Drucker on Effective Decisions, Part 3

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 3, Drucker suggested that we think about what a right solution is rather than just what is acceptable. The reason is that every decision always has some form of compromise in the end. If we do not know what the specifications and boundary conditions that can satisfy the right solution are, we cannot distinguish between the right compromise and the wrong compromise.

Drucker also suggested that there are two kinds of compromise. One kind is expressed as half of something is better than having nothing to work with. The other kind is expressed as half of something is worse than not having anything. In the first expression, some boundary conditions can be satisfied but not all. In the second expression, the partially satisfied boundary conditions still might not be enough to solve the problem.

Rather than worrying about what is acceptable, begin the solution formulation process by asking what the “right” thing to do is. When we focus on answering the “acceptable” question, we gain nothing and often would lose any chance to come up with an effective, let alone the right, answer.

While thinking through the boundary conditions in Step 3 is the most difficult step in decision-making, converting the decision into effective action is usually the most time-consuming for Step 4. However, a decision will not become effective unless we build the action commitments into the decision from the start.

Drucker asserted that we had not made a decision unless we carry it out in specific steps that turn into someone’s actions and responsibility. Until then, all the work we have done so far are only good intentions.

Drucker suggested we ask the following questions when converting a decision into action:

  • Who has to know of this decision?
  • What action has to be taken?
  • Who is to take it?
  • What does the action have to be so that the people who have to do it can do it?

The first and the last of these are too often overlooked—with dire results, according to Drucker.