Peter F. Drucker and the COVID-19 Crisis
April'20 | William A. Cohen, Ph.D., Major General, USAF, Ret.
We are involved in a worldwide war which involves not only our health, but our livelihoods and our economy. Yet there is good reason to be positive and there is a good source of advice from Peter Drucker. We need to recognize that Drucker wasn’t given accolades like the “Man Who Created Management” for nothing. Even though Drucker is no longer able to guide us in person, his wisdom and ideas can. Consider the following just a sampling of his legacy, which can help during the pandemic:
“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic.”
Following yesterday’s logic is always the natural thing to do and it may work, although there is typically a downside. We are all too frequently presented with a dilemma of only two equally bad alternatives. If we shut down our businesses, schools, restaurants, and other places of interest and then require everyone to stay at home; social distancing does work. The problem is that unless we do something different, it also destroys our economy. Certain enterprises are doing well, a few even better than before the pandemic. These are those that recognize that if they were not acting like an entrepreneur before COVID-19, they must do so now to be successful because:
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”
A virus killing our fellow citizens and hurting our economy causes obvious undesirable change, but it also forces opportunities. Some find new products, others find new ways of distribution or production. These can help significantly in our fight and make for a better life in the future. Some will be game changers.
Game Changers: Henry Kaiser’s & Current
A few years ago, the Hudson River was packed with hundreds of immobilized ships. Each looked the same, about 400-500 feet long and were in storage like sleeping giants. They were called Liberty Ships and had been built on an emergency basis during World War II.
They were part of the game changer needed during British Prime Minister Churchill’s “Darkest Hour” in the early days of World War II. England was losing thousands of tons of shipping to German submarines. The supplies and munitions these ships brought were desperately needed to feed the population and to continue the fight.
In partial response, Churchill ordered a game changer. This was a relatively inexpensive and easier to build cargo ship.
Unfortunately, there was still a problem, England was the first great seafaring nation with centuries of experience in shipbuilding, but it still took skilled workers to build a ship, even one with a vastly simplified design like this one. Britain was fully engaged in all aspects of fighting the war. The manpower, shipyards, and production facilities to build the ships no longer existed.
So, England looked to America, which was not yet in the war. The United States did not have any record for cargo shipbuilding. The expectation was that with the British design and with British help, it might take about a year for the Americans to build each ship. Since the United States was not yet in the war, it was just possible that the Americans could find enough manpower to produce the ships in numbers which would make the project viable. Anyway, there seemed no alternative.
Since few Americans knew anything about building ships, those with a lot of experience in the industry didn’t exist. President Roosevelt recommended American industrialist Henry Kaiser. Kaiser knew very little about building cargo ships. However, he looked at the British design and with Roosevelt’s encouragement agreed to take on the job. Experienced English shipbuilders had strong doubts if the Americans could indeed build the ship in a year.
How could Kaiser succeed? Using his knowledge of manufacturing, Kaiser re-designed the assembly process using prefabricated parts so that no worker had to know more than a small part of the assembly job and also introduced simple assembly-line techniques. This made workers easier to train.
The British knew that for close tolerances in their high-quality ships, heavy machinery was necessary to cut metal accurately. Kaiser didn’t have heavy machinery. Kaiser came up with a new solution, but not the one used previously. He told his workers to cut the metal using oxyacetylene torches. This worked and was cheaper and faster than traditional methods. He also replaced riveting with welding, which also was cheaper and faster.
Kaiser called this even cheaper American-made version ’Liberty Ships.’ He started building them, but it didn’t take him a year for each ship. It didn’t even take him eight months. He started building them from start to finish in about a month. Then they got production time down to a couple weeks and for publicity purposes, they constructed one Liberty Ship in just four and a half days and promoted this accomplishment widely.
Kaiser built almost 1500 Liberty Ships at a quarter of the previous cost. This was an unexpected game changer. Even though Liberty Ships were not built to last, a couple were still around and in use fifty years after their construction. Those in storage along the Hudson were eventually scrapped when the Cold War ended.
The U.S. government has encouraged many companies, and not only large corporations, to get in the business of manufacturing other devices such as ventilators, protective masks and clothing, and specialized medical equipment that are in great demand because of the crisis. In Minnesota, the My Pillow company is changing 75 percent of its pillow production to face masks for health care workers. "We have capacity to make a lot of things at big rates and we’re going to be going hopefully from 10,000 units a day to 50,000 units a day in a very short period of time," CEO Mike Lindell announced. Like Kaiser, Mike Lindell must know that:
“The purpose of an organization is to enable ordinary human beings to do extraordinary things.”
So past statistics don’t always count. We’ve seen many successful online businesses in the last twenty years. In 2019, U.S. online retail sales of physical goods amounted to 365.2 billion dollars and were projected to reach close to 600 billion dollars in 2024 prior to the pandemic.
“Because its purpose is to create a customer, the business enterprise has two - and only these two — basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are 'costs'.”
Many restaurants have gone online to satisfy new demands due to social distancing. Gyms are closed, but many instructors are training their clients over the Internet and acquiring new clients. Doctors are now seeing and diagnosing patients over the Internet. Even colleges and universities, large and small are now teaching 100% online.
Not all new solutions are online. Church services are being conducted in paved open areas with congregants remaining isolated in their cars as in outdoor movie theaters. Field hospitals are being set up in large parks outdoors. Drive-in coronavirus testing has been going on for some weeks. When combined with new tests recently developed taking minutes to get results, patients and health officials will both know immediately about the presence of disease.
Moreover, the pandemic forced the fastest labor realignment since WWII, so workers are available for new innovations and volunteers have been rushing forward to assist those on the firing line in various capacities.
“In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition.”
Be safe and healthy, and also live long and prosper. That’s part of Drucker’s legacy for engaging and defeating the pandemic.
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William A. Cohen, PhD
Major General, USAF , Ret., President