Management as a Liberal Art Research Institute

Peter Drucker’s Most Frequent Comment

William A. Cohen Ph.D.

PUBLISHED:

November 17, 2023

Drucker said and wrote so much that was wise, profound, valuable, and witty that he may have more quotes attributed to him than any other management thinker of modern times. However, the most frequent comment he made during my acquaintance with him was “What everyone knows is usually wrong.” His continued use of this phrase clearly meant that he not only believed it strongly, but considered it important. Yet until I wrote it in my first book about Drucker, A Class with Drucker, I never saw it in print.

 

Drucker was Right


Through repetition I finally began to think more deeply about what his words really meant. This simple statement is not only true; it is immensely valuable in a variety of instances, especially now when various questionable comments are expressed as fact on TV and elsewhere. What Drucker wanted to emphasize was that we must always question all assumptions no matter from where they originate or how obvious they may first appear. This is especially true regarding anything that a majority of people “know” or assume without analysis or further questioning. This “knowledge” should always be suspect and needs to be examined much more closely, because in a surprisingly high percentage of cases, the information “known to be true” will turn out to be only partially true, inaccurate, or a complete falsehood. This is especially true during a war when one side or another may falsify information to put themselves in a more favorable light, and their adversary in a poor one. If you can get many people to announce something as fact repeatedly, many will believe it because “everyone knows it to be true.”

 

The current war which Israel is fighting with Hamas terrorists is an example. Hamas terrorists attacked an Israeli group of several thousand partying men, women, and children in a peace celebration without warning, shooting parents in front of their children, raping women, even murdering children by beheading, burning others alive and taking over 200 hostages. We know this to be true, and not only from survivors because Hamas filmed these actions themselves, thinking to intimidate Israelis and others and so released the films of their actions to be shown to the world.

 

Hamas later announced that Israel had intentionally bombed a major hospital causing hundreds of deaths. The Israelis denied this. They said that likely an errant rocket fired by the Palestinian terrorist group the Islamic Jihad had fallen short and caused the hospital explosion. This was confirmed several days later after U.S. experts and others had examined the data. However, many countries and even many entities in the U.S. including students and professors at prominent universities believed this false information, repeated it, and demonstrated in favor of the terrorists and the false information quickly spread around the world with most  never waiting for  the results of a close examination of the facts by other parties. By the time the truth of Israel’s complete innocence was known definitively, “everyone knew” that Israel was guilty even though that was false.

 

 

Is What Everyone Knows Usually, Sometimes, or Never Wrong?


Of course there are many old “truisms” once thought by everyone to be true, which we laugh at today. “The world is flat” or “The earth is the center of the universe” are typical. If you publicly doubted some of these false facts which “everyone knew” in past centuries, you could be sent to prison or burned as a witch. Many were. The French heroine Joan of Arc is a well-known example.

 

The ancient Greeks knew that everything was made up of only four elements: earth, air, fire, and water. I don’t think that you got imprisoned or killed for believing otherwise, but you were at the very least thought ignorant.

 

In modern times we learned that these views were mistaken. When I took chemistry in high school, I learned that a Periodic Table of Elements had been formulated by the Russian chemist and inventor, Mendeleev and that it had been established that there were exactly 93 elements which were arranged by atomic mass. You got an “A” if we could name them all.  Had we proposed that there could be more, I am certain that we would have been immediately corrected by our teachers. In the words of Richard Rodgers and Oscar Hammerstein in Oklahoma, things “had gone about as far as they could go.” Today, there are 102 elements, maybe even more --- I didn’t check this morning.  And they forgot to tell is that Mendeleev had only envisioned 63 elements . . . the other thirty hadn’t been discovered yet in his time.

 


Elementary, my dear Watson


For over sixty years we’ve seen a lot in the movies or TV regarding Arthur Conan Doyle’s famous detective, Sherlock Holmes. Everyone knows Sherlock’s most famous utterance was a sentence consisting of only the four words, “Elementary, my dear Watson.” Everyone knows that the famous detective would respond with these words on Dr. Watson’s surprise at a particularly shrewd and unexpected deduction made by Holmes. Maybe everyone knows this, but everyone is wrong. As pointed out by Paul F. Boller, Jr. and John George in their book, They Never Said It (Oxford University Press, 1989), Holmes didn’t utter the immortal words in a single instance in anything ever written by Doyle, not in any of Doyle’s four published novels and fifty-six short stories about the adventures of Sherlock Holmes and his side-kick and physician friend, Dr. John H. Watson. Wherever then did people ever come up with such universally believed, but incorrect bit of knowledge?  If not Doyle’s literary character, who did utter these immortal words? It was the English actor, Basil Rathbone playing the part of Sherlock Holmes in Hollywood movies that responded with the famous sentence, not Doyle’s character in anything he ever wrote. These words seemed to fit the character of Holmes perfectly in those days on the silver screen, and though not emanating from Doyle’s creation, it became a known “fact” that it did.

 

Analyze Every Assumption


Many years ago, I was involved in the selection of one of two designs for a new aircraft from two different companies for the Air Force. The companies were The Boeing Aircraft Company and McDonnell-Douglas Aircraft Company. Those who know this industry also know that the former company eventually acquired the latter, but this has nothing to do with my story here. Both companies proposed modifying one of their standard airline designs, which was already in production and in use.

 

Periodically we would meet with each aircraft company’s design team individually to assess progress on each company’s proposals, the acceptance of which would be worth hundreds of millions of dollars to the winning contractor.

 

On one occasion we met to discuss ways in which we might lower the cost of each aircraft. The suggestion came from the McDonnell-Douglas manager (although, getting ahead of my story, it was the other contractor who ultimately won the contract). He said: “You can save several million dollars for each aircraft produced if you will allow us to deviate on the size of the escape hatch by about two inches. That would be the standard size of the hatch of current airliners. They successfully passed all FAA tests with no problems.” I promised to look into his request as it could save a lot of money.

 

Is the Source Valid?


Both reliability and validity are concepts that come from testing. The validity of a test tells us how well the test measures what it is supposed to measure. It is a judgment based on evidence about the appropriateness of inferences drawn from test scores. But we’re not looking at test scores here, we’re looking at assumptions. So where did this specification in the aircraft design handbook come from? Knowing that source could help me decide whether this specification was valid for the aircraft we now wanted to build. We still hadn’t located the original source for this information.

 

So, I looked further. I knew that every specification in the aircraft design handbook was referenced as to where it came from and what it was based on. Making this a requirement was good thinking. Usually, they were based on the original tests performed. I asked the engineer to do the necessary research to find out what tests this design specification was based on and when they were accomplished. Surprise, surprise, this specification was based on an aircraft test done with propeller-driven aircraft almost thirty years earlier. That aircraft traveled at about 120 miles per hour. The aircraft we were working on traveled at about 500 miles per hour. Obviously, in this instance, the design specification was not valid. We turned it over to one of our aeronautical designers. He advised us to forget what everyone knew (the design handbook) and the two inches at the air speeds we were anticipating for an emergency bailout would make no difference at all. We took his advice and saved the money. We need to do this with all claims that come with no proof other than “everybody knows.”


By Karen Linkletter Ph.D. November 19, 2024
Interview with Karen Linkletter at the 16th Global Peter Drucker Forum 2024  Video Interview
By Ryan Lee November 7, 2024
Nowhere is management theory demanded more than in managing the knowledge worker, and yet nowhere is management theory more inadequate in addressing a field’s issues than in knowledge work. This is the point Peter Drucker posited in his work Management Challenges for the 21st Century (1991), and to resolve it he came up with six factors that determine the productivity of the management worker. Among these, his final point that management workers “must be treated as an ‘asset’ rather than a ‘cost’” by any given organization is an important concept1. While it only gradually emerged within management theory over the century, it is crucial for any employer and any government to understand and apply if they are to retain a competitive advantage going into the future. Historically, management theory has been about improving the output of the worker through banal efficiency: how to increase the production of steel per head, how to increase the production of cars per hour, how to minimize deficient products, etc. In all these considerations, the worker is a disposable resource. When he is hired, he is set to a particular task that is typically repetitive and thus easily taught, and when he is not needed because of shortcomings in his work, company difficulties, or automation, he is laid off. Referred to as “dumb oxen”, workers were seen in management theory as machines to have productivity squeezed out of. The shift from a majority manufacturing to service-based economy during the first half of the twentieth century changed this dynamic to some extent. The American postwar economic boom introduced the office worker as a common source of employment. This trend continued throughout the conglomerate era of the 1960s and was helped by the decline of the American manufacturing industry in the 1970s. Now in a stage dominated by service and knowledge work, the American economy must approach management differently. The aforementioned cost-asset shift is a demonstration of why this is so, as Drucker’s emphasis on the knowledge worker’s autonomy means that they wield control, not only within their job but over who they should work for as well. This in addition to the high-capital nature of knowledge workers means that the old management theory approach to labor as disposable will backfire catastrophically for any company that tries it with their knowledge workers. It is also important to remember the demographic trends of the United States, and more so the world, in considering why the cost-asset shift is vital. For all of human history until some fifty years ago, population was considered to be in tandem with economic power, given larger populations yielded larger labor forces and consumer markets. Economic growth was thus also correlated with population growth, demonstrated by the historic development of Europe and the United States and the more recent examples of the developing world. Consequently, the worldwide decline in fertility rates, and the decline in population numbers in some developed countries, signals economic decline for the future. In the labor market, smaller populations mean fewer jobs that produce for and service fewer people. Although the knowledge worker has grown in proportion to the total labor market, these demographic declines will affect knowledge workers as well, meaning employers will have a vested interest in retaining their high-capital labor. To enforce this, the cost-asset shift will have to come into play. The wants and needs of the knowledge worker pose a unique challenge in the field of management. Autonomy, for the first time, can be regarded as a significant factor affecting all other aspects of this labor base. What good does a large salary provide a knowledge worker if they don’t feel that they are welcome at an institution? How would they perceive that their work is not being directed towards productive pursuits at their corporation, especially given the brain work and dedication given to it? Of course, the fruits of one’s labor has been a contentious issue in management ever since compensation and workers’ rights became a universal constant with the Industrial Revolution, but this is augmented by the knowledge worker’s particular method of generating value. Given that Drucker poses their largest asset and source of value as their own mind, they will intrinsically have a special attachment to their work almost as their brainchild. Incentivizing the knowledge worker is also only one part of this picture. Per Drucker, the knowledge worker’s labor does not follow the linear relationship between quantity invested and returned. The elaborate nature of knowledge work makes it heavily dependent upon synergy: the right combination of talent can grow an organization by leaps and bounds, while virtually incompatible teams or partnerships can render all potential talent useless. And the human capital cost of the knowledge worker, both in their parents and the state educating them and in cost to their employers, is astronomical compared to all previous kinds of labor. In conclusion, the needs and wants of the knowledge worker must be met adequately, especially in the field of management. Management must almost undergo a revolution to adapt to this novel challenge, for the knowledge worker is the future of economic productivity in the developed world. Those employers that successfully accommodate the demands of this class of talent will eventually reign over those that do not accept that this is the direction economic productivity is headed.  References Drucker, P. F. (1991) Management Challenges for the 21st Century. Harper Business.
By Michael Cortrite Ph.D. November 7, 2024
What is wisdom? The dictionary says it is knowledge of what is true and right coupled with just judgment as to action. Jennifer Rowley reports that it is the “ability to act critically or practically in a given situation. It is based on ethical judgment related to an individual's belief system.” (Rowley 2006 p. 255). So, wisdom seems to be about deciding on or doing an action based on moral or ethical belief in helping other people. This clearly describes Peter Drucker and his often prescient ideas For the 100 th anniversary of Peter Drucker’s birth, Harvard Business Review dedicated its November 2009 magazine to Drucker. In one of the articles about Drucker by Rosabeth Moss Kanter (2009 p. 1), What Would Peter Say? Kanter posits that, Heeding Peter Drucker's wisdom might have helped us avoid—and will help us solve numerous challenges, from restoring trust in business to tackling climate change. He issued early warnings about excessive executive pay, the auto industry’s failure to adapt and innovate, competitive threats from emerging markets, and the perils of neglecting nonprofit organizations and other agents of societal reform. Meynhardt (2010) calls Drucker a towering figure in Twentieth Century management. He says no other writer has had such an impact. He is well-known to practitioners and scholars for his practical wisdom and common sense approach to management as a liberal art. Drucker believed that there is no how-to solution for management practice and education. Doing more of “this” and less of “that” and vice versa is not how Drucker suggests managers do their work. Rather, Drucker relies more on morality and the virtue of practical wisdom to solve problems related to organizations. The virtue that Drucker talks about cannot be taught. It must be experienced and self-developed over time. A good example of this is Drucker’s Management by Objectives (MBO). Drucker does not give technical advice on how to initiate MBO. Rather he wisdomizes his moral convictions that integrating personal needs for autonomy with the quest of submitting one’s efforts to a higher principle (helping people) ensures performance by converting objective needs into personal goals. (Meynhardt, 2010). Peter Drucker published thirty-eight articles in the Harvard Business Review (HBR) and seven times won the McKinsey Award presented annually to the author of the best article published during the previous year in HBR. No other person has won as many McKinsey awards as Drucker The former editor-in-chief of Harvard Business Review, Thomas A. Stewart, quotes Peter Drucker; “The few of us who talked of management forty years ago were considered more or less deranged.” Stewart says that this was essentially correct. Harvard Business Review's very mission is to improve management practice. Stewart says this mission is inconceivable without Drucker’s work. Drucker’s work in management planted ideas that are as fruitful today as they ever were. Stewart posits that each year, managers discover extraordinary and immediate relevance in articles and books that were written before they were born or even before their parents were born. Stewart (2016) tries to answer the questions: Why does Drucker’s work endure? and Why is Drucker still relevant? First, was Drucker’s talent for asking the right questions. He had an instinct for being able to not let the urgent drive out the important, for seeing the trees, not just the forest. This allowed him to calmly ask pertinent questions that encouraged clients to find the proper course to take. Secondly, Drucker was able to see whole organizations. Instead of focusing on small particular problems. Ducker had the ability to find the overarching problem as well. Stewart uses Drucker’s 1994 HBR article, The Theory of the Business to make this point. Many people were trying to analyze the problems of IBM and General Motors by looking for root causes and trying to fix the blame. Drucker, on the other hand, argued correctly that the theories and assumptions on which they had managed successfully for many years were outdated. This article is as relevant today as it was in 1994 because Drucker took the “big picture view.” And no one else has ever been so skillful at describing it. Thirdly, starting in 1934, Drucker spent two years at General Motors with the legendary Alfred P. Sloan, immersed in the workings of the automaker and learning the business from within. This allowed him to talk with authority, but he has always stayed “street smart and wise.” This mentoring helped give Drucker the gift of being able to reason inductively and deductively. He could infer a new principle or a theory from a set of data or being confronted with a particular problem; he could find the right principle to apply to solve it. Drucker’s first article published in HBR, Management Must Manage, challenged managers to learn their profession not in terms of prerogatives but in terms of their responsibilities, to assume the burden of leadership rather than the mantle of privilege. Many in the management/leadership field probably found Drucker to be “deranged,” but in 2024, this is important advice for leader (Stewart 2006). Just a few more of Drucker’s ideas that seemed well outside the mainstream when he proposed them but are standard practice today include: Managing Oneself, Privatization, Decentralization, Knowledge Workers, Management by Objectives, Charismatic Leadership Being Overrated, CEO Outsize Pay Packages, and Enthusiasm of the Work of the Salvation Army (Rees, 2014). Clearly, Drucker remains relevant! References: Kanter, R. 2009. What would Peter say? Harvard Business Review. November, 2009. Meynhardt, T. 2010. The practical wisdom of Peter Drucker: Roots in the Christian tradition. Journal of Management Development Vol. 29. No. 7/8. Rees, M. 2014 The wisdom of Peter Drucker. Wall Street Journal. Dec. 12, 2014. Rowley, J. 2006. Where is the knowledge that we have lost in knowledge? Journal of Documentation. Vol. 62, Iss. 2. 251-270. Stewart, T. 2006. Classic Drucker. Editor Thomas A. Stewart. Harvard Business School Publishing Corporation.
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