The Drucker Difference

Big Solutions Should Start Small


Even if Harry and Louise hadn't killed off President Clinton's health-care reform initiative in the planning stages, Peter Drucker believed it would have been doomed in practice by two other culprits: enormity and complexity. "You have to start small," Drucker remarked during a 1996 interview, as he zeroed in on "the problem" with ClintonCare. "The big cure-alls never work." It is this very insight that likely would have made Drucker a fan of the historic health-care legislation that Congress is in the final stages of passing. And it is an insight that managers far beyond the medical world should take note of, as it applies to practically every kind of organization. The notion that the health-care package now on Capitol Hill is, in fact, based on a "start small" paradigm has gained currency in recent weeks, thanks to the publication in The New Yorker of a compelling article by Atul Gawande, a Boston surgeon and former Clinton adviser. Despite all the critics who have warned of a "big government" takeover of medicine, Gawande points out that nearly half the 2,000-plus pages in the Senate health-care bill are devoted to relatively small-gauge pilot programs that would "test various ways to curb costs and increase quality." Avoiding Grandiosity"There is a pilot program to increase payments for doctors who deliver high-quality care at lower cost, while reducing payments for those who deliver low-quality care at higher cost," Gawande writes. "There's a program that would pay bonuses to hospitals that improve patient results after heart failure, pneumonia, and surgery. There's a program that would impose financial penalties on institutions with high rates of infections transmitted by health-care workers. Still another would test a system of penalties and rewards scaled to the quality of home health and rehabilitation care. Other experiments try moving medicine away from fee-for-service payment altogether." It seems counterintuitive, in some respects, to take on a gargantuan task by trying a little of this and a little of that. But Drucker taught that this is the only way for a potential game-changer to get off the ground. "Grandiose ideas for things that will 'revolutionize an industry' are unlikely to work," Drucker asserted. At another point, while discussing the development of education policy, he put it like this: "We need innovation; therefore, we need experimentation." Bill Pollard, the chairman emeritus of ServiceMaster, a pest-control, lawn care, and housecleaning company, says that one of the most valuable lessons he ever learned from Drucker was that "the potential for the new always requires testing and piloting." "Worth Doing Poorly""For a new idea to be successful, it must get off the drawing board and beyond a market analysis or focus study group," explains Pollard, a Drucker consulting client and close friend. "It's important to get started—to start servicing a few customers to learn from the practical application of an idea. Ideas can be studied and analyzed until they are suffocated. If a thing is worth doing, it is worth doing poorly to begin with … to learn from experience." Of course, truly learning from experience takes real effort. Drucker stressed that every new endeavor must have built into it from the beginning carefully considered tools for flagging when an undertaking has gone off course and isn't likely to pan out. At the same time, Drucker made clear that such assessments must not become too sharply focused on what's broken. "The first aim," Drucker wrote, "is to find out what we are doing well, for one can always go ahead and do more of the same, even if we usually do not have the slightest idea why we are doing well in a given area." In his piece, Gawande makes the case for advancement through trial and error by tracing how a series of U.S. Agriculture Dept. pilot programs revolutionized farming in the early 20th century. "What seemed like a hodgepodge eventually cohered into a whole," Gawande reports. "The government never took over agriculture, but the government didn't leave it alone, either. It shaped a feedback loop of experiment and learning and encouragement for farmers across the country." The result: Food prices tumbled while productivity and quality soared. Pilot Testing the New DealDrucker, for his part, drew similarly on history. He concluded that the parts of President Franklin D. Roosevelt's agenda that fared the worst—including, for instance, the National Recovery Administration—started out as overly ambitious conceits that spanned the country. By contrast, Drucker said, "it is no coincidence that practically all successful New Deal programs had been pilot tested as small-scale experiments in states and cities over the preceding 20 years—in Wisconsin, New York City, or elsewhere in New York State, or by one of the Chicago reform administrations." Drucker certainly understood the limits of the federal government and would have insisted that the actual implementation of these pilot programs and any follow-ons be left, wherever possible, to local agencies, nonprofits, and businesses. As the saying goes, Uncle Sam has to steer more and row less. Yet interestingly, Drucker also discerned the seeds of what Gawande just wrote about, commenting in that 1996 interview: "The outline of a new American health-care system is slowly emerging out of literally hundreds of local experiments." If health-care reform becomes law and more of these pilot projects reach full flower, maybe we'll hear a different—and more uplifting—watchword coming out of Washington: It's too small to fail.
Wartzman
Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.

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