January 28, 2013 12:06 am

The art of leadership

Artist "painting" a graph. Illustration by Andrew Baker©Andrew Baker

In his 1989 book, The New Realities, the late Peter Drucker, described management as a “liberal art” – that is, the application of knowledge, self-knowledge and wisdom to achieve an effective result. The context, argued Drucker, the first serious chronicler of modern business, was that management, ubiquitous and essential for any kind of human endeavour, had become a social and not just a business function. Redefining management in this way, drawing on the insights of the humanities to illuminate present needs and how to meet them, would help solve the existential crisis brought on by management’s very success: what gives it its legitimacy? To whom is it accountable, and for what?

If it has not turned out quite like that, and the idea of management as a liberal art seems somewhat quaint, it is because Drucker, far-sighted as he was, made one spectacular miscalculation: he believed the power and wealth of capitalists were declining, to the point where “if all the super-rich of the developed countries suddenly disappeared, the world economy would not even notice it”.

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How wrong can you be? In fact, the power and wealth of business have increased so much that the business form of management has driven out any other possibility. Non-governmental organisations, social enterprise, the NHS, schools and universities are all subject to the accountants’ calculus of rankings, audit and performance management – even though when anyone last looked it was not clinical, medical or academic management systems that proved so fallible in 2007 and 2008.

Ironically, the failure of the “liberal art” project endangers business as much as the other institutions to which management is applied. As Drucker was well aware, shareholder value does not confer management legitimacy – another of his sayings was that free enterprise could not be justified as an end in itself, only as the means to a good society – all too often encouraging the accumulation of corporate power and takeovers “sacrificing long-range, wealth-producing capacity to short-term gains”. Outsourcing has denuded economies of skills and jobs; innovation peters out in triviality while the planet heats and resources run dry.

The idea that a great corporation is endowed with the prerogatives of a free individual is as essential to the acceptance of corporate rule in temporal affairs as the divine right of kings in an earlier day.

- Thurman Arnold, ‘The Folklore of Capitalism’ (1937)

In terms of creativity, it takes a positive outlier such as Apple, the technology company, to show what business is missing. Steve Jobs, the former chief executive, was explicit that Apple’s distinctiveness and success were in large part due to its conscious marrying of the liberal arts and the physical sciences. Although at first glance there may have been little in common between the California hippy and the European-born intellectual, Drucker would have appreciated the photo of Jobs giving a presentation beneath a mocked-up street signpost whose arms bore the words “technology” and “liberal arts”. Echoing Drucker, Jobs once described the role of technology as solving problems that the humanities decided should be solved. As for products, he said: “Part of what made the Macintosh great was that the people working on it were musicians and poets and artists and zoologists and historians who also happened to be the best computer scientists in the world. It is in Apple’s DNA that technology alone is not enough – it is technology married with liberal arts, married with the humanities, that yields us the results that make our hearts sing.”

By now management has long abandoned the search for legitimacy – it just assumes it, with consequences that often make hearts sink rather than sing. Drucker thought that in an information-based society, size and scale in business would no longer rule. While in mechanical systems bigger is better, in biological ones size follows function, so that “in an information-based society, bigness becomes a ‘function’ and a dependent, rather than independent, variable”. The smallest effective size would be best. Here, too, though, he was wrong. In fact, companies have just gone on getting bigger, like cancer cells replicating beyond control until, as the financial sector did in 2008, they imperil the economy and wider polity as a whole.

That the great questions of legitimacy and accountability still needed to be asked was for Drucker both a measure of managers’ success and their great indictment. Had he lived to see the crash (he died in 2005) he would have considered them even more urgent. Now more than ever, the world needs his concept of management as a liberal art, to focus “the wisdom and beauty of the past on the needs and ugliness of the present” and “to make the ‘humanities’ again what they ought to be: lights to make us see and guides to right action”.

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