PETER DRUCKER: Facing the Totally New and Dynamic

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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?