Peter Drucker on social responsibility

A business that does not show a profit at least equal to its cost of capital is irresponsible; it wastes society’s resources. Economic profit performance is the base without which business cannot discharge any other responsibilities, cannot be a good employer, a good citizen, a good neighbor.

But economic performance is not the only responsibility of a business any more than education is the only responsibility of a school or health care the only responsibility of a hospital.

Every organisation must assume responsibility for its impact on employees, the environment, customers, and whoever and whatever it touches.

That is social responsibility. But we also know that society will increasingly look to major organizations, for-profit and non-profit alike, to tackle major social ills. And there we had better be watchful, because good intentions are not always socially responsible. It is irresponsible for an organisation to accept – let alone to pursue – responsibilities that would impede its capacity to perform its main task and mission, or to act where it has no competence.

Peter Drucker – Managing in a time of Great Change

The soft option

Your desire to be generous to others is a great motivator to excellence: if you’re serious about ensuring that the externalities of your project are consistently positive, you’re going to need to be doubly good at what you do.

You need emotional energy and time to spare to listen well, to be gracious under pressure, to be the kind of employer or customer that helps your team or partners to do their best work.

It takes discipline to do this kind of emotional labour day in, day out. You need to be clear about what you’re doing and how and why, plan for it, and be deliberate about doing it consistently. You need to find ways to articulate your values to people inside and outside your project.

You need to be hard-headed about being soft-hearted.


We’re familiar with the externalities of industrial production and consumption. They’re fairly predictable, and often visible. Even air pollution, the silent killer, is usually visible when it happens, before the poison spreads. It’s a perfect example of a negative externality – something put into the world that everyonepays for, not just the producer or the consumer.

What are the externalities of your project, program or product? What invisible outputs do you have?

  • What does your way of working with users, customers or clients say that your words leave out? How do they see you seeing them? Do they leave feeling smaller, more pressured, less competent – or with a greater belief in their ability to get better and to make a difference? (As you teach that vital knowledge and share those crucial skills, what else are you teaching?)

  • As you manage your team, how do they feel when they leave the office? What do they take home with them? What are your externalities for their families, friends and neighbourhoods?

    • What about your suppliers – the people who serve you as you serve others. What externalities do you have for the people in the photocopy shop, the electrician who comes to the office, or for your cleaners?

  • What about your suppliers – the people who serve you as you serve others. What externalities do you have for the people in the photocopy shop, the electrician who comes to the office, or for your cleaners?

Not polluting – ‘do no evil’ – isn’t nearly enough.

W. Brian Arthur on combinatorial innovation

The idea … that we have is that there’s some genius in an attic… cooking up technology and coming up with inventions.

But it started to become clear to me having looked in detail at some inventions is that technologies in a way come out of other technologies. If you take any individual technology, say like a computer in the 1940s, it was made possible by having vacuum tubes, by having relay systems, by having very primitive memory systems… All of those things existed already.

So it seemed to me that technology’s evolved by people not so much discovering something new or discovering, but by putting together different Lego blocks so to speak in a new way. Once something’s been put together, like say a radio circuit for transmitting radio waves, it can be thrown back in the Lego set. And occasionally then some of the new combinations would get a name and be tossed back in.

Things like gene sequencing were put together from existing molecular biology technologies and then that becomes a component in yet other technologies…

W. Brian Arthur – a16z podcast

What’s already out there that you could combine to do something in a new way?

How do you keep an eye out for new Lego?

What do you make that you could throw into the Lego set for others?

Strategy: from ideas to value propositions to business models

Ideas are easy. Ideas are free, they’re everywhere. The hard thing is turning ideas into value propositions that customers want, and business models that can scale.

How many projects do I need to invest in to create the next growth engine?

It turns out, you’d actually need to invest in 250 projects. You start with small bets first, and then gradually you filter out those ideas that don’t work, not based on a beautiful powerpoint presentation but based on evidence from the market. And gradually you’ll get to those that win. So the big lesson here is that you can’t pick the winners. You need to invest in “the losers”.

Where do I take this data from? … If you look at early stage venture investment, which is a great proxy, 65 percent of all ideas fail. 25 percent return a little bit of capital, so you invest 100 you may get 500 back. So where do the outliers come from? It’s from a small number … it’s basically four out of a thousand, or one out of 250 [that provide massive returns].

So if you want growth to happen, you need to create the playground, the boundaries, for these ideas to emerge. You need to allow people to experiment and have projects in parallel, so that you can win. That’s what strategy is about: creating the conditions for ideas to emerge. It’s not “hey this is a good idea, we make a big bet, and we execute.”

There are only a few companies in the world that have created these conditions, and it’s not a miracle or a coincidence that Amazon has grown so quickly, because when you have a leader who says “Amazon is the best place in the world to fail” and he admits that “invention and failure are inseperable twins,” you have a completely different culture for those ideas to emerge.

Alex OsterwalderGlobal Peter Drucker Forum 2018

Old year’s resolutions

  • What can you tick off already? Good work on those.
  • What do you need to quit – stop doing, stop trying to do, draw a line under, declare an amnesty for yourself, admit that it won’t get done, and let die with the old year?
  • Perhaps most crucially, what are the little things – acts of kindness that you’ve been thinking it might be nice to do, short emails to friends, decisions, bookings, commitments – that you can do, and get into the habit of doing, starting from right now? Today, the day before you make new year’s resolutions, everything you do is a bonus, a gift of the momentum that a frontlog brings that will make tomorrow better or easier for your future self – the self who’s arriving tomorrow.

Deep literacy: Kevin Kelly on more than reading

… producing books with ease on Gutenberg’s press did not fully unleash text. Real literacy also required a long list of innovations and techniques that permitted ordinary readers and writers to manipulate text in ways that made it useful. For instance, quotation symbols make it simple to indicate where one has borrowed text from another writer. We don’t have a parallel notation in film yet, but we need one.

Once you have a large text document, you need a table of contents to find your way through it. That requires page numbers. Somebody invented them in the 13th century. Where is the equivalent in video?

Longer texts require an alphabetic index, devised by the Greeks and later developed for libraries of books. Someday soon with AI we’ll have a way to index the full content of a film.

Footnotes, invented in about the 12th century, allow tangential information to be displayed outside the linear argument of the main text. And that would be useful in video as well.

And bibliographic citations (invented in the 13th century) enable scholars and skeptics to systematically consult sources that influence or clarify the content. Imagine a video with citations. These days, of courses we have hyperlinks, which connect one piece of text to another, and tags, which categorise using a selected word or phrase for later viewing.

All these inventions (and more) permit any literate person to cut and paste ideas, annotate them with her own thoughts, link them to related ideas, search through vast libraries of work, browse subjects quickly, resequence texts, refind material, remix ideas, quote experts, and sample bits of beloved artists.

These tools, more than reading, are the foundations of literacy.

Kevin KellyThe Inevitable

Stability: Burke and incremental change

Steve Jobs is right about changing the world.

And here’s Edmund Burke with a counterpoint – for society read ‘society’, but also, ‘family’, and ‘your organisation’:

Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure—but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico, or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties.

It is to be looked on with other reverence, because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue and in all perfection.

As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place.

Edmund Burke – Reflections on the Revolution in France


The point?

Stability counts. It’s a product of history, built by those who went before us. The strongest systems grow incrementally  and through iteration, rather than flat-out revolution.**

Too much change will leave your team feeling adrift and uprooted, uneasy and struggling to focus. It’s great to get rid of things that cause friction and slow us down, but change too much, too fast, and things get slippery. It can be hard to keep a grip.

We’re just as blind to many of the things that hold us together as we are to the things that hold us back. So by all means, bounce – but don’t break the trampoline.

**Come back another day for tea with Hayek

In their hands

Make something people can use.

Put it in their hands.

See what happens.

If they’re eager to pay – attention, time, money – you’re onto something.

Watch them. Listen to them. Tweak it. Make more of it. See what they think.

If they tell their friends – and if their friends tell their friends – then you’ve got it.

What change do you seek in the world? Who are the people you seek to serve?

You’ve got it when they’ve got it.

You’ll know you’ve got it when you meet someone for the first time, and the thing you made is already in their hands.

Network opportunities

One telephone – in the whole world – is useless. Who would you call?

The more telephones there are – and especially the more telephones that belong to people you want to talk to – the more useful they become.

This is Metcalfe’s law: the value of a network increases exponentially with the size of the network.

It works for Lego, too. Add a brick, and you add many more possibilities.**

And it’s true for languages – broadly speaking, if more people speak a given language, the more opportunities knowing it creates.

Books also exist as a kind of network. They don’t just depend on other books to enrich their meanings. Books need other books to mean at all. Books make it easier for there to be more books, and if more people read them it makes your books more valuable.

Most things work better with other things – and it’s truer than ever as our networked age allows more people, things and ideas to connect than ever before.

Some ways to add value to a network:

  • Expand the network – add a new node and increase the possible connections
  • Highlight the best parts – not all books are equal
  • Strengthen important connections.
  • Make maps: find and share ways through the network that make it more useful, richer in meaning, faster, more fun
  • Explore: find lost treasures at the periphery and bring them in
  • Create: look for missing pieces – points of possibility that would add a lot of value to the network if they existed – then make them

** Two eight-stud Lego bricks of the same color can be combined in 24 different ways. Three eight-stud bricks can be combined in 1,060 ways. There are more than 915 million combinations possible for six 2 x 4 LEGO bricks of the same color. (Lego Land fun facts)