We Have CEOs, but No Top Management
Peter Drucker, Management: Tasks, Responsibilities, Practices — Chapters 49. Georg Siemens and the Deutsche Bank / 50. Top-Management Tasks
Introduction
We look up to the star CEOs. Jensen Huang at Nvidia, Elon Musk at Tesla, Satya Nadella at Microsoft. Their names always invite the same question: why doesn’t Korea produce leaders like them? We blame a shortage of talent, or we blame our schools for stifling the entrepreneurial leader before they can emerge.
But the question itself betrays an assumption. We stake almost everything on the capability of one individual, the CEO. We do not start by asking what top management is and then look for someone to do it; we simply decide we need a capable CEO. And since Korea, we conclude, has too few of them, we can never become a top American firm. So we go looking abroad, hoping to import a CEO already proven at a world-class company.
Yet no matter how capable the executive we bring in, they often fail to thrive inside a Korean company. Why? Chapters 49 and 50 suggest we may have started from the wrong premise altogether. Top management is defined not by who occupies the seat, but by what the work demands.
What Drucker Means by Top Management
Chapter 49 opens with a single figure: Georg Siemens, the great German banker-entrepreneur. In 1870, the Deutsche Bank was small, thinly capitalized, and unable to attract an established banker. It handed the job to a thirty-year-old government lawyer with no business experience. Within a decade he had built it into Germany’s leading financial institution.
What Siemens did was create, for the first time in history, the organ we now call top management. He analyzed the bank’s key activities and key relationships and assigned each, as a clear responsibility, to one member of his team. Who took what was decided by temperament, ability, and workload — never by rank. Drucker’s conclusion is unambiguous: top management is top management not because it sits at the top, but because its tasks can be discharged only by people who can see the whole business.
Chapter 50 goes further. Every other unit in an organization is built for one defined contribution. Top management is the exception. “There is no top-management task; there are only top-management tasks.” Thinking through the mission, setting standards and values, building tomorrow’s leaders, owning the critical outside relationships, the ceremonial duties, standing ready for crisis — all of it belongs to top management.
And here Drucker overturns a common belief. We tend to assume that what a CEO does is a matter of personal style. Nonsense, he says. The law of gravity does not depend on what the physicist had for breakfast, and neither does the content of top-management work. The tasks come first; the person is fitted to them.
In many Korean companies, that order runs backward.
We Look for a Capable CEO — Never for “Top Management”
If a company has a capable CEO, we assume its top management must be working too. One member of our study group challenged that. The presence of a CEO and the presence of top management are not the same thing.
Consider a large automaker. Everything turns on one vast objective — building cars — and every function, supplier, and affiliate has to move in lockstep with a single plan, without a hitch. In a business like that, what matters above all is keeping the whole machine synchronized. And so the energy of top management is pulled, almost by gravity, into operations. It is not a failure of will, and not the fault of any one executive. The very nature of the business bends top management toward operating work.
For a long time this served us well. As fast followers, what mattered was importing a proven strategy quickly and out-adapting everyone else to a fast-changing environment. Operating excellence was exactly the right thing to prize. But that era is ending. When there is no longer a leader to follow, someone has to decide where the business itself should go — and that is top-management work, not operating work.
This is also how the order quietly reverses. Whatever the incumbent is consumed by becomes, in practice, what the company calls “top management” — the very fallacy Drucker called nonsense. The task should define the person, not the other way around.
So Should Top Management “Operate” or Not?
This maps exactly onto Drucker’s diagnosis in Chapter 50. Top-management tasks are recurrent but not continuous. They are not a nine-to-five job. But because they are not continuous, even people running large businesses fill the day with operating work, and the top-management task waits for a tomorrow that never arrives.
When I led the Korean operations of a global media company, I rarely asked what the top-management job was. I was a fixer. I found the gaps in what my people were doing, filled them quickly, supplied resources where things were stuck, and kept the organization running. That, I believed, was my role.
What Drucker is after is not whether one operates. Top management is not something added on top of operations when time allows; it is the essence of the job. There is only one test: if someone else can do it, it is not top-management work.
A business school professor once put a question: are the two tasks Drucker ranks highest — defining the mission and serving as the organization’s conscience — even possible in the reality of a Korean firm? It is an honest and important question. Many Korean executives share the same doubt, treating top-management work as something for when there is time to spare. But Drucker’s answer, and what I came to see too late, is the opposite: that is the essence. And this is not a matter of not knowing. It is that even those who know have neither the room nor the structure to do it. It is a problem the rest of us, myself included, have to solve together.
In the End, It Is a Problem of Structure
Which brings us back to the first question. Is the Korean CEO’s weakness in top management a matter of character or ability?
Here a shift in perspective is needed. Foreign executives posted to Korea, it is said, keep asking the same thing: why do Korean managers refuse to decide, sending every matter up to the CEO? They are baffled that decisions climb the ladder even when people with ample authority sit lower down. But if no one below decides, the CEO has no choice but to operate. In the end, a CEO buried in operations is not short on ability; the company is short on clear delegation and defined authority. Whether top management can be done is decided not by the individual but by the structure.
Closing
Return once more to the leaders we look up to. Admiring Huang, Musk, and Nadella is natural enough. The real question is what, exactly, we should be admiring.
Is it Jensen Huang the man — or the structure that let him do top management in the first place? And in your own company: is the top-management task written down somewhere, or is it defined by the habits of whoever holds the seat?
From the Monday morning Drucker reading group, 7:00 a.m.