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Vol. 5, No. 9
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WHAT PETER DRUCKER TAUGHT US ABOUT HOW TO SOLVE PROBLEMS

Extraordinary achievements demand extraordinary leaders.

© 2007 William A. Cohen, PhD

This Drucker lesson began unexpectedly on a chilly afternoon in January of 1976, a little after 4:00 in the afternoon. I can’t place the date any closer, but I recall the weather. It was not chilly in the sense of a northern or eastern winter. In fact, it was not cold inside the building. Still, I remember that it had been what was considered chilly outside. However, this was Claremont, California, about forty miles east of Los Angeles.  The temperature rarely dipped lower than 60 degrees Fahrenheit during the day in the winter season. Sometimes it really warmed up. Visitors from other parts of the country proclaimed our winter climate to be balmy. Still, we termed it “chilly” and for one reason or another, I remember this fact when remembering Peter’s giving us this lesson. This class met in one of the larger classrooms in Harper Hall. Harper Hall was an old building on the Claremont Graduate School campus, part of The Claremont Colleges allocated to it. The Colleges was a consortium of five undergraduate colleges and two graduate institutions and a central organization that provided general services to all seven institutions.

Drucker Begins His Lecture

This evening’s lecture was far from boring. Moreover, the important lesson that came right away was a gem. Drucker began to reminisce about his work with various corporations both here and in Japan. He told us that it was often very simple things that an outsider could do which would have a major impact in the company he had assisted. This was because people were generally much too close to the issues and also because they assumed things from their past experience that they incorrectly thought were identical in the present situation.  An outsider would wonder and question these things that a practicing manager in that organization frequently missed, although all managers needed to train themselves to ask questions. Asked the secret of his success in these endeavors by a student, Drucker responded, “There is no secret. You just need to ask the right questions.”

Unexpectedly one of my classmates raised his arm and exploded with three questions in rapid succession. “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?”

“I never ask these questions or approach these assignments based on my knowledge and experience in these industries,” answered Drucker. “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.”

Hands shot up around the room, but Peter waved them off. “Ignorance is not such a bad thing if one knows how to use it,” he continued, “and all managers must learn how to do this. You must frequently approach problems with your Ignorance; not what you think you know from past experience, because not infrequently, what you think you know is wrong.”

The Value of Ignorance

Drucker immediately launched into a story to prove his point. His stories covered the wide range of Drucker’s reading and thinking — from the Catholic Church to Japanese culture, politics, history, Jewish mysticism, warfare, and of course, business. The stories were usually fairly short, but sometimes they were much longer. Many times I heard Peter launch into an answer to a question and his “answer” wasn’t an answer at all. It was a story that led to a story within a story that led to another story within that story. I am ashamed to say, and sorry too, because sometimes I got lost and allowed my mind to become disengaged from his line of reasoning. This was truly unfortunate, because although Drucker might lecture for an hour or more in this fashion, all of the stories and information were linked. In the end, he would tie it all together, and if you stayed with him you could see that to understand his answer completely required that you understand everything else he had talked about including the Pandora’s box of stories.

However, this particular tale was neither long, nor linked to other sets of information. Moreover, this time it had to do with a subject with which I was familiar as when I was a cadet at West Point, the Hudson River, for several miles was packed with hundreds of immobilized, no-longer-used ships. Each looked the same, about 400-500 feet long and clearly inactivated like sleeping giants. I was told that these were called Liberty Ships and had been built on an emergency basis during World War II. Drucker now proceeded with the rest of the story to illustrate his point.

“After World War II broke out in 1939, the British were losing thousands of tons of shipping to German submarines.  This was not unimportant, as the British needed the supplies and munitions these ships brought to feed their population and to continue to fight the war.

In response to the demand and their high losses due to German submarines, the British had come up with a design for a cheap cargo ship. These ships were so cheaply built and basic in design that the ships weren’t even expected to remain in use more than five years. They were slow, bulky, and inefficient. However they had a major advantage and that was the reason that they were built. They could be constructed much faster than any other cargo ship. This was the critical factor. It only took about eight months for each ship to be built from start to finish. This was a significant improvement over the time it took to build a merchant cargo ship previously.

Unfortunately, there was still a problem. Though England was the first great seafaring nation with centuries of experience in shipbuilding, it still took experts and skilled workers to build a ship, even a vastly simplified design like this one. Britain was fully engaged in all aspects of fighting the Germans. The manpower, shipyards, and production facilities to build the fleets needed simply didn’t exist.

“So, the British looked to the United States, which was not yet in the war. However, United States did not have a terrific record for merchant shipbuilding on the eve of World War II. In fact, in the previous decade only two ocean-going cargo ships had been built in the United States. However England was so desperate that it was willing to turn to a country that had little experience and no expertise in building the types of ships needed. The hope was that with the British design and with British help, it might take about a year to build each ship. Since the United States was not yet in the war, it was just possible that the Americans could put enough manpower on the project to produce the ships in numbers which would make the project viable. Anyway, there was no alternative as German submarines were sinking merchant shipping every day.

“Since few Americans knew anything about building merchant cargo ships, the British cast a wide net and didn’t limit themselves to shipbuilders or those with a lot of experience in the industry. One of the individuals that the British contacted was industrialist, Henry Kaiser. Kaiser knew little about shipbuilding and was completely ignorant about cargo ships. However, he looked at the British design and proceeded not with British help and expertise, but out of his own ignorance.

“The British used expert workers who had general, but in-depth shipbuilding knowledge. Since he didn’t have such workers, Kaiser asked himself how he could proceed without such expert workers. He came up with a unique solution based on his ignorance of shipbuilding. Kaiser re-designed the assembly process using pre-fabricated parts so that no worker had to know more than a small part of the job and much easier to train. Moreover, he introduced American assembly-line techniques. The British knew that for close tolerances in high quality ships, heavy machinery was necessary to cut metal accurately. Kaiser didn’t know this, and anyway he didn’t have heavy machinery. Again, he asked himself a question: ‘How do I cut the metal?’ Again he came up with a solution, but not the one the British had been using. In his ignorance he told his workers to cut the medal using oxyacetylene torches. This turned out to be cheaper and faster than the traditional British methods. In his ignorance, Kaiser replaced riveting with welding, also cheaper and faster. He called his ships “Liberty Ships.” He started building them and it didn’t take him a year for each ship. It didn’t even take him eight months. He started building them from start to finish in about a month. Then they got production time down to a couple weeks and for publicity purposes, they constructed one Liberty Ship in just four and a half days.

“Approaching this problem out of his ignorance, Kaiser built almost 1500 ships at two thirds of the time and a quarter of the cost of other shipyards previously. Other American shipbuilders immediately adopted his methods in building these ships. Interestingly, despite the fact that they were not built to last, a couple are still around and in use.”

Concluding his story, Drucker went on to say that like Henry Kaiser who knew nothing about building merchant ships and approached the problem out of his ignorance, and not his knowledge in this area, Peter looked at situations; the background of which he knew nothing, and asked questions stemming from his ignorance much as Kaiser was forced to ask himself and his staff questions out of his ignorance. Those who he helped were frequently surprised that these questions led to effective solutions that helped them with their problems.

Drucker then went on to his original topic and continued lecturing, his lesson on the importance of approaching a problem from a position of ignorance complete.

What to Do; Not How To Do It

This was typical of the way in which Drucker disseminated his lessons. Drucker taught what to do. He was very specific about this. However, he did not teach how to do it. That was left up to the student or to his consulting clients. Shortly after his death, a tribute in The Los Angeles Times quoted famed former GE Chairman Jack Welch. Welch credited Drucker with helping him to understand what to do in order to restructure his giant company, a company that was in many disparate businesses conducted in many different geographical locations around the world.

Most consultants would not have done what Drucker did in this instance. Most probably would have begun an expensive and lengthy study of the organization and structure of GE and the location, nature and profitability of these varied businesses. Drucker cut right to the heart of the issue. He didn’t know much about GE or its businesses, but he did know that it was a mess and required a simplifying process. According to Welch, Drucker asked only: “If you weren’t already in this business, would you enter it today? And if not, what are you going to do about it?” Welch’s comment to his interviewer for the article was: “Simple, right? But incredibly powerful.[1]

Coming from a position of his ignorance about GE, Drucker had asked a question that caused Welch to analyze GE businesses using Drucker’s question as a starting point. In answering, Welch answer had to answer the primary question and then to come up with a decision to act, or a conscious decision not to act.

Welch decided that if GE couldn’t be number one or two in the marketplace for any business, he would never have chosen to enter the business in the first place. Welch gathered the information he needed to determine whether GE could become first or second in the market in each. Using these criteria, he ruthlessly dropped businesses that he would not have chosen to enter. The result of this pruning was that GE became much more efficient and concentrated its resources on those businesses which it could really exploit. GE’s became more efficient and effective and its stock began to skyrocket. This helped to make Welch’s reputation as one of America’s most effective and celebrated executives. Not bad for starting with a little ignorance.

 

Analyzing Drucker’s Lesson

At the time of Drucker’s lesson, I knew I was on to something profound and so jotted down a few quick notes about approaching a problem primarily with ignorance for later consideration. Then I transferred my attention to the new topic Drucker had already embarked upon.

Later back home, I began to think about how to apply what Drucker had said regarding what managers should do in applying their ignorance to problem situations. I knew that Drucker didn’t mean to exclude one’s prior experience, knowledge or expertise completely. If that were true, how would Drucker have known even where to begin? Moreover, his injunction to begin with ignorance had to be based on a model developed through knowledge, experience and expertise.  I suspected it was his background as a journalist may have given him the inspiration for this concept. In addition, I realized that as a manager got involved in following Drucker’s advice based on a question, whatever it was, without considerable knowledge, he would be unable to accurately understand the issue. This meant that Drucker was not talking about tactical decisions that needed to be made immediately and on the spot. Such decisions had to be based on prior knowledge and experience. Peter was talking about more strategic decisions about which one had the time to reflect. Moreover, since Peter had said on many occasions that managers needed to trust their gut feelings, it didn’t mean ignoring intuition either. I concluded that what Drucker meant was that a manager should not jump in with an immediate solution. And while a manager’s experience and intuition were not to be excluded, he or she had to approach these problems first with an open mind and thus the manager needed to recognize, even emphasize his own ignorance in organizing resources to solve the problem. To rely primarily on expertise was in fact, dangerous to the problem’s optimal solution. That this was in fact what Drucker meant was confirmed some years later in a personal discussion.

 

The Application of Ignorance to Problem Solving

Starting with Drucker’s concept, I began an investigation of problem solving methodologies. I categorized two major approaches to managerial problem solving, both of which involved beginning from a point of “ignorance.” Essentially these involved emphasizing the left-brain and right-brain methods; or if you wish; logic and analysis versus reliance on creativity and emotion. In this short article, I’m going to explain the the brain solution only. In a future article, I’ll explain the right brain solution. Both approaches work. The important element is to enter with ignorance — even though both methods may involve amassing and analyzing additional information available.

 

The Left Brain Solution

I had already been exposed to an effective left-brain methodology previously. It was used in staff studies and was extremely effective not only in organizing complex problems and reaching logical solutions, but in presenting this information to others to convince them of the validity of the problem solvers solution. I always understood that this was developed by the military in the 19th century. However, during my investigation, I discovered that this method was also used and taught at Harvard University. Later yet, I learned that other professions such as the law, used a very similar approach to analyzing and reaching logical conclusions when confronted with difficult and complex problems.The left brain approach involves defining the problem, deciding on the relevant information bearing on the problem situation, developing potential alternative solutions to the problem, analyzing these alternatives, developing solutions from this analysis, and finally making the decision. 

 

Problem Definition

You can’t get “there” until you know where “there” is. That’s not one of Peter Drucker’s injunctions; it’s one of mine. That’s my way of emphasizing that in order to solve any problem, you’ve got first to understand exactly what the problem is. That’s the “there” in a problem situation. The shipbuilding problem was not to be able to build the ships the British way, it was to build ships.  Drucker saw Welch’s restructuring problem as having to do with trying to manage a number of businesses that didn’t fit the strengths of the overall corporation.

 

You can see where Drucker’s instruction to begin with ignorance is so important. Previously with the shipbuilding problem, the problem had been defined incorrectly.  If had been defined as “How can we build the ships the British way without the same human and physical resources. The fact was, you couldn’t. If Kaiser’s ignorance hadn’t been brought to the problem so that this problem statement was redefined, Kaiser and other potential American emergency shipbuilders might still be working on the problem, or long since decided that it couldn’t be done.  Using 1940’s technology available at the time, the problem just couldn’t have been solved.

 

Similarly, had a large consulting concern accepted GE’s problem and defined it as simply the restructuring of GE, they probably would have embarked on a massive program of analysis of each individual business owned by the corporation. While eventually a common theme of which businesses GE should or should not have shed may have emerged, it would have taken far longer and used up many more resources to arrive at this solution. Further, it might have ignored Welch’s eventual strategic criteria since Welch himself would never have been forced to struggle with the issue of which businesses he would have GE enter if it were not already in the business.

 

Relevant Factors

Both Kaiser and Welch’s problems had a number of factors that were directly relevant to each problem situation. Therefore, both needed to gather additional data. Kaiser knew what he didn’t have. He needed to know what resources he did have available. Kaiser looked into this, did his analysis and decided that he could build these particular ships cheaper and faster. Similarly, Welch had to decide which businesses he would or would not cut or retain measured against a common standard. He decided on those in which GE could not be number one or two in the market.

 

Alternative Courses of Action

In this part of the left-brain decision process, Kaiser had to decide on alternatives to solve the problem. One option might have been to develop new tactics. Maybe he could have started a world wide search for expert shipbuilders in neutral countries and offered them high wages. Maybe he could have designed new metal cutting machinery and produced it quickly using his methods. It is possible he did consider these or other options. Welch might have used different criteria, say eliminate businesses that don’t have the potential to reach a certain level of profits.

 

All alternatives have both advantages and disadvantages. Welch probably sold off some really valuable companies using his criteria. He knew that this could, and probably would happen in some instances. That was a disadvantage to this alternative.

 

Kaiser took an enormous risk with his solution. He had millions of dollars invested in it before he built his first ship. Many of the methods he used had never been employed previously and many were extremely innovative to say the least. It was reported that because it took years and extensive training to enable novice fitters to tightrope across the high structures of the ship as it was completed, Kaiser hired ballet dancers as fitters.[2]

 

Analysis, Conclusions, and Decision

During the analysis, the manager essentially compares the relative importance of each alternatives advantages and disadvantages. Some alternatives have few disadvantages, but no great advantage either. In any case, the manager needs to think it through and document his thinking. This helps this left-brain method to be really effective in explaining the decision to others after the decision is taken.

 

In this case, the conclusions are from the analysis and the eventual decision should be obvious. I’m sure Henry Kaiser went through this process in detail in explaining what he wanted to do to his managers, workers, and his board of directors. He would have left nothing out, concluding that despite the risks, the best way to achieve the desired results was to implement the building of the British design in the way he outlined it. Similarly, Welch would have explained the situation to his board and eventually to GE stockholders as to why certain businesses, even if profitable, had to be sold in order to secure the future growth and higher profitability of the corporation.

 

In summary, of course you shouldn’t overlook lessons learned, or what you know in your problem solving — but as Drucker demonstrated we must still keep our minds open and begin to solve problems from our ignorance.


[1] James Flanigan and Thomas S. Mulligan, “Peter F. Drucker was the original management guru,” Los Angeles Times(November 12, 2005). Accessed on The Seattle Times, Business and Technology at http://seattletimes.nwsource.com/html/businesstechnology/2002619549_druckerobit12.html February 10, 2006.

[2] John H. Lienhard, Engines of Our Ingenuity. “No. 1525: Liberty Ships, accessed at http://www.uh.edu/engines/epi1525.htm , February 21, 2007


 

The Article above was adapted from A Class with Drucker:

The Lost Lessons of the World’s Greatest Management Teacher

by William A. Cohen

(AMACOM, 2008)

 

 

 

 

 

 

 

 

 

Relevant to our article several months ago on diversity, Dr. John Gaze of Touro University International sent us an interesting research diversity study done by him in a hospital environment in the armed forces. It is located by following the link:  “A Diversity Audit in a Hospital Setting.”

 

BillCohen

William A. Cohen, PhD, Major General, USAFR, Ret.

President

THE INSTITUTE OF LEADER ARTS

www.stuffofheroes.com

wcohen@stuffofheroes.com

(626) 794-5998/791-8973

FAX (626) 791-8973

 

 

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THIS MONTH’S THOUGHTS FOR LEADERS

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                                                    – Friedrich Nietzsche (1844–1900), German philosopher and  classical scholar

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