How's my Luck now?

Reflections, views and descriptions during my stay at IIM Lucknow from July 2004 to March 2006

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Location: India

Wednesday, January 25, 2006

'Men, Ideas & Politics' - II

Two very good essays emerge from Drucker's own experience with Japan and the Japanese. In 'Japan Tries for a Second Miracle', Drucker outlines the astonishing economic progress Japan made in the decade since 1952, and attributes it to five things: new investments, creating a mass market for goods, advances in agriculture, in education, and in health. He outlines the new challenges for Japan - creating new markets in Europe, and in return, opening up their domestic market to foreign competition for the first time; solving the problem of Japan's high-cost economy; problems caused by such practices as lifetime employment; and, the need for able political leadership.

Eight years later (in 1971), Drucker wrote 'What We can Learn from Japanese Management', very lucidly outlining three traits of Japanese management that made Japanese business so effective - the importance of consensus, not so much in making a decision, as in actually understanding a problem and the need for a decision; the practice of lifetime employment and how it harmonizes job security with flexibility in labour cost; the Japanese mentorship tradition in organizations and how that results in developing able leaders for the future.

Drucker includes two obituaries in the collection. The first is that of Henry Ford, who he credits with bringing together isolated ideas of the 19th century to evolve the technique of mass production, thereby solving a lot of the problems associated with typical capitalist society of the 19th century which led to the birth of Marxism. Mass production, Drucker says, was not just a production technique, it was a technique of social organization. It gave birth to its own problems, during Ford's lifetime - no worker having skills to produce something entirely on his own, etc.

The second obituary is that of John Maynard Keynes. Like Ford, Keynes is also seen as a great man in his field (economics) who saw the grand success of his theories but also the failure of his economic policies during his lifetime. Keynes' introduction of the idea of money itself being an important psychological factor in man's economic decisions (and not just the economically rational factors of supply & demand) was revolutionary. It helped explain the phenomena of depression and unemployment, at a time when it was most required. At the same time, the economic policies he devised for Britain, and later, proposed for the international economy, betrayed the fact that his political belief was still that of the classical economist - a laissez faire economy with government doing only some slight nudging and pushing, and even that on the basis of purely economic indicators and not political factors. The failure of such policies was immediately visible in America's New Deal.

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