Drucker on Effective Decisions, Part 1

In his book, The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, Peter Drucker analyzed the ways that management practices and principles affect the performance of organizations, individuals, and society. The book covers the basic principles of management and gives professionals the tools to perform the tasks that the environment of tomorrow will require of them.

These are my takeaways from reading the book.

In the chapter “Effective Decisions,” Drucker discussed the five aspects of the effective decision-making process.

Step 1. The decision-maker reaches a clear realization that the problem was a generic situation and not a random exception.

Step 2. The decision-maker understand the specifications that the answer to the problem had to satisfy.

Step 3. The decision-maker thinks through what is the “right” solution.

Step 4. The decision-maker builds actions into the decision.

Step 5. The decision-maker gathers feedback that tests the validity and effectiveness of the decision.

In Step 1, the effective decision-maker assesses the situation and determine whether the situation was generic or an exception. An occurrence is generic when it is something that underlies many other similar occurrences or symptoms

We can address a generic situation by making a decision. That decision will establish a rule, a policy, or a principle to address the situation. Once we develop the right principle to solve the problem, we can pragmatically address all manifestations of the same generic situation. Another word, we now have the decision/rule that can guide us to solve the situation based on the concrete circumstances of the case.

If the occurrence was indeed a unique event, establishing a decision to address the exceptional is not an effective use of time and resource. We must treat the truly unique events individually. It is not possible to develop enough rules to handle all the exceptions.

Sometimes, in a complex system or an environment, a group of seemingly unique situations could be part of a much larger generic problem. This can happen when we do not see right-away the connection between one unique situation with another, or we simply lack the visibility of the big picture.

On some occasions, it is also possible that a unique event is an early manifestation of a new generic problem. When this happens, it is easy to dismiss it as something that is only an exception.

So, we essentially have four categories to classify our situations.

Category 1: The truly generic occurrence that requires a decision.

Category 2: The seemingly unique occurrence that is part of a bigger generic problem.

Category 3: The seemingly unique occurrence that is an early manifestation of a new generic problem.

Category 4: The truly unique occurrence that requires just individual attention.

The effective decision-maker spends the time to determine which of these four situations she is dealing with. She knows that she will make the wrong decision if she classifies the situation incorrectly. The effective decision-maker also avoid the common mistake of treating a generic situation as if it were a series of unique events. When that happens, it inevitably leads to on-going frustration and futility.