Drucker's Lost Lesson
August 21, 2008
Famed management guru Peter Drucker knew his stuff, and he also knew what everyone knows is frequently wrong.
By William A. Cohen
One day Peter began his lecture about a company he knew. As the president of the company grew older, he knew that he should begin thinking about succession. There were two vice presidents, both equally outstanding, of the right age and with a record of outstanding prior accomplishments. The president increased the responsibility of both subordinate executives and gave them each the new title of executive vice president. He told them that he intended to retire in five years and that one of the two would be named to succeed him as president.
Over the next five years of their apprenticeship a differing pattern began to emerge from each of the prospective presidents-to-be. Although both men did well in every task given them and were equally successful in accomplishing their assignments, the process each followed was quite different.
On being given a task, the first candidate would request the information needed and would ask when the job was to be accomplished. He would gather his subordinates together and would invariably present the president with a completed job well done days, weeks, or months later. Unless he needed some specific information or help, permission to do something a little out of the usual process, or something came up that he thought the president should know about, he would do this without ever bothering the old president again about the project.
The other executive vice president took a different approach. Given a project by the president, he, too organized his subordinates to complete it successfully. However, unlike the first candidate he did not work independently. The second candidate initiated periodic contacts and frequently solicited the president’s advice. He never worked things out independently.
"Now," asked Drucker, "When the president retired, which candidate did he pick to succeed him, the executive who was always successful without bothering him or taking his time, or the one who continually seemed to seek his help and approval?"
Almost everyone said that the president picked the executive who was able to succeed on his own without having to report back until the job was done unless there was a specific problem in that the new president would need to operate on his own and would not have the old president’s counsel to fall back on.
Surprisingly Peter told us: "Most of you are wrong. The former president selected the candidate who continually consulted with him." The class was in an uproar. This went against everything we knew about management and leadership. Everyone knew that the candidate who demonstrated that he could make decisions on his own should be selected.
Drucker continued: "What everybody 'knows' is frequently wrong. We are dealing with human beings. Most top managers want to feel that their policies and legacies will be continued. The constant contact and interaction with the second manager gave the president that confidence. Both executives were outstanding, but the president felt he knew and understood the executive who maintained contact with him, and was more invested in his success. He was less certain about the other executive, and less invested in his success, too. As he should have after picking candidates based on accomplishment, he went with his gut instinct, a perfectly correct way in which to make such an important decision after considering all the facts. Unless the president's preferred style was to let those who reported to him operate independently, the first executive should have tried to adapt his preferred method to that his boss preferred, even though "everyone knows" that continual consultation with a higher manager is less representative of presidential behavior."
Listen to "What Everyone Knows," but Make Your Own Decisions
Over the next few years, I heard Peter say this quite a few times. I believe it was one of his most important lessons for his students. Maybe through repetition I began to think more deeply about what the words "what everyone knows is frequently wrong" really meant. This seemingly simple statement is amazingly true and immensely valuable, and not only in business. What Drucker wanted to emphasize was that we must always question our assumptions no matter from where they originate. This is especially true regarding anything that a majority of people "know" or assume without questioning. This "knowledge" should always be suspect and needs to be examined much closer, because in a surprisingly high percentage of cases, the information "known to be true" will turn out to be false or inaccurate, if not generally, than in a specific instance. This can lead to extremely poor, even disastrous management decisions.
Things Once Known to be True are Now Known to be False
There are many old "truisms" once thought by everyone to be true which we laugh at today. "The world is flat." "The earth is the center of the universe" are typical. The ancient Greeks knew everything was made up of only four elements: earth, air, fire, and water. Of course, in modern times we learned they were mistaken. When I took chemistry in high school, I learned that a Periodic Table of Elements had been formulated by a fellow named Mendeleev and that it had been established that there were exactly 93 elements, no more, no less. We got an "A" if we could name them all. Today, there are 102 elements—or so "everybody knows."
Drucker's Lost Lesson is Valuable for Business
Some years ago, someone laced a popular over-the-counter drug with cyanide. Several who bought the poisoned product died. This led to a nation-wide panic. One hospital received 700 queries from people suspecting they had been poisoned with the tainted product. People in cities across the country were admitted to hospitals on suspicion of cyanide poisoning. The Food and Drug Administration (FDA) investigated 270 incidents of suspected product tampering. In most cases this was pure hysteria with no basis at all in fact. This panic in itself demonstrates part of Peter’s thesis, but there is more that is of some importance to business decision-makers.
At that time, the product was almost thirty years old. It had built up a well-deserved trust with consumers. Nevertheless, sales of the product plummeted and the product’s owner launched a recall and stopped all sales. The company advised its own customers not to buy or use the product until further notice.
Virtually everyone predicted the demise of the product. One well-known advertising guru was quoted in the New York Times: "I don't think they can ever sell another product under that name…There may be an advertising person who thinks he can solve this and if they find him, I want to hire him, because then I want him to turn our water cooler into a wine cooler."
The product once dominated the market. "Everyone knew" that those days were gone for good. Even an article in the Wall Street Journal commented sadly, that the product was dead and could not be resurrected. A survey of "the-man-in-the-street" found almost no one that would buy the product regardless of what the company did to guarantee its safety or promote its sale.
Despite "what everyone knew," Johnson & Johnson retained the product Tylenol and its now famous brand name which had become infamous through no fault of the product or its maker. Johnson & Johnson launched one of the most effective public relations campaigns for a product in commercial history. As a result, sales began a steady climb only a few months after the poisonings. Today Tylenol is the number one analgesic and controls 35 percent of a $2 billion dollar market.
Where would Johnson & Johnson have been today had this established brand, built through thirty years of advertising, performance, and reliability, been allowed to disappear? How much would it have cost Johnson & Johnson to attempt to introduce and build an entirely new brand to replace Tylenol? Could this have even been accomplished? We'll never know. Nor do we know whether Peter Drucker was called in to consult with Johnson & Johnson. What we do know is that Johnson & Johnson did the right thing ethically when this tragedy struck and then took the right actions to reintroduce the Tylenol product successfully. These actions today are studied in business schools as an almost perfect example of a successful public relations strategy and execution, and, of course, in doing the right thing. However the basis of the successful reintroduction was that Johnson & Johnson executives decided, "what everyone knows is frequently wrong." They went against what all the experts "knew" and went on to resurrect Tylenol to be even more successful than it was previously.
What everyone knows is frequently wrong. It is wrong because people make one or more erroneous assumptions. A decision maker needs to consider what others say, but to make his or her own decisions.
Dr. William A. Cohen was Peter Drucker's first executive Ph.D. graduate and is president of The Institute of Leader Arts at www.stuffofheroes.com. His most recent book is "A Class with Drucker: The Lost Lessons of the World's Greatest Management Teacher," from which this article was adapted.
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