Peter F. Drucker and the COVID-19 Crisis



William Cohen
04/02/2020

We are involved in a worldwide war which involves not only our health, but our livelihoods and economy. Yet there is good reason to be positive, and there is a good source of advice for the latter.

Peter 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 are. 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 a dilemma of only two equally bad alternatives. If we shut down our businesses, schools, restaurants, movie theaters, etc. and require everyone to stay at home, social distancing does work. The problem is that unless we do something different additionally, it also destroys our economy.

Certain enterprises are doing well, a few even better than before the pandemic. These enterprises recognize that if they weren't being an entrepreneur before COVID–19, they must do so now. Entrepreneurs are 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 do it by finding new products, others by finding new ways of distribution or production. All of these can help significantly in our fight and make for a better life in the future. Some will be game changers.

Henry Kaiser Showed Us How to Create a Game Changer

A few decades 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 they were part of the game changer built on an emergency basis during British Prime Minister Churchill’s “Darkest Hour” in the early days of World War II.

Things were so bad during that time that members of his own party, hoping to save the British Empire, wanted to approach Hitler to ask for his terms for a negotiated peace.

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 to fight.

In partial response, Churchill ordered a game changera relatively inexpensive and easier way to build cargo ships that weren’t expected to last more than five years. They were slow, lumbering and without frills.

However, they had a major advantagethey could be constructed much faster than any other cargo ship. What previously took well over a year to make from start to finish could now be completed within eight months. A significant improvement.

Unfortunately, there was still a problemalthough England was the first great seafaring nation with centuries of experience in shipbuilding, it still took skilled workers to build a ship, even a vastly simplified 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. Desperate, England took a gamble on America.

The U.S. didn't have any record for cargo shipbuilding. In fact, in the previous decade, only two ocean-going cargo ships had been built. But since the U.S. wasn't in the war yet, it was possible that the Americans could find enough manpower to produce the ships in numbers which would make the project viable. The expectation was that with Britain's help and design, it might take about a year for the Americans to build each ship.

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. The British used expert workers that were no longer available. 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 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 so he came up with a new solution. 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 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 1,500 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, 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 hopefully go 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 advent of 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 but 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.


References

  • A Class with Drucker by William A. Cohen (AMACOM, 2008)
  • Consulting Drucker by William A. Cohen (LID, 2019)
  • Drucker’s Way to the Top by William A. Cohen (LID, 2019)
  • The Practical Drucker by William A. Cohen (AMACOM, 2013)

 

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