This shifting of focus was Peter Drucker’s unique style of consulting. He “forced” the company’s management team to see their business in a different light—one that entirely changed their approach to day-to-day operations and strategic planning for the future. The railroad company approached their abandoned rail lines in an entirely different light in terms of land development opportunities.
In his book, The Five Most Important Questions You Will Ever Ask about Your Organization, Peter Drucker’s chapter pertaining to question number one, “what is our mission?” describes Peter Drucker’s consulting approach to emergency-room management of a large metropolitan hospital. Experienced ER physicians and ER nurses defined their mission as, “Our mission is health care.” Peter’s consulting approach was to engage in a discussion that had the participants step back and think “out of the box” for a minute. With probing from Peter, the organization’s professionals realized that the real purpose of the ER was, “to give assurance to the afflicted”. This realignment of thinking resulted in a restructuring of the entire patient and health care professional interaction. Patients were triaged within minutes of arrival at the ER, instead of wait times of hours. In some cases, the “assurances” were that a professional communicated to patients that they simply needed to let time take care of the healing to get over the flu or illness. It was this assurance that the patient required, versus an admission to the hospital.
My personal consulting practice approaches the topic of improving quality in health care organizations much the same way that Peter Drucker approached his clients: ask instead of tell and provide meaningful assistance to the unique situation at hand versus providing an “off the shelf” document. Consulting to Peter was not a “cookie-cutter” product process; it involved thoughtful probing and serious listening to assist a company’s management into rethinking what they had been doing for years, repeating ad nauseam. His approach often blended a company’s social responsibilities with that of the Chinese thinking of strategies of planning for existence in 100 years.
About Eric McLaughlin
Eric McLaughlin is a management consultant and Chief Presidential Academic Advisor and former Dean at the California Institute of Advanced Management. Previously Dr McLaughlin was a senior administrator and faculty member at California State Polytechnic University, Pomona, California as well as at other universities from UCLA to Washington State University. He obtained his PhD from what is today the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University in the programme established by Peter F. Drucker. He has written for more than 100 publications and given scores of presentations, as well as performed consulting engagements using Drucker’s methods for organizations such as the American Red Cross, the American Dietetic Association, American Medical International, Citibank Corporation, Stanford University, and West Coast Industrial Relations Association.
My Experience as Peter Drucker’s Client
By Minglo Shao
In the summer of 1999, I went to visit Peter Drucker, as I was planning to establish an institution on management training to serve Chinese managers and entrepreneurs. Peter was very enthusiastic about this idea and immediately offered to be my consultant for the rest of his life. What’s more, he would do it for free. Since then, I would visit him at his home in Claremont, California almost every three months until shortly before he passed away in 2005.
According to the agreement between Peter and me, I would provide a report of a few pages updating business development since we last met and send it to him in advance for his review. The report would cover the recent changes in the environment and the market, new opportunities and challenges, as well as my questions. Every time I sat down in his living room, I would find my report marked with his notes and comments on his coffee table.
Peter usually began the meeting by confirming with me if his understanding of my report was correct. He would then answer my questions listed in the report one by one. Sometimes he would point out that a problem was not a real one, but rather the facade or result caused by the real problem and would guide me in finding the root of the facade by myself. When he finished, he always asked if I had more questions. If my answer was no, he would say, “Let me ask you a few questions.” His questions were often unexpected, but at the same time very enlightening.
Not long after I set up this new institute, a professor from a famous business school approached me and suggested that we should proceed in the direction of elite education that would cultivate potential executives for big corporations and charge expensive tuitions. She masterfully designed an international study tour and recommended herself to be the candidate for the dean of this new institute.
I almost accepted her suggestion due to my admiration for the famous school and this famous professor, but still I forwarded her proposal and résumé to Peter, hoping to get his feedback. When I met with him, Peter told me that the lady was certainly a talent and her proposal was also very creative. Nonetheless, he did not agree to this proposal nor consider her to be the right candidate for the position. Peter said to me, “China definitely needs big corporations and elite leaders. But in China, as in any other country, 90% of its organizations are small- to medium-sized local ones. This professor wishes to help establish another Harvard Business School, which is not your intention. Your goal is to foster a managerial culture that emphasizes results. China’s biggest weakness is that, as a big country, there are not enough people with higher education. However, you have a large number of talented people, who have learned how to survive under extremely difficult conditions and have achieved success. They may only have a general education and might not be particularly smart or outstanding, but they know how to handle things delicately. There might be millions of them, and they can lead those small- to mid-sized local organizations. They are the ones that will build up a well-developed China. These people are your real students. They are the potential resources and the rough gems. They have enormous acceptability and a craving for learning. Therefore, do not allow anyone to alter your direction.” Peter’s wise advice brought me back to my original intention of establishing this institute and also reminded me of his three most important questions: “What is your business? Who is your customer? What does the customer consider of value?” Eventually, Peter helped me avoid making a wrong decision.
Our institute was categorized in China as a “non-accredited higher education organization”, i.e., we were not authorized to award degrees, while a considerable number of our students wanted to obtain a Master’s Degree through our programme. In 2003, a US university was willing to partner with us to offer a joint MBA degree in China. They even agreed to my request that half of the curriculum be designed and taught by our faculties while this US university awarded the degree. I was so excited to have such a good opportunity that I rushed into negotiating specific terms of our cooperation. When Peter learned about this situation, he asked me: “Why do you need them? What do you expect them to contribute to this collaboration? Do they think they can deliver?” I answered affirmatively without hesitation. Peter went on and asked me more: “Why do they need you? Can you satisfy them? What is your contribution to the success of this collaboration? Do they value you?”
I became uncertain upon his questioning. I started to wonder if this US university was just using us to enter the China market; did they truly recognize our curriculum as they claimed, or was it just because we could recruit students for them? Or was it all of the above? While I admitted to myself that his questions were meaningful, I was too eager to accept the partnership and offer the MBA. This time Peter did not stop me from moving forward.
Three years later, at the end of our second class of the joint MBA programme, this US university, having gained a certain reputation in China from our joint programme, decided to split from us and teamed up with another Chinese state-owned university. This discontinued cooperation taught me a lesson and I always remembered that I must thoroughly thin
k through and correctly answer those questions Peter asked prior to entering any partnership. These questions actually can diagnose if the two parties really have shared values and if their missions are compatible.
Before I met Peter, I tended to take on too many projects at one time, and Peter soon noticed my problem. I visited him one day and he said to me the moment I sat down, “My friend, you looked tired. You always kick off several different projects simultaneously. I know that you would be capable of doing most of them well, but you will not be outstanding with any of them. When was the last time you had a vacation with your wife? If you go on like this, you will be exhausted and you will upset your wife, too.”
Toward the end of our conversation, Peter asked me what the most important task I had for my upcoming trip back to China. I answered that I planned to spend a week in the southern part of China to visit ten customers who had attended our courses and to get their feedback on our courses. Peter asked me to write the names of these customers on a piece of paper, then asked: “What if, after you landed, you received a phone call that you needed to shorten your trip to only four days instead of a week due to something urgent? What would you do?” I replied that I could do nothing but visit fewer customers. Peter asked me to cross out the customers that were less important. After I reduced my list per his request, Peter went on to ask, “What if you received another notice that you needed to shorten your trip further from four to two days? If you want to allow sufficient time for each customer, which customers would you visit in such a limited time?” This exercise inspired me to begin reflecting on how to cut down seemingly necessary things in order to focus on one or two of the most important projects and reserve sufficient time for those that matters.
These are just a few cases with Peter as my consultant. We can see how Peter engineered his questions in a Socratic way that guided me to discover the “real problem” behind the facade. Peter, on the other hand, could be very straightforward sometimes with powerful assertions that revealed the essence of the matter. It usually resulted in the person involved to get introspective, and eventually leads to discover the “real problem”, just like what I experienced in the first case told above. To Peter Drucker, “Asking the right question” and subsequently finding out the “real problem” are far more important than just getting the resolution. It’s obvious that you would be on the wrong track and wasting your time if you institute a resolution to solve problem B when you really need to resolve problem A.
Thanks to Peter Drucker’s wisdom and patience, our small institute, established 16 years ago, has become the Peter Drucker Academy in China today, providing training to more than 10,000 managers each year. Looking back, Peter’s repeated question still echoes in my ears. When we bid our farewell at the end of each meeting, Peter would ask, “Was it useful to you, what I said today?” Absolutely. What Peter said was always useful, whether I then understood and accepted it or not.
About Minglo Shao
Minglo Shao is the co-founder and Chairman of the Board of Trustees of the California Institute of Advanced Management and the founder and Chairman of the Peter F. Drucker Academy and the Bright China Group in China. He was a client of Peter Drucker’s from 1999 until Drucker’s death in 2005. Under the personal guidance and involvement of Drucker, Minglo Shao founded the Peter F. Drucker Academy in 1999, fully committed to providing executives and entrepreneurs with practical training and education in Drucker’s methods. The Academy has trained over 60,000 graduates in 33 Chinese cities plus Hong Kong. Chairman Shao has established and manages many enterprises in a number of industries. Under his leadership, the Bright China Holdings has cumulatively invested over $600 million in China.
Drucker’s Consulting Goes On
By Edna Pasher, PhD
When I founded my management consulting firm in Israel, I applied Peter Drucker’s principles from the very early beginning. I read all of his books and articles, and he was my source of inspiration when facing the challenges in my work. However, I never experienced his consulting directly, but I did indirectly. Through another friend, Dr Tamir Bechor, who eventually taught in the Peter F. Drucker and Masatoshi Ito Graduate School of Management, which is where Drucker taught when he was alive, I met Dr Bill Cohen, president of the California Institute of Advanced Management (CIAM). In 1979, Bill was the first graduate of the PhD programme for executives that Drucker established. Bill’s new school, CIAM, not only teaches Drucker’s concepts but requires all students to do pro bono consulting for real organizations, including small businesses, as well as major corporations and non-profits using Drucker’s methods in every course they take for their MBA.
Two years ago, CIAM pioneered distance management consulting, and I was fortunate enough to be able to utilize this free service twice. Both engagements were with the involvement and expert help of Dr Al Randall, a former combat pilot with an MD, who received an MA from Drucker when Drucker was alive, and is also CIAM’s Director of Outreach.
Of course, I had already read a lot of Drucker, and the performance and actions of the two teams that acted as our consultants confirmed important facts I had already learned about him from my reading.
1. No Retirement
Peter Drucker died at the age of 95. He worked almost to his last day. In one of his HBR articles, he explained that the concept of retiring had been created when life expectancy was less than 60 years. He saw no reason why his children should have to support him for more than 30 years! Many of my friends have already retired from work. I work as much as I have always worked and hope to work to my last day, just as Peter Drucker did.
2. Knowledge Work
Drucker is the real pioneer of Knowledge Management. I am considered the pioneer of Knowledge Management in Israel. It is from him that I gained the deep understanding of this new discipline. He coined the term “knowledge workers” and explained that they cannot be managed the way people were managed in the Industrial Age. I try to remember it as a manager and as a management consultant and try to decode the unique needs of knowledge workers as the deepest basis of my work.
3. Clear Writing Style
Peter Drucker, just as my mentor in my doctoral studies, Professor Neil Postman at NYU, wrote in a simple and clear style. They both wanted people to fully understand what they meant. I try to follow this example, avoiding unnecessary jargon and data that might make it difficult for my readers to get my main message.
4. Learning from Volunteers
Drucker understood that there is a lot to be learned from volunteer organizations for the benefit of effective management in business. I believe that good work is done with passion, just like volunteering for something you have passion for, and that the role of managers is to identify what tasks and roles their people have passion for, in order to get good results.
5. Time Management
Drucker dealt a lot with time management, especially regarding managers. How a leader manages oneself is the toughest challenge. Effective leadership is first of all about what I do myself and how, and only then, what I delegate to others and how I do that. How I allocate my own time is more important than what I expect of others. Do I set a good example for my people? Will they like to follow me?
6. Innovation Management
Drucker conducted research and taught, as well as consulted. These three competences are mutually beneficial. Especially in innovation management, which, following Drucker, is where my own passion lies, these core competencies are absolutely a must. Without research there is no innovation. Teaching helps one stay in touch with young people through which one understands the future. Consulting is a co-creation with people who need to solve tough problems constantly, and problem-driven innovation is the best innovation.
7. Customer focused
Drucker wrote: “There is only one valid definition of business purpose: to create a customer.” I try to remember it in everything I do. The older I get, the closer I try to get to my customers. Understanding their real needs, helpi
ng them clarify their needs, helping them design more than one solution to a problem, and analysing the benefits and disadvantages of each option are at the heart of consulting. This way my team, my business partners, including CIAM, and I see our purpose as creating customers. I am mostly proud of our loyal customers, some who have been working with us for many years, innovating and growing together.
8. The Triple Bottom Line
Drucker said: “Although I believe in the free market, I have serious reservations about capitalism.” I fully agree and have looked at the issue of “the bottom line” for a long time. In our firm we believe that organizations grow in harmony with their social and physical environments – or they die. This is why we have been involved in the challenge of sustainability and sustainable development for quite a while and focus on “Smart Cities,” where we study the eco-system and help organizations engage all stakeholders for the benefit of all and not just the stockholders. We believe in commitment to the Triple Bottom Line – People, Planet, Profit – or the social, environmental, and economic bottom line. This leads to reinventing capitalism, which is a must if we want a good future for our customers and future generations!
9. Culture before Strategy
Peter Drucker said: “Culture eats strategy for breakfast.” Yes! Very often strategies are not implemented because they were “eaten” by the culture of the organization. If the strategy-making process is not aligned with the culture of the organization, it will not succeed. In our work we first try to understand the organizational culture and only then identify opportunities to develop in the next strategic efforts. Sometimes we need to help our client organizations change the culture itself – which takes a long time. In this case the best way is to start with increasing the strengths of the existing culture before introducing any new ideas to adopt for more effective organizational behaviour.
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