autocratic leadership. It emphasized the importance of the led, who had many subtle means of resisting orders and arbitrary directives. For Follett, leaders and led pursue a common goal. Employees must be involved in decisions. And employees want to do a good job of their own accord. Intrinsic motivation is the norm and can easily be destroyed. Those who lead autocratically risk reducing employees' sense of responsibility. Only through different and better management training will it be possible to achieve better results and make changes to previous practices possible. Almost everything needs to be done differently, especially when it comes to dealing with power, instructions and orders. Orders should be de-personalized, punishments should be abolished. And if there are orders, they should always be justified.
Another central focus of her leadership model was her theory on conflict management. Conflicts are omnipresent in all areas of life ("fact of life"). Conflicts should be acknowledged and, as a manager, you can make them work for the organization ("make to work for us"). In democracy and organizations, conflicts embody the "difference of opinions and interests", and without conflicts there is no progress.
In turn, solutions to conflicts should not be prescribed from above. They must be found within the teams themselves. The demands of the various members of the organization must take into account the interests and needs of others. And last but not least, needs must be expressed, considered and respected.
Follett's practical approach to conflict resolution was also groundbreaking. The sim-plest way of resolving conflict is domination. One side wins against the other, which is rarely successful in the long term. She describes the second variant as "compromise". Controversies are then largely settled by compromise. Each side gives up a little to establish peace and achieves a socially accepted form of conflict resolution. The problem: nobody gets what each side really wants, everyone has to give up something. The right conflict resolution for Follett was "integration", whereby the focus here was on interests rather than positions. Both sides would get what they want. All wishes and needs would essentially be fulfilled, no one would have to give up anything.
Mary Parker Follett, an avant-gardist with pioneering theses on dealing with power, knowledge management, the social network theory of organization, the role of organization in liberal democracy, conflict management and the "self-governing principle" that she originated, have today found their way into all modern forms of the organizing process. It is no exaggeration to say that the way we organize the world of work today, that the origins of modern management can be traced back to the work of a Boston social scientist, democracy researcher and social entrepreneur who is still hardly known to anyone today.
Thus, the starting point for this book, which relates the current changes in business, management and society to the concept of "purpose", is a shift in organizational and management theory that can be traced back to a few pioneering thinkers, such as Mary Parker Follett.
In addition to Mary Parker Follett, Peter Drucker, Herbert Simon, James March and Karl Weick should be counted among the recognized pioneers of modern management (see the empirical study of managers by Weber, 2005).
In "Landmarks of Tomorrow" (1957), Drucker outlined the basic features of a purpose-driven economy. He announced a departure from the mechanical world of causes and effects and a move towards a world of patterns, goals and processes, a shift to a "universe of configuration, purpose, and process" (ibid.). Ever since Drucker put these seemingly innocuous terms into context, management has had to think about how companies can maintain their routines and generate profits on the one hand, while constantly renewing themselves and adapting to social expectations on the other. After all, none other than management has to translate these irresolvable contradictions to which organizations are exposed in modern society into everyday decisions and autonomous action.
In 2009, to mark the centenary of Peter Drucker's birth, executives and management experts discussed his findings on pioneering management innovations (see the anthologies published by Weber, 2009 and 2010). In China alone, six conferences with more than 10,000 guests each were held to mark the centenary of his birth. What challenges would management face in the 21st century in view of this "universe of configuration, purpose, and process"? Sociologist Dirk Baecker summed up the dilemma for management described by Drucker. Those who manage today announce the new and, as it were, invite repetition. "Management has thus opened itself up to a world that is always invention and reality at the same time, but never on the same footing. Invention and reality rub up against each other without ever being able to reduce one to the other. The process deals with precisely this. It sets a beginning in order to be able to reinterpret it in the course of the process. It sets a goal in order to be able to recruit and integrate material and personnel with this in mind. And it relies on itself, i.e. on surprising experiences that invite us to view the beginning, end and course of the process as variables in themselves." (Baecker 2009)
In an article on "Proverbs of Administration" in 1946, Herbert Simon also readjusts the function and principles of management and calls for contradictory strategies and orientations to be made compatible. "For almost every principle there can be found an exactly opposite principle which is equally plausible and acceptable. Even if the two principles lead to exactly opposite organizational recommendations, there is no indication in theory as to which is the one to adopt." (Simon 1946). Simon's model of boundedly rational behaviour is thus another central turning point in management theory.
Karl Weick argues similarly in "The Social Psychology of Organizing" (1969). Weick calls on management to "Complicate yourself!" and to break with teleological manage-ment theories. Teleology, Greek telos (goal, purpose), claims that there is such a thing as intention and planning in nature and later also in organizations. Weick set himself the task of taking organizational theory into new theoretical and empirical territory. His main thesis turned the familiar idea that the process of organizing is goal-oriented into its opposite. For Weick, the beginning is not the goal, the purpose and the planning, but rather the deed ("action") or the design ("enactment"). It is precisely the process of shaping that deals directly with an external environment. "The environment literally bends to people's acts of shaping, and a large part of the activity of sense-making consists of the effort to separate the external world and action." (ibid., p. 191) Karl Weick gives an example from communication among those present: "If I walk into a strange meeting with a basket of chips on my back, the people are rude to me and I leave in resentment, my actions are intertwined with those of the people who were there when I marched in. It is up to the selection process to unravel how much hostility I have caused and how much was already there. Are they responsible for the rude reception or me or both of us or no one? At the conclusion of the creative process, this is not known." (ibid.)
If we follow Weick's thoughts on what this means in practice, we get an initial sketch of how to deal with Drucker's irresolvable contradiction: "1. don't panic in the face of dis-order! 2. you can never do one thing completely at once. 3. chaotic action is preferable to orderly inaction 4. the most important decisions are often the least visible. 5. there is no solution." (ibid., p. 243)
James March, on the other hand, who coined the terms "Garbage Can Model of Organizing" (March/Cohen/Olsen 1972) or "Technology of Foolishness" (March/Olsen 1987), dealt with the question of where decision-making preferences in organizations come from and reflected on the unavoidable ambiguities of all actions in organizations. For March, myths, facades of rationality or plans are only there to provide legitimization after the fact. What are you guided by when you switch from causal and useful considerations to something else? Leadership then has to do with the search for meaning and must switch to ambiguity.
In "Managing the Nonprofit Organization" (New York 1990), Peter Drucker then drew attention to a further role of organization with the development of the urbanization of society. The challenge was to give its members "community and common purpose". Although this referred to non-profit organizations in the context of this book, for the vast majority of people today this also applies to all other organizations. It is precisely the characteristics and challenges of non-profit organizations that lend themselves to an understanding of management in the purpose economy. If, as with the Girl Scouts, there is less than one employee for every thousand volunteers, a picture of the next civil society emerges, "tomorrow's society of citizens through the nonprofit service institution. And in that society everybody is a leader, everybody is responsible, every-body acts. Everybody focuses himself or herself. Everybody raises the vision, the competence, and the performance of his or her organization. Therefore, mission and leadership are not just things to read about, to listen to." (ibid., p. 49)
In 1995, Peter Drucker published the text "Can democracies win the peace" in the Atlantic Monthly. Drucker wrote the article out of concern for the continued existence of institutions without which, in his view, a "bearable society" would not be possible. A functioning civil society is based on the rule of law and the foundation of universal human rights. "The neoliberals are right to say," says Drucker, "that a modern economy cannot exist without a market economy." Conversely, however, the market economy is just as dependent on an intact civil society: "Without it, it is impotent." The purpose economy as part of liberal modernity thus goes beyond the classic self-description of the economy; profits as an end in themselves are no longer enough. (Drucker 1995)
"Managing in the Next Society" (2002), Drucker also highlighted the social legitimacy and exemplary role for the political culture of the democratic constitutional state as further tasks of the managerial profession in what he called the next society.
„In the next society, the biggest challenge for the large company especially for the multinational may be its social legitimacy.” … “Managers will increasingly have to learn that in turbulent times they have to be leaders and integrators in a pluralist society. The manager in other words will have to learn to create the ‘issues’ to identify both the social concern and the solution to it.” (Drucker 2002)
Follett, Drucker, Simon, Weick, March - where do their starting points lead? Does management mean announcing the new and inviting repetition? Does management mean that all members lead in the next organization? Does management mean keeping an eye on a counter-principle for every principle? Does management mean internalizing the primacy of action and only using plans for subsequent legitimation? Does management mean that not just a few, but everyone takes responsibility? Are organizations and their management now shifting from profit as an end in itself to social legitimacy? And last but not least, are managers no longer just attentive observers, but decisive shapers of liberal modernity and its constitutional state? So what values and social models are actors in the purpose economy dealing with today? What controversies in the social debate and possible alternatives to previous economic activity will organizations have to prepare for in the future? How can management make appropriate decisions in the face of irresolvable contradictions?
Readers expect simple answers to such questions. Tom Peters, a disciple of Peter Drucker and Karl Weick, whose management book "In Search of Excellence" (New York, 1982, with Robert Waterman) exceeded one million copies for the first time in the USA, was repeatedly confronted with one question in the thousands of subsequent workshops he conducted with managers in the 1980s: "Tom, we understand what you mean. But please tell us what we should do now!" (cf. Peters 1987). Bounded rationality" (Herbert Simon) becomes the defining phenomenon of entrepreneurial action. Many abstractions of management theory do not help at first glance, but - as another (hobby) mastermind and full-time manager, Chester Barnard (1886-1961) once described it, as a practitioner he moves in "clouds of events" and as a theory-enthusiastic abstractor in "clouds of abstractions" (Barnard 1938). When the more practice-oriented Harvard professor M. Copeland once accused him of the unworldliness of his management concepts, Barnard justified himself by distinguishing between two ways of talking about management: abstract-theoretical and generally understandable-practical. He himself needed both styles for his actions and could only understand what he did in practice theoretically. For Barnard, managing meant acting intuitively without being able to say what knowledge was guiding it. He was interested in organizational theory because it could explicate knowledge that guided action and could perhaps explain why practitioners could not be aware of this knowledge and often followed different models than they thought they did (Barnard 1939).
The aim of this book is to provide the reader with a guide, a vade-mecum, which approaches the concept of purpose and the associated shift in business, management and society. The vademecum aims to contribute to dealing with the unpredictable and contradictory nature of the purpose economy and the next management, which is al-ready developing new patterns of action. The starting points of Follett, Drucker, Simon, March and Weick set the milestones. Managing means preserving patterns, purpose and processes on the one hand, and dissolving them in a measured way on the other, thus remaining fit for the future. For management in organizations today, nothing is more important than listening and talking. Anyone who manages today communicates. Anyone who wants to make the process of organizing fit for the future relies on second-order observation. Or as Niklas Luhmann once put it so remarkable, "A leader can only be someone who can influence how he is observed." (Luhmann 2002)
As the proverb goes in English: "We didn't do it on purpose - it was an accident." In business, this sentence is reminiscent of a start-up that operates with coincidences in the founding phase and still has to find its way. Once the one-time invention organization is established, it can rarely rely on coincidences and inconsistencies. Its sustainable business model and social legitimacy must be developed and maintained. In external communication, purpose emphasizes the self-image and aims for reputation. Purpose becomes a story, a narrative, a social process of sensemaking (Weick 1995). "All our efforts were to no purpose" would then be a sentence that would probably damage most organizations in open markets in the future.
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