Drucker on Effective Decisions, Part 2

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 2, the decision-makers reach a clear understanding of “specification of the decision.” The specification defines:

  • the objectives the decision must reach
  • the minimum goals the decision must attain
  • the conditions the decision must satisfy

Another word, an effective decision must satisfy the boundary conditions, in scientific term.

In addition to supporting decisions that are effective and appropriate, the boundary conditions also can help in other ways. Sometimes we might have reached a decision that satisfies the wrong boundary conditions. On those occasions, it is still possible to salvage the appropriate decision when we have incorrect boundary conditions. However, we will not be able to make the necessary correction on a decision that is inadequate to its specifications, to begin with.

Also, thinking clearly about the boundary conditions is necessary so that we know when a decision must be abandoned. Boundary conditions are, after all, risk-taking judgment calls.

In the end, Drucker suggested that thinking clearly about the boundary conditions is needed to identify the most dangerous of all possible decisions: the one that might work if nothing else goes wrong. These decisions always seem to make sense, but they often have boundary conditions that are grossly improbable. Effective decision-makers do not rely on miracles.

Eventually, everyone can and will make the wrong decision. But no one needs to make a decision that falls short of satisfying the boundary conditions or the specifications.