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Drucker's Most Valuable Lesson
Journalists who interview me about my books on Drucker frequently ask me: What was Drucker's most valuable lesson? With Drucker's so many insights, so many wonderful ideas, so much ethical and moral guidance that might have saved organizations or even countries from financial ruin, I find this an almost impossible question to answer. For several years, my response was something along the lines of, “It all depends.” I pointed out that Drucker's “most valuable lesson” was situational—that it depends primarily on what issue someone is considering. I avoided naming a single lesson that covers all instances because I couldn't think of one lesson that overshadowed all the others.
Recently, I rethought this matter, however, and I decided I could do a lot better. I reviewed various Drucker prescriptions for a range of problem areas. Was there a thread of commonality in his predictions? Some recommendations and solutions that might lead to a universal lesson? A principle that might honestly be entitled “Most Valuable”?
Do the Right Thing
If it was an ethical issue, Drucker might recommend, “Do the right thing, and since the definition of ‘the right thing’ is based on so many situational and cultural factors, above all, think it through to ensure that, above all, you do no harm.”
In the Los Angeles area where I live, the small town of Bell (population 40,000) came under national scrutiny in 2010, when it was discovered that the city manager had an annual salary of nearly $800,000. Other top executives were being similarly rewarded. Even city council members had salaries of over $100,000 a year for their part-time positions, which involved meetings lasting only a few minutes each month. All this while employees in that same city government, some in essential services and others making $9 an hour, were being laid off owing to “budget cutbacks” and the recession. This was not even a wealthy town. It was and is a working-class town. That this situation was wrong was obvious to all.
Drucker died in 2005. However, he knew forty years ago that extremely high CEO salaries were unethical. Why would any CEO need to make 300 times that earned by the lowest-level employee—when the ratio of highest-paid to lowest-paid employee in every other country in the world was no more than 20 to 1? Drucker said that this imbalance caused immeasurable harm—to the company, to the industry, and to society—and he advised stopping the practice.
But advocates claimed that these incredibly high salaries were necessary to attract the best talent. They asserted further that these huge compensations were justified by the wealth these well-heeled executives created for the organizations. But Drucker pointed out that these giant bankrolls were paid whether the company was making or losing money. A few executives chose to limit their own salaries; most did not. Drucker predicted that we would eventually pay a terrible price for this lapse in fairness. Many top executives never forgave him for publicizing the matter, and many of us didn't even think much about it until the onset of the Great Recession that began in 2008.
Find Out What the Customer Values
If a matter was a marketing challenge, Drucker would advise us to think it through to determine what the customer considered of value and to be extremely cautious that marketers didn't substitute their own definitions of value for those of the customers or prospects. This is a valuable insight. If you go down a list of failed products, you will find at their core this marketing problem; even geniuses are not immune.
A young Steven Jobs claimed that the Lisa computer would be successful because it was so superior technologically to any of its competitors. The Lisa had an advanced system-protected memory, multitasking ability, a sophisticated operating system, a built-in screensaver, an advanced calculator, support for up to two megabytes (MB) of RAM, expansion slots, a numeric keypad, data corruption protection, a larger and higher-resolution screen display, and more. It would be years before many of those features were implemented in any other computer. Still, Jobs was wrong. All of these features resulted in Lisa's high price of about $22,000 in today's dollars, and so buyers opted for the far less expensive, although technologically inferior, IBM at less than a third of Lisa's cost. Apple's prospects valued cost above technological superiority at the time.
Promotion and Placement of People
Drucker had a number of good ideas regarding placement and promotion decisions. For instance, if you put a previously successful employee in a job in which he fails, that failure is yours—the manager who put the individual in the job—not the proven employee who was given the assignment. As a corollary, Drucker abhorred the idea so popular in many organizations of “the whole man concept.” That is, you look for individuals who are well-rounded, minimally acceptable in all facets of their managerial responsibilities but superior in none. He emphasized that at best you'll end up with an organization staffed with individuals who are wonderfully adequate, but none who are the best in an assigned role. Ironically, he pointed to the military (ironic because for years the military had been promoting “the whole man concept”), and he chose to compare two generals: George Patton (an example I've mentioned earlier in this book) and Dwight Eisenhower.
George Patton could motivate his soldiers to extraordinary efforts. He could accomplish any mission on the battlefield and do this with one of the lowest battlefield casualty rates of any senior commander. However, Patton couldn't get along with his allies. He said, and sometimes did, things that were certain to get him into trouble. In contrast, Eisenhower had never even fought on a battlefield and would have been totally lost in Patton's job. But he knew how to get senior officers from many different backgrounds and cultures to work together and how to minimize their differences and squabbles. He was the best choice for Supreme Allied Commander in Europe, just as Patton was the best choice for commanding an army group in the field.
Drucker's solution? Think it through and staff for strength. Ensure that weaknesses, whatever they are, are irrelevant for a particular assignment.
Think for Ourselves
I thought a lot about Drucker's various solutions to different problems. It seemed to me that what Peter Drucker was doing was asking us to think. He did not accept “common knowledge” or the way things were being done as necessarily being correct. In fact, the phrase I heard him use most in the classroom was “What everybody knows is usually wrong.”
Drucker never claimed great knowledge about anything, especially in his legendary consulting. Instead, he claimed great ignorance, which required him to think and ask questions. Chapter 35 relates the story he used to prove this point. In brief, because the British were losing too many transport ships to German submarines during World War II, they developed a basic design to build replacement ships more cheaply. British shipbuilders were considered the best in the world, but Britain was engaged in fighting the war and lacked the manpower, shipyards, and production facilities to build the fleet. Out of desperation the British turned to the United States for help, even though we did not have much shipbuilding capacity. American industrialist Henry Kaiser came to the rescue, even though he knew little or nothing about shipbuilding. Approaching the problem from the stance of ignorance, Kaiser revolutionized the operation and ended up producing the ships even faster and more efficiently than had the British.
The Tortoise and the Hare
The Sydney to Melbourne Ultra Marathon was held in the years between 1981 and 1993 and was regarded as the toughest footrace in the world. It was 544 miles long and took up to seven days to complete, with stops for rest permitted along the way. Most athletes ran all day and rested at night. In 1983, an unknown sixty-one-year-old potato farmer by the name of Cliff Young entered the race. Many thought he would be lucky to finish. But Young didn't accept what everyone knew to be true or follow the way things had always been done. He thought about the race, not from experience and expertise but from complete ignorance. He realized that he could walk the distance if he chose to and that he wasn't required to stop overnight. So he didn't. Result? He won, shaving almost two days off the previous record and finishing almost a day ahead of the second-place winner, who was half his age.
What was Drucker's most valuable lesson? He taught us to think and ask questions.