Consulting Drucker

by William Cohen

  Dr Suarez is now a vice president. A team of four CIAM students had completed a consultancy for his organization several months earlier. All this was accomplished with weekly meetings electronically. Another team of four has completed a long-distant consulting engagement for an organization in Israel, 7,563 miles away, even as the client was under potential attack from rockets from the Gaza Strip during the 2014 war. In addition, another team recently concluded a presentation electronically in Lebanon. Remote consulting with clients in Africa, China, and other parts of the world are planned.

  All this is under CIAM’s Consulting Institute, which was then headed by a man whom, like Drucker, has a Juris Doctor (JD), a professional doctorate in law from Harvard, and was also a former McKinsey & Company consultant. Our students and professors all had experience with Drucker’s concepts of consulting. Today, CIAM is under the able leadership of former VP Jennie Ta, who carries on the traditions of incorporating Drucker’s methods in both teaching and consulting.

  How to Use and Master Drucker’s Techniques and Concepts

  This book is based on the consulting of Peter Drucker, but also builds on his ideas and methods, for as Drucker himself said, “Keep doing what made you successful currently and in the past, and you will eventually fail.” Applied correctly, Drucker’s genius will save you thousands of wasted hours and much frustration. You will not only avoid countless blunders and create new ideas for success, but it will enable you to offer better advice to clients, subordinates, bosses, and fellow executives, which will lead them toward success. The principles, concepts, and experiences of hundreds of Drucker’s clients, and others practising his principles, are all here. The aim is to understand Drucker’s thinking, why he thought this way and, moreover, to apply his unique ideas in your own business as a practising manager or consultant.

  As Drucker taught and, I believe, would have approved, Consulting Drucker is not theoretical – it is practical. You will understand his way of thinking and the tools he used to build perhaps the most successful independent consulting practice ever, and the principles and concepts that helped hundreds of his clients achieve great success. As Drucker wrote and exhorted those of us who were lucky enough to have been his students: “Without action, nothing gets done.” The action part is essential, and that part is up to you. You have to take Drucker’s ideas and apply them to your own issues. From this, there are no limits to what you can do. So let’s get started!

  1 Time-Warner, Fortune magazine, “GE’s Jack Welch Selected Manager of the Century,” 1 November 1999, accessed at http://www.timewarner.com/newsroom/press-releases/1999/11/01/fortune-selects-henry-ford-businessman-of-the-century, 22 November 2015.

  2 John A. Byrne, “The Man Who Invented Management,” Business Week, 28 November 2005, accessed at http://www.bloomberg.com/bw/stories/2005-11-27/the-man-who-invented-management, 22 November 2015.

  3 Dan Rather interview, “Jack Welch: I Fell in Love,” 60 Minutes, 24 March 2005, accessed at http://www.cbsnews.com/news/jack-welch-i-fell-in-love/, 22 November 2015.

  4 Peter F. Drucker, The Practice of Management (New York: Harper & Row Publishers, 1954), p.194.

  5 Peter F. Drucker, Management: Tasks, Responsibilities, Practices (New York: Harper & Row Publishers, 1973), p. 367

  6 This story was given in class. This version is from William A. Cohen, How to Make It Big as a Consultant, 4th edition (New York: AMACOM, 2009), pp.168-169.

  Chapter 2

  The Drucker Consulting Difference

  Drucker’s management consulting approach differed greatly from other giants in the field and, in fact, from just about any other management consultant. These differences included the basic organization of his consulting practice; his services; what he demanded of clients; his focus on thinking through to solutions rather than more rigid, structured approaches; an emphasis on questioning clients rather than providing answers; an emphasis on managerial gut decisions over only use of numbers and quantitative methods; his use of historical analysis; and so much more.

  Applying Drucker’s Methods Requires Understanding

  To understand and practise Drucker’s methods, it is first necessary to understand his education and how he came into a consulting career, and the fact that it was integrated into his teaching and writing activities. According to him, consulting was not his profession. In fact, according to Drucker, neither were writing or teaching. He might have paused to consider the accuracy of the descriptive title of chapter one, The World’s Greatest Independent Consultant, and with great reluctance might even have agreed to its being essentially true. But he probably would have reminded me that he was neither a consultant, a professor, nor even a management author, but a “social ecologist”.

  What Is a Social Ecologist?

  One dictionary defines an ecologist as “someone who investigates the interactions among organisms and their environments”.1 If we look up “social”, we see that this has to do with “of or relating to people or society in general”.2 Add the two together and we see that Drucker saw himself as one who studies and investigates human interactions and their environments.

  There is one more word we need to add to the definition of what Drucker felt was his profession: “scientist.” He usually did not use this word in the basic definition of his activities, but it was certainly implied. A scientist is “a person who is engaged in and has expert knowledge of a science, usually, most frequently, a biological or physical science”.3 Keep this in mind as we examine the differences in Drucker’s consulting. Drucker saw himself as a scientist who investigates human actions and environments.

  Drucker’s Strange Non-consulting Organization

  Years ago, a writer wondered about the fact that of all the world-famous, “brand name” consultants, Drucker alone did not establish a major consulting organization supporting or expanding his activities. There was and is no “Drucker Consulting Group” or “Drucker and Associates,” or “Drucker LLP or LTD”.

  McKinsey and Company, the largest consulting firm in the world, with 9,000 consultants worldwide, was founded by a former University of Chicago accounting professor, James O. McK-insey, in 1926. Its biggest growth was under Martin Bower, who, as explained in the previous chapter, occupied a cubicle next to Drucker’s during their work as US government management consultants during World War II. Bower and Drucker were friends, but Drucker did not follow Bower’s lead to build a worldwide consulting organization. Call Drucker’s telephone number and you didn’t get a receptionist or a secretary unless you dialled his university. In his consulting practice, he had neither. Drucker lived until 2005, a technologically modern time. However, he never had a website, either. If you wanted Drucker, you were either his student, a client, or looked him up in the phone book. He may have actually turned more potential clients away than he accepted. But remember, Drucker was not primarily a consultant. He was primarily a scientist and a social ecologist, even though many (including me) think that he was the world’s greatest independent consultant.

  And Drucker thought of himself as a scientist, even if he did not use the word to describe himself. He painted a word picture of working in his “laboratory”, which he said was like a business or corporation. And if he wasn’t wearing a white coat, his imagery may have encouraged your mind to dress him in one anyway. It did mine.

  This mind-set explains a lot. Since Drucker clearly thought of himself as a scientist, like many scientists, he never coveted great wealth. Instead of billing his clients $10,000 a day, in later years he requested that they donate $10,000 a day to his foundation. He lived in a modest house in Claremont, California. He drove a relatively inexpensive car. He mowed his own lawn. He did not wear $1,000 suits or expensive watches and his shoes were not high fashion either. He acted exactly the way he lived.

  Once, while mowing his lawn, Drucker was confronted by a young community organizer who wanted him to sign a petition for some long-forgotten cause. Doris, Drucker’s wife, ran out of the house and rescued
him. “Peter isn’t signing anything,” she said and took the pen away. This was reported by the city mayor in 2009 – he was once that young political volunteer. He told this story as he renamed the street adjacent to Drucker’s office at Claremont Graduate University “Drucker Way” four years after Peter’s death.

  How Drucker Became a Consultant Helped Form the Drucker Difference

  It is worthwhile reviewing how Drucker became a consultant. He prepared himself well, but it was not a conscious preparation. I’ll explain that in a later chapter, because his methods can be adopted successfully by any who set their sights on becoming an independent management consultant in the mould of Drucker, or frankly, any other mould. Meanwhile, recall that according to the story he had told us in class, until Drucker’s World War II assignment as a management consultant, he didn’t even know what a management consultant was. After the war, Drucker began to teach, but not at any of the nation’s famous business schools – not at Harvard, not at Wharton, and not at the University of Chicago. Drucker began his teaching career at two girls’ schools, Bennington and Sarah St. Lawrence. He didn’t teach business or management; he taught politics and philosophy. It wasn’t until his book, Concept of the Corporation, was published in 1946, based on his experiences at General Motors, that Drucker began to offer extensive paid management consulting to many organizations.

  Drucker’s book was a masterpiece, but controversial. Although legend has it that he had full access to everything at GM and that he actually attended meetings with famed General Motors president Alfred P. Sloan, little original evidence has been found at GM that support these claims. Some say that this is because Sloan and others didn’t like the book, and therefore not only ignored his work but even concealed evidence that Drucker had any significant role in analysing GM’s operations. In later years, after Drucker became known as the father of modern management, GM itself adopted this story. Nevertheless, Drucker’s book included a very favourable review of GM’s management, as Drucker was very impressed with GM’s organization and operations. Without a doubt, the book acted as a marketing vehicle and Drucker was approached for various consulting services by many other organizations.

  Those who have become independent management consultants do so through a variety of portals. Some start with established consulting organizations, or as managers in various business organizations, and then go out on their own. Some are forced into independent consulting because they have been laid off from their jobs and need the income. Others begin in academia and are hired because of their areas of expertise. There is another category, and this is the one in which Drucker falls. They write an article or a book that attracts the attention of an organization and are contacted about the work. I came into consulting through this portal. This is also probably how Drucker became involved with GM. He had written several books by then and was teaching history, and he was also writing for popular magazines such as The Saturday Evening Post and others. Drucker’s book written before The Concept of the Corporation was The Future of Industrial Man, published in 1942. It’s possible that Donaldson Brown, then a senior GM executive, had read the book, investigated the author, and inquired about Drucker’s availability and interest. It was Brown who recruited Drucker to perform the GM management audit, which led to Drucker’s writing The Concept.4 Once he became a management professor at New York University after writing it, the requests for his consulting services probably increased significantly.

  Whatever portal brought Drucker to consulting has little to do with the quality of his consulting, but it may well affect both the level and type of consulting performed, as well as various decisions about how and what services he provided. It is important to note that The Concept of the Corporation was not a “how to do consulting” book. It was descriptive in nature regarding much about GM’s multidivisional structure and also suggested some new ideas, decentralization being one, and a re-examination of some of GM’s long-standing policies in all.

  According to legend, Alfred Sloan was so upset about the book that he “simply treated it as if it did not exist, never mentioning it, and never allowing it to be mentioned in his presence”.5 In any case, this particular portal led to a ton of consulting for Drucker, speaking before corporations and many other organizations. This is a strong lesson for anyone wishing to follow in Drucker’s footsteps. It also set the stage for Drucker’s consulting practice for the next 60 years: he would consult on what to do.

  Drucker Was Concerned with What to Do, Not How to Do It

  As a social ecologist, Drucker was concerned with what to do, not the step-by-step instructions of how to do it. For this reason, he never wrote a book about his consulting. I’m not surprised. Books about consulting, if they are not descriptive of the industry, invariably concern the details of how to accomplish some aspect of the consulting profession, be it technology, sales, presentations, or client relationships. This would not have been the higher level of what to do, which is what the scientist Drucker dealt with. Believe me, I should know. My book, How to Make It Big as a Consultant (AMACOM) has sold about 100,000 copies from four US and many foreign editions since it was first published in 1985. However, if I had advised would-be consultants to answer their own phones and accept fees only for a foundation, I doubt if the book would have made it past the first edition or even been accepted for publication.

  Drucker’s writing about what to do, with almost never explaining how to carry out his ideas, has been both a curse and a blessing for myself and a good many of his consulting clients as well. It meant that I had to become something of a detective to determine how Drucker came to his conclusions and also to translate this information into the action that Drucker constantly urged his clients to undertake. Some of this understanding took years. For example, it wasn’t until after Peter’s death that I understood what he was talking about when he said that marketing and sales were not only not complementary, but could actually be adversarial. This will be explained later, as it is an essential consideration in consulting for either sales or marketing, or anything else. In any case, these mysteries constituted the curse I spoke of. The blessing was that when I finally deciphered his thinking, it was like finding hidden gold. I also began to suspect that maybe that was exactly his intent. To make clients, readers, and students think rather than merely be fed answers that they were simply to execute.

  I recall one client telling me: “This led us to examine the issue more closely and to come up with our own ways of implementing a solution. His questions led us to excellent solutions, which he had forced us to generate through our own thinking and discussions. However, it took some getting used to. I don’t remember Peter ever presenting us with fancy overhead presentations or quantified reports.”

  The Most Difficult Aspect of Being a Drucker Client

  I heard once that the manner in which he provided consulting was the most difficult thing about being a Drucker client. One Drucker client that I spoke with 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. Before PowerPoint, they presented their detailed solutions and recommendations on stacks of overheads. We were instructed exactly what we were to do to execute the recommendations. And if we didn’t understand it, they were happy to explain themselves in more detail and answer our questions. Drucker, on the other hand, did none of that. He would begin by asking us questions that 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. In the process we had to think through logically to arrive at solutions we would have otherwise completely overlooked.”

  The Chinese philanthropist Minglo Shao, who contributed the money that founded the very unusual non-profit graduate school based on Drucker’s teachings, for which I have the honour to be president, told me that every year he would visit Drucker at his
home and Drucker would ask him questions about various issues regarding the developments of his many businesses and foundations. However, though he asked questions and may have spoken in generalities about what to do, he never once told Minglo how to do it – including the Peter Drucker Academy of China, which Minglo founded. This is probably the only school in the world – other than my alma matter, the Drucker School at Claremont where Peter taught – that has the legal authority to use the Drucker name. To date it has been taught in 32 cities in China, plus Hong Kong, and has 60,000 graduates of various courses and programs.

  Drucker’s Methodology of Conducting the Consulting Engagement

  Drucker did not conduct his engagement the way any other consultant did. And there are few consultants that I know to whom I would recommend it, because to follow it exactly you would need the stature of a Drucker in management, and while I know plenty of outstanding managers and management scholars, none would claim to be Drucker. Almost 20 years ago, Jack Beatty, then an editor of The Atlantic Monthly, who had edited several of Drucker’s articles, conducted an excellent investigation of how Drucker saw things and acted on these insights. This resulted in the 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 the main issue to his audience from an entirely new perspective, still unsolved. However, it was this new perspective that enabled the client to solve the issue with minimum direction from Drucker. According to Beatty, Drucker’s methodology was a form of teaching.6