Wisdom from Peter Drucker

Peter Drucker’s Story of Two Vice Presidents (Why What Everybody Knows Is Frequently Wrong) I enjoyed that piece of wisdom so much that I had to blog it for you.

In 1975  William Cohen was among the first students in legendary management guru Peter Drucker’s Executive Ph.D. program at what was then Claremont Graduate School and is now The Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University. In the following excerpt from his new
book A Class with Drucker: The Lost Lessons of the World’s Greatest Management Teacher (AMACOM, 2007), Cohen describes a lesson he learned in the fall of 1975 during his first class with the master.

The Story of the Two Vice Presidents
Drucker  began with a story about a company he had observed. As the president of the company grew older, he knew that he should begin thinking about succession. Fortunately, he had two vice presidents, both equally outstanding, and of the right age, and each with a record of outstanding prior accomplishments with this firm. He increased the responsibility of both subordinate executives and gave them each the new title of executive vice president. He called them in together and announced that he intended to retire in five years and that one of them would be named to succeed him as president.

Both men thanked the president for the opportunity. The president had confidence that he had picked the right candidates. Although both were ambitious, he knew that both would put the company before themselves in whatever they undertook. He knew that either would make an excellent replacement.

Over the 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. One would be given a task by the president. He would request the information needed and would ask when the job was to be accomplished. He would go off, 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 permission to do something a little out of the usual process, he would do this without ever bothering the old president.

The other executive vice president took an entirely different approach. Given a project by the president, he too would organize his subordinates to complete it successfully. However, there was a big difference. The first candidate worked independently and didn’t bother the president with the details of what he was doing unless specific help was needed. However, the second candidate met periodically with the president to discuss the project and frequently requested additional meetings, continually seeking the president’s advice.

“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?”

Many hands shot up, including my own. Drucker called on several students. Each stated his opinion 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. This was my opinion too. Our thinking was that the new president would need to operate on his own and would not have the old president’s counsel to fall back on.

Drucker  asked for a show of hands as to how many agreed that the president selected the executive who demonstrated that he was able to operate independently and without the president’s ongoing approval. A large majority agreed with the students Peter had previously called on. Only a few thought that the second executive who constantly bothered the former president had been the one selected.

Drucker  stated the results: “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 and would be selected.

Drucker’s Lesson: Question Your Assumptions
“What everybody ‘knows’ is frequently wrong,” Peter responded. “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 while the president felt that he knew and understood the executive who maintained contact, he was less certain about the other executive and he was less invested in his success. 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 what his boss preferred, even though ‘everyone knows’ that continual consultation with a higher manager is less desirable.”

Drucker was right, and I should have known better. I was in the process of losing the confidence of my then boss by behaving exactly like the executive who operated independently. That in itself is an important lesson, but the idea that what everyone knows is frequently wrong proved even more important to me, and I think many other of Drucker’s students. Over the next few years, I heard Drucker say this quite a few times.

Maybe through repetition I finally began to think more deeply about what the words really meant. This seemingly simple and self-contradicting 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 more closely. In a surprisingly high percentage of cases, the information “known to be true” will turn out to be false or inaccurate, if not generally, then 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
Of course 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.” The ancient Greeks knew that everything was made up of only four elements: earth, air, fire, and water. Of course, in modern times we learned that 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.”

Questions Raised by 100% Agreement
Interestingly, Drucker’s lesson goes back over the millennia. In ancient Israel, the highest court was called the Sanhedrin. It corresponded roughly to the U.S. Supreme Court today, although it had a lot more power. The Sanhedrin tried the most important cases, and it had the power to exact capital punishment. In this high court, there were no prosecuting or defense attorneys and no appeals. The Sanhedrin court consisted only of judges. Some historians say 71 judges, others 23. The actual number is unimportant to some factual points.

The judges could examine the defendant, the accusers, and any witnesses either side brought before it. To exonerate a defendant required a majority of one, while to find him guilty required a majority of two. But perhaps the most interesting aspect of this ancient Jewish legal body was that if all judges found the accused guilty of a capital crime, he or she was allowed to go free! This was because the ancient Hebrews were convinced that there is a defense to be argued for every individual accused, regardless of the gravity of the crime and the persuasiveness of the evidence. If not a single judge thought that the defendant’s case had merit, then it was clear that no matter how heinous the crime, something was wrong in the situation and it was likely that the accused was innocent. In other words, when every judge “knew” something to be “true,” it probably wasn’t.

In modern times, the impact of mass agreement about an issue has been addressed and confirmed in psychological research. In one experiment, subjects were asked to rate the attractiveness of individuals depicted in selections of photographs. However, there was only one real subject and the results were rigged. Unknown to the subject, the other participants were part of the scientist’s team of experimenters. These participants were to agree about the most attractive individual depicted in any particular set of photographs at random. It was found that the subject could usually be influenced to agree with any photograph that the group selected, regardless of merit. This experiment demonstrates the influence of social proof, while it confirms one reason why Drucker’s theory that what everyone knows is frequently wrong is correct. Accepting what everybody knows without any examination will often result in faulty decisions.

© 2008 William A. Cohen.

1 comment so far ↓

#1 Oli on 12.11.07 at 10:20 pm

On the topic of 100% agreement, that reminds me of groupthink: http://en.wikipedia.org/wiki/Groupthink

Groupthink is the result of avoidance of conflict to reach a consensus. The classic textbook case of groupthink is the Space Shuttle Challenger disaster. Everyone who opposed the consensus was shot down and forced to agree to the common idea.

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