Drucker’s Method of Solving a Client’s Problem

 

May 2021 | William A. Cohen, Ph.D., Major General, USAF, Ret.

Peter Drucker had a reputation as an amazingly effective management consultant. He charged as much as $10,000 an hour for his work, donated to his foundation. I learned his methods first-hand in the classroom and I’ve taught his methods to students all over the world. Mostly he used a simple straightforward methodology. I don’t know whether this was entirely his or whether he adapted and perfected it, but I also found it discussed in one of his books.

First Define the Central Problem

That you can’t get “there” (solve a problem effectively) until you diagnose the problem accurately is obvious. I use the word diagnose, a medical verb, intentionally. If a medical doctor makes an incorrect diagnosis and applies the wrong treatment or prescribes the wrong medicine, the patient can be made worse. In any case he or she is unlikely to be cured.  It is the same with management consulting. Yet many leap right into grappling with the issue without stopping first to thoroughly understand and diagnose the problem completely and correctly. That’s the “there” in any problem situation. To define the problem, you need to uncover the central problem that’s causing the symptoms which are usually more obvious such as sales are poor, profits are down, or turnover of personnel is frequent.

Defining the central problem in any particular situation is the single most difficult yet most important task in any consulting process. If you correctly identify the central problem in a situation, you can usually find several different approaches that may work in solving it. But if the wrong problem is identified, even a brilliant idea will not help and may cause the situation to worsen. One of the major errors made in defining the central problem is confusing the symptoms with the problem. For example, low profits or sales are not usually the central problem, but symptoms of something bigger which is causing the symptom. 

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Also, a consulting engagement may reveal more than one issue. The object then is to locate the main problem, the one that is more important than any other and is therefore "central." It may be causing several of the other problems. If you find more than one central problem in any situation; you can use Drucker’s procedure to handle each one separately.

Write out a brief, even one-sentence definition if possible. 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, if not most cases you will have to go back and modify it as you proceed and learn more as you go through the analysis.

Also be careful not to word the problem as if it were the solution, by consciously or unconsciously assuming that one course of action is correct before you complete the analysis. Your goal at this point is to word the problem sentence broadly enough that you will not overlook a potential solution, but not so general as to be meaningless. 

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?" as a central problem. That allows for only two alternatives: yes or no. Occasionally there are some situations where only two alternatives need to be analyzed. Usually, however, you can reword the problem statement in a way that opens it up to more than two alternative courses of action.

Be careful about making your problem statement too long by incorporating unnecessary additional factors. Even if these factors are interesting and mildly associated with the issue, they can make the problem statement unwieldy, awkward, and confusing.

With these cautionary notes in mind, you can begin formulating your problem statement.  Drucker learned to help to find the central problem by asking lots of questions of his clients. Which is probably where his well-known “Five Questions,” (Beginning with “What business are you in?”) came from. 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 this and after considerable experience, didn’t even need to write it all out. In many situations he simply asked the question or questions of a client, and they were able to get to this important central issue rapidly. Drucker spent a lot of time fine-tuning the central problem. He knew that working on the wrong problem was not only a waste of time, it meant a waste of resources and money, too and almost invariably resulted in at best, a less optimal solution.

Determine the Relevant Factors

Relevant Factors may include facts, estimates, speculations, assumptions, time and money limitations, and more. All must be documented, and many should be tested before they are even listed. Also, their relevancy should not be ignored. Even though there will be many factors associated with any situation, you should determine and list only those that are relevant to the central problem you described.

List Alternative Courses of Action

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 a problem-solving analysis procedure like this wouldn’t be needed except maybe to double check your initial thinking.

All alternatives have both advantages and disadvantages. Jack Welch probably sold off some valuable companies using the requirement he established that all of GE’s businesses had to be capable of becoming first or second in its market. Welch knew that there could be mistakes and there were enormous risks as well. However, this simple alternative solution for determining which businesses GE would pursue and which would be sold or closed increased General Electric’s value by 4000% in nine years.

Discuss, Compare and Analyze Each Alternative Solution

During the analysis, you must essentially compare the relative importance of each alternatives’ advantages and disadvantages with every other alternative. Some alternatives have few disadvantages, but no great advantage either. In any case, you need to think it through and document your thinking. This helps this essentially left-brain method to be especially effective in explaining the final conclusions and recommendations to others after a clear solution is developed.

Here is a test of the clarity of the logic to your solution and the clarity of your thinking:

Show the entire written document up to this point to someone who is unfamiliar with the problem. Have this individual read everything down to your discussion and analysis. Then ask what his or her conclusions are. If they are identical or almost the same as yours, you have correctly worded your discussion and analysis. If his conclusions are different from yours, you need to make your analysis clearer.

Recommend the Solution

Finally, list your recommendations resulting from your previous discussion, analysis, and conclusions. Do not add any explanations; they belong in the previous section. Also don't list new recommendations based on information not included in your analysis. The recommendations should be based solely on your previous discussion and analysis. If you think they are needed, go back and add them to your entire analysis, in fact you may need to return to rewording your central problem.

Ensure that your recommendations solve the central problem as you wrote it. If your recommendation doesn’t solve the problem as you wrote it, something is either wrong with your recommendation or you need to reword your central problem.
In this last section, just state your recommendations as to what your client should do to solve the central problem you have identified and defined. If you are presenting this orally, your client will ask additional questions; if this is a written report, your client may contact you for additional information. It is better to deal with potential questions whether orally or in writing without being asked.

If you have done the analysis correctly, there will rarely be a need for much explanation; your reasons will be obvious from your discussion and analysis.

Did Drucker do all of this in his head? I doubt it. There are limits even to genius. Knowing him, he did not allow for chance. Except for the rarest of general consulting issues, he would have had things well worked out with his notes ready, and fully prepared with his questions, even if he didn’t use presentation slides.
 

*Adapted from Consulting Drucker by William A. Cohen (LID, 2018) and syndicated internationally.

ABOUT DR. WILLIAM A. COHEN, CiAM PRESIDENT EMERITUS

Dr. Bill Cohen is a retired Air Force general and you can “Google” him as “Major General William A. Cohen.” He graduated from West Point and has an MBA from the University of Chicago and an MA in Management and PhD in Executive Management from the Peter Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University. In 2009 he received an award as a distinguished alumnus from that institution. He’s a distinguished graduate of the Industrial College of the Armed Forces in Washington, DC in residence. His more than 50 books on business and Management, including A Class with Drucker, Drucker on Marketing, Drucker on Leadership, and his latest book, The Practical Drucker, have been published in 23 languages.

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