The Effective Executive- Book Summary

The Effective Executive: Peter F. Drucker

Business classic about what makes an effective executive. In this day in age an ‘executive’ does not need to be a leader, but rather a knowledge learner. All effective executives have the following in common:

  • Asked “what needs to be done?”
  • Asked ” what is right for the enterprise?”
  • Developed action plans
  • Took responsibility for decisions
  • Took responsibility for communicating
  • They were focused on opportunities rather than problems
  • They ran productive meetings
  • They thought and said “we” instead of “I”

In this summary I will outline what it means to accomplish the above practices. The first two give the knowledge you need, the next four help convert knowledge into effective action. The last two ensured the whole organization felt responsible and accountable.

  • Effectiveness can be learned
    • very little correlation between a man’s effectiveness and his intelligence, his imagination, or his knowledge. We have learned this before that brilliant men are often strikingly ineffectual.
  • The knowledge worker- cannot be supervised closely or in detail, only helped
    • the knowledge worker’s ‘doing’ is thinking.
    • The motivation of the knowledge worker depends on his being effective, on his being able to achieve. If he is not effective, he will become a time-server going through the motions from 9-5. 
      • Effectiveness + Achievement  drives motivation
    • He must make decisions, not just carry out orders. Must take responsibility for his contribution
    • knowledge work is defined by its results
  • 4 things that make executives ineffective (pg 10-12)
    • The executive’s time belongs to everyone else
    • Executives are forced to keep on “operating” unless they take positive action to change the reality in which they live and work.
      • the fundamental problem is the reality around the executive. unless he changes it by deliberate action, the flow of events will determine what he is concerned with and what he does.
    • He is within an organization: he is effective only if and when other people make use of what he contributes
    • The executive is within an organization. Notice the emphasis is on the executive for this one. He sees the outside through distorted lenses. What is going on outside is not typically known first hand
  • The fewer people, the smaller the organization in terms of its only reason for existence: the service to the environment.
  • One challenge for knowledge workers is that the important outside events are often qualitative and not capable of quantification. Leading indicators often fall into this category.
    • You also need to make sure that your data is appropriate. The market is always shifting so you will want to know if figures no longer correspond to actual behavior.
  • Everyone wants an all around universal genius, but they have always been in scarce supply. As a result we will have to staff our organizations with people who at best excel in one major ability and are more likely to lack in any but the most modest endowment of the others.
    • All you really need to have in common with other executives is the ability to get the right things done
    • Effectiveness is a habit, or a complex of practices. Practices can always be learned, are often simple. Here are the five practices:
      • Effective executives know where their time goes
      • Focus on outward contribution. gear their efforts towards results rather than to work
      • build on strengths- their own strengths. do not build on weaknesses , do not start with the things they cannot do
      • Concentrate on the few major areas where superior performance will produce outstanding results (80/20 rule)
      • make effective decisions
  • Know thy time
    • In order to know where their time actually goes it is a three-step process:
      • recording time
      • managing time
      • consolidating time
    • Do not rely on your memory, it will always fail you. you need to record the time
      • You will not believe how much you underestimate tasks and need to actually record it in order to see where your time is going.
    • In order to be effective, the knowledge worker needs to have large chunks of uninterrupted time at his disposal.
    • Personal relations can be really time consuming. Management literature has a theorem “the span of control” that asserts that one man can manage only a few people if these people have to come together in their own work (have to work each other to get any results done such as an accountant, sales manager, and manufacturing ops guy)
    • You cannot manage your time if you do not know where it goes
      • A lot of effective executives keep a log and look at it regularly. Again, it should be real time, not from memory
    • Time-related diagnostic questions
      • Try to identify the things that do not need to be done at all. Learn to say ‘no’
      • Which of the activities on my time log could be done by somebody else just as well, if not better” – seems to be taken right out of the 4 hour work week… I know TF cites this book a lot in his work.
        • Delegation, as it is usually presented makes little sense. If it means that somebody else should do ‘my work’ and the most effective manager is the laziest manager, it is not only nonsense but immoral
        • Delegation should be ‘getting rid of anything that can be done by somebody else so that one does not have to delegate but can really get to one’s own work’
      • What do i do that wastes your time without contributing to your effectiveness ask this question to other people systematically without coyness.
        • If possible, in order to keep people out of meetings let people know that a meeting is going on, they can come if they want to give input, but you will send out a summary of what happened and give anyone who did not attend a chance to give feedback.
    • Next steps in pruning the time wasters
      • Identify the time wasters which follow from lack of system or foresight
      • Time wasters often result from over staffing!
      • Another common time-waster is malorganization. Its symptom is an excess of meetings. Your either meeting or working, it is impossible to do both at the same time
        • As a rule, meetings should never be allowed to become the main demand on an executive’s time
      • The last major time waster is malfunction in information
        • you want to look at product mix, ranges, extremes, etc. to see the true variation in the data the accountants screw up with ‘averages’ (page 47)
    • The key to time management
      • Effective executives start by estimating how much discretionary time they can realistically call their own. Then they set aside continuous time in the appropriate amount.
      • They set themselves deadlines for the important activities, based on their judgement of their discretionary time

What can I Contribute?

  • The effective executive focuses on contribution, he asks: “what can I contribute that will significantly affect the performance and the results of the institution I serve?”
    • Do not focus on efforts, focus on results (make sure you have good measures)
    • You are looking for the unused potential in the job
    • If you do not ask this, you are likely aiming too low
    • You may be defining your contribution too narrowly
    • Every organization needs performance in three major areas
      • needs direct results
      • building of values and their reaffirmation
      • building and developing people for tomorrow
    • Ask yourself: “What can I and no one else do which, if done really well, would make a real difference to the company?”
    • To be effective as a knowledge worker, you need to concern yourself with the usability of your product (knowledge)
  • 4 basic requirements for effective human relations – pg 64-65
    • communications-Executives should ask their people ” what are the contributions for which this organization and I, your superior, should hold you accountable? What should we expect of you? what is the best utilization of your knowledge and your ability?”
    • teamwork- ask “who has to use my output in order to be effective?”
    • self-development- depends on the focus on contributions
    • development of others- The executive who focuses on contributions also stimulates others to develop themselves
  • The effective meeting
    • Why are we having this meeting?
      • make a decision?
      • inform?
      • Make it clear to ourselves what we should be doing?
    • Always state the purpose and contribution the meeting is to achieve, do not let it degenerate into a ‘bull session’
    • Focus on contribution is to focus on effectiveness
    • Always take a step back and ask yourself “how am i maximizing my contribution to the organization?”

Making Strength Productive

  • Make your strengths productive, you cannot build on weaknesses. From a staffing standpoint, make decision based on what a man CAN do, do not make staffing decisions the minimize the weaknesses.
    • Ask “what strengths can you use/do you care about the most? Are the weaknesses irrelevant to the situation?” page 72
    • Strong people also have strong weaknesses too
    • The effective executive doesn’t ask “does he get along with me?” he asks “what does he contribute?”
  • How to staff for strength: 4 rules
    • Do not start with the assumption that jobs are created by nature or God. They were made by fallible men and you should be on guard against the ‘impossible job’.
      • Any job that has defeated two or three men in succession, even though each had performed well in previous assignments must be assumed unfit for human beings and must be redesigned
    • Make each job demanding and big- it should have challenge to bring out w whatever strength a man may have
    • Effective executives know they need to start with what a man can do rather than what a job requires
      • need to know the strengths of the man as well as what the job requires
    • To get strength means you need to put up with weaknesses
  • Staffing the opportunities instead of the problems not only creates the most effective organization, it also creates enthusiasm and dedication
  • Making strength productive is as much an attitude (mindset!!!) as it is a practice… but it can be improved with practice
  • The Bible tells us in the parable of the Talents, the task is to multiply the performance capacity of the whole by putting to use whatever strength, health, aspiration there is in individuals

First things first

  • Effective multitasking is not possible. Concentration is the secret of effectiveness.
  • Effective executives do first things first and they do one thing at a time
    • As a result they need much less time than the rest of us
  • Ask yourself “If we did not already do this, would we go into it now?” if the answer is not a hell yes! you should probably drop it or curtail it sharply
  • It is the executives specific job to commit today’s resources to the future
  • Don’t be afraid to kill the sacred cows, look past investment and focus on future growth
  • If pressures other than the executive are allowed to make the decision, the important tasks will predictably be sacrificed. No task will be completed unless other people have taken it on as their own. Other wise they will focus on the urgent over the relevant (WIG, Whirlwind, etc. for 4DX)
  • Set posteriorities – decide which tasks not to tackle and stick to the decision. These are tough since you will be putting something like MTBI off your top priority, and every posteriority is somebody else top priority.
    • This takes courage… if you try to make everybody happy nothing will ever get done.
  • Rules for identifying priorities
    • Pick future vs. past
    • Focus on opportunity rather than problem
    • choose your own direction vs. climbing on bandwagon
    • Aim high, aim for something that will make a difference rather than “safe” or easy to do
  • Deciding that everything is important is the same thing as not making a tough decision- concentration is key!!

Elements of Decision Making

  • Only one of the tasks of an executive, they do not make a great many decisions. They concentrate on the important ones.
  • Case study on page 116 and 117 has a cool case study on how Bell telephone created a system of intentional cannibalism with a division that was designed to try to make the current technology obsolete.
  • Sloan at GM made a decision that drove a new corporate structure: decentralization which balances local autonomy in operations with central control of direction and policy
  • 5 elements of the decision process (starting page 122)
    • the clear realization that the problem was generic and could only be solved through a decision which established a rule, principle
      • the generic always has to be answered through a rule/principal
      • “new” truly unique events are rare, if one appears ask: is this a true exception or only the first manifestation of a new genus?
    • definition of specifications which the answer to the problem had to satisfy, that is of the ‘boundary conditions’ or scope
      • The more concisely and clearly boundary conditions are stated, the greater the likelihood that the decision will need to be an effective one and will accomplish what it was set out to do
      • No one needs to make a decision which, on its face, falls short of satisfying the boundary conditions
    • Thinking through ‘what is right’ that is, the solution that will fully satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable.
      • You cannot make the ‘right’ compromises unless you first know what ‘right’ is
      • Two types of compromises depending on your boundary conditions:
        • Half a loaf is better than no bread
        • half a baby is worse than no baby at all
    • The building into the decision of the action to carry it out
      • requires answering several distinct questions:
        • who has to know of this decision
        • what action has to be taken
        • who has to take it
        • what does the action have to be so that the people who have to do it can do it?
    • The ‘feedback’ which tests the validity and effectiveness of the decision against the actual course of events (PDCA)
      • Military generals learned a long time ago that to go oneself and look is the only reliable feedback- go out on the floor/battlefield/etc.
        • Failure to go out and look is the typical reason for persisting in a course of action long after it has ceased to be appropriate or even rational

Effective decisions

  • It is rarely a choice between right and wrong- at best it is between ‘almost right’ and ‘probably wrong’
  • You need to know that you are not starting with facts, but rather opinions, or an untested hypothesis that is worthless unless tested against reality.
    • The effective decision does not flow from a consensus on the facts. Rather it comes from “the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives” – similar to the 5 dysfunctions of a team book
    • you need to ask “what do we need to know in order to test the validity of this hypothesis?”
    • “The effective decision-maker assumes that the traditional measurement is not the right measurement. otherwise there would generally be no need for a decision; a simple adjustment would do”
      • The best way to find the appropriate measurement is to go out and look for the ‘feedback’ discussed earlier. Do not rely on the averages, dig into the numbers to find out what is really going on
      • Unless you have considered alternatives, you are making a decision with a closed mind. Create dissension and disagreement, rather than consensus – 5 dysfunctions
      • In regards to imagination, you need to challenge and stimulate it unless it will remain latent and unused. “Disagreement, especially if forced to be reasoned, thought through, documented, is the most effective stimulus we know.”
      • The effective decision maker organizes disagreement
      • The executive who wants to make the right decision forces himself to see opposition as his means to think through the alternatives.
      • One final question the decision maker asks is “is a decision really necessary?”
    • When to act on a decision
      • Act if on balance, the benefits greatly outweigh the cost and risk AND…
      • Act or do not act; but do not “hedge” or compromise 
    • When done correctly, it becomes obvious that the decision is not going to be pleasant or popular, and it is not going to be easy
      •  be careful here, you may get sucked into an analysis paralysis looking for more data that makes it easier.
      • Also beware of the compromises that will inevitably pop up. remember that my saying yes to everything you will get nothing done.. choosing everything is the same thing as not making a decision.

Conclusion: Effectiveness Must Be Learned

  • This book rests on two premises
    • the executives job is to be effective; and
    • effectiveness can be learned
  • Effectiveness is not a ‘subject’ but a self-discipline
  • Steps to learn effectiveness:
    • Recording where time goes, and analyzing where the time goes, to eliminate the time-wasters
    • Focus your vision on contribution: think though purpose and ends rather than means alone
    • Make your strengths productive
    • First things first- you want to develop character: foresight, self reliance, courage… in essence leadership.  Not the leadership of brilliance or genius, but the more modest and enduring leadership of dedication, determination and serious purpose
    • The effective decision is concerned with rational action- and well informed.
  • There is much more to self-development of an executive than his training in effectiveness- need to learn skills and knowledge, dump poor work habits, etc.
    • It goes from mechanics to attitudes, values and character, from procedure to commitment
  • Organizations are not more effective because they have better people. They have better people because the motivate to self-development through their standards, their habits, their climate. These in turn, result from  systematic, focused, purposeful self-training of the individuals  in becoming effective executives.
  • In our efforts, far too much is devoted to yesterday or to avoid decision and action
  • Feed your opportunities and starve your problems
    • make your strengths productive
    • Set priorities instead of trying to do a little bit of everything
  • The knowledge worker is in danger of boredom, frustration, and silent despair
  • Self-development of the executive toward effectiveness is the only available answer- it is the only way in which organization goals and individual needs can come together.
    • he needs opportunity, he needs achievement, he needs fulfillment, he needs values
  • This book can be summarized by two needs:
    • needs of organization to obtain from the individual the contribution it needs
    • need of the individual to have organization serve as his tool for the accomplishment of his purpose

Effectiveness must be learned


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