Peter Drucker's global legacy and management in Indonesia

Novianta Hutagalung, Ovingham, South Australia

Recently, the Business Week and The Economist wrote articles about Peter Drucker's legacy to the business world after his death at 95 years of age. Both magazines acknowledged his unique and valuable contribution to the development of management principles despite the argument that his works were not always supported by the extensive and rigorous process of academic research.

However, instead of merely discussing his contribution to management concepts, it may be more valuable to contextualize his ideas within the context of management in Indonesia.

His concepts may have even greater relevance, because Indonesia as a nation is facing a protracted multi-dimensional crisis that signifies major management problems.

Existing disputes over the draft tax laws, fuel shortages in particular regions, unresolved conflicts in Poso, the slow down in economic growth, the political maneuvers over the Cabinet reshuffle plan and confusion in the distribution of compensation funds are a few examples of how our nation fails to manage its problems.

In terms of global competition, Indonesia is also considered one of the most corrupt countries; it has low competitiveness, a low credit rating and is among the least attractive places for investment.

Probably triggered by the awareness of our low global competitiveness, President Susilo Bambang Yudhoyono during his visit to South Korea attending the APEC conference last month, suggested four critical factors for Indonesia to leap forward.

Those factors are hard work, higher productivity, advancement in technology and adequate capital. However, these factors may not be adequate in order to bring about fundamental transformation in this country.

First, human capital holds growing importance in the present and the future economy. Therefore, work smart and work with wisdom (which is rooted in understanding the fundamental values and purpose in life as well as incorporating strategic and creative thinking) is now becoming much more important than merely depending on hard work for long term and sustainable success.

Second, technology and capital basically do not imply value. Therefore, technology and capital can only be leveraged and capitalized when there are creative ideas from human capital which enables them to be transformed into valuable activities.

Third, productivity is basically a past performance indicator which may be driven by good investment in human capital. By investing in human capital, we may have ingenious ideas which may alter the way our nation perceives and responds to problems, performs the work, plans for the future and develops.

In this matter, Peter Drucker suggests that human capital and the ability to anticipate change are the critical factors that need to be taken into account by any modern organization.

In many cases, rather than trying to find creative ideas to generate new opportunities, our senior government officials and politicians tend to blame others or external factors for their failure to perform their task.

In other words, our paradigm is mostly characterized by a narrow minded, short term, partial, transactional, win-lose, us- them and backward way of thinking.

The minister of finance recently attacked businessmen for demanding too much with regard to their suggestions for more incentives for businesses within the amendments to the tax laws. His reaction and statement reflected his failure to acknowledge the real problems faced by the business community.

Moreover, his reactionary response signifies that he overlooked the systemic and long term implications of his statement. Such behavior actually represents yesterday's logic, which is strongly challenged by Peter Drucker. Simplifying the problems, as shown by simplistic comments by many of our high- ranking government officials and politicians is not relevant in today's competitive global landscape anymore.

In terms of human capital, Peter Drucker argued that knowledge which resides in the people is critical for creating the values of modern organizations. Therefore, the workforce needs to be treated as an asset rather than merely considering it as a cost which burdens the organization.

In anticipating change, Peter Drucker suggests that the ability to create is essential rather than merely depending on the ability to solve a problem. According to Drucker, the ability to solve problems is not enough to anticipate change.

First, because problem solving may distract the organization's ability to see, reap and create the opportunity from new ideas and perspectives.

In the context of Indonesia, tribulations tend to be approached by the same old ways of thinking. Solving the problem is more recognized than creating or re-creating opportunity. It is not surprising then that in many cases high government officials tend to stay within their comfort zone by avoiding problems. Problem solving often simply becomes problem avoiding.

Second, problem solving tends to be merely seen, understood and therefore resolved based on the perspective of the most powerful party. In this situation, the decisions merely shift the problems from the powerful to the powerless party, without ingenious ideas to open new windows of opportunities for both. It is no wonder that short term solutions are popular even though the long term objective and fulfillment of the broader people's interests are sacrificed.

The writer is a lecturer at Perbanas Business School Jakarta; and a graduate from the International Graduate School of Business, University of South Australia.