Facing the "Totally New and Dynamic"

By EDWARD REINGOLD Peter Drucker

Q. In the remaining years of the 20th century . . .

A. We are already deep in the new century, a century that is fundamentally different from the one we still assume we live in. Almost everyone has a sense of deep unease with prevailing political and economic policies, whether in the U.S. or Japan or West Germany or England or Eastern Europe. Things somehow don't fit, and there is a clear sign that while we don't yet see the new ((era)), we know the old one is no longer right, no longer congruent. For 500 years the century mark has been almost irrelevant; the new century has always begun at least 25 years earlier.

Q. What kind of new century are we in, then?

A. In this 21st century world of dynamic political change, the significant thing is that we are in a post-business society. Business is still very important, and greed is as universal as ever; but the values of people are no longer business values, they are professional values. Most people are no longer part of the business society; they are part of the knowledge society. If you go back to when your father was born and mine, knowledge was an ornament, a luxury -- and now it is the very center. We worry if the kids don't do as well in math tests as others. No earlier civilization would have dreamed of paying any attention to something like this. The greatest changes in our society are going to be in education.

Q. This is a result of advanced technology, is it not?

A. Every major change in educational technology changes not only how we learn but also what we learn. Just as the printed book totally changed the curriculum of the schools, so are the computer and tape recorder and video. The printed book is primarily a tool for adults. The new tools are for children; they fit the way children learn best. We now know how to make the accumulated wisdom of the human race relevant again. We should know that the old approach to education is theoretical and unsound. We still believe that teaching and learning are two sides of the same coin, but we ought to realize that they are not: one learns a subject, and one teaches a person. The process is increasingly going to shift to self-teaching on the basis of new technology because we now have these self-teaching tools.

Q. You call this a post-business society, but predatory takeovers and greenmail are still with us.

A. Yes. There is an old proverb that says if you don't have gravediggers you need vultures. And with management of large corporations being accountable to no one for the past 30 years, you need vultures. The vultures are the raiders who have come to clean up. But the cost to society of the hostile takeover is extremely high. It totally demoralizes a company, and above all it demoralizes middle management, the people who actually do the work.

Q. But don't you think there can be reasonable benefits even from a hostile takeover?

A. Let me say there is absolutely no doubt that a good many of these conglomerates need to be unbundled, need to be split up. Many managements have been building empires without economic justification, just for the sake, well, partly of having a big company, and partly for the sake of dealmaking. I will tell you a secret: dealmaking beats working. Dealmaking is exciting and fun, and working is grubby. Running anything is primarily an enormous amount of grubby detail work and very little excitement, so dealmaking is kind of romantic, sexy. That's why you have deals that make no sense. There's also * another rule that says if you can't run this business, buy another one. There are a lot of companies around that need to be restructured and split up, that never had a justification for being.

Q. Then what are the implications for U.S. business competing in the world economy in the new century?

A. For a hundred years, we have had basically a European-based American foreign policy. Now the world economy is moving very fast toward regions rather than nations. The Soviet empire is unraveling. In North America the only question is whether Mexico will join in; Canada has basically already integrated with the U.S.

In Asia one of the big question marks is whether the Japanese will succeed -- they are certainly trying -- in creating a Far Eastern trading bloc that would include Korea, Taiwan, Singapore, Hong Kong and, I think, Thailand. The question is whether China will go along. After all, the old Japanese co- prosperity sphere basically was built around the development potential of the coastal cities of Shanghai and Canton.

Q. So the world of the 21st century is split into competing trading groups: Europe, North America and Asia?

A. Yes, and the activities of three big trading blocs will have political consequences. I think we are already in the midst of this, and the pattern is not going to be fair trade or protectionism but reciprocity.

Q. That's a bad word to the Japanese.

A. Very bad, and quite rightfully so. Reciprocity is a two-way street, and that is not the Japanese way of doing business. It is a threat to them. But in some ways Japanese industry is way ahead of the government.

Q. You mean by exporting manufacturing to the U.S. and the E.C.?

A. Yes. For example, those big car-carrying ships landing in San Pedro or Rotterdam are going to be as obsolete as the steam locomotive.

Q. How do you envision the new living patterns in the years ahead?

A. The city as we know it is obsolete. It is a 19th century product based on our 19th century ability to move people. Moving ideas and information then was more difficult, and the great inventions of the 19th century were the streetcar and the post office. Today we have an incredible ability to move ideas and information, but the movement of people is grinding to a standstill.

Q. And what happens to cities? Do they become ghost towns?

A. I don't think you can foretell the shape of the city of tomorrow, but what $ you can say is that the city of the 19th century reached its pinnacle, its apogee, in the 20th, in the 1980s, with an enormous building boom all over the world. This also happened in the great cathedral-building era a millennium ago. But nobody would build a monastery for 600 Benedictine monks anymore. I think we have seen the last outburst of the city as we know it.

Q. Then what will we do in the cities?

A. I don't know what the function of the city will be. Look, the medieval cathedral functioned more as a town cultural center, school and governmental center than as a church most of the year. Nobody lived in Chartres. I do not see our cities as ghost towns so much as a congeries of ghettos -- the city is already becoming a place where only the very rich, the very young and the very poor live. The middle class works in the city but doesn't live there. Those enormous central offices we have built in the post-World War II period are, I think, very largely going to be counterproductive. The clerical work will move out. Our largest single pool of labor in the years ahead will be older people and part-time employees, and they aren't going to commute four hours to work. This is soon going to be a problem all over the world.

Q. Do you think we and our institutions are ready to cope with what you call "new realities"?

A. Many are still stuck in the world of 1960. What we face now is totally new and dynamic -- and we are quite unprepared for it.