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Vol. 4, No. 2
www.stuffofheroes.com
(626) 350-1500 Ext 102 

5 ESSENTIAL LESSONS FROM MY PROFESSOR,

PETER F. DRUCKER

1909 – 2005

Extraordinary leaders do things that ordinary leaders won’t do, but extraordinary leaders are made, not born.

© 2005 William A. Cohen, PhD

On November 11th, I received an important and distressing e-mail from Claremont Graduate University in Claremont, California  regarding a man from whom I learned much, and who in many ways, changed my life. Peter F. Drucker, “The Father of Modern Management” had died peacefully several hours earlier at the age of 95. While death at an advanced age does not come as a complete surprise, because he was who he was and did the things he did, because he made major contributions to the lives and thinking of several generations of business practitioners, researchers, and thinkers, such an announcement cannot come without a profound sense of loss. In my case this loss was especially grievous, for up until fairly recently, I spoke with my former professor by telephone a couple times a year and probably saw him at least once a year. I considered him a friend and mentor as well as my former professor from whom I had studied for my PhD  some twenty-five years earlier.

Five Extraordinary Lessons from an Extraordinary Professor

The lessons I learned from Drucker were extraordinary and significant to my thinking and practice, not just of business, but of life. One of the highest honors I have ever received came from a group of doctoral students abroad who earlier I had guided through a difficult course in planning and decision making.  One was kind enough to say, “As you have taught and quoted the ideas of Peter Drucker, in the future as we progress in our careers, we will quote you and your ideas.”

So, in my column this month I would like to tell you more about this wonderful man. I would like to share with you how I happened to become Peter’s student and later, his friend, and share with you five of the extraordinary lessons I learned from him which have guided and helped me over the last thirty years.

How I Learned About Peter Drucker

In 1973, I returned from Israel after living and working there for three years. Previously, my background was totally in the military, I was even born into a military family. I knew little outside of the military, and less about business and how it was practiced, although I did know something about how to run research and development since I had done this in the Air Force and in Israel and had been director of research and development for a company in the U.S. In this capacity, I decided that I had better learn something about business, so I committed to reading one business book every week.

I soon discovered Drucker. I read some of his classical works such as Concept of the Corporation and The Effective Executive. His book, Management: Tasks, Responsibilities, Practices was published the same year as I began as an executive in industry and I eagerly read every word of the thick volume.

My First Drucker Lesson

I received my first Drucker lesson before I even met Peter Drucker. As a senior executive in a company in which I headed up research and development, I attended an offsite meeting called by the president. One of the items on the agenda was discussion of a recent Drucker concept that “the first task of any business management was to decide what business it was in.” I took it all in. I soon realized that it was not only a profound statement about business; it was true about every endeavor you might undertake in life.

Consider searching for a job. Many job candidates don’t get hired by companies because they don’t know what they want to do. They want “to keep their options open.”  Even some very experienced managers who have extensive experience in many industries make this mistake. They put together a very general resume which says that they have done a little in many different areas, but their resumes do not emphasize what “business” they are really in. As a consequence, someone with a lot less experience for a specific position, but who makes it clear by the way his or her limited experience is documented that this is the one “business” that the person is really in, gets the job.

The same is true regarding our goals and time management. Each of us has the same amount of time: 24 hours a day. But some fritter away and waste their time on things which have no bearing on what they would like to accomplish or where they would like to be one, five, or ten years in the future. Once you decide on “your business” the non-essential things that you do become obvious. Maybe you are in the wrong job for where you want to be. Unless that job is supporting you as you work to gain knowledge or in other ways work toward your real “business” goal, you are much less likely to reach your goal, than someone who knows what business he is in and focuses on that to the exclusion of other activity non-essential to this business goal.

“Without question, this fellow, Peter Drucker, knows something!,” I thought.

I Become Peter Drucker’s Student

I was head of research and development for a company, but I had only an MBA. I wanted a doctorate. I called two well-known universities in my geographical area. They both said that if I wanted a doctorate, I had to quit my job and work on the doctorate full-time. There was no such thing as studying for a doctorate without becoming a full-time student. Of course, most realize today that this is nonsense. Probably it was nonsense then also, because those full-time students were forced to teach or assist the full-time professors in order to support themselves. This amounted to a full-time job. They were paid a small fraction of what they had earned previously or could earn outside the academic environment. In a word, most were exploited to one extent or another by the universities that had accepted them as doctoral students.

Seeing an advertisement in The Wall Street Journal by a university that claimed to offer doctoral degrees part-time, I responded and was invited for an interview. Much to my surprise and disappointment, the “university” turned out to be in a suite of rooms in a hotel.  I discovered that this was a “diploma mill.” It wasn’t a real university at all! In those days California education laws were very loose, and these so-called “universities” flourished. Fortunately, California law was tightened up in the late 1980’s and these phony universities have disappeared. Today non-accredited universities in California must be approved by the State, and in order to gain this approval they have to meet standards which are in some ways higher than those required by regionally accrediting bodies.

Soon after this incident, I received a printed advertisement at work promoting an MBA. In small letters at the bottom of the flyer were the words: “New PhD program for executives – call the dean’s office.” It gave a telephone number. The university was called “Claremont Graduate School.” Not being from the Los Angeles area, I had never heard of this university and suspected that it might also be a diploma mill.  I called the telephone number and was soon connected with Dean Paul Albrecht. I didn’t know Dean Albrecht then, but he was one of the “greats” in education – an innovator who in many ways changed education as we know it.

Dean Albrecht told me that this new PhD for executives had just been approved by Claremont’s president and academic council and that a limited number of students would be admitted to the first class in the fall of 1975. He told me that this was not a program for specialists or academics. Potential students wanting to get into the program had to be practicing managers with a certain minimum number of people reporting to them as evidence of their practicing manager status. Albrecht questioned me extensively about my background and about the research and development organization which I headed.  Finally, he said: “If you are interested, you seem to meet the basic requirements. Why don’t you send me your curricular vita?“ He had to explain to me that “a vita” was the academic way of saying “resume.” I sent it. Several weeks later his secretary called to set up an interview for me at Claremont.

A week or so later I was heading toward the small town of Claremont, about 40 miles due east from my home in Pasadena. I wondered whether I was to be disappointed again with another diploma mill. I was much relieved when I arrived at the university and found it to be one of a consortium called “The Claremont Colleges.” It looked real, but after my earlier experience, I was still somewhat suspicious.

I met Dr. Albrecht and he explained what in academia we call “the theory construct” of his new doctoral program. “Management is becoming more and more complex,” he said. “Even an MBA is no longer sufficient. Our new program differs substantially from our regular PhD program. Our regular program requires a high degree of specialization.  For example, for a PhD in finance you must take mostly all finance courses and pursue this one discipline in some depth. Then of course, you must do research and write a dissertation in that discipline.

In our new PhD program you will still be required to do research and write a dissertation on a specific business topic. You must also meet the requirements for traditional research tools such as taking a qualifying examination and a proficiency examination in two foreign languages. The difference is that your doctoral courses will not be in one area, but will cover various disciplines of business and economics.  “Also,” he said you will be required to take at least two courses from Peter Drucker.”

The magical name, “Peter Drucker,” caught my immediate attention. I could not believe that this incredible managerial thinker and writer whose first lesson of first deciding what business I was in had already impacted on my career and life was teaching at the very university at which I was interviewing. I didn’t want to insult Dean Albrecht about my disbelief that this world famous professor could be at this small-town university. So, I asked, “Which Peter Drucker is this?”

“There is only one Peter Drucker,” Albrecht said with a smile.

A couple months later I was in a class with nine other PhD executive students with perhaps the greatest management thinker of our time in the first class of the new program. It was conducted in a lounge room at the university faculty club. The class was completely informal, with both Paul  Albrecht and Peter Drucker leading the class in discussing a number of important managerial issues of the day.

The subject of management consulting came up and someone asked Peter how he became a management consultant. This led to my second Drucker Lesson.

I Learn a Second Great Lesson from Peter Drucker

Peter answered that his experience with management consulting came at the beginning of World War II. As a new immigrant with a doctoral degree, his talents were mobilized and he was assigned to report to a military post and to meet with a certain army colonel who would be his boss. His written orders said he was to serve as a “management consultant.”

Drucker had to pass armed guards at the gate and more armed guards outside the colonel’s office. He was led into the office by a stern-faced sergeant who wore an automatic at his belt. The colonel glanced at Peter’s orders and invited him to sit down. He talked to Drucker and questioned him at some length about his background and education. But though they talked on and on, Drucker did not know what the colonel did, nor was he given any understanding as to what he would be doing for the colonel as a “management consultant.”

Drucker was very intimidated by the colonel and hoped that he would soon get to the point and tell Drucker what he would be doing. Finally, Drucker could take it no longer, and so he asked, “Please sir, can you tell me what a management consultant does?”

Drucker told us that the colonel glared at him for what seemed like a long time and then said: “Young man, don’t be impertinent.” By which, Drucker told us, “I knew that he didn’t know what a management consultant did either.” 

Having read Arthur Conan Doyle’s Sherlock Holmes, Drucker knew what a “consulting detective” did. With that knowledge and the insight that the colonel did not know anything about management consulting either, Drucker laid out what he felt he could do for the colonel. The colonel agreed and this was Drucker’s first successful consulting engagement. So, Peter Drucker was not only the father of modern management; he was probably the father of management consulting, too.

The lesson was clear: never be intimidated by individuals you interact with no matter how powerful or knowledgeable they may appear. They could know less than you about the subject under discussion and may look to you as the expert to tell them what should be done.

My Third Drucker Lesson from Japanese Art

Most of Peter’s students were amazed to discover that in addition to holding a professorship in management, Drucker also held a professorship in Japanese art. The reason for this strange appointment was unclear. No one felt that they could ask him this question. Maybe Drucker was an international expert in Japanese art. Such a question might be viewed as an insult. Actually, this speculation about his expertise in this vastly different field wasn’t far off.

One day Drucker lectured us on the origin of great ideas in management and stated that many concepts had been around for years, sometimes for generations, but not in business. There they remained hidden until someone with an interest in both fields brought the idea over and adapted the concept or practice to business. It was his contention that a practicing executive should develop his expertise both in management and in a totally different field.  Not only would this advance both fields, but would make for a better manager. He told an allegorical story about a successful business executive who died and only at his funereal did his colleagues from work learn that he had other colleagues in a totally different discipline as a well-known amateur Egyptologist.

I immediately realized that this is why Peter both sought and became a professor of Japanese Art. He actually published in this other, highly specialized, subject! I realized the wisdom of this lesson and adopted it in my own career. This not only enabled me to advance in my military career, but also in my career as an academic and business writer and speaker. I simply borrowed ideas from one profession and applied them to the other where they were little understood or known.

The Fourth Lesson: I Learn to Find My Own Strength in Any Situation

My earlier experiences in the military had taught me to seek a situation where you were stronger than a competitor where it counted. We called it “concentrating superior combat power at the decisive point.” I adapted this for business in dealing with a competitor as “concentrating superior resources at the decisive point.” However, what I did not understand was that although Drucker agreed that in business competition you should seek a situation where you could concentrate your resources and be stronger, this was not always possible. Regardless, all participants had strengths in any competitive situation.

Let’s say that your attempt to concentrate superior resources at a decisive point fails. Maybe you were in a company that was competing with another to enter the market first with a new product or service. There were clear advantages to being first in the marketplace. The entire market would be yours, with no competition. The customer had no alternative but to buy from you. You could get the best channels of distribution, the best agents, the best retailers and wholesalers, etc. and lock them in.  You could advertise first and establish your brand in the market before any competitor even got started. It would seem that with these advantages, any other competitor would be locked out completely. Maybe you tried, but your competitor was successful in getting to the market first. Drucker taught that there were still strengths you could use to your advantage if you exploited them properly.

For example, the first in the market had to spend money to develop that market.  If you were second, or even last, the market was already developed. Also, if you are the pioneer, you must try a lot of different approaches in marketing your product or service. Some work; some do not. The point is, if you come in after the first, you can avoid those approaches in advertising, production, pricing, etc. that do not work and concentrate on those that do.  You’d save a lot of time, effort, and money. Also, the leader gets locked into certain ways of operating, certain suppliers, distributors, etc. that may not be the most efficient or effective. Since you are just starting, you can avoid less efficient ways of doing business and frequently negotiate better deals than the company that went first and now is locked in by contract to these business partners. There is more, but you get the general idea.

Drucker believed in the oriental philosophy of “Ying and Yang”: opposites with advantages and disadvantages to each. It meant that while there were real advantages in many competitive situations, say to the competitor who was first in the market, every competitor had strengths regardless of the situation, if he would but look for and exploit them.

The Fifth Drucker Lesson: Success Can Lead to Failure

Drucker taught “his apprentices” that any successful organization which continued to do what made it successful in the past, without change, would eventually fail in the future. I think this was one of the hardest lessons for us to assimilate. Surely, if a business or organization has a successful model, it should continue to follow it. The truth is, if we look at history virtually every organization, business, political, or military which does not continually change and innovate does eventually fail, or at least declines substantially. And there are clear and logical reasons for this: the environment changes and even the successful firm must adapt or fall by the wayside.

The business environment may be divided into a number of major  categories. These include the state of technology, politics, economic conditions, social conditions, culture, laws and regulations and competition. These are constantly changing and thus require continual innovation on the part of a business. In simplistic terms,  a company that manufacturers buggy whips can be outstandingly successful, as long as there are large numbers of buggies. The widespread adoption of the automobile caused a number of highly successful buggy whip companies to fail.  Automobiles do not require buggy whips.

In our own time a 500 million dollar industry disappeared in just three years. This was the vinyl record industry. The advent of CDs destroyed this industry almost overnight. The hand-held electronic calculator did the same for slide rules and that industry, The Pickett company dominated this latter industry and every single engineer owned at least one slide rule. Today, thirty years later ,many don’t even know what a slide rule is. If you are one who does not know what a slide rule is, don’t despair.  Go to this web side and you’ll even find a picture: http://en.wikipedia.org/wiki/Slide_rule .

This has always been so. The railroads dominated the transportation industry in the 19th and early 20th century. They were brilliantly successfully and made unbelievably amounts of money for their owners and stockholders. But because they continued to focus on what made them successful in the past, they failed to appreciate the dynamic expansion of the highway system as a threat, and certainly not the infant airplane. As a result they did not recognize that they had been in the transportation industry and not the railroad industry until it was too late. As Peter said, “Keep doing what made you successful in the past and eventually, you’ll fail.

The Last Lesson

I spoke of telling you of five of Drucker’s lessons, but I see there is another. When Peter died just nine days short of his 96th birthday, I hadn’t seen him in almost a year. When I did see him last, it was at a leadership conference at Claremont McKenna College. Peter was clearly ailing. He had difficulty walking. He had huge hearing aids which still didn’t enable him to hear perfectly. I heard he had been battling stomach cancer. He had difficulty in recognizing me. He had stopped teaching the year previously, and he told me he wasn’t working on a new book — that he didn’t have the energy. That was a shock. Still, despite all that, he was the keynote speaker at the conference and he did his usual outstanding job. Peter Drucker made contributions to his fellow man and to society right up to the last. That is a lesson, perhaps the most important lesson, for us all.

 

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THIS MONTH’S THOUGHT

“What everyone knows is usually wrong.” 

– Peter F. Drucker