Drucker never served in the military, however, when war came he had a PhD so he volunteered for civilian service. He was assigned and he eventually became familiar with the Army and how it operated, including its rules, systems and unique aspects. This included organization and management which he later incorporated into his practice and recommended for civilian adoption.
Generals rarely get rich
Right away, he saw that a general who might command thousands and have responsibility for millions of dollars of equipment earned less than US$50,000 a year. At the time, this was less than five times the pay of the average soldier who was not an officer.
Later he discovered that many corporate CEOs received more than 58 times the pay of their average workers. Drucker said that not only was this unfair, but it was also poor management and affected productivity.
In 2004 he expressed his admiration for the Army in a testimonial for the book Be, Know, Do, co-authored by his friend Frances Hesselbein who had been CEO of the Girls Scouts of the USA and General Eric K. Shinseki who had been US Army Chief of Staff. Drucker wrote:
“The Army trains and develops more leaders than all other institutions together and with a lower casualty rate. Be, Know, Do shows how this is done and how it can be adapted by the nonmilitary businesses, colleges and universities, nonprofits and churches.”
The first of many lessons that Drucker learned from the military
I heard many lessons that he learned from the military in my time as his student. The first involved his government orders to report to a colonel who was to be his commander. His assignment was as a management consultant; however, the orders did not explain what a management consultant was nor what duties he was expected to perform.
Drucker himself did not know. The term was not in any dictionary, nor any management or book he consulted but the colonel seemed pleasant enough and asked if he had any questions.
“Please, Sir,” Drucker asked. “Can you tell me the responsibilities of a management consultant?”
The colonel looked at him with a twinkle in his eye but did not answer Drucker’s question and said only: “Young man, don’t be impertinent.” By this Drucker told us that he knew that the colonel did not know what the duties of a management consultant were either. Drucker said: “His response allowed me to suggest something that I wanted to do and where I could best contribute.”
Knowing yourself is more important than knowing your competitors
I had always thought that competitive intelligence was important, but Drucker discovered that knowledge of self, your own capabilities and limitations at a particular time is even more so, and he was not the first.
Ancient Chinese military genius Sun Tzu wrote: “If I know myself and know my enemy, I need not fear defeat in 100 battles. If I know only myself, I will lose half. If I know only my adversary and not myself, I will lose all.”
Proven again in China during WWII
Claire Chennault, then a retired captain from the Army Air Corps, went to China as advisor to General Chang Kai Shek, fighting the Japanese who had invaded the country. He was made a colonel in the Chinese Air Force and commanded the American Volunteer Group sent to China and known as the “Flying Tigers” by President Roosevelt, to be part of the Chinese Air Force before the US entered the war.
Few of the 200 American volunteers had flown fighters previously. They all held reserve commissions in the Army, Navy and Marine Corps, and all were pilots. They had flown transports, bombers and observation planes, not fighters, which is what Chennault needed.
Chennault had helped to convince President Roosevelt to give the Chinese 100 P-40E fighter planes. They were all that was available but were considered inferior to Japanese fighters. Moreover, their Japanese opponents had years of combat experience while the American pilots had none.
Chennault knew they could be trained and had knowledge of the P-40E. It was not as nimble for traditional dog fights as the Japanese aircraft, however it was heavier and faster and had much better armor.
He trained his pilots to take advantage of what P-40E’s had, not what they lacked. In their first combat the Flying Tigers defended the important Chinese city of Kunming, which previously had no aerial defense and the Japanese had been bombing it unopposed. The inexperienced pilots trained by Chennault shot down nine of 10 attacking bombers.
Over the next six months his inexperienced fighter pilots destroyed 296 enemy aircraft, while losing only 14 pilots of their own in combat. No other fighter unit of any country in history has equaled this record.
How Corporal Joe Cossman overcame obstacles
Cossman had no college experience and had been a corporal in the combat engineers during WWII. After the war he explained: “I bought an old typewriter and used my kitchen table as an office every evening after supper. Every night I read the newspaper, looking for scarce commodities. Then, I offered these products through the mail to prospects overseas.”
He worked for a year skipping meals and working part-time from his kitchen table. He said: “Then, one day I saw a small, classified ad in the New York Times. It was for laundry soap, which was then in short supply. As I had several times before, I answered the ad, got samples and sent them to overseas contacts. This time I got an order with a letter of credit for US$180,000 almost by return mail.”
The letter of credit said that a New York bank would pay him US$180,000 as soon as he presented bills of lading, which are the documents showing the product on a ship bound for the buyer. There was also a deadline, as the bills of lading had to be presented to his bank within thirty days, or the letter of credit would be worthless.
Cossman explained: “When I got to New York, I telephoned the man who ran the ad. He didn't own a single bar of soap! He had put the ad in the paper on speculation and sent a few samples he had on hand.”
From a local library Cossman got the names, addresses and phone numbers of every soap manufacturer in the US and locked himself in his hotel room the next day. There was a telephone strike and it took fifteen minutes before he got an operator and after telling his story, the operator promised to keep him on the line until he made his calls.
It took until the following day for him to find a company in Alabama which had the laundry soap he needed but he had to get it to New York. He proceeded to look for someone who would loan him thirty trucks and drivers on credit to transport the soap and succeeded.
He arrived back in New York 24 hours before the letter of credit was due to expire, but the act of loading the soap on a freighter in the harbor was going to take too long. Banks closed at two o-clock and he would not be able to present his on-board bills of lading in time.
Cossman found the steamship line’s president’s office near the docks and convinced his secretary to get him in to see him. After telling the president his story, he looked him in the eye and declared: “If you've gone this far, you're not going to lose the deal now.”
Within minutes Cossman had his bills of lading and arrived at the bank in the president’s fifteen minutes before closing time. The teller gave him a check for US$180,000 and some cash that helped him get a taxi.
Cossman went on to build a multimillion-dollar corporation over the next few years. His company sold dozens of unusual products including 1.8 million ant farms, a toy for children still being sold today. Like Drucker he adapted military lessons to civilian life. Veteran or not, you can apply many lessons learned from those in uniform too.
Let us know of any other business lessons that can be learned from those in uniform in the comments below.