Consulting Drucker Read online

  Drucker’s Most Valuable Contribution?

  Journalists interviewing me about previous books on Drucker frequently ask one question: “What was Drucker’s most valuable contribution?” With 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 found this a difficult question to answer. For several years my response was something along the lines of “It all depends.” I pointed out that his “most valuable contribution” was situational, and depended primarily on what issue one was looking at. I avoided naming a single contribution that would cover all instances because I couldn’t think of any.

  However, after one interview, I rethought this issue and decided I could do a lot better with my response. I reviewed various Drucker prescriptions for a variety of problem areas. Was there a thread of commonality in his recommendations and solutions that might lead to a universal and most valuable contribution?

  Why Krav Maga Training Has a Relatively Low Injury Rate

  For combat, everyone knows you should train as hard as you fight, and the injury rate from combative sports is not insignificant. Krav Maga is a self-defence system developed by a Hungarian Jew, Imre Lichtenfeld or Imi Sde-Or, and brought to Israel when he escaped Europe during World War II. Krav Maga is Hebrew for “close combat”. It is known to be brutal, and if practised in real life can cause permanent injury or death to an opponent.

  In 1935, Lichtenfeld visited then-Palestine with other Jewish wrestlers to participate in the Maccabian Games, similar to the Olympics. However, Lichtenfeld could not participate because of a broken rib that resulted from his training practice on the way to the competition. This mishap led to his immediately abandoning what everyone knew about combat arts and the adoption of what is now the fundamental Krav Maga principle, which is not to get hurt while in training. Yet, the effectiveness of Krav Maga in actual combat is not to be denied, not only in Israel, but worldwide. Still, it is the prevailing wisdom in the athletic world that success comes from training as hard as you can so you’re ready for the highest performance when it is for real.

  Drucker on Customer Value

  If it were a marketing challenge, Drucker would advise clients to think it through to determine what their customers considered value and to be extremely cautious that they didn’t substitute their own definition of value for that of their customers or prospects. This is a valuable insight and if you go down the list of failed products, you will find this at the core of many marketing problems.

  A young Steven Jobs claimed that the Lisa computer would be successful because it was technologically superior to any of its competitors. The Lisa had an advanced system-protected memory, multitasking, a sophisticated operating system, a built-in screen-saver, an advanced calculator, support for up to 2 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 these features resulted in Lisa’s high price of about $22,000 in today’s dollars, and buyers opted for what they considered important to them and of value – the far less expensive, although technologically inferior IBM, at less than a third of Lisa’s cost.

  How a 61-Year Old Won the World’s Toughest Ultra Marathon

  The Sydney-to-Melbourne Ultra Marathon in Australia was regarded as the toughest 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 61-year-old potato farmer by the name of Cliff Young entered the race. Many thought he would be lucky to finish. Young thought about it and realized that he could walk the distance if he chose since the rules allowed. The rules also did not require him to stop overnight to rest. So he didn’t. Result: he won, shaving off almost a day from an athlete half his age who came in second place. Once again, what everyone knew was wrong.

  Applying This Lesson as a Consultant

  What was Drucker’s most valuable contribution? He taught us not to listen to what “everybody knows,” but to think it through and develop our own methods of success. There is no question that applying this lesson requires critical analysis, because while “what everyone knows is usually wrong” may be true, sometimes it may be the case that what everyone knows is actually true. So the problem is in how the consultant can know when common knowledge is true and when it is not. The first thing we need to understand is that what everyone knows, or “so-called” common knowledge, is simply an assumption. Now we have the problem nailed down. Our task is an analysis of an assumption believed by a majority. An assumption is any belief, idea, hunch, or thought that you, a group of people, or any experts, internal or external, have about any subject. These assumptions are crucial because we use our assumptions to guide our actions and decision making. This is sometimes complicated by the fact that frequently these assumptions are implicit and unstated. Psychologists tell us they are useful because if true, they provide a sort of short-hand way of thinking and decision making. However, decision making can be disastrous if we accept assumptions as fact without analysis.

  In the Tylenol example, Tylenol would have been dropped as a product and Johnson & Johnson would have lost millions of dollars in revenue, as well as having to spend the money to develop and market a replacement product. On the other hand, maybe the Tylenol case is a unique example. Maybe in most situations, trying to reintroduce a product that had been withdrawn due to the deaths of consumers of the product, even if it was no fault of the manufacturer and it had behaved ethically in every way, would have resulted in zero sales and might have been an absolutely disastrous decision. So the consultant must always think and analyse.

  Analysing an Assumption

  The first step in analysing an assumption is to look at the source’s source. From where did this assumption originate and is it still a valid and reliable source today?

  Many years ago, I was involved in the selection of one of two designs from two different companies for a new aircraft for the Air Force. The companies were the Boeing Aircraft Company and McDonnell-Douglas Aircraft Company. Those who know this industry also know that the former company eventually acquired the latter, but this has nothing to do with my story. Both companies proposed modifying one of their standard airline designs that was already in production and in use.

  Periodically we would meet with each aircraft company’s design team individually to assess progress on each company’s proposals, the acceptance of which would be worth hundreds of millions of dollars to the winning contractor.

  On one occasion, we met to discuss ways in which we might lower the cost of each aircraft. It was the McDonnell-Douglas manager who stated, “You can save $10 million dollars for each aircraft produced if you will allow us to deviate on the size of the escape hatch by two inches. That would be the standard size of the hatch on our DC-9 airliners. They successfully passed all FAA tests with no problems.” I promised to look into his request. It could save a lot of money.

  Tracking Down the Origin

  In this case, the initial source was the engineer who had put this requirement into the package listing design specifications that we had sent to the two aircraft manufacturers. However, frequently we need to conduct a process I call “peeling the onion” because the initial source may not be the actual originator. What we are looking for lies inside one or more layers of onion and we need to peel away the layers to get to the centre – the ultimate source.

  As soon as I could, I contacted the engineer responsible for the aircraft specification that McDonnell-Douglas wanted waived. “We can’t do it,” he told me. “This requirement comes directly from our aircraft design handbook with specifications that we must use for all new transport-type aircraft.”

  This meant that the source was not the prime source. It had another source. This other source was the design handbook. Not only d
id it produce a predictable and repeatable result, but “everybody knew”, because of its reliability, not only that these dimensions were the correct ones for the escape hatch, but that we were required to use them. It was as if Johnson & Johnson had investigated the sources for those who said that the demise of Tylenol was irreversible. These were the advertising and business experts who wrote for the business journals. These were good sources. They were frequently correct in their judgments regarding advertising and how “bad press”, accurate or not, could ruin a product’s reputation. They were reliable sources based on past history.

  Is the Source Valid?

  Both reliability and validity are concepts that come from testing. The validity of a test tells us how well the test measures what it is supposed to measure. It is a judgment based on evidence about the appropriateness of inferences drawn from test scores. But we’re not looking at test scores here, we’re looking at assumptions. So where did this particular specification in the aircraft design handbook come from? Knowing that source could help me decide whether this particular specification was valid for the aircraft we now wanted to build. In other words, we still hadn’t located the original, prime source for this information.

  So I peeled the onion again. I knew that every specification in the aircraft design handbook was referenced as to where it came from and what it was based on. Making this a requirement was good thinking. Usually they were based on the original tests performed. I asked the engineer to do the necessary research to find out what tests this particular design specification was based on and when they were accomplished.

  Surprise, surprise – this specification was based on an aircraft test done with propeller-driven aircraft almost 30 years earlier. That aircraft travelled at about 120 miles per hour. The aircraft we were working on travelled at about 500 miles per hour. Obviously, in this instance, the design specification was not valid. We turned it over to one of our aeronautical designers. He advised us to forget what everyone knew (the design handbook) and the two inches at the air speeds we were anticipating for an emergency bailout would make no difference at all. We took his advice.

  In the same way, the chairman of Johnson & Johnson and his advisers must have evaluated the sources cautioning them to abandon the original Tylenol product and introduce a new product. I can imagine them just considering changing the name as one option. They probably asked what the success rate was for a product that was reintroduced in this way and under similar circumstances. That would have been peeling the onion. They probably discovered that there wasn’t much of a database to go on because no one had even attempted something like this. They had taken the high road all the way, and felt that despite “what everybody knew”, it was worthwhile trying. This brings up another important aspect. Testing the assumption.

  I can’t tell you how many times, both as a consultant and as a decision maker in the Air Force, in industry, and as an academic administrator, I have seen that because everyone knows something to be true, others don’t even want to test the assumption for truth and will want to dismiss it outright. The naysayers may proclaim knowingly, “that’s the way it’s always been done.” Or “everybody does it that way.” Or maybe simply, “We tried that long ago and it won’t work.” Long ago in direct-response advertising, I learned the value of testing a headline, artwork, the medium, the vehicle, or a concept and found that what everyone knew was simply wrong, or wrong in this particular instance. I’ve heard this reasoning, ultimately proved wrong, so many times that when I hear the argument, “no one else does that!” my instant retort is, “wonderful! Then we’ll be the first.”

  All this reminds me of Roger Bannister’s achievement. Bannister, an English medical doctor, broke a record in running once thought to be impossible. The experts knew that it could not be done. This was the famous “four-minute mile”. No one had ever run a mile in four minutes previously. Today, the fastest-mile record is held by Moroccan Hicham El Guerrouj. He ran the mile in a time of 3 minutes 43.13 seconds in Rome, Italy, on July 7 1999.5

  I’ve even heard that some high school runners break the four-minute mile. However, the fact is that when Bannister achieved this on 6 May 1954, many, if not most, knew that it was impossible and that’s why it had never, and would never, be done. Bannister was knighted for his achievement. At 3 minutes 59.4 seconds, Bannister’s time was less than a second faster than the fabled four-minute mile. Since this was deemed impossible previous to Bannister accomplishment, you might ask yourself why no one was knighted or received honours for running even faster since then.

  I was in high school at the time and I remember a radio interview with a doctor of kinesiology shortly before Bannister broke the record. He stated emphatically that the human body just wasn’t built to run that fast and it couldn’t be done. He predicted that Bannister would never succeed. Bannister knew better. What everybody “knew” was wrong and Bannister understood this. Did Cliff Young, the 61-year-old Australian potato farmer who entered and won the ultra marathon in 1983, use this technique? I don’t know. Maybe he tried it out before the race. However, it was certainly a case of what everyone knew being in error.

  What everyone knows is usually wrong. It is wrong because people make one or more erroneous assumptions. To use Drucker’s wisdom – maybe his greatest contribution – effectively, a consultant needs to look at the source of what everyone knows and determine its reliability and validity. Do your own thinking and critically analyse the assumptions made by others. Test the assumption with a small investment. Do this and you will surprise yourself at the number of times you will, like Drucker, prove that what everyone knows is wrong.

  1 NewAdvent, Catholic Encyclopedia, “Immaculate Conception,” accessed at http://www.newadvent.org/cathen/07674d.htm, June 26 2015

  2 Jerry Knight “Tylenol’s Maker Shows How to Respond to Crisis.” The Washington Post., p. WB1, 11 October 1982.

  3 Judith Rehak, “Tylenol Made a Hero of Johnson & Johnson : The Recall that Started Them All,” New York Times, March 23 2002, accessed at http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html, 22 June 2015.

  4 No author listed, “Hey, Where’s my Tylenol? CVS Pulls Popular Pain-Reliever from Some Stores.” New York Daily News, January 15 2013, accessed at http://www.nydailynews.com/life-style/health/cvs-won-stock-tylenol-stores-article-1.1240622, 22 June 2015

  5 No author listed, “Four-Minute Mile,” Wikipedia, accessed at https://en.wikipedia.org/wiki/Four-minute_mile, 24 June 2015.

  Chapter 9

  How Drucker Used his Ignorance to Consult in Any Industry

  Asked by a student about the secret of his success as a consultant in so many different industries, Drucker responded, “There is no secret. You just need to ask the right questions.” We talked about this important aspect of Drucker’s consulting in chapter seven. However, my fellow students immediately asked, “How do you know the right questions to ask? Aren’t your questions based on your knowledge in the industries in which you consult? What about when first starting out with no experience – how did you have the knowledge and expertise to do this when you first started?”

  It was then that Drucker responded with his amazing consulting secret. “I never ask these questions or approach these assignments based on my knowledge and experience in these industries,” he answered. “It is exactly the opposite. I do not use my knowledge and experience at all. I bring my ignorance to the situation. Ignorance is the most important component for helping others to solve any problem in any industry, and ignorance is not such a bad thing if one knows how to use it. All managers must learn how to do this. You must frequently approach problems with your ignorance and not what you think you know from past experience, because not infrequently, what you think you know is wrong.”

  Ignorance Has Value

  Drucker immediately launched into a story to prove this point. His stories covered the wide range of Drucker’s reading and thinking – from the Catholic Church to Japanese culture, politics, hi
story, Jewish mysticism, warfare, and of course business, and so did this one.

  There was a tremendous fuel shortage in Japan immediately after World War II. Automobiles existed even right after the war, but they were immobilized by a shortage of gasoline. Soichiro Honda, a young manager, had significant experience in manufacturing machinery and even airplane propellers during World War II. He came up with the very creative idea of fitting a bicycle with a small engine as a substitute for automobile transportation, since this simpler, lighter vehicle would consume far less gasoline. He built a model as an experiment and it was successful. The problem was that due to the gasoline shortage there were also governmental restrictions in Japan on even manufacturing new engines that utilized gasoline. So it was a great idea, but it couldn’t be immediately implemented.