This is a full transcript of LDRLB podcast episode 0504, an interview with William Cohen.
DAVID: So who are you and what do you do?
WILLIAM: Well sometimes I wonder myself, but I am the president of a startup university, we’re about two years old now, by the name of California Institute of Advanced Management. We offer one degree and one degree only: the master’s of business administration, the MBA. We incorporate Peter Drucker, who was my professor when I got my doctorate and a good friend afterward for many, many years until he passed away some years ago.
DAVID: I absolutely love … I should add you’re the author of this new book “The Practical Drucker.”
WILLIAM: Yes. I definitely am the author of “The Practical Drucker,” which tries to incorporate, does incorporate 40 different chapters which apply … Someone asked me, “Well, do you mean Drucker was impractical?” The answer is no, he was not. He was very practical. Drucker did so much in his lifetime, even though he lived to the age of 96 years. He did so much in so many different areas of management that he couldn’t possibly do everything, although he certainly covered the ground.
Drucker really mentioned what to do, but he rarely taught us how to do it. What I have tried to do in “The Practical Drucker” is to fill in that and explain what, from his what-to-do, and translate that in how to do these various things.
DAVID: I think it’s absolutely awesome. I look at Drucker and I’m a huge fan of his work. In fact, I was just talking to a friend of mine who just began his doctoral studies and he was reading some Drucker and really, really enjoying it. I said, “It’s still this amazing voice that I think keeps the discussion of management elevated at the level that it should be.” In a world where we lampoon … with shows like “The Office” where we lampoon management, he kept it in a respectful way where it should be.
The other thing is he’s such a brilliant thinker in the research that he did and the thoughts that he put out there. On this podcast and in this community we’re all about putting ideas into practice, bridging the gap between scholar and thinker and practitioner. That’s why I absolutely love this “Practical Drucker,” because it’s about that. It’s taking these ideas from Drucker, stilling them down and adding, like you said, the how-to, the way to apply it so people can be almost scholarly practitioners in Drucker in and of themselves.
I had three chapters that I really resonated with, but before we dig into that I kind of want to hear more about your connection with him. You said you were his first PhD graduate and then you lived on to be friends with him at least as long as he was with us. Tell me more about how that relationship developed and how he influenced you especially.
WILLIAM: First I have to say I was his first PhD graduate in the executive management program, because there were others before them. The executive management program was a program that was started back in 1975. The idea was that management that had become so complex that the more you could give at the doctoral level, especially the Drucker way, the better top managers we’d have.
Now you mentioned about how I got … It was really kind of interesting because I was working for a corporation, of course I was well aware who Drucker was, we used one of Drucker’s books. I knew who he was, but I’m not from California and I had applied … about every 10 years I’d get interested in going back to school. I did my bachelor’s at West Point, my master’s at the University of Chicago, but now I felt another 10 years had gone by and I felt the urge to once again.
At first I applied to some school advertised in the Wall Street Journal. It turned out to be diploma mill, which in those days in California were all over the place. Claremont Graduate University, or Claremont Graduate School in those days, where Drucker was, was very well known although I didn’t know Drucker was there. I applied for this not really knowing what I was getting into.
They’re about 30 miles from Los Angeles. I drove out and still didn’t know maybe these guys were a diploma mill, and so I met with the dean. The dean, he said this is going to be a very controversial program because everyone in it’s going to be an executive in a corporation that’s headed to the top, and we want you to take some Drucker. I didn’t know that Drucker was there, but I knew who Drucker was. I thought, “Is Drucker at this school?” I didn’t want to embarrass the dean, so I said, “Excuse me, Dean, but which Drucker is this?” He said, “There’s only one Peter Drucker.” That’s how I found out he was there.
I really resonated to Peter’s work. I call him Peter, it’s not meant to be insulting or too familiar, he insisted that all his students call him Peter and so I did that. We became friends. He was very interested in the military. In those days I was a very junior officer. In fact, I had left the Air Force for a brief period. I had left as a young major and I went back in as a captain a few years … just about the time I graduated. Through applying what Drucker taught and utilizing these things I was fortunate enough to eventually be promoted to a major general before I left.
Drucker was just an absolute genius. I was very fortunate to befriend him and we maintained, as I mentioned, maintained contact just about almost until the time he died. The guy was an absolute genius, and was willing to work with his students in every way he could.
DAVID: I love that you are continuing that on, both through the California Institute of Advanced Management but also through this book. There’s three areas that really resonated with me, and they’re areas that I think are actually quite relevant because they’re sort of ahead of their time in some ways. The first one I thought was really interesting was around engagement.
We’ve talked a lot through the four years that the LDRLB podcast has been around about employee engagement. It’s a really big trend right now. You talk about how Drucker may not have used that term, but he addressed this issue. He even outlined four paths to an engaged worker. Four paths to developing people on your team, making sure they were engaged. Tell me a bit about Drucker’s take on engagement.
WILLIAM: Sure. Drucker was incredibly logical. In fact, a lot of the things that he said, after he said them to me I thought, “Gee, why didn’t I think of that?” It was nothing like some magic hocus-pocus that no one ever thought of, but they were really interesting. He believed that if you did four different things simultaneously you would get the desired results of what today we call an engaged employee.
One is be careful about your placement and promotion. He thought that this was done too haphazardly in a lot of cases. He thought that for example even basic hiring was done incorrectly, they were done based on maybe the school that the individual went to rather than the performance that the individual showed.
I don’t mean by grade point average, for example if it was an undergraduate, did that individual work while he was going to school? Did he do some special things outside of the school for his church or synagogue or whatever? Or any other nonprofit organization. He felt people didn’t pay enough attention to that and should really look at accomplishments that people have done rather than simply a school that they went to or even the GPA that they achieved.
The other thing, the same thing with promotion in an organization. He thought promotion as well as hiring should be looked at and discussed with several people before a decision was made simply to promote and hire some individual and just promote them and that was it. He always felt that if a promotion failed it was really the responsibility, the fault of the individual that had done it, not necessarily the person that had been promoted.
In other words, if an individual was successful for 20 or 30 years with the company and then you promote him to a more senior position and he failed, he said, “This is obviously an error that was by the guy promote him. He did something wrong. It was either a square peg in a round hole, or maybe the job was not doable by anybody.” In any case, he wanted that person to take responsibility.
Another thing around the same lines about this having careful placement and promotion is he said a failure was not the end of the world, that many great people failed. Churchill, for example, failed in Gallipoli during World War I, terribly, and got demoted from a senior position. I think he was the head of the Admiralty, it was a very senior position, to went on the line in the trenches in World War I as a lieutenant colonel, as a battalion commander. Yet here’s a guy that practically certainly saved England, if not the entire world, during World War II.
So he said failure just simply means you failed. It’s not the end of the world. There’s no such thing … he was not … Some people identified him with Peter Lawrence, who thought up the Peter Principle where one rose to a level of incompetence. He said there was no such thing like that, that you could fail and then go on ahead to greater things. That was the first thing.
The second thing was he said you’ve got to demand high standards of performance if you want engaged employees. If you just let them sit around and let them do what they want to do, you would not have an engaged employee. They wanted to respond to high standards. They wanted the pride of knowing that they had done these things. This was very important.
Another thing that was done an awful lot by leaders is they try to lead through withholding information. In other words, they don’t let everything get out. They keep everything a secret or you don’t know what you’re doing. Gosh, I’ve seen a lot of things go wrong because of that.
I’ve seen it go wrong in academia as well, where a president of one university for example did not allow his administrators or even his instructors to know they were on probation by their accreditor believe it or not, and did not tell them that. Well, the students found out about it. It was crazy because he had told his professors that they had done just well in the accreditation, which was true in most cases. They come and periodically the accreditor every five years, they inspect and everything. They had done pretty well, but they were also put on probation for one error, and he didn’t mention that. The students found out about it, so it put everybody in a bad situation.
You want to make sure that everyone that is in an organization, if they’re going to be engaged they have to know what’s going on. Otherwise they don’t trust you and they can’t really operate very well.
The final thing was he wanted … he thought all employees ought to have a vision of what was going on at the higher levels and what was happening. He called it a managerial vision, and he thought that this was what was going to lead them to success, that if they proceeded with that then it gave them an idea of where the corporation was heading or where the organization, because it didn’t have to be a corporation. It also meant too, there’s an old saying that … I don’t know where exactly it came from, the military, that every soldier should have a marshals baton in his knapsack.
We don’t even use knapsacks nowadays and I don’t think the marshals … we don’t have any marshals in the US Army anyhow. We don’t use batons either. What it meant was that even a lowest ranking individual could really become a very, very high ranking person in the corporation. I personally met, and I’m sure you have also, David, many people that have started at the bottom of an organization and rose to the very top. He thought that giving them this managerial vision was imminently important.
DAVID: Oh, absolutely. Even some people that you meet at the entry levels in the organization you look at and you just kind of know, “Twenty years from now I’m going to come back and their name’s going to be on the corner office door.” I really like the point about the responsibility of managerial success being on the person that promoted them to that position. I kind of have made a similar argument even in hiring, which I don’t think we do from an on-boarding perspective. When we hire someone and they don’t work out, we tend to blame that person instead of looking to the person that hired them and said, “What happened here?”
I’ve personally witnessed in organizations people who were hired, brought in, and then the manager who hired that initial person was promoted on up. In the time between when that manager was promoted and now several of their hires have flamed out and have been not a good fit.
I don’t think we take the time to do that reflective getting feedback, really on anything, whether it be on failures or even successes, the way Drucker sort of advocated both with when people don’t work out reflecting themselves through failure, but even the manager who hired them reflecting on, “Why didn’t this work?”
WILLIAM: How true. How true. Very true.
DAVID: I want to move on to another area which I think is personally really interesting. There’s a famous saying about Drucker about the purpose of business. He said this at a time where I think a lot of people thought, “Yeah, the purpose of business, attain a customer. Awesome. That makes perfect sense.” What I think he saw on the horizon, or must have and was ahead of his time, was that shortly after he said that we kind of got into this mode where the purpose of business suddenly became profit and maximizing shareholder value and all of these things that I don’t think he was in agreement.
Ironically now I think we’re right on the cusp of a time where people are saying, “Yeah, the purpose of business isn’t just a profit motive. There’s something else here about the business and customer relationship.” Tell me a bit more about Drucker’s thoughts on the primary purpose of a business.
WILLIAM: As you mentioned, he said the purpose of a business is to create a customer. He had thought this thing through. In other words, some people think, “Well this is a very altruistic thing,” but he wasn’t thinking altruism so much. He thought profit was just the fuel or the air or the oxygen, if you will, to get the part of creating a customer. Through a customer, if you created a customer and you did this properly and everything, of course more profit came.
As he saw it, that money should go into two basic functions of business: marketing and innovation. He thought the company had to innovate or it would eventually die. Basically, he saw a business was not for profit. He said it was a grave mistake to focus on profit, that eventually it would lead to more problems than you could possibly imagine. It was counterproductive.
It’s interesting to me that Steve Jobs said something along the same lines, by the way. Steve Jobs, who was not college educated even, and I don’t know whether he read Drucker or did not read Drucker but I do know that Jobs said that if you focus on profit that this is a big mistake. If you focus on the product you may well get the profit, but this is what you really need to do is focus on the product. Essentially he was saying the same thing.
If you focus on the product, then you will create a customer as per Drucker, and this may well lead to increased profit. If you focus on the profit rather than that, it may direct you into cost you’re getting a … cutting the cost of the product, making it a less desirable product in some fashion, a cheap product, or various other things that could really get you into trouble.
I see this a lot too and I’m sure you have as well, and I see this in all fields, in academia as well, where people have … and a lot of schools are in trouble just because of that. They have cut down on the product, cut down the product, cut down the product, cut down the product or rather the service of the education. As a consequence, they are now losing students. This is not only small organizations, small universities, small schools, but also the very largest are all hurting right now. This, I think, is a primary reason.
DAVID: No, I totally agree. Several months ago on the podcast we were interviewing Michael Rainer. He has a great sort of restatement. This is the irony of Drucker, right? People come out with these amazing ideas and it’s sort of like, “Well, Drucker was right, and you just got more data that proved it,” which he’ll admit. He likes to phrase it as “revenue before cost.” Because if you think about profit, you have to have revenue and you have to have cost. If you’re too focused on a profit motive, then all you do is tweak costs.
What he’s saying is that all of the successful businesses out there focus on revenue. Either generating a product that is better quality and allows them to charge more, so that’s innovation, or marketing, which Drucker would say focusing on getting more people buying your product. Focusing on that as a means to attaining profit more than just focusing on cutting cost because if you’re … and all of that is a service of generating a better customer. If you’re too focused on just profit, there’s a really easy way to be profitable and that’s to spend no money in a quarter and take in all the money that you still take in. The challenge with that is with next quarter, there’s no new money coming in.
WILLIAM: That’s right. Very true.
DAVID: The book is full of insights like that. One of my favorites is the final chapter. I think it’s ironic, because as close to Drucker as you were, you even say it in this last chapter that you get this question all the time and as you were writing the book you sort of decided, “I’m going to rethink through and make sure that I know the proper answer to this question.” That question is: What is Peter Drucker’s most valuable lesson? He’s a man that wrote about everything organizations running the gamut from for profits to nonprofits and every iteration of an organization between. Every level of an organization, inclusive. He had a lot of lessons out there. What do you feel like is his most valuable lesson?
WILLIAM: Oh, boy. I’ll tell you. There’s so many, and so many things he said were so wise and mean so much. Everything from one saying, which he didn’t write about very much, but he said, “What everyone knows is usually wrong.” If you think about that, that’s very true. Everything from the very simplistic things such as the earth is flat.
Also, everyone knows also … One of the things that I came up with that I found somewhere was that in the Sherlock Holmes. What’s the favorite saying that everyone knows Sherlock Holmes said? Almost everyone will say, “Elementary, my dear Watson.” That’s the thing that he said. But actually, he never ever, ever not once said that in the book written by Sir Arthur Conan Doyle who wrote Sherlock Holmes. That was said by Basil Rathbone in the 1940s in the movies, that was never said by Sherlock Holmes the real character.
What Drucker in my opinion after really a lot of thought about this is, Drucker really taught us how to think in so many different ways. I think this is one of the ways that I think that we translated things of what he said and what he really meant. He said what to do, and then we translate this into how to do it.
Drucker was a great forecaster, by the way, in many ways. He predicted the current recession 40 years ago, I would say. He said so many different things. He predicted the rise of the Internet, especially for education. Just dozens and dozens and dozens of ways. One time someone asked him in the classroom, “How is it that you’re able to come up with these great predictions?” Drucker paused, and this is a typical Drucker sense of humor. He paused and then he said, “I listen,” paused and then he said, “To myself.” We all laughed about that.
I believe that Drucker taught us and taught me certainly how to think. If I didn’t express that well in the last chapter, I don’t know if I did or not, but I believe more than anything else he really taught me how to think. I really think that all of us need to spend the time to think through a lot of these things, everything from engagement in hiring and promotion and so forth. How we’re going to get folks that work in our organization to be engaged, everything from that on through to making predictions, and right across the board. We have to think.
DAVID: Yeah, I think that’s a … I think ironic. It’s a wonderful lesson. I feel like a lot of times we’re so focused on knowing as opposed to thinking. That might be semantics, but when I say that I mean we feel like as soon as we get into a leadership or management position we have to know the answers and know what the right thing to do is instead of feeling comfortable going, “Hang on. Let’s all collectively think about this and make sure we’re in line about what is the right thing to do moving forward.”
I love that Drucker, one of the world’s greatest … history’s greatest management thinker reminds us, “Take some time and actually think about management. Your people will be okay if you can take some time. Don’t pretend you know the right answer and end up doing the wrong thing. Think about it, and think through it.” I think that’s a great lesson.
If it’s okay, I’d like to actually switch from the book and from Peter, from Drucker to you, and ask you a couple questions.
WILLIAM: Sure. Absolutely.
DAVID: The first thing, what are you reading now?
WILLIAM: I’m rereading “The Practical Drucker” for one thing. I recommend that to all book authors who read. They should reread what they write. I’m reading about … I’m very interested in Custer, for various reasons, George Armstrong Custer. For one thing, I have to tell you that I graduated West Point with one of the lowest math averages since George Armstrong Custer graduated in the class of June of 1861. That’s a true statement. I got through okay though.
The other thing is about Custer himself is he was largely misunderstood in a lot of ways. He was the youngest major general in the Union Army during the Civil War. He was only 28 years old at the time and he was promoted to major general. He earned it. He never lost a single battle except for the last one that we all know about, the Battle of Little Big Horn.
The Battle of Little Big Horn itself was a fight that he knew that he could not win but he felt that he had no choice that it was his duty. He was not naive or anything. The intelligence that was provided to him was very faulty. The government told him there would be no more than 800 hostiles. He knew and stated that there would be three or four times that many. He knew what he was getting into.
The individual that wrote “Dances with Wolves” some years ago wrote a book about Custer, as a matter of fact. He was interviewed on television and the author, the interviewee, I think it was on “The Today Show,” was very upset or seemed to be anyway that he seemed to be indicating that Drucker was a great hero. He said, “Drucker was a great hero.”
He said, “Like many, when I first started to research Custer, I thought he was some kind of crazed guy that went off got himself killed, and hated Indians and so forth, but that’s not true.” He said, “Custer himself in his own book wrote that if he was an American Indian he would be fighting against the Federals for the way we treated them and what we were doing.”
He said he really was a hero and it’s unfortunate that beginning about the 1930s for various reasons someone wrote a book about Custer which indicated that he was glory hunter. In fact, that was the name of the book. He said that really was inaccurate. He said, “What I tried to do, when I wrote ‘Dances with Wolves’ I got beat up because everyone said I was being politically correct. Now that I’ve written this book about Custer…” I think it was called “Marching to Valhalla.” He said, “Now everybody on the other side comes out that I’m an arch conservative or something.” Anyway, Custer’s always been of some interest to me. I’m reading, and I think I have a number of books about Custer, and I’m reading one now also.
DAVID: In line with what you’re reading and what we’ve been talking about both at the California Institute of Advanced Management and with this book, what’s next with you? What should we look for on the horizon from you?
WILLIAM: I really like what I’m doing. The California Institute of Advanced Management is doing incredible things. I mean really incredible. For example, our students finish an MBA, which normally takes two years, they finish it in 11 months. They do, during their work here, everyone takes the same course. They get an MBA in executive management in entrepreneurship. We only permit a maximum of 20 in a class, total. They do consulting, real consulting for real companies in teams of four, in every single class they take. They’re interfaced with a number of different organizations.
The professors all have doctorates in their fields from accredited universities. They’re only permitted to lecture one hour out of every four. We provide them with guest executive speakers that come in and talk for an hour, or guest lectures from research universities that come in over Skype. I mean these are top universities, everything from UCLA, USC, UC Berkley, MIT, Harvard, Cornell, Princeton. We’ve had all the top universities. Continually we have research professors that talk directly to the students in the classroom, Skype over that.
The textbooks we all own. We commission them from around the country. They’re cyber textbooks, so that in edition to the textual material they’re linked to PowerPoints, they’re linked to videos. They have all this and they’re equivalent to about 500 to 1000 pages each. The students get them free, they don’t pay anything for them whatsoever.
The students compete to get in. We have pretty high standards. We’re looking for not only GPAs, but that’s not the main thing. The main thing is their accomplishments. We want to know what they did when they did their undergraduate degree. We’ve got some really great students. They really do … we had our first graduation last June.
We had two students, but we had 100 people in attendance, including the presidents or representatives from a number of the surrounding universities. We had a color guard from UCI-USC. We had three general officers there. We had our guest speaker from Vancouver flew in, who we’re non-profit so he had given us some money to found the school.
We had a guest speaker who was the president of Peter Drucker Academy in China, Hong Kong. We got an award from the local universities. It really was a big thing honoring these two first graduates. It was pointed out that … I pointed out that West Point had two graduates in 1802 and a friend of mine pointed out that … he was a CEO of City of Hope, which is a major hospital in the local area here, and he started a graduate school for physicians and so forth while he was there in 1996.
He goes, “We only had two graduates in our first class too.” Then it was pointed out to me by one of the … our guest speaker from the Peter Drucker Academy in Hong Kong that one of the—our guest speaker from Vancouver is also Chinese, who pointed out that the first … the graduating class at the University of Hong Kong had two graduates in I forget, I think it was 1896, and I think one of them was Sun Yat-sen, the father of modern China.
We concluded that maybe there’s some magic in having two graduates in the first class. At any rate, so I’m very proud of that and I don’t expect, I expect to be doing this into the future. I’m very happy with it. I’m very proud of our professors, and our administrators, and especially our students.
DAVID: Well, it’s an amazing model. One that’s steeped in the type of innovation Peter Drucker would be proud of, playing around with business models and thinking through what’s the right way to do. We’ll keep an eye on that, we’ll obviously keep an eye on other books coming out from you, and other insights from Peter Drucker. I feel like he’s a man who will resonate for a very, very long time. I think it’s unfortunate that we call Frederick Taylor the father of management, because I think we should skip about 50 years and I think we should just give the title over to Drucker.
In the meantime though, I want to encourage our listeners to check out “The Practical Drucker.” If you feel like you’ve dabbled in Drucker before but you feel like it’s a little bit too much of the what and the things to think about, but you want a little bit more of the how, check out “The Practical Drucker.” It’s a great read for that. Bill, thank you so much for joining us inside the LDRLB.
WILLIAM: Thank you sir, I enjoyed it very much.
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