THE DRUCKER CONSULTING DIFFERENCE*

 

OCTOBER, 2017 | William A. Cohen, PhD, Major General, USAF, Ret.

Peter DruckerDrucker differed greatly in his management consulting approach from other giants in the field, and in fact from just about any other management consultant. These differences start with what he demanded from clients, his focus on thinking through to solutions over more rigid structured approaches, an emphasis on questioning clients rather than providing them answers, his emphasis on management as a liberal art , his use of historical analysis, and a lot more.

 

The Most Difficult Aspect of Being a Drucker Client

I heard once that the manner in which he provided his consulting was the most difficult thing about being a Drucker client. One Drucker client expressed it this way: “We had been accustomed to hiring consultants to whom we told what we wanted done or asked them to solve a specified problem. They then went off and returned after some time with mounds of data and reports. We were told exactly with what we were to do. And if we didn’t understand it, they were happy to explain themselves in more detail and to answer our questions. Drucker did none of that. He would begin by asking us questions which we were expected to answer. If the engagement was an all-day event, he might lecture on various topics which seemed to have nothing to do with our problem. We had to think through logically to get to solutions ourselves which we would have otherwise completely overlooked.”

The Chinese philanthropist, Minglo Shao, who co-founded the non-profit graduate school based on Drucker’s teachings for which I had the honor to be president, told me that every year he would visit Drucker in his home and Drucker would ask him questions about various issues regarding the developments of his many businesses and foundations. However, though he spoke in generalities telling him what to do, he never once told him how to do it.

 

Drucker’s Methodology of Conducting the Consulting Engagement

Drucker did not conduct his engagement the way of other consultants and there are few consultants that I know to whom I would recommend it. Almost twenty years ago, Jack Beatty, then an editor of The Atlantic Monthly who had edited several of Drucker’s articles, conducted an investigation of how Drucker saw things and acted on these insights. This resulted in his book, The World According to Peter Drucker. In interviewing many of Drucker’s consulting clients he found that whether it was a one on one, or a full room of senior company executives, Drucker lectured without graphics and seemingly touched on just about everything but the problem for which he had been engaged. After as much as a full day of lectures he would return to the main issue, still unsolved. However, it was this new perspective that enabled his clients to solve the issue with minimum direction from Drucker. According to Beatty, Drucker’s methodology was a form of teaching.[1]

This last statement struck a responsive chord with me. Many times, I had seen Drucker respond to a question from a student or one he himself had initiated and then proceed into an hour long lecture with many twists and turns which seemed at best to be only tangentially important to the initial question posed. However, after an hour monologue he would suddenly tie it all together and come up with an amazing and frequently unexpected solution to whatever issue had been raised. Only if you went back and reviewed your notes of his ad hoc lecture could you understand how it all fit together, and I could well imagine him conducting his consulting in this fashion.

It was also speculated that this process enabled Drucker himself to integrate everything that came into his own reasoning, and in this way, he was able to return to the initial problem in such a way as to give to the client an entirely different slant on the issue.

This method could be amazingly effective. Dudley Hafner, former president of the American Heart Association told Beatty that Drucker caused the association to reorganize their entire field operation and to redefine themselves as an information organization.[2]

 

The Brain is for Thinking, Use It!

Although Drucker was aware of the use of many innovative methodologies developed over the years for analyzing business situations and determining strategies, he made almost no use of them, emphasizing instead thinking through every situation on its own merits. He never taught, “portfolio analysis” with their famous quadrants of cash cows, shooting stars, problem children, or dogs as developed by the Boston Consulting Group (BCG) or the GE/McKinsey nine cell version, or any other version of management or business strategy by rote methods. He was one of the first to point out that the main inputs in the BCG matrix would encourage organizations to grow by acquisition without the attention needed as to whether the acquiring corporation added valued in managing the assets of the acquired business. At the same time, many corporations were growing and were extremely profitable by concentrating their resources in products or businesses where they could grow in profit even while their size remained relatively small. Eventually, many of the rapidly growing conglomerates based on acquisition failed, and Drucker was proven correct. Not that Drucker opposed acquisition or bigness per se. He was all for acquisition if the acquiring organization had something to offer the acquired and  if other owned businesses were dropped so that resources would be available to make the new acquisition viable.

 

Drucker’s Emphasis on Feelings over Numbers in Decision Making

Drucker insisted on measures in just about everything but the results were to be considered primarily informational. He avoided decision making by numbers whereby the decision was made for the manager by merely inputting certain data considered crucial to a software program, turning on a computer, and having the answer magically appear. He pointed out that one could gather data on thousands of businesses, including primary factors, even the weather and some elements thought to be relatively insignificant and before the results were finally attained. You could then design the software based on your extensive data. You might claim that by imputing your own situational data you might be able to predict the project results with some high per cent of accuracy, say 92.5 per cent. That’s significant, but the significance may be of little help in a particular situation.

Drucker maintained that this was still inferior to using your brain, thinking through everything and making your own decision based on available information, your experience and knowledge of the nature of your own personnel and organization. He noted that your knowledge or instinct of one vital factor might well be decisive and that the computer would never pick it up. He reminded his students and his clients that though a certain program might give accurate outcome results of 92.5 per cent for that time, for the other 7.5 per cent of the time the results were 100% inaccurate. In other words, if failure or success was the outcome you sought to predict, if the end result was part of that 7.5 percentage area, your answer was 100 per cent in error. He recommended managerial gut decisions after considering all the information that could be obtained. Drucker told his clients to make “gut” decisions, but these gut decisions were to be made with the brain. The brain was a better device than a computer and is associated software by itself for decision-making. In this way Drucker believed that better decisions were made by practicing management as a liberal art.

Drucker taught management and performed as a management consultant by doing both while considering management as a liberal art. According to classical antiquity “liberal art” included those subjects or skills that were considered "worthy of a free person" in order to take an active part in civic life. The core included participating in public debate, defending oneself in court, serving on juries, and military service.[3] Although most didn’t know it, Drucker was an avid student of military history and military methods. Drucker incorporated interdisciplinary lessons from language, history, sociology, psychology, philosophy, culture, religion and more into his consulting. However, he also took the ancient injunction about military service to heart and although he never spoke or taught about so-called “marketing or business warfare,” his consulting advice and writings is filled with military examples. Promoting Frances Hesselbein’s 2004 book, Be Know Do, based on U.S. Army Leadership Manual, Drucker wrote: “The Army trains and develops more leaders than all other institutions put together – and with a lower casualty rate.” [4]  

*Adapted from the book Peter Drucker on Consulting: How to Apply Drucker’s Principles for Business Success by William A. Cohen (LID, 2016), also titled Consulting Drucker: Principles and Lessons from the World’s Leading Management Consultant (LID, 2017) and syndicated elsewhere.

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[1] Beatty, Jack, The World According to Peter Drucker, (New York: Free Press, 1998) p.182.

[2] Ibid.

[3] No author listed. “Liberal Arts Education,” Wikipedia, Accessed at http://en.wikipedia.org/wiki/Liberal_arts_education , March 2, 2015

[4] Hesselbein, Frances and Eric K. Shinseki, Be-Know-Do, (San Francisco: Jossey Bass, 2004), back cover.