Drucker on Asia: A Dialogue between Peter Drucker and Isao Nakauchi – Peter F. Drucker, Isao Nakauchi

Chapter 3
The Challenges of the ‘Knowledge Society’
The Japanese educational system itself is not wrong. Japan has its own forms of creativity and originality

Peter Drucker
Problems imposed from outside the education system

I hope you will forgive me if I start out by saying that I have always found it very difficult to understand the criticism that you in Japan have of your educational system. To be sure, there are some very serious things wrong with it, but they are not, as far as I can see, the fault of the educational system. They have been imposed from the outside, and largely by events of the last thirty or forty years to which society has not yet adjusted.
I have been hearing for many years that the Japanese educational system breeds conformity, that it stifles originality and creativity, and creates organization-men who cannot make decisions, cannot innovate, cannot think for themselves. The results, my dear Mr Nakauchi, do not support these allegations. In fact, to an outsider such as me, the amazing fact is the tremendous amount of originality and creativity that has characterized Japan for many centuries.
Individuality in Japanese arts
As you know, I have been interested in Japanese art for more than sixty years. One of the things that attracted me to it and still fascinates me – is the tremendous individuality of the Japanese artist. If you look at Western art, there is one prevailing style, one prevailing aesthetics at any one time. This has not been true of Japanese art since early Muromachi days. There have always been several, sometimes six or seven, different aesthetics and different styles existing side-by-side, with many artists working in more than one style and more than one aesthetic at the same time. Yet the young artist began to work in a school, and spent ten or fifteen years learning to be a master in that school. Then he blossomed forth into an artist on his own, with tremendous individuality. As I dictate this letter, sitting in my study, I look at three paintings produced by three different artists of the same school who lived at the same time, and who studied under the same masters. And each of the three paintings is strikingly different. At one glance one sees a different artist. In fact, this was the official philosophy of that great intellectual and artistic movement which I am convinced created modern Japan, the movement of the Bunjin of the late Edo period. Their creed was to enable each of the artists in each circle, or in each studio, to develop his own talent and capacities to the utmost – and they succeeded in a way that goes way beyond anything ever done in the West.
Individuality in Japanese company and university
This is still largely true today. I do not pretend to understand it, but it is a fact. There are those faceless, anonymous, organization-men in the Japanese company, who for the first twenty-five years of their career work as subordinates. Then, at age forty-five or so, they are appointed to senior positions. Suddenly, you have as large a number of individuals with their own policies, their own styles, their own strategies, as you have in any country in the world. You see that in the Japanese university. The way Japan treats young scholars in the universities always shocks us in the West. For twenty years they are treated as subordinates rather than as colleagues. They are not encouraged to do their own research – in fact, they do so at their peril. At age forty-five they finally get the full professorship. Then an amazing number of them become individuals, become pioneers in their discipline, and extremely original. Do not ask me to explain this. I know that it would not work in the West, but it works in Japan. I cannot, therefore, accept the criticism I hear in Japan all the time that the Japanese school system creates conformists and destroys individuality, originality, and initiative.
Experience within Japanese schools
My own experience within Japanese schools is quite different. I have visited quite a few elementary schools, over the years. The young children of friends of mine – then eight, nine or ten years old – invited me to come to their schools, some in Tokyo, some in Kyoto, some in Fukuoka. These were ordinary neighborhood schools, and not particularly distinguished ones, but I was impressed by the warmth of the class, by the mutual respect between teacher and students, also by the gaiety and freedom of the school. Those classes were lively. The children were disciplined, but they were not conformists. I also went to quite a few high schools, again as a guest either of a teacher or of a student. I found very much the same spirit there. It was above all the warmth of the relationship between teacher and student that so greatly impressed me. For a good many years, we spent weeks in the countryside of Japan climbing mountains, usually accompanied by two of our younger children. So, whenever we spent an evening at a camp site in a small town at the foot of a mountain, we would be invited to join a Japanese school class on its excursion. Again, I was tremendously impressed by the relationship between the teacher and the students, their warm friendship, their mutual respect; and their spontaneity. As far as I am concerned, the criticism which I hear in Japan all the time, mainly that your schools breed conformists and repress originality and individuality, does not agree with my own experiences and impressions.
Student against student
There are major problems, I admit. The pressure on the child in the Japanese school today to prepare for the ‘examination hell’ is extremely unhealthy. I think all of us agree on that. What bothers me the most is not that it deprives young people of their childhood, though it does that. What really bothers me is that it sets individual student against individual student. I was deeply shocked a few years back- when the son of a friend of ours, a fourteen year old, told me with great glee that his best friend was seriously sick and therefore would not be a competitor in the examination for high school entrance. Such an attitude would not be permitted in the West. We insist, especially in the United States, that the youngsters in a school see themselves as team-mates. In fact, our better schools are as much concerned with mutual support and with being a team player as the large Japanese corporations are in respect to young employees.
Leading universities and careers into the top echelon
Equally serious, at least to this foreign observer, is the fact that your present system deprives Japan of the full yield from a very large part of your human resources. It restricts careers, especially careers into the top echelon – in government, in the leading universities, and in major businesses to the graduates of a few prestige universities. I am willing to admit, though I am not convinced at all, that these few universities may attract a disproportionate number of the ablest and brightest of the young people. All we know about the way human beings develop argues against the thesis that all young people develop at the same pace and rhythm and that, therefore, performance at age seventeen or eighteen is a reliable indication of ability and potential. Even if a very large proportion, make it fifty per cent, of the ablest and the brightest are the ones who are admitted to the prestige universities, that means that at least half of the pool of potential and ability in the Japanese population is kept out of top careers. No country can afford such a waste today. We need a system that reaches out and brings into productive work and contribution the largest possible proportion of ability and potential we can find in the nation.
Plutocracy in education
Increasingly, the Japanese educational system does not reward ability and potential. It rewards money. Increasingly, to get into the prestige universities requires a family that has the money to pay for the cram-school, and a family rich enough to give the young student a room of his or her own to study. Considering how small Japanese apartments usually are, this means that working class children, and even lower-middle class children, are increasingly unlikely to be able to afford prestige education, no matter how able they are. This is not meritocracy. This is plutocracy. And it bothers me a great deal.
Universities before World War II
All this is, however, most definitely not the fault of your educational system. The reason is that we have not adjusted to the changes of the last fifty years, and the same comment applies equally outside Japan. If you go back to the days when I was a high school student getting ready for the university, anybody in any European country could enter any university provided he or she had finished high school. This was not only true of Japan, it was true the world over. I attained my high school graduation in 1927, in Austria. I did not apply for admission to the university. I simply appeared with my diploma, and enrolled. I could have enrolled in any university in Europe, even though my diploma was an Austrian one. In fact, I had applied to Oxford, when I decided instead to go to Hamburg in Germany. I could just as well have gone to Sweden, or to Italy, or to Spain, or to France.
The same thing was true in the United States. When I first came to the United States in 1937, I soon got to know Princeton University very well. Even then it was considered a high prestige university, but if you had a high school diploma you were accepted in Princeton. In fact every year, when the University opened in September, a few young men appeared who had not applied at all. They presented their high school certificate and were admitted. In Japan, you had almost the same situation. There were more place in the Japanese prestige universities than there were students. And so, if you did a decent job in your high school, and if you could afford it, you were automatically admitted to whatever university you or your parents chose.
An explosion in university attendance
Then came the tremendous explosion of university attendance after World War II, which forced us into rigorous admissions procedures. On the European continent, anyone with a high school diploma is stilI automatically eligible for the university, but no longer for any university in Europe. If you graduate from an Austrian high school, you have to go to university in Austria. You can no longer go to Hamburg in Germany, as I did, sixty-eight years ago. You have the same pressures in Japan, but because you inherited a close relationship between employers and individual universities from pre-War days, the restrictions now create the pressures – pressures which underlie the cram-school, that underlie the ‘examination hell’, and which distort the entire educational system. The purpose is no longer to learn; but to have a career, and this is incompatible with education and with human development.
This approach deprives the nation of talent and ability. It is totally impossible, by any law of statistics, that the small proportion of young people who do well in formal examinations contain more than a small fraction of the ablest young people in the nation. The present system thus impoverishes the nation.
‘Examination hell’ and the desire to innovate
There is yet one more reason why the present system – with its enormous pressures on teenagers to cram for examinations – may do tremendous damage to Japan. Whenever we have made a study of successful innovators, especially in new fields such as information technology, genetics, material sciences and physics in general, and also in music or mathematics, or finance, we have found that these people start their interests while they are twelve or thirteen, and usually not much later than fourteen. Then they become enamored of their subject; they become amateurs. They spend endless hours doing experiments, reading, building models, and so on. Most of these young people are good students despite their absorption in a scientific or technical area which is outside the school and totally outside the curriculum, but they are rarely top students. Their main interests are outside of school. When these people reach their early twenties, what had been a hobby during their years, becomes a major career.
Constraining entrepreneurial spirit
The present Japanese system gives the young person no time to do anything except prepare for the next examination. It completely imposes school subjects on the teenager – and school subjects, by definition, deal with yesterday, deal with what is already known, and exclude experimentation, curiosity, and playing around.
I am not saying that most American young people spend the time our school system gives them on productive interests. On the contrary, most of them surely waste most of that free time. I myself, for instance, wasted endless hours as a teenager writing very poor poetry. The successful innovators of the last thirty years – and not only in such areas as computer design or software, but in most scientific and technical fields – trace the beginning of their interest to their middle school or at the latest, their high school years, almost without exception. As I will discuss later, we can build innovation into existing organizations. What we cannot do is to build the entrepreneurial spirit into an organization. That is a matter of the individual. You, for instance, certainly did not derive your desire to innovate, and your capacity to do so, from anything the organization did, but from your own inner drive. The present social climate in Japan (not the schools) militates against exactly that. If you indulge in outside interests, you are likely to fail the examination on school subjects and, thus, be deprived of access to a first-rate university and, ultimately, of access to a first-rate career. If you submit to the pressure and, as a result, make it into a first-rate university and into the first-rate career, your drive to innovate may have been destroyed. Our evidence strongly suggests that this drive has to be developed, preferably encouraged, in the teen years to become productive five or ten years later.
Improvement of the current situation
I think it is fairly easy to change the system, or at least to alleviate it to the point where its worst effects are eliminated. The major Japanese employers, both businesses and government, should recruit from twenty-five universities rather than from three or four. If they then treated all people, regardless of their university, the same way in respect to career and promotions, the worst effects of your system, I am convinced, would disappear within a few years – the examination hell, the cram-schools, and the terror and trauma inflicted on those who don’t make it into Tokyo University or Keio University, and who therefore see themselves condemned at age eighteen to a lifetime of inferiority. Let me repeat that what I am talking about is not a weakness of the educational system. It is a weakness of society. It is not the result of anything that was designed intentionally. It is the result of pure accident the post-War expansion of university attendance has not yet been reflected in the employment system. The employment system is still based on the realities of seventy-five years ago, and not on the realities of today.
Very similar problems are to be found in the systems of most other developed countries, though they are most pronounced in the Japan for the simple reason that no other nation demonstrates such a close relationship between individual universities and individual employers. This, in many ways, is a great strength, both of the Japanese university system and of Japanese society, but it has lead to the exclusion a very large fraction, perhaps a majority, of ability and potential from access to careers. It has became counter-productive and needs to be changed.
What is an educated person?
Your question: ‘What is an educated person?’ goes directly to the meaning of learning, the meaning of education the essence of the system.
I am afraid, however, that I cannot answer that question. It is going to be our challenge for the next one hundred years. In one way, I very much hope that we will be able to maintain the link with tradition and with the past, which is implicit in the traditional definition of an educated person. The Japanese definition was developed by the Bunjin of the mid Edo period, and the Western definition was developed by the great educators of Europe’s seventeenth century. These definitions still largely underlie the education that you and I received. I do not believe that this, by itself, is enough, for these definitions assume that learning is finite. They assume that an educated person is somebody who has learned while young, and stopped learning when going to work. We will now, I think, have to build into our definition what one of the great men of the Meiji period tried to establish. Yukichi Fukuzawa, truly one of the most important figures of the nineteenth century, strongly believed and preached that an educated person is one who is able and eager to continue learning. This will be particularly important as more and more young people are likely to start as specialists or, at least, will make their early careers as specialists.
Young people not knowing how to connect their knowledge
A specialist is a knowledgeable person, but he is not automatically an educated person. An educated person is capable of relating an area of special knowledge to the universe of knowledge and of human experience. This, if I may say so, is what today’s younger people are not able to do. As you know, I teach mostly successful and fairly advanced executives, from business, from government, from non-profit institutions of all kinds – typically men and women in their early or mid forties – who have been successful enough to hold important executive positions, usually in large organizations. They know a great deal, but they do not know that they know it. They cannot, for instance, relate something they know about economics to their own work. They cannot relate what they know about their own work to any other field of knowledge. They do not know how to connect. This is just as true of my Japanese students as it is of my American or European students. These executives are usually brilliant people. They are sent to our Executive Management Program by their employers because they are highly promising executives. They have an outstanding educational record as a rule, and ten or fifteen years of successful, practical experience behind them, but they find it difficult to relate their experience to what their colleagues in the classroom tell them about their experiences. They find it difficult to relate what they have learned, let us say, about psychology, to their own work in managing people.
Knowledge and human development
Such people know a great many things, but they are not educated in the sense that they can reflect this knowledge on their own work or development, their own personality. This, I submit, is the great challenge ahead of us, for the next generation of educational leaders. Without it, we will have a great deal of specialized competence, but little else. The challenge ahead of us is to make knowledge again a means to human development. The challenge is to go beyond knowledge as tools and to recover education as the road to wisdom. I try to do this in my classroom and with my students. It is the one reason why I still teach at my age. Even if I am successful and I have great doubts – I would not know how to teach this to others, let alone how to convert this into a system, a curriculum, an organized educational effort. This, in a way, is what being an educated person always meant. This is what Liberal Arts always meant. It is, in effect, what education, as distinct from knowledge competence, always meant and will, again have to mean.
Chapter 4
The Challenges for entrepreneurship and innovation
Two parallel needs concerning entrepreneurship
We know, first, that we face two parallel but separate challenges. We need entrepreneurs who can start new businesses outside established companies.
We also need to build into existing business a capacity to innovate. If the existing business does not learn to become entrepreneurial and innovative, we face far too much social dislocation.
How to organize for entrepreneurship and innovation

Secondly, we know how to organize for entrepreneurship and innovation. We have the discipline for it, although forty years ago, when you started, it did not exist. We know that innovation begins with looking at the changes that have already happened in economy, in society and in technology, in order to find the opportunities for successful innovation. As you know, I wrote a book on this, some ten years ago. The title is Innovation and Entrepreneurship, so I shall not bore you or our readers by repeating what this book reported as a result of my forty years of work in this area. It is not difficult, in fact, to become innovative.
Young people are required
The next issue is something else again, at least for Japan. Innovation and entrepreneurship require young people. Unless you start to innovate in your twenties or, at the latest, in your early thirties, you will never do it. You yourself, if I may say so, were barely thirty when you started to build what is now Daiei. Morita was twenty seven or twenty eight when he began to build what is now Sony. Honda was not much older. Matsushita was even younger. And the men of the Meiji period were all in their late twenties when they began. Shibusawa Eiichi (whom I consider the real father of modern Japan), founded the first modern Japanese bank when he was thirty. Fukuzawa Yukichi published his first important book when he was twenty six, and founded Keio University when he was thirty seven. Iwasaki Yataro established what is now known as Mitsubishi when he was twenty six. The same is true in every country. Innovators and entrepreneurs have to start early.
This may be the greatest challenge for Japan. It requires changes in the financial system so that young entrepreneurs can have access to capital. To the best of my knowledge, there is no way of obtaining venture capital in Japan, today. But, above all, it requires tremendous changes in the way big companies are organized, especially drastic changes in the way existing companies manage their younger people. That it can be done is demonstrated by the example of two American companies that are among the world’s largest businesses but which have managed to remain innovative. One is 3M, the world’s leader in half a dozen different industries; the other one is Johnson & Johnson, the world’s leader in a wide variety of health-care products. In both you cannot gain admission to senior management unless you proposed a new product before you were thirty, and then built a successful business on it.
How do you build this approach into the existing successful, large company? I am not talking of Japanese companies alone. We have the same problem in the United States and in Europe.
Innovators do not work in a team
In Japan the problem may be most difficult and most acute. One reason is that innovators are not team-players. Innovation cannot be done by committee. As you exemplify, it is highly individual and very lonely. Successful innovators build teams, but they do not work in a team. They work alone and by themselves. This is not what existing, large companies want and tolerate, let alone encourage. Yet, it is what they will have to learn to do. It requires changes in rewards. It requires that young people, in the first ten years of work within a company, are challenged to step out of line and make radical suggestions for change – and that the company then encourages them and sets them up to perform what they have promised. It requires that society values and respects the individual entrepreneur who starts a business on his own, rather than give all approval to the organization man.
Role of pioneers
You may say that these are radical changes, and changes which are all but impossible for Japanese companies, and Japanese society. In fact, when I discuss these things with my friends, I am being told that I am talking of a cultural revolution. My American or German friends are very often just as skeptical as my Japanese friends. But what happened in Japan in the Meiji era, and what happened forty years ago in the 1950s, represent even more radical cultural revolutions. In fact, we do not need to have every company change the way it manages to bring about such a cultural revolution. In the 1950s, when I first visited Japan, the great majority of businesses were still managed the way Japanese businesses had been managed fifty years earlier. It took only two or three companies to pioneer a radically new corporate culture – one focused on continuing quality, on continuing improvement, on becoming multinational. At first, these few companies had a very difficult time. The financial community did not understand what they were doing. MITI, and other government agencies, were opposed to them. They found it difficult at first to attract first-rate people. Only five years or so later, their success had become apparent, and then it took only another five years before what had been the rare exceptions became the rule. It takes only a few successful pioneers to show the way.
Chapter 6
Reinventing the individual
‘The Awareness of change’ has changed
That these questions now seem obvious to us, bespeaks a profound change, in both our views of society and organizations, and in the reality in which we live. It is not only that we are so conscious of change. This is nothing very new. Though we live in a period of great and rapid changes, there have been earlier periods in the history of all civilizations in which changes were equally great and equally rapid. The common belief that technology moves much faster these days than it ever did before is largely a delusion.
No technology in recent years has diffused faster than did eyeglasses, an invention of the late thirteenth century. They spread in fifty years from Oxford in England to the Court of the Pope of the Catholic Church at Avignon in France, to the Court of the Sultan of Egypt in Cairo, and to the Court of the Chinese Emperor. Printing with moveable type, as it was discovered (or, rather, rediscovered) in Germany around 1440 had, twenty years later, spread throughout Europe, with some fifty thousand books printed before the year 1500. And nothing in this century has moved faster than three American inventions of the nineteenth century – the electric light bulb, the sewing machine, and the typewriter. Each spread worldwide within ten years of its invention.
What has changed, and changed profoundly, is our awareness of change. In the past, change was always seen as the anomalous, the exception, perhaps as something that should not be allowed to happen. Societies and groups were organized to prevent change and to maintain stability. We now realize that this does not work. Society and groups have to be organized to take advantage of change.
Drucker’s seven experiences
I was not yet eighteen when, having finished high school, I left my native Vienna in Austria, and went to Hamburg in Germany, as a trainee in a cotton-export firm. My father was not very happy. Ours had been a family of civil servants, professors, lawyers and physicians, for a very long time. He therefore wanted me to be a full-time university student, but I was tired of being a school boy, and wanted to go to work. To appease my father, but without any serious intention, I enrolled at Hamburg University in the Law faculty. In those remote days, the year 1927, one did not have to attend classes in Austria or Germany to be a perfectly proper university student. All one had to do was to obtain signatures of the professors in the registration book. For this, one did not even have to go to class. All one had to do was to give a small tip to the faculty messenger who then went and sought the professors’ signatures. There were no classes offered in the evening, and I worked during the day. During my entire year and a half in Hamburg, I therefore did not attend a single class at the university. And yet, I was considered a university student in good standing.
This sounds strange to modern ears, but it was not at least unusual in those more relaxed days. As I have recounted earlier, anyone with a high school diploma was automatically admitted to any university. All one then had to do to obtain a university degree was to pay a small annual fee and show up for an exam at the end of four years.
Work as a trainee in an export firm
The work as a trainee was terribly boring, and I learned very little. It began at seven-thirty in the morning, and was over at four in the afternoon, and at twelve on Saturday. So I had lots of free time. On weekends, two other trainees – also from Austria, but working in other firms – and I usually went hiking in the beautiful countryside outside of Hamburg, spending the night in a youth hostel where, being officially students, we could obtain free lodging. I had five week-day evenings all to myself in Hamburg’s famous City Library, which was almost next door to my office. University students were encouraged to borrow as many books as they wanted. For fifteen months, I read, and read, and read, in German and English and French.
The first experience – taught by Verdi
And then, once a week, I went to the opera. The Hamburg Opera was then, as it still is, one of the world’s foremost opera houses. I had very little money as trainees were not paid, but for university students, the opera was free. All one had to do was to go there one hour before the performance. Ten minutes before the performance began, cheap seats remaining unsold were given out free to university students. On one of these evenings I went to hear an opera by the great nineteenth century Italian composer, Giuseppe Verdi the last opera he wrote in 1893, the title is Falstaff. It has now become one of Verdi’s most popular operas, but sixty five years ago it was rarely performed. Both singers and audiences thought it too difficult. I was totally overwhelmed by it. I had a good musical education as a boy as the Vienna of my youth was an extremely musical city. Although I had heard a great many operas, I had never heard anything like this. I have never forgotten the impression that evening made on me.
‘Striving for perfection’ – goal and vision
When I made a study, I found, to my great surprise, that this opera, with its gaiety, its zest for life, and its incredible vitality, was written by a man aged eighty! To me, then just eighteen, eighty was an incredible age. I doubt that I even knew anyone that old. It was not a common age when life expectancies, even among healthy people, were around fifty or so. Then I read what Verdi himself had written, when he was asked why, at his age, a famous man and, considered one of the nineteenth century’s foremost opera composers, he had taken on the hard work of writing one more opera, and an exceedingly demanding one. ‘All my life as a musician,’ he wrote, ‘I have striven for perfection. It has always eluded me. I surely had an obligation to make one more try.’
I have never forgotten these words – they made an indelible impression on me. Verdi, when he was my age, that was eighteen, was of course already a seasoned musician. I had no idea what I would become, except that I knew by that time that I was unlikely to be a success exporting cotton textiles. At eighteen, I was as immature, as callow, as naive as an eighteen-year-old can be. It was not until fifteen years later, when I was in my early thirties, that I really knew what I am good at and where I belong. But I then resolved that, whatever my life’s work would be, Verdi’s words would be my lodestar. I then resolved that if I ever reached an advanced age, I would not give up, but would keep on. In the meantime, I would strive for perfection even though, as I well knew, it would surely, always elude me.
The second experience – taught by Phidias
It was at about the same time, and also in Hamburg during my stay as a trainee, that I then read a story which conveyed to me what ‘ perfection’ means. It is a story of the greatest sculptor of ancient Greece, Phidias. He was commissioned around 440BC to make the statues which to this day, 2400 years later, still stand on the roof of the Parthenon in Athens. To this day, they are considered among the greatest sculptures of the Western tradition. The statues were universally admired, but when Phidias submitted his bill, the City Accountant of Athens refused to pay it. ‘These statues,’ the accountant said, ‘stand on the roof of the temple, and on the highest hill in Athens. Nobody can see anything but their fronts. Yet, you have charged us for sculpturing them in the round, that is, for doing their backsides, which nobody can see.’
‘The Gods can see them’
‘You are wrong,’ Phidias retorted. ‘The Gods can see them.’ I read this, as I remember, shortly after I had listened to Falstaff, and it hit me hard. I have not always lived up to it. I have done many things which I hope the Gods will not notice, but I have always known that one has to strive for perfection even if only ‘the Gods’ notice.
Whenever people ask me which of my books I consider the best, I smile and say, ‘The next.’ I do not however mean it as a joke. I mean it the way Verdi meant when he talked of writing an opera at eighty in the pursuit of a perfection that had always eluded him. Though I am older now than Verdi was when he wrote Falstaff, I am still thinking and working on two additional books each of which, I hope, will be better than any of my earlier ones, will be more important, and will come a little closer to excellence.
Work as a journalist
A few years later, I moved to Frankfurt in Germany. I worked first as a trainee in a brokerage firm. Then after the New York Stock Market crash in October 1929, when the brokerage firm went bankrupt, I was hired on my twentieth birthday by Frankfurt’s largest newspaper, as a financial and foreign affairs writer. I continued to be enrolled as a law student at the university because in those days one could easily transfer from one European university to any other. I still was not interested in the law, but I remembered the lessons of Verdi and of Phidias. A journalist has to write about many subjects so I decided that I had to know something about many subjects to be at least a competent journalist.
The third experience – developing own method of studying
The newspaper I worked for came out in the afternoon. We began work at six in the morning and finished by a quarter past-two in the afternoon, when the last edition went to press. So I began to force myself to study afternoons and evenings: international relations and international law; the history of social and legal institutions; history in the round; finance, and so on. Gradually, I developed a system. I still adhere to it. Every three or four years I pick a new subject. It may be statistics, it may be medieval history, it may be Japanese art, it may be economics. Three years of study are by no means enough to master a subject, but they are enough to understand it. So, for more than sixty years, I have kept on studying one subject at a time. This has not only given me a substantial fund of knowledge. It has also forced me to be open to new disciplines and new approaches and new methods – for everyone of the subjects I have studied, makes different assumptions and employs a different methodology.
The fourth experience – taught by the editor-in-chief
The next experience to report in this long story of keeping myself intellectually alive and growing is what was taught by the editor-in-chief, one of Europe’s leading newspapermen. The editorial staff consisted of very young people. At age twenty two, I became one of three assistant managing editors. The reason was not that I was particularly good. In fact, I never became a first-rate daily journalist. But, in those years around 1930, the people who should have held this kind of position – people aged thirty five or so – were not available in Europe. They had been killed in World War I. Even highly responsible positions had to be filled by young people such as me. This situation was not too different from what I found in Japan when I first went there ten years after the end of the Pacific War, in the mid- and late fifties.
The editor-in-chief, then around fifty, took infinite pains to train and to discipline his young crew. He discussed with each of us every week the work we had done. Twice a year, right after New Year and then again before summer vacations began in June, we would spend a Saturday afternoon and all of Sunday to discuss our work over the preceding six months. The editor would always start out with the things we had done well. Then he would proceed to the things we had tried to do well. Next he reviewed the things where we had not tried hard enough. And finally, he would subject us to a scathing critique of the things we had done badly or had failed to do. The last two hours of that session we would then project our work for the next six months: What are the things on which we should concentrate? What are the things we should improve? What are the things each of us needs to learn? And a week later each of us was expected to submit to the editor-in-chief our new program of work and learning for the next six months.
I tremendously enjoyed the sessions, but I forgot them as soon as I left the paper.
Reviewing the preceding year
Almost ten years later, and already in the US, I remembered them. It was then in the early 1940s that I became a senior professor in a major faculty, started my own consulting practice and began to publish major books. Then I remembered what the Frankfurt editor-in-chief had taught. Since then, I have set aside two weeks every summer in which to review my work during the preceding year, beginning with the things I did well, but could or should have done better, down to the things I did poorly and the things I should have done but did not do. I decide what my priorities should be in my consulting work, in my writing, in my teaching.
I have never once truly lived up to the plan I make each August, but it has forced me to live up to Verdi’s injunction ‘to strive for perfection’ even though ‘it has always eluded me’ and still does.
The fifth experience – taught by the senior partner
My next learning experience came a few years later. From Frankfurt in Germany I moved to London in England in 1933, first as a securities analyst in a large insurance company and then, a year later, to a small but fast-growing private bank as the firm’s economist and executive secretary to the three senior partners – one, the founder, a man in his seventies, two others in their mid-thirties. At first I worked exclusively with the two younger men, but after I had been at the firm some three months or so, the founder called me into his office and said: ‘I didn’t think much of you when you came in here and still don’t think much of you, but you are even more stupid than I thought you would be, and much more stupid than you have any right to be.’ Since the two younger partners had been praising me to the skies each day, I was dumbfounded.
What is necessary to be effective in a new assignment
And then, the old gentleman said, ‘I understand you did very good securities analysis at the insurance company. But if we had wanted you to do securities analysis work, we would have left you where you were. You are now the executive secretary to the partners yet you continue to do securities analysis. What should you be doing now, to be effective in your new job?’ I was furious, but still I realized that the old man was right. I totally changed my behavior and my work. Since then, when I have a new assignment, I ask myself the question, ‘What do I need to do now that I have a new assignment, to be effective?’ Every time it is something different.
I have been a consultant, now, for fifty years. I have worked with many organizations and in many countries. The greatest waste of human resources in all the organizations I have seen is the failed promotion. Of able people who are being promoted and put into a new assignment, not many become true successes. Quite a few are outright failures. A very much larger number are neither successes nor failures, they become mediocrities. A handful only are successes.
The reason for sudden incompetence
Why should people who, for ten or fifteen years have been competent, suddenly become incompetent? The reason in practically all cases I have seen, is that people do what I did, sixty years ago in that London bank. They continue in their new assignment to do what made them successful in the old assignment and what earned them the promotion. Then they turn incompetent, not because they have become incompetent, but because they are doing the wrong things.
Requirement for success
For many years, I have made it my practice to ask those of my clients who are truly effective people – and especially those who are truly effective executives in large organizations – to what they attribute their effectiveness. Practically always, I am being told that they owe their success, as I do, to a long-dead boss, who did what the old gentleman in London did for me: force me to think through what the new assignment requires. No-one, at least not within my experience, discovers this for himself. You need someone to teach you. Once one has learned that, one does not forget it, and then – almost without exception – one is successful in the new assignment. What it requires is not superior knowledge or superior talent. It requires concentration on the things that the new assignment requires, the things that are crucial to the new challenge, the new job, the new task.
The sixth experience – taught by the Jesuits and the Calvinists
Quite a few years later, around 1945, and after I had moved from England to the US in 1937, I picked for my three-year study subject early modern European history, and especially the fifteenth and sixteenth centuries. There I found that two European institutions had become the dominant forces in Europe: The Jesuit Order in the Catholic South and the Calvinist Church in the Protestant North. Both owed their success to the same method. Both were founded independently, in 1536. Both from the very beginning adopted the same learning discipline.
Importance of writing down
Whenever a Jesuit priest or a Calvinist pastor does anything of significance, for instance, making a key decision, he is expected to write down what results he anticipates. Nine months later, he then feeds back from the actual results to these anticipations. This very soon shows him what he did well and what his strengths are. It also shows him what he has to learn and what habits he has to change. Finally it shows him what he is not gifted for and cannot do well. I have followed this method for myself now for fifty years. It brings out what one’s strengths are – and this is the most important thing an individual can know about himself or herself. It brings out where improvement is needed and what kind of improvement is needed. Finally, it brings out what an individual cannot do and therefore should not even try to do. To know one’s strengths, to know how to improve them, and to know what one cannot do – they are the keys to continuous learning.
The seventh experience – taught by Schumpeter
One more experience, and then I am through with the story of my personal development. At Christmas 1949 – I had just begun to teach management at New York University – my father, then seventy three years old, came to visit us from California, where he had retired a few years earlier. Right after the New Year, on January 3, 1950, he and I went to visit an old friend of his, the famous economist Joseph Schumpeter. My father had already retired, but Schumpeter, then sixty six and world-famous, was still teaching at Harvard and very active as President of the American Economic Association.
In 1902 my father was a young civil servant in the Austrian Ministry of Finance, but also did some teaching in economics at the university. He had come to know Schumpeter, then at age nineteen, the most brilliant of the young students. Two more different people are hard to imagine: Schumpeter was flamboyant, arrogant, abrasive, and vain; my father, quiet, the soul of courtesy and modest to the point of being self effacing. Still the two became fast friends and remained fast friends.
By 1949, Schumpeter had become a very different person. Sixty six years old and in his last year of teaching at Harvard, he was at the peak of his fame. The two old men had a wonderful time together reminiscing about the old days. Both had grown up and had worked in Austria, and both had eventually come to America, Schumpeter in 1932 and my father, four years later. Suddenly, my father asked with a chuckle: ‘Joseph, do you still talk about what you want to be remembered for?’ Schumpeter broke out in loud laughter, and even I laughed. For Schumpeter was notorious for having said, when he was thirty or so and had published the first two of his great economic books, that what he really wanted to be remembered for was to have been ‘Europe’s greatest lover of beautiful women, and Europe’s greatest horseman and perhaps also as the world’s greatest economist.’ Schumpeter said, ‘Yes, this question is still important to me, but I now answer it differently. I want to be remembered as having been the teacher who converted half a dozen brilliant students into first-rate economists.
He must have seen an amazed look on my father’s face because he continued, ‘You know, Adolph, I have now reached the age where I know that being remembered for books and theories is not enough. One does not make a difference unless it is a difference in the lives of people.’ One reason my father had gone to see Schumpeter was that it was known that he was very sick and would not live long. Schumpeter died five days after we had visited him.
I have never forgotten that conversation. I have learned from it three things. First, one has to ask oneself what one wants to be remembered for. Secondly, that should change as one gets older. It should change both with one’s own maturity and with the changes in the world. Finally, one thing worth being remembered for is the difference one makes in the lives of people.

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