Consulting Drucker

by William Cohen

  Honda struggled with the idea. He knew something about manufacturing, but was totally ignorant about gasoline or fuel substitutes. Like Drucker, he brought only his ignorance to the problem. However, he didn’t drop the project because of his ignorance. He wanted to introduce a product immediately, with tremendous marketing waiting, but it wasn’t within his power to end the gasoline shortage or to lobby the government to at least allow him to manufacture the small gasoline engines for propelling the vehicle. After studying this, he came to the conclusion that the solution was in using another type of fuel. This helped him to focus on the problem. That was step one.

  Because Honda was unfamiliar about potential fuels or fuel substitutes for gasoline, he began to do research. His complete ignorance led to knowledge and some level of expertise. He read an article somewhere that pine resin had been used, or at least tried, as a substitute for aviation fuel during the war. He reasoned that if pine resin could be considered by experts as a substitute for aviation fuel, why not as a substitute for ordinary automobile gasoline as well? Others thought it a worthless idea born of his ignorance. That Honda’s idea was born of ignorance was undoubtedly true. Moreover, if this was such a good idea, why had more experienced manufacturers not already adopted it? Still, Honda reasoned that if pine resin, plentiful in Japan, worked with gasoline engines for aircraft, it should work with much smaller engines as well.

  He experimented with pine resin as fuel for his engine himself, and much to his delight, he eventually got it to work reliably. So Honda developed a unique bicycle motor that ran efficiently on pine resin. Of course, there was a strong odour, and colleagues called his engine “the chimney.” Through the successful commercialization and development of this innovation and eventually switching to gasoline when restrictions were lifted, he grew the company into the largest motorcycle company in the world. Honda also began to manufacture automobiles and today these, too, are sold worldwide, but these developments were actually unexpected benefits to solving his initial problem. None of this would likely have occurred had Honda not solved an “unsolvable problem” by approaching his challenge with his ignorance.

  Analysing Drucker’s Claim of Ignorance

  Using my own ignorance, I began to investigate how to employ what Drucker had asserted 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 that it was his journalistic background that may have given him the inspiration to begin from ignorance, but then approach general problems in a logical fashion while gathering additional information so that he was no longer as ignorant as when he began.

  In addition, I realized that as a manager or a consultant 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. He was referring to decisions that one had the time to investigate thoroughly and reflect upon. Moreover, Peter had said on many occasions that managers needed to trust their gut feelings, but that this didn’t mean ignoring intuition, either. Clearly the same was true in his consulting work.

  I concluded that what Drucker meant was that a consultant or 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. Thus the manager needed to recognize and even emphasize his own ignorance in organizing resources to solve the problem. This point continues on from the previous chapter of this book, in which we discussed his oft-repeated phrase, “what everyone knows is usually wrong”. To rely primarily on expertise or on what everyone knows is equally dangerous to the problem’s optimal solution. That this was, in fact, what Drucker meant was confirmed some years later in a personal discussion over lunch.

  The Beauty of Ignorance in 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; essentially logic and analysis versus reliance on creativity and emotion. Of course, both approaches can be combined. Most importantly, both are applicable by managers directly or by consultants assisting them. The important basic is to approach the problem with ignorance and you’ll become knowledgeable as you proceed, since both methods involve amassing, organizing, and analysing additional information available.

  Left-brain Problem Solving

  A very long time ago, I was taught left-brain problem solving in the Air Force. It was and is used in staff studies. It is extremely effective, not only in defining complex problems, organizing and analysing data, and reaching logical solutions and recommendations, but in presenting this information to others to convince them of the validity of the problem solver’s solution. This makes it absolutely critical for consultants.

  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 professionals, such as lawyers and psychologists, frequently use a very similar approach to analysing and reaching logical conclusions when confronted with difficult and complex problems.

  Without a doubt, Drucker hit on a similar solution. And for years I overlooked the fact that he had hit upon it almost exactly, and published the information in his book, The Practice of Management, in 1954.1

  The left-brain approach involves defining the problem, deciding on the relevant information bearing on the situation, developing potential alternative solutions to the problem, analysing these alternatives, developing solutions from this analysis, and finally making a concluding decision, even turning these conclusions into recommendations to consulting clients or even others higher up in an organization, such as boards of trustees and directors.

  Building Ships at High Speed

  Drucker was asking us to think on our own. He was not accepting “common knowledge” or the way things were done in the past as being necessarily correct. In fact, the phrase that I heard him use most in the classroom was, “what everybody knows is usually wrong”. Drucker never claimed great knowledge about anything, especially in his legendary consulting. Instead he claimed great ignorance, which therefore required him to think. That’s what an American industrialist did with amazing results during World War II, which is an outstanding example of this simple approach that Drucker recommended.

  In response to high losses from German submarines, the British had developed a design for cheap cargo ships. These ships were so cheaply built and basic in design that they weren’t even expected to remain in service for more than five years. Moreover, they only took about eight months to build, and this was important.

  British shipbuilders were considered the best in the world, but 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 war. The manpower, shipyards, and production facilities to build the fleets needed simply didn’t exist.

  The US was not yet at war, so the manpower was available. However, the United States did not have a terrific record for merchant shipbuilding. In the previous decade, only two ocean-going cargo ships had been built in the United States. The hope was that with the British design, it might take about a year to build each ship, which could be built in England in eight months.

  The US government looked around and Henry Kaiser go
t the job. Kaiser knew little about shipbuilding and was completely ignorant about cargo ships. However, he looked at the British design and proceeded not with his knowledge and experience, but with his own ignorance. But he did think about it. First Kaiser redesigned the assembly process using prefabricated parts so that no worker had to know more than a small part of the job and workers were much easier to train. The British knew that for close tolerances, heavy machinery was necessary to cut metal accurately. Kaiser didn’t know this, and anyway he didn’t have heavy machinery. In his ignorance he told workers to cut the medal using oxyacetylene torches. This turned out to be cheaper and faster than the traditional British methods. Kaiser thought about it and replaced riveting with welding. It was 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. He built almost 1,500 ships. Despite the fact that they were not built to last, a couple were still around and in use almost 50 years later.

  Problem Definition

  You can’t get “there” until you know where “there” is was not one of Peter Drucker’s assertions; it’s one of mine. That’s my way of emphasizing that in order to solve any problem, you’ve got to first 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, but to build merchant ships to get food and supplies to England despite the huge losses to intercepting German submarines. But it took some thinking to arrive at this definition.

  Defining the central problem in a particular situation is the single most difficult, and most important task in most consulting issues. If you correctly identify the main problem in a situation, you can find many different approaches to solving it. But if the wrong problem is identified, even a brilliant solution will not correct the situation. You are well advised to take all the time necessary; be sure you are indeed looking at the central problem, for as Drucker wrote: “for there are few things as useless – if not dangerous – as the right answer to the wrong question.”2

  You can see why Drucker’s instruction to begin with ignorance is so important. Previously with the shipbuilding problem, the problem had been defined incorrectly. It had been defined as, “how can the US build the ships the British way without the same human expertise, the experience of centuries, and physical facilities for building ships quickly enough to help England in its hour of need?” The fact was, that problem couldn’t be solved. The British were the best. Build it their way and they would be the best, but it would take months. 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 given up. Using the 1940’s technology available at the time, and the state-of-the-art American shipbuilding of merchant ships, the problem just couldn’t have been solved. Only ignorance could save the day! So the first step was redefining the problem.

  One of the major errors made in defining the central problem is confusing the symptoms with the problem. For example, low profits are not a central problem, but a symptom of something else. Frequently a consulting engagement has more than one problem. The object then is to locate the main problem in the situation, the one that is more important than any other and is therefore “central.” It may be causing many of the other problems. If you find more than one major problem in a particular situation, you should handle each one separately.

  Once you have identified the central problem, write an initial draft explaining what the problem is. Try to keep this statement as simple as possible by making it as short as you can; a one-sentence central problem is usually best. Be aware, however, that even if you have spent some time in both identifying the problem and wording it as concisely as possible, in many cases you will have to go back and modify it as you proceed through the analysis.

  Also be careful not to word the problem as if it were the solution by assuming one particular course of action is correct before you analyse it. Returning to Honda’s problem, if he defined it as, “How to get the government to drop the restriction on building gasoline engines,” he would have arrived at an entirely different course of action, which would have had nothing to do with pine resin. Remember, too, that your goal in using this methodology is to develop as many different courses of action as possible. Try not to word your statement so that only two alternatives are possible. For example, don’t ask the question, “should a new product be introduced?” That allows for only two alternatives: yes or no. Occasionally there are some situations where only two alternatives need to be analysed. Usually, however, you can reword the problem statement in a way that opens it up to more than two courses of action.

  In your statement, include important specifics about the problem. “What should be done about the possibility of introducing a new product?” is not the best problem statement. It allows for more than two alternatives, but it omits specifics about the problem that may be important to readers of your report who are not as familiar with the problem as you or your client.

  Be careful about making your problem statement too long by incorporating various additional factors. Even if these factors are relevant, they will make the problem statement unwieldy, awkward, and difficult for any reader to understand.

  With these cautionary notes in mind, begin formulating your problem statement. Phrase it as a question, beginning with who, what, when, where, how, or why. Or you may start with an infinitive, as in “To determine the best source for borrowing $xxx,xxx.”

  Drucker knew all of this and, after considerable experience, didn’t even need to write it all out. Also, in many situations he simply asked the client a question or questions, and they were able to get to this important central issue at once. Drucker spent a lot of time describing what is needed to get to the right problem and so did I. He knew that working on the wrong problem was not only a waste of time, but also a waste of resources and money, and almost invariably resulted in the wrong solution.

  Relevant Factors

  Factors may be facts, estimates, speculations, assumptions, time and money limitations, and more. All must be documented, and many should be tested before they are even listed. Most importantly, the word relevant is critical because, even though there will be many different factors in any situation, you must determine and list only those that are relevant to the central problem you have decided upon. Kaiser’s problems had a number of factors that were directly relevant to the problem situation. Therefore, additional data and information was needed. Kaiser knew what he didn’t have. For example, he needed to know what resources he did have available. Kaiser looked into this, did his analysis, and eventually concluded that he could build these particular ships cheaper and faster. This was made easier because he discarded the unimportant and irrelevant and focused on what mattered in doing his analysis and seeking a solution.

  Alternative Courses of Action

  In this part of the left-brain decision-making 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 worldwide 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.

  Although theoretically it is possible to have an alternative with all advantages and no disadvantages, this is highly unlikely. If this were the case, the solution would be self-evident, and this problem-solving procedure would be superfluous.

  All alternatives have both advantages and disadvantages. Jack Welch probably sold off some really valuable companies using his requirement of she
dding any of his businesses that were either not being or capable of becoming number one or two in its industry. He knew that there would be mistakes in some instances. That was a disadvantage to this alternative. And there were enormous risks in this alternative. But there always are and Drucker cautioned clients how to deal with these risks, as I will explain in a later chapter.

  Kaiser took an enormous risk with his solution. He had millions of dollars invested 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 also hired ballet dancers as fitters.3 Yes, he really did. He thought that it would enable faster work in completing the ship’s superstructure, and it worked.

  The Analysis

  During the analysis, the manager essentially compares the relative importance of each alternative’s 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. That helps this left-brain method to be really effective in explaining the final conclusions and recommendations to others after a clear solution is developed.

  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 managers, workers, and 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.