Drucker on Information Challenges, Part 4

In his book, Management Challenges for the 21st Century, Peter Drucker analyzed and discussed the new paradigms of management.

Although much of the discussion revolves around the perspective of the organization, these are my takeaways on how we can apply his teaching on our journey of being a knowledge worker.

Drucker discussed the challenges of managing information in an enterprise. To run an organization that focuses on wealth creation, Drucker advocated that we must collect information about both the internal organization and the external environment. Information, as Drucker asserted, must be organized or they are still just data.

However, there is not only one right way to organize information. Every executive must decide what is the right way to organize information for their needs. Even though there is no one perfect way, Drucker did suggest three elements to look for when designing an information organizing methodology.

Key Event: The executive should decide what key events should be tracked by the information system. Drucker defined the key event as something the executive’s performance depends on and want to monitor closely.

Probability Theory: The executive should work with her team to determine what constitutes normal operational fluctuation and what are exceptional events. Applying the total quality management principles, we can leverage the probability theory to determine that is normal and what is outside the norm.

Threshold Phenomenon: The third element of information organizing methodology can help the executives connect the dots for their businesses. The threshold concept is especially helpful to the executives when a sequence of events becomes a “trend,” thus warranting the executive’s attention and potential actions.

To measure the effectiveness of an information organizing effort, Drucker suggested the ultimate test is the goal of “No Surprises.”

No information design will be perfect for all occasions, but it should serve the executives by minimizing the surprise element of the business. Before events become significant, the information system should have allowed the executive to analyze them, understand them, and take appropriate actions or make the adjustments.

In the end, Drucker advised the executives to learn two very important lessons. We need to “eliminate” data that do not pertain to the information we need, and we need to focus on the usage of information for “action.” The purpose of having information is not so much about the knowledge we can gain. It is all about being able to take the right action using the information.