Drucker’s innovative approach to optimal decision-making
William Cohen, first graduate of Drucker’s PhD program, shares the revolutionary management consultant’s advice for making the right decisions
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In 1967-68 I graduated from the University of Chicago business school and received my MBA degree. Those were the days of Defense Secretary Robert McNamara’s ‘whiz kids’, and everyone was encouraging managers to be more scientific.
Soon management was taught as a science and managers were using economic analysis extensively in government or business. My bachelor’s degree was in engineering and I knew nothing about business but, being a practitioner, I did have some knowledge of management.
I knew that economic issues were important for profitability and for cost minimization in R&D and other military projects. The latter was my primary interest outside of flying but managing with numbers and quantitative analysis seemed a little extreme, although it opened up new possibilities.
When applying economic analysis you get a numerical answer and arrive at an optimal economic decision. The result is based entirely on the numbers. We used complex quantitative models and it certainly made decisions easy. You just plug the numbers into the equation and solve a mathematical problem. It follows science. However, I could see that while useful, economic analysis frequently provided only an incomplete answer.
Today, struggles with Covid-19 provide a good example of the problems with even strong quantitative skills if you just ’follow the science’ and manage by numbers alone.
What were the lessons learned from the pandemic?
As Covid-19 became a critical issue, most attempted to ‘follow the science’. They found, however, that regardless of the objective, there were always other factors and sometimes conflicting goals and benefits that needed to be evaluated. This got more challenging as time went on and more problems occurred and stronger strains of the virus appeared.
The issue of relative merits of different vaccines and their effectiveness remained, even after Operation Warp Speed was successful despite doubts by experts over whether a vaccination could be developed so quickly. Recently, more issues surfaced.
Decisions needed to be made regarding how many shots were needed, who should receive them and when should this occur. Experts looked at the numbers and arrived at different conclusions. Some intended recipients did not even want to be vaccinated while others maintained that they should be mandated to do so.
An optimal decision requires a different and more complex analysis than the outcome of a single goal analysis or quantitative conclusion. The Covid-19 experience forces us to recognize that there are usually multiple and conflicting goal solutions and success in reaching one goal might result in failure or a higher risk of failure in others.
Finding a solution which does not ignore issues such as economic recovery, the need to educate school children, the worldwide nature of the pandemic, vulnerability, effect on different age groups and those with other underlying illnesses and more. All of these issues require consideration of a much wider range of situational factors.
Even the personalities and abilities of those involved in implementation must be considered, as well as the culture, customs and belief systems of the groups we are attempting to help, while also evaluating available resources and defining what could be termed ‘competitive issues’ that would need to be considered.
Moreover, politics might affect the interpretation of data and decisions made which are far removed from the injunction to simply ‘follow the science’. Experts can be on all sides of important issues, and their opinions may differ greatly on what is ‘fake news’, scientific fact, or simply an opinion on what certain data means and what action should be taken.
Multiple factors complicate management decisions
Some geniuses began grappling with these problems through the use of liberal arts long before Covid-19. In 1905, Albert Einstein employed the liberal arts in place of quantitative analysis to explore highly technical questions in theoretical physics. He developed the theory of relativity and the equation E=MC² for the conservation of energy without computers, or even the use of chalkboards, only with the arts and his own imagination.
Two experts who rethought management as a liberal art
Almost simultaneously, two leading management scientists, Peter Drucker and Henry Mintzberg, concluded that economic analysis alone was insufficient. Both of them independently concluded that because management itself is an art, effective management cannot be accomplished solely by crunching numbers to make decisions.
Employing all liberal arts was necessary. Economics and the physical sciences are not excluded, but other liberal arts must also be employed and might be of equal or more importance at different times and places.
What two management scientists did that others did not
Both geniuses improved management decision-making. Drucker wrote that: “Management is what tradition used to call a liberal art: ‘liberal’ because it deals with the fundamentals of knowledge, self-knowledge, wisdom and leadership; ‘art’ because it deals with practice and application.” He called knowledge, self-knowledge, wisdom and leadership “the four essentials”.
Drucker wrote that leadership is the most important essential and results in 50 percent of the quality of outcome for any endeavor. Where others said that integrity and social responsibility were desirable, Drucker taught that they were not desirable, but required.
Drucker and his dean, Paul Albrecht, established a PhD program which, though it offered a few traditional courses, was comprised mainly of courses that he himself developed and taught which were focused on management and were outside of the traditional specialty graduate courses offered in a management program. Some called it ‘the Drucker difference’. I should add that I was the first graduate of this program in 1979.
The approach used in Drucker’s work was uncovered by Minglo Shao and C. William Pollard, both members of the Drucker Institute board at Claremont Graduate University where Drucker taught.
With another board member, Bob Buford, they funded and promoted the concept as ‘management as a liberal art’ or MLA and furthered its development at several schools, including Centennial College in Hong Kong, Claremont Graduate University, the Peter Drucker Academy in China and the California Institute of Advanced Management.
They also commissioned a book, Drucker’s Lost Art of Management by Joseph Maciariello and Karen Linkletter (McGraw-Hill, 2011), which introduced the social responsibility aspect of leadership in MLA as a prime philosophy of management. Professor Maciariello developed and taught a non-degree online course on MLA primarily based mostly on his research.
Henry Mintzberg’s innovations
Meanwhile, at McGill University in Canada, Henry Mintzberg, an internationally famous management professor, came to similar conclusions as Drucker regarding the need for better analysis and practice of management decision-making.
He wrote: “Management is above all a practice, where art, science and craft meet.” Drucker took this even further and theorized that many of the survey courses in areas including accounting and finance taken by managers for an MBA were unnecessary, as the material was already part of programs for attaining specialty graduate degrees.
He suggested that the time spent on these courses was needed for mastering actual management. Once on the firing line, specialists already assisted more generalist managers with support in their areas of expertise.
Along with partners in other countries, Mintzberg developed an accredited graduate management degree that was not an MBA. In 1989, he convinced senior academic administrators and others at McGill to let him test his concepts in a fully functioning academic and accredited program outside of the school of business.
Based on its success, the program has grown considerably since and he wrote a bestselling book, Managers, not MBAs (Berrett-Koehler, 2004) which explained his views of the shortcomings in MBA courses for educating managers. Many of his ideas dovetail with what has been taught under the MLA banner, but there are also new ideas, including the notion of reflective mindsets, shared competencies and an emphasis on teamwork and global culture.
Mintzberg recognized that reflective mind-sets impact the way a manager looks at any problem. These mind-sets help frame how problems are perceived. In light of this, his students practiced one of five mind-sets in five different countries as they traveled between them, to solve management problems and complete his program. These were reflective, analytic, worldly, collaboration and cooperation and action mind-sets.
Mintzberg also recognized that experienced managers look at any problem a little differently and might develop different, but equally effective solutions. This fitted with another of Drucker’s observations, which was that the biggest breakthroughs and innovations frequently came when employees with backgrounds from different industries or companies moved to new ones. They brought with them their ideas, thinking and procedures that had been used in their previous organizations.
These were frequently unknown to the new organization with which they were now affiliated, however. Mintzberg also developed the concept of shared competencies of participating students to practice this idea for more innovative solutions to problems using groups of management-experienced students.
Drucker’s work which resulted in MLA and Mintzberg’s successful development and application of the liberal arts for management decision-making demonstrate the flexibility and almost unlimited potential of the MLA concept for success and additional development. MLA is adaptable to all organizations for more effective problem solving and decision-making.
