Excerpt from World Inc.

Chapter 8:
Money Will Not Manage Itself

Tractor Pushing Pennies

One of the leading management gurus of last century, Peter Drucker, had just turned ninety-five when I last spoke with him in the middle of 2005 — just a few months before his death. Drucker was shockingly clear, and not ready to give up. After he passed, I read whatever coverage I could get my hands on, and looked over his many books again. I found out one thing in the process: Drucker and corporate money are almost synonymous, like HP and LaserJet. He left a mark.

For example, ARCO's CEO Lod Cook used to have Peter come in annually in the 1990s. Cook told me twice this exact story: "Even when he could hardly hear any more — we would have Peter come into our Flower Street offices in LA." I'd ask why: "Well...because he always had insights to give us — especially when we were doing something wrong. Kissinger and Thatcher would come in for different reasons, often about new access or emerging markets. In contrast, Peter Drucker saw into how management worked directly. He often knew before I knew if we were doing anything wrong."

Peter Drucker

Peter Drucker
SOURCE: www.cgu.edu

I've asked my other forty corporate affiliates over the years about Peter Drucker and his books' impact on their firms, and most of them had similar tales. In contrast, only about 10 percent of my users spent any real time with the new legends like Jim Collins, John Elkington, or Amory Lovins. This new generation of high-class management gurus comes in for a short "talk of stimulus" at $55,000 a pop. They do not really dwell in firms the way Peter Drucker grew famous for doing, actually getting his hands dirty with the people he was teaching. Peter Drucker has staying power and corporate penetration.

Never one to shy away from controversy and what makes managers tick, Drucker was in a reflective mood for most of the last ten years of his productive life, taking stock of his career and discussing with force and grace with me, and many others, what he learned along the way. His work sums up brilliantly a shift of values from last-century capitalism to the new tenets of a global equity culture.

"Teaching twenty-three-year-olds in an MBA program strikes me as largely a waste of time," Drucker remarked in late 2005. "They lack the background of experience. You can teach them skills — accounting and what have you — but you can't teach them management." Boy, I know what he means there.

Drucker, who was among the first to identify the business of business as a subject of serious study, had spent seventy years trying to teach corporations not to act like twenty-three-year-olds. He had been lecturing corporate leaders on this during the time of Enron and WorldCom. Drucker's last decade was very much a study in how to run successful companies, investigate corporate scandals and schemes, and get to the bottom of why consumers continue to buy shoddy products. It is too bad not many of these leaders took heed while they could. These final chapters are devoted to his work, in an attempt to update them on a matter of great consequence that he missed.

International Banknotes

Click to enlarge

"I have watched this for almost seventy years now and it never changes," Drucker said to Financial Times of London, on several occasions, regarding the swath of business scandals that came to light in the 1990s after the most phenomenal bull stock market in history. Drucker, and his many mimics, have always been fascinated with how money works to either enhance or distort the worth of a corporation. Toward the end, he spoke about these things — about how money is seldom managed well from within — with an added grace and force. This fact explains why the value of a firm often remains hidden, squandered, or enhanced. It also explains why I spent some five years going to heads of all rating groups in preparation for these last two chapters.

Here again I quote Drucker to outline the domain of our two concluding chapters: "At the peak of a boom, investors come to expect 10 percent growth in revenue, and 10 percent growth in profits, which, by simple arithmetic, cannot be done forever. When that becomes clear, management begins to play with the figures. It happens in every cycle." In our search for a better world, I now ask a new-century question not available to Peter Drucker:

  1. Can we use superior information technologies and sharpened financial tools to break this absurd recurrent pattern of abuse?
  2. Is it possible for the ordinary consumer, and the growing number of individual equity investors, to break the code and avoid the deceptive losses?...

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New Millenium Investment Trends, 1989-1998


On Quality

Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.

— Peter Drucker

The Art of Money  

Some International Currencies

ROLL OVER a banknote to see reverse side.
CLICK for a magnified view of the currency.

Rupia (Indonesia)
Indonesian Banknote

Krone (Norway)
Norwegian Banknote

Baht (Thailand)
Thai Banknote

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