The Drucker Lectures – The Knowledge Worker and the Knowledge Society. The Essence Of Management is To Make Knowledges Productive.

October 27, 2010 by · Leave a Comment
Filed under: Knowledge Management 

The Knowledge Worker and the Knowledge Society.

The knowledge society is an employee society. Traditional society—
or society before the rise of the manufacturing enterprise
and the blue-collar manufacturing worker—was not a society
of independents. Thomas Jefferson’s society of independent, small
farmers each being the owner of his own family farm, and farming
it without any help except that of his wife and his children,
was never much more than a fantasy. Most people in history were
dependents. But they did not work for an organization. They were
working for an owner, as slaves, as serfs, as hired hands on the farm;
as journeymen and apprentices in the craftsmen’s shops; as shop assistants
and salespeople for a merchant; as domestic servants, free
or unfree; and so on. They worked for a master. When blue-collar
work in manufacturing first arose they still worked for a master.

In Dickens’s great 1854 novel of a bitter labor conflict in a cotton
mill [Hard Times], the workers worked for an owner. They
did not work for the factory. Only late in the nineteenth century
did the factory rather than the owner become the employer. And
only in the twentieth century did the corporation, rather than
the factory, then become the employer. Only in this century has
the master been replaced by a boss, who himself, 99 times out of
100, is an employee and has a boss.

Knowledge workers will be both employees who have a boss
and bosses who have employees.

Organizations were not known to yesterday’s social science,
and they are, by and large, not yet known to today’s social science.
The great German sociologist Ferdinand Toennies, in his
1888 book Gemeinschaft und Gesellschaft [Community and Society]
classified the known forms of human organization as being
either community, which is organic, and fate, or society, which
is a structure and very largely under social control. He never
talked of organization. Nor did any of the other sociologists of
the nineteenth or early twentieth century.

But organization is neither community nor society, although it
partakes of some characteristics of each. It is not fate. Membership
in an organization is always freely chosen. One joins a company
or a government agency or the teaching staff of a university.
One is not born into it. And one can always leave. It is not society,
either, especially as it does not embrace the totality of its members.
The director of market research in a company is also a member of
half a dozen other organizations. She may belong to a church, to
a tennis club, and may well spend, especially if an American, five
hours a week as a volunteer for a local nonprofit organization—for
example, as a leader of a Girl Scout troop. Organizations, in other
words, are not true collectives. They are tools—means to an end.

There have been earlier organizations. The professional military
as it arose after the seventeenth century was an organization;
it was neither a society nor a community. The modern university,
as it emerged after the foundation of the University of Berlin in
1809, was an organization. Faculty members freely joined and
could always leave. The same can be said for the civil service as
it arose in the eighteenth century, first in France, then on the
European continent, and finally in late nineteenth century in
Great Britain and Meiji Japan (though not until 1933 or World
War II in the United States).

But these earlier organizations were still seen as exceptions.
The first organization in the modern sense, the first that was
seen as being prototypical rather than exceptional, was surely
the modern business enterprise as it emerged after 1870, which
is the reason why, to this day, most people think of management
as being “business management.”

With the emergence of the knowledge society, society has
become a society of organizations. Most of us work in and for
an organization, and we are dependent for our effectiveness and
equally for our living on access to an organization, whether as
an organization’s employee or as a provider of services to an
organization—as a lawyer, for instance, or a freight forwarder.
More and more of these supporting services to organizations are,
themselves, organized as organizations. The first law firm was
organized in the United States a little over a century ago; until
then, lawyers practiced as individuals. In Europe there were no
law firms to speak of until after World War II. Today, the practice
of law is increasingly done in larger and larger partnerships.
It is also true, especially in the United States, of the practice of
medicine. The knowledge society is a society of organizations
in which practically every single task is being performed in and
through an organization.

Most knowledge workers will spend most if not all of their
working life as employees. The meaning of the term is different
from what it has been traditionally, and not only in English but
in German, Spanish, or Japanese as well.

Individually, knowledge workers are dependent on the job.
They receive a wage or salary. They are being hired and can be
fired. Legally, each is an employee. But, collectively, they are the
only capitalists. Increasingly, through their pension funds and
through their other savings (such as through mutual funds in the
United States), the employees own the means of production. In
traditional economics—and by no means only in Marxist economics—there is a sharp distinction between the wage fund, all
of which goes into consumption, and the capital fund. Most social
theory of industrial society is based, one way or another, on the
relationship between the two, whether in conflict or in necessary
and beneficial cooperation and balance. In the knowledge society,
the two merge. The pension fund is deferred wages and, as such,
a wage fund. It is also increasingly the main source of capital, if
not the only source of capital, for the knowledge society.

Equally important, perhaps more important: In the knowledge
society, the employees—that is, knowledge workers—again
own the tools of production. Marx’s great insight was the realization
that the factory worker does not and cannot own the tools
of production and therefore has to be alienated. There was no
way, Marx pointed out, for the worker to own the steam engine
and to be able to take the steam engine with him when moving
from one job to another. The capitalist had to own the steam
engine and had to control it. Increasingly, the true investment in
the knowledge society is not in machines and tools. It is in the
knowledge of the knowledge worker. Without it, the machines,
no matter how advanced and sophisticated, are unproductive.

The market researcher needs a computer. But increasingly,
this is the researcher’s own personal computer—a cheap tool the
market researcher takes along wherever he or she goes. And the
true capital equipment of market research is the knowledge of
markets, of statistics, and of the application of market research to
business strategy, which is lodged between the researcher’s ears
and is his or her exclusive and inalienable property. The surgeon
needs the operating room of the hospital and all of its expensive
capital equipment. But the surgeon’s true capital investment
is the 12 or 15 years of training and the resulting knowledge
that the surgeon takes from one hospital to the next. Without
that knowledge, the hospital’s expensive operating rooms are so
much waste and scrap.

This is true whether the knowledge worker commands advanced
knowledge, like the surgeon, or simple and fairly elementary
knowledge like the junior accountant. In either case, it is the
knowledge investment that determines whether the employee is
productive—not the tools, machines, and capital the organization
furnishes.

The industrial worker needed the capitalist infinitely more
than the capitalist needed the industrial worker—the basis for
Marx’s assertion that there would always be a surplus of industrial
workers, an industrial reserve army that would make sure
wages could not possibly rise above the subsistence level (probably
Marx’s most egregious error). In the knowledge society
the most probable assumption, and certainly the assumption on
which all organizations have to conduct their affairs, is that they
need the knowledge worker far more than the knowledge worker
needs them. It is the organization’s job to market its knowledge
jobs so as to obtain knowledge workers in adequate quantity and
superior quality. The relationship increasingly is one of interdependence,
with the knowledge worker having to learn what
the organization needs, but with the organization also having to
learn what the knowledge workers needs, requires, and expects.

Because its work is based on knowledge, the knowledge organization
is altogether not one of superiors and subordinates.
The prototype is the symphony orchestra. The first violin may
be the most important instrument in the orchestra. But the first
violinist is not the superior of the harp player. He is a colleague.
The harp part is the harp player’s part, and not delegated to her
by either the conductor or the first violinist.

There was endless debate in the Middle Ages about the hierarchy
of knowledges, with philosophy claiming to be the queen
of knowledges. We long ago gave up that moot argument. There
is no higher knowledge and no lower knowledge. When the patient’s
complaint is an ingrown toenail, the podiatrist’s knowledge controls, and not that of the brain surgeon—even though the
brain surgeon represents many more years of training and gets a
much larger fee. If an executive is posted to a foreign country, the
knowledge he or she needs, and in a hurry, is the fairly low skill of
acquiring fluency in a foreign language—something every native
of that country has mastered by age 2 without any great investment.
The knowledge of the knowledge society, precisely because
it is knowledge only when applied in action, derives its rank and
standing from the situation and not from its knowledge content.
This, too, is new. Knowledges were always seen as fixed stars,
so to speak, each occupying its own position in the universe of
knowledge. In the knowledge society, knowledges are tools and,
as such, dependent for their importance and position on the task
to be performed.

One final conclusion: Because the knowledge society perforce
has to be a society of organizations, its central and distinctive organ
is management.

When we first began to talk of management, the term meant
business management. But we have learned in this last half
century that management is the distinctive organ of all organizations.
All of them require management, whether they use
the term or not. All managers do the same things, whatever
the business of their organization. All of them have to bring
people—each of them possessing a different knowledge—together
for joint performance. All of them have to make human
strengths productive in performance and human weaknesses
irrelevant. All of them have to think through what are results
in the organization, and all of them have to define objectives.
All of them are responsible to think through what I call “the
theory of the business”—that is, the assumptions on which the
organization bases its performance and actions, and equally,
the assumptions on which organizations decide what things
not to do.

All of them require an organ that thinks through strategies—
that is, the means through which the goals of the organization
become performance. All of them have to define the values of
the organization: its system of rewards and punishments, and its
spirit and its culture. In all of them, managers need both the
knowledge of management as work and discipline and the knowledge
and understanding of the organization itself—its purposes,
its values, its environment and markets, its core competencies.

Management as a practice is very old. The most successful
executive in all history was surely that Egyptian who, 4,000
years ago or more, first conceived the pyramid without any precedent,
designed and built it, and did so in record time. Unlike
any other work of man, that first pyramid still stands. But as a
discipline, management is barely 50 years old. It was first dimly
perceived around the time of World War I. It did not emerge until
World War II, and then primarily in the United States. Since
then, it has been the fastest-growing new function, and its study
the fastest-growing new discipline. No function in history has
emerged as fast as management, and surely none has had such
worldwide sweep in such a short period.

Management, in most business schools, is still taught as a
bundle of techniques—budgeting or organization development.
To be sure, management, like any other work, has its own tools
and its own techniques. But just as the essence of medicine is not
the urine analysis, the essence of management is not technique or
procedure. The essence of management is to make knowledges
productive. Management, in other words, is a social function.
And, in its practice, management is truly a liberal art.

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