Vienna

A wonderful gathering of the management clan is taking place here in the Austrian capital this week. CK Prahalad is in town, as is Charles Handy, Yves Doz and Philip Kotler, among many others. What is everyone doing here? They have come to commemorate the hundredth anniversary of the birth, in this city, of Peter Drucker, the world’s greatest management writer, who died in 2005 just short of his 96th birthday. Why, even his widow Doris, aged 98, has come over from the States to see it all for herself.

On Thursday and Friday delegates will be taking part in the first global Peter Drucker forum, led by Richard Straub, president of the Peter Drucker society of Austria and himself a senior IBM executive based in Paris. On Wednesday there was a pre-summit series of talks and debates, which whetted appetites nicely.

I shall be writing in greater detail about what emerges during this event in my column next Tuesday. But it is already apparent after one half day that the management world is eager to use this anniversary, and the ongoing global economic crisis, as an opportunity: not only to reacquaint itself with Drucker’s writings, but to stake out new ground and reinvigorate thinking on the art of management itself.

What is the big goal for management as we approach 2010? Put simply, it is “to reinvent the social compact of business,” as CK Prahalad declared earlier today. Not what you might call a trivial ambition. And the full conference hasn’t even started yet.

The three most dangerous words in management? “Not invented here.” Only complacent leaders believe that their way of doing things cannot be improved upon. But that attitude can lead apparently successful businesses astray.

As Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley, has pointed out, senior management teams can fail to spot important innovations because the new business models they rely on do not easily fit in with the way things are being done now.

Researching the performance of Xerox, the copier and printer company, between the late 1990s and early 2000s, Prof Chesbrough found that, out of 35 projects that had been rejected as part of a review process, 10 had gone on to become highly successful businesses. Indeed, the combined market capitalisation of these 10 new ventures, even after the “new economy” crash of 2001, was twice that of the former parent itself. He calls these unfortunate rejections a “false negative”: the innovations had looked bad, but that was because senior managers were unable to recognise their virtues.

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My children like Kraft’s Philadelphia soft cheese - the light version (got to think of their health, you know). But I have a question for the company. For many, many years - too many - the product was presented in the most flimsy, feeble packaging imaginable. If you dropped it the lid broke or the packaging shattered.

Finally, this year (in the UK at least), a sturdier version has gone on sale. I and my children welcome this. (Well, I do anyway). But my question is: what sort of company takes so long to recognise the inadequacies of its packaging? Is this new packaging a sign that Kraft’s management has woken up and would therefore make a worthy acquirer of Cadbury? Or is it still a lumbering giant that would never move fast enough in the ultra competitive and fast-moving confectionery market?

I hope the analysts and investors are giving this some thought.

The scene is Detroit, a training room at the headquarters of one of the three great US car companies. A group of corporate vice-presidents is attending a course being given by a distinguished management thinker.

“What you are telling us is great,” the VPs say, “but you are talking to the wrong level. You should be speaking to the next tier up.” The next week, working with more senior managers, he hears the same thing. “This is great, but you are talking to the wrong level. You should be speaking with the chief executive.”

The week after that, our thinker finally gets in to see the boss. “This is great,” the CEO says, “but you should be speaking with my subordinates – I’d need their support in order to do it.”

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At an Editorial Intelligence panel discussion here at the FT in London on Wednesday evening, I was astonished to hear a former City editor, someone well-known for his robust and solidly pro-market views, condemn the levels of some City bonuses as “nauseating”. He also decried what he saw as the “grotesque inequality” of modern society.

When such a distinguished and experienced commentator is prepared to speak publicly in this way, we can safely say that times are changing. Public unease about the behaviour of certain people in financial services is growing. Politicians and regulators talk tough. What will they do?

And what will ordinary decent businesspeople do when they find themselves being harangued for the excesses of others? This is not healthy. Nor is it reassuring. The historian (and FT contributor)  Simon Schama, also speaking at this event, predicted massive social unrest and a real threat to democracy itself.

Is that wildly over the top? Or a reasonable forecast?

Hard work and relentless attention to detail: that’s management for you. Talk is cheap. Visions can inspire, for a moment or two. But without graft – and competence – things go wrong. Any business, no matter how successful, will struggle if it forgets this. There are no quick fixes for organisations that have big commercial and cultural problems.

That is the lesson to draw from the story of Little Chef, the 51-year-old British roadside restaurant chain. For generations, these little cafés, with their red and white signage, have formed a familiar part of the UK landscape. “Fat Charlie” is the diminutive chef in question, smiling out at travelling businesspeople, families and lorry drivers from the side of motorways and A roads.

At its peak, in the 1970s and 1980s, Little Chef enjoyed a dominant market position. But you did not seek out a Little Chef for a thrilling culinary experience. You went there for a reliable cooked breakfast, for plaice, chips and peas, for something acceptable to tired and hungry children. It worked.

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Sad news over the weekend: Russ Ackoff has died. He was 90 years old.

Ackoff was the father of systems thinking, which in the context of management means that looking at problems in isolation is probably going to be a mistake. Work flows (or is supposed to) through a business or organisation, pulled through by customer (or user) demand. Tinkering with bits of the business without considering the whole is likely to lead to further problems.

I met Ackoff in London two years ago, when he was still in splendid form (as he was, apparently, right up until his sudden and unexpected death last week). He was a kindly, mellow, thoughtful man. And very witty.

“All of our [social] problems arise out of doing the wrong thing righter,” he told me. “The more efficient you are at doing the wrong thing, the wronger you become. It is much better to do the right thing wronger than the wrong thing righter! If you do the right thing wrong and correct it, you get better.”

There is a lot more to say about Ackoff and I hope to do so in a future column.

There is an obituary on his web site.

Do take a quick look at our regular Judgment Call feature from Wednesday’s paper. It’s a particularly good one, even if we say so ourselves.

We have sharp contributions from four distinguished commentators: Harvard Business School’s Rakesh Khurana, Rotman’s Roger Martin, Kai Peters from Ashridge and Jim O’Toole from the University of Denver.

We have asked them how good a job business schools are doing in providing an ethical education to their students. Their overall verdict: probably not good enough.

But I am over-simplifying their answers, which are worth reading in full.