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Drucker continues a previous lecture concerning the performance of organizations, focusing on the operation of hospitals and what they need to function properly. Hospitals buy upwards of 50,000 items a year. He then proceeds to discuss innovation and entrepreneurship--with a focus not on doing things better, necessarily, but doing different things, which Drucker identifies as a very blurred line. Doing things better often results in a qualitative change. Entrepreneurship, according to Drucker, does involve starting a new business; however, he notes that very few businesses are innovative. Innovation requires resources and does not result from a flash of genius, because it is very hard work. Historically, very little innovation has come from outside existing organizations. Ideally, in an organization or business, one must both manage and innovate. In reviewing Western history, it can be said that almost everything the modern world now has was a development of the mid and late nineteenth century. The new institutions and industries from this time period emerged into a vacuum, as they did not replace anything. However, since those times, the United States’s major cities have moved away from manufacturing and have become primarily financial centers. Currently, the U.S. is moving away from downtowns as centers of activity and commerce. Before World War II, the people who travelled were primarily salesmen and lecturers. Drucker hypothesizes that cities will more likely be communication centers rather than people centers as time progresses. He then muses on the history of colleges and education, specifically focusing on the progression of the German, Japanese, and American models of colleges and universities, and gives particular attention to the evolution of The Claremont Colleges. New institutions, whether in education, medicine, business, or government, move ultimately into a vacuum in their creation. Innovation must therefore occur, according to Drucker, in existing institutions. Historically, schools have believed that there must be one right method in instruction, and today it is now known that different people learn differently. Almost all of the education controversies are nonsensical. Most people learn skills and acquire knowledge behaviorally, with the exception of reading, which is highly cognitive. It will be the duty of the teacher to direct kids to their proper educational context. If the wrong rhythm and speed is imposed on human beings, resistance and fatigue are created. Returning to the topic of hospitals, Drucker observes how, for much of their existence, they were places for the poor to die with some dignity, and nuns were the caretakers. As late as 1920, children were not born in the hospital, and maternity wards were places where women could rest before returning home. Drucker goes on to predict that the hospital will become a diagnostic or lab center, and how one manages it will become a central problem. The hospital will continue to change very quickly in the modern era. Moving on, he comments that when society reaches the point where capital is no longer scarce, and the world is drowning in liquidity, the balance of power shifts and enormous returns simply cannot be made. Learning to innovate within existing institutions will be increasingly important--this will be a difficult task for very large organizations, while medium organizations will fare better. However, small organizations will have a similarly difficult time as the larger ones. He concludes that there are three things one has to learn for innovation in existing institutions. First, it must be learned how to look for innovation--what is it? Innovation has to be learned systematically. At the end of the nineteenth century, for the first time, people looked at learning. Second, it must be determined how one organizes innovation so that it becomes doable. Third, it must be discovered how one implements innovation so that it becomes effective. Drucker proceeds to advocate the idea that schools should become more like hospitals and function as diagnostic centers. The secret to performance is knowledge of self, and acting according to expectations is necessary, if only in manners.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Hospitals Hospitals-Administration Innovation Entrepreneurship History Manufacturing processes Manufacturing industries Finance Financial institutions Financial services industry United States World War II Colleges and universities Claremont Colleges (consortium) Claremont Colleges Pomona College (Claremont, Calif.) Reading Cognitive learning Teachers Teacher-student relationships Teaching Nuns Organizations Organizational Innovation Organizational change Organizational behavior Organizational effectiveness Implementation Diagnostics Claremont Graduate School Claremont Graduate University Qualitative change Western civilization Higher education--Germany Higher education--Japan Higher education--United States Behavioral learning Maternity wards Symposia
Original recording, January 27th, 1990; Drucker Archives; Box 68