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Lessons From Peter Drucker

Why You Need to Know how Peter Drucker Consulted*

Posted: 10/04/2016
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No, this is not a self-help piece on how to manage consulting services for your organization effectively or anything like that. I’m not going to encourage you to follow the methods of just any consultant either, but a consultant in the manner of Peter Drucker, the Father of Modern Management and how he consulted with organizational heads to help big companies, small companies, non-profits, and top political leaders of countries solve their problems and reach their goals.

I’m not talking about hanging out your consultant’s shingle or applying for work at a major consulting firm either. What I am saying is that consulting in Drucker’s unique way can have major benefits for your organization and for your own development as a corporate leader. Drucker is gone, and you can’t hire him any longer. However, if you can understand and apply Drucker’s methods of consulting you can significantly Improve your own organization today. First, you should understand how Drucker’s modus operandi of consulting differed from all others.

How did Drucker Consulting Different from Others?

Drucker was a good friend of Marvin Bower who was the McKinsey and Company CEO who had the most impact on the largest consulting firm in the world, even more than its founder, University of Chicago accounting Professor James McKinsey. Bower and Drucker had adjacent cubicles when both of them were mobilized for consulting duty during WWII. They remained friends thereafter and throughout their careers, although while Bower build a 9000-consultant worldwide firm, Drucker didn’t hire or supervise anyone, not one other consultant. He worked out of his home by himself, answered his own phone and met with clients in his living room. Still Drucker’s worldwide impact was at least as impressive. He commanded and received a $10,000 donation to his Foundation for an hour or so of his time. He was the consultant behind numerous success stories. However, new clients unaccustomed to his methods said that Drucker consulting was pretty frustrating at first. Previous consultants marched in, studied the situation, returned sometime later and told their clients what they should do, presented an invoice and left. Drucker refused to answer any questions about what to do, saying that this wasn’t his job. Yet the questions he asked led these new clients to come up with solutions which led to success time after time.

To command this kind of compensation and get these kind of results, Drucker consulted differently and to paraphrase Teddy Roosevelt’s recommendation for negotiation, to “speak quietly and carry a big stick,” Drucker “spoke quietly and carried a big trick.” That “big trick” was his unique consulting methodology, practiced by few, if any.

Albert Einstein Set the Path

Perhaps Einstein’s most productive period was in the single year 1905. In that year he produced four ground breaking theoretical papers, one of which eventually won him the Nobel Prize. None of these four were products of government, corporate, or university laboratories. Instead, Einstein was working at the only job he could get after he received his doctorate from the University of Zurich. He was working at the Swiss Patent Office. But after all, Einstein was only 26 years old.

It was Einstein himself who described the first step in the development of one of his most famous theories: the Theory of Relativity. Again, he conceived this theory not in the laboratory, but perhaps reclining on a couch. Or, he might have even been taking a hot bath for all we know. What he did say was that he imagined himself traveling along the side of a beam of light and what he would see relative to another beam.

Einstein described his process of analysis in an article in the London Times written in 1919. In this article, he wrote about what he called “Theories of Principle.” He stated that these theories “. . . employed the analytical, not the synthetic method. Their starting-point and foundation are not hypothetical components, but empirically observed general properties of phenomena, principles from which mathematical formulae are deduced of such a kind that they apply to every case which presents itself.” According to The Oxford Dictionaries Online, the scientific method is defined as "a method or procedure that has characterized natural science since the 17th century, consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses.” Einstein’s method, while based on observation, dropped the hypotheses.

So did Sir Arthur Conan Doyle. He was the originator of the most famous fictional detective in the world: Sherlock Holmes. Sherlock Holmes had an acute ability to deduce highly accurate information from his observations. His assistant, Dr. John Watson, did not have this ability.

Watson complained to Holmes of his own inability to see all the facts that Sherlock seemed to see. The great detective responded: “On the contrary, Watson, you see everything. You fail, however, to reason from what you see. You are too timid in drawing your inferences.” In other words, it was not only that that one must observe, but must analyze and draw conclusions from these observations. As Drucker commented similarly on his ability to predict the future: “I only look through the window and observe something which has already taken place. Then I ask myself, what is likely to be the result of this thing which has already occurred.” Does this sound much like Sherlock Holmes explanation to Dr. Watson?

Did Drucker’s method of reasoning evolve from that of Einstein and Arthur Conan Doyle? It is impossible to say. We do not even know whether Drucker actually read Einstein’s article. Drucker was only ten years old at the time it appeared and did not then know English. However, Drucker did refer to Einstein later, and it is possible that he read the article at some later late. And Drucker did live and work in England from 1933 to 1937. It is likely that he read Doyle’s works in English as well.

Synthetic Research and the Research of Einstein and Drucker What is the difference between synthetic and analytical research? Synthetic research starts with the known and proceeds to the unknown. Thus one starts with a hypothesis or hypotheses and tests this hypothesis to prove or disprove it, usually by examination of a sufficient number of examples and testing mathematically for significant difference.

Analytical research starts with the unknown and proceeds to the known. There is no hypothesis. One definition of analytical research is “a specific type of research that involves critical thinking skills and the evaluation of facts and information relative to the research being conducted.” The analytical process is how Einstein, Sherlock Holmes, and Drucker arrived at their theories. This extended to Drucker’s consulting practice both in his use of what he observed and in his reasoning in considering a client’s issues. Unlike Dr. Watson, he was not timid in drawing his inferences. Moreover he didn’t supply his clients with answers. Rather, he supplied them with questions. In this way Drucker got his clients directly involved in the process.

Questions and Their Value

By asking questions, Drucker not only demonstrated the advantages of analytical thinking over the synthetic method, he put his clients to work on the issue, and who would be more understanding the challenge and the need for the consulting better than his clients? Certainly not Drucker. Drucker knew the right questions to ask. In asking them Drucker put the most qualified individuals to work on the issue, more qualified than even than the questioner, who was ignorant, he said.

Drucker’s Five Basic Questions

Drucker’s five basic questions came from his consulting experiences. What is your mission? Who is your customer? What does your customer value? What results do you seek? What’s your plan for achieving those results? However, he asked many others. He was good questioner. But this wasn’t rocket science. When a top executive complained that most of his businesses were profitable or nearly so, Drucker merely asked him what businesses would he get rid of if he could? And when the CEO told him, Drucker merely followed up with: “Okay, now what are you going to do about it?” That CEO was legendary manager Jack Welch, of GE. He decided that if a GE business was not number one or two in its market and was unlikely to attain one of those two positions he would sell or liquidate it and invest the money in those that had a higher potential. That came to be known as Drucker’s abandonment strategy. By listening to Drucker’s two questions and taking actions based on his own answers, Welch grew GE by 4000%. No Power Points or four or nine-celled matrices were required. In a number of graduate courses as Drucker’s PhD student, I never saw him draw a single matrix.

*Adapted from Peter Drucker on Consulting (LID, 2016).